Kusserow on Compliance: OIG reports on new items added to its 2016 work plan

The HHS Office of Inspector General (OIG) released a mid-year update on its 2016 Work Plan that summarizes new and ongoing reviews and activities it plan to pursue with respect to HHS programs and operations during the current fiscal year and beyond. This report includes those items that have been completed, postponed, or canceled, as well as including new items begun since the original plan had been published for this fiscal year, with links to the full summaries for new work. The following is a summary of some of the new items added to the Work Plan for the current year. Compliance Officers might find it useful to review to determine if any of this new work impacts on their organization.

  • Outpatient Outlier Payments for Short-Stay Claims. To determine the extent of potential Medicare savings if hospital outpatient stays were ineligible for an outlier payment. The purpose of the outlier payment is to ensure beneficiary access to services by having the Medicare program share in the financial loss incurred by a provider associated with individual, extraordinarily expensive cases.
  • Skilled Nursing Facility Prospective Payment System. Review of the compliance with the skilled nursing facility (SNF) prospective payment system requirement related to a three-day qualifying inpatient hospital stay. If the beneficiary is subsequently admitted to a SNF, the beneficiary is required to be admitted either within 30 days after discharge from the hospital or within such time as it would be medically appropriate to begin an active course of treatment.
  • National Background Checks for Long-Term Care. Review the procedures implemented by participating states for long-term-care facilities or providers to conduct background checks on prospective employees and providers who would have direct access to patients and determine the costs of conducting background checks to determine the outcomes of the states’ programs and whether the checks led to any unintended consequences.
  • Potentially Avoidable Hospitalizations of Medicare and Medicaid Eligible Nursing Home Residents for Urinary Tract Infections. Review of nursing home records for residents hospitalized for urinary tract infections (UTI) to determine if the nursing homes provided services to prevent or detect UTIs in accordance with their care plans before they were hospitalized.
  • Accountable Care Organizations: Beneficiary Assignment and Shared Savings.  Determine whether CMS properly performed the process of assigning beneficiaries to ACOs in the Medicare Shared Savings Program (MSSP). Examine CMS’ shared savings payments for beneficiaries who were assigned to ACOs under the MSSP to ensure that there is no duplication of payments for the same beneficiaries by other savings programs or initiatives.
  • Medicare Home Health Fraud.  Analyze Medicare claims data to identify the prevalence of potential indicators of home health fraud.
  • Physician-Administered Drugs for Dual Eligibles.  Determine whether Medicare requirements for processing physician-administered drug claims impact state Medicaid agencies’ ability to correctly invoice Medicaid drug rebates for dual eligible enrollees.
  • Oversight and Effectiveness of Medicaid. Determine the extent to which selected States made use of Medicaid waivers and if costs associated with the waivers are efficient, economic, and do not inflate federal costs.
  • State Medicaid Agency Breach Protections. Examine breach notification procedures of State Medicaid agencies and their contractors, as well as their responses to past breaches of unsecured patient health information.
  • CMS Oversight of Risk Adjustment Data. Timelines, Validity, and Review of summary reports produced by the ACA risk adjustment data collection system, as well as to determine the extent of any data discrepancies and what actions were taken by issuers to review and resubmit data as well as the extent to which issuers appealed risk adjustment changes.
  • Risk Corridors: Insights from 2014 and 2015. Assess the difference in reported risk corridors data from benefit years 2014 and 2015; and the guidance and tools that CMS used to ensure the accuracy of reported risk corridors data for the two benefit years.
  • CMS’ Implementation of New Medicare Payment System for Clinical Diagnostic Laboratory Tests-Mandatory Review. Assess CMS’ ongoing activities and progress toward implementing CMS’s new Medicare payment system for clinical diagnostic laboratory tests.
  • Other Providers and Suppliers. Assess CMS’ ongoing activities and progress toward implementing CMS’ new Medicare payment system for clinical diagnostic laboratory tests.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2016 Strategic Management Services, LLC. Published with permission.

ACA risk shifting programs may actually be too effective

The risk adjustment program, found in section 1343 the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), worked as intended by shifting funds to insurers that have high-cost enrollees. The American Academy of Actuaries (the Academy) found that the loss ratio differences among insurers were compressed into a smaller range by both the ACA’s risk adjustment program and reinsurance program payments. The policy analysis noted that insurers receiving the largest risk adjustment payments actually had below average loss ratios.

Risk reduction

The ACA implemented various rules for insurers, such as prohibiting them from denying coverage or charging higher premiums due to a consumer’s health history. These requirements introduced a higher level of financial risk, especially because individuals with more health care needs were more likely to enroll than those with fewer, cheaper health costs. In addition, insurers enrolling a disproportionate share of sicker patients would be at risk for increased financial losses.

The risk adjustment program is a permanent program that transfers money between insurers based on the average premium collected within a state and the risks of the enrolled consumers. The reinsurance program, found in section 1341, compensates individual market plans that have many enrollees with high-cost claims, but is only in effect from 2014 to 2016. Finally, section 1342’s risk corridor program, also ending in 2016, allowed insurers to receive a payment from HHS if they experienced a higher number of losses, but had a smaller impact as insurers received only 12.6 percent of expected payments for the 2014 plan year.

Risk shifting effects

The Academy found that, as expected, insurers with higher loss ratios received payments through the program and saw their ratios reduced. The reverse was also true, resulting in a smaller range of loss ratios. However, loss ratios reflect additional factors like premiums and administrative costs in addition to risk, accounting for some remaining variation.

This variation was reduced somewhat when reinsurance payments were incorporated. Insurers with higher loss ratios received higher reinsurance payments, which lowered their ratios even more. The analysis revealed that the combined effect of the two programs might have overcompensated some insurers, resulting in below average loss ratios for insurers with the largest risk adjustment payments.