OIG Issues FY 2015; Includes Several Audits Impacting Health Centers

On October 31, 2014, the Office of the Inspector General (OIG) for the U.S. Department of Health and Human Services (HHS) published its Work Plan for FY 2015, summarizing new and ongoing reviews and activities that the OIG plans to pursue with respect to HHS programs and operations during the current fiscal year. Similar to previous years, this year’s Work Plan includes three new reviews that may impact the way in which health centers conduct certain aspects of their operations.

  • Health center compliance with grant requirements of the Affordable Care Act (ACA): The OIG will assess whether health centers that received grant funds pursuant to the ACA are complying with federal laws and regulations. In particular, the review will focus on the allowability of expenditures and the adequacy of accounting systems to assess and account for program income.  While similar reviews have been conducted previously over the last couple of years, these reviews will be the first ones conducted by the OIG on this topic subsequent to the publication in March 2014 of Policy Information Notice (PIN) 2013-01: Health Center Budgeting and Accounting Requirements (the “Total Budget” PIN).
  • Duplicate discounts for 340B purchased drugs: The OIG will assess the risk of duplicate discounts under 340B-purchased drugs paid through Medicaid managed care organizations and States’ efforts to prevent them. In particular, the OIG will assess whether existing tools and processes to prevent duplicate discounts under the Medicaid fee-for-service program are sufficient under managed care operations. While this review does not focus directly on health centers, as 340B eligible entities the results of the review could impact the way in which health centers account for certain 340B drugs. Further, when combined with the stated intention of the Office of Pharmacy Affairs to conduct an increased number of 340B compliance audits as well as the upcoming direct assessment of health centers’ compliance with 340B requirements (as discussed in the blog from November 5), it is apparent that the 340B program in general will be facing increased scrutiny.
  • Oversight of vulnerable health center grantees: The OIG will assess the extent to which HRSA awards grant funds to health center grantees that have documented compliance or performance issues. Although HRSA has a variety of processes in place to monitor grantees, the OIG is concerned that the agency may still continue to fund grantees with serious, ongoing compliance or performance issues. All health centers should be aware that HRSA intends to issue a revised Health Center Site Visit Guide in the near future to incorporate the new policies issued since January 2014 and should expect a potential increase in the number of Operational Site Visits conducted this year.

In addition to the health center-reviews discussed above, the OIG announced its intention to conduct reviews related to compliance with certain fraud and abuse and program integrity requirements, including, but not limited to: (1) whether CMS and its contractors have implemented enhanced screening procedures for Medicare providers pursuant to the ACA; (2) whether States are complying with a new requirement that they terminate Medicaid program providers that have been terminated under Medicare or by another state Medicaid program, as well as whether payments are being made to providers with allegations of fraud deemed credible by States and the sufficiency of suspension of payments processes in several States; and (3) whether HHS operating divisions are taking adequate precautions to ensure that individuals and entities suspended or debarred are not awarded federal grants or contracts.

What the Election Means for Medicaid Expansion

The Republican gains this week carried through to the state level as well. In terms of Governors, the breakdown shook out to 31 R and 18 D (Alaska is yet to be decided) which is 3 more than the Republicans previously held. In statehouses across the country, Republicans won 10 chambers which resulted in more splits in power rather than complete control. At this point it looks like 30 legislatures are republican led, 11 democrat led, and 7 are split (Colorado remains undecided). What does this mean for Medicaid expansion in the states? Not a whole lot. Getting Medicaid expansion done in those states that have yet to do so will remain an uphill battle. Anti-expansion incumbents in Georgia, Wisconsin, Kansas, and Maine won re-election. In Florida, where the Governor has quietly expressed some support in the past, the conservative legislature actively opposes expansion. Arkansas advocates will have the challenge of securing a ¾ vote for the annual reauthorization of their “Private Option” with a more conservative governor and legislature. There is some speculation with the new Governor in Pennsylvania that down the road the state might go with a more streamlined expansion. However, currently they are working on implementing the waiver that CMS recently approved which includes premiums and incentives for healthy behaviors and job training. The best hope for Medicaid expansion may be in Alaska where the Governor’s race is undecided but the challenger has expressed his willingness to expand. Several conservative states considering Medicaid expansion remained basically unaffected by the elections so some progress could be made now that elections are over in Indiana, Utah, Tennessee, Wyoming and possibly North Carolina.

GAO Identifies Lack of Internal Controls for HRSA Oversight of Grantees

In September 2014, the Government Accountability Office (GAO), an oversight arm of Congress, published a report (Action Taken to Train and Oversee Grantee Monitoring Staff, But Certain Guidance Could Be Improved) in which it found that despite efforts by HRSA to increase and improve its guidance and training related to monitoring grantees, key components of grantee monitoring are not included in the Standard Operating Procedures of certain individual HRSA bureaus. This lack of detailed policies is inconsistent with federal standards for internal controls and. According to the GAO, puts HRSA at risk for incomplete or ineffective grantee monitoring, which could jeopardize the stewardship of federal dollars.

The GAO report assessed the four HRSA bureaus with the largest number of project officers, largest number of active grants and greatest amount of grant awards in FY2013: the Bureau of Primary Health Care, Bureau of Health Professions, HIV/AIDS Bureau and the Maternal and Child Health Bureaus. The GAO examined:

1. The extent to which HRSA has developed guidance for staff responsible for monitoring grantees;
2. The extent to which HRSA has implemented training for its staff responsible for monitoring grantees;
3. HRSA’s oversight of its staff responsible for monitoring grantees; and
4. What practices, if any, HRSA has in place to ensure that the contractors conducting grantee monitoring activities are qualified and carry out their work as appropriate.

The GAO report found that HRSA has increased and improved its guidance and training related to monitoring grantees, including implementation of new training programs for key staff responsible for grantee monitoring and development of SOPs for staff at the agency and bureau level.

To assist in the development of SOPs by individual bureaus, HRSA provided a template outlining the key components of grantee monitoring. The key components included three main categories—communication, reviewing grantee reports and conducting site visits—each with specific components. While the report did not provide detailed findings by bureau, the GAO generally found that the bureau-level SOPs did not address all of the key components of grantee monitoring specified in the template. Of the SOPs reviewed, the GAO found that the components related to communication were most thoroughly addressed and those related to conducting site visits were least thoroughly addressed.

The GAO recommended that HRSA develop a process at either the agency or bureau level to ensure that bureaus’ SOPs address all of the key components of grantee monitoring. In response, HRSA stated that it has begun a process to ensure that specific bureau and office SOPs address the key components and that going forward, HHS policy will direct bureaus and offices to annually review and update their SOPs to reflect changes in legislation, policy, or program operations. HRSA is also establishing an annual process to discuss with the bureaus and offices post-award monitoring activities, best practices, and implementation of agency and government-wide changes.

BPHC Announces Reorganization – Implementation Set for Beginning of New Year

On October 23, 2014, BPHC issued a Federal Register Notice in which it announced a reorganization of its Offices and Divisions.  The Notice indicates that the reorganization is effective immediately.  However, during a BPHC All Programs Webcast that took place that same afternoon, Jim Macrae indicated that the reorganization would be implemented early next year.  Presently, BPHC is in the process of hiring up to one hundred (100) new staff persons for the new structure.  Until January, it’s “business as usual.”

The reorganization entails modifying the existing structure to reflect five (5) operational Offices plus the Office of the Associate Administrator and Division of Administrative Operations.  Those Offices are as follows:

1. Office of Policy and Program Development: Director – Jen Joseph – will include 3 Divisions focusing on: (1) Expansion; (2) Policy; and (3) Strategic Initiatives and Planning (which will include Outreach and Enrollment and capital-related activities).

2. Office of Quality Improvement: Director – Suma Nair – will include 4 Divisions focusing on: (1) Data and Evaluation; (2) Federal Tort Claims Act coverage; (3) Strategic Partnerships (which will be the point of contact for Health Center Controlled Networks, Primary Care Associations, and National Cooperative Agreement grantees); and (4) Quality.

3. Office of Strategic Business Operations: Director – Margaret Davis – will include 3 Divisions focusing on: (1) External Affairs; (2) Organizational Development; and (3) Systems.

4. Office of Northern Health Services: Director – TBD – will include 4 Divisions comprised of Regions I, II, III, V, VIII, X: (1) Northeast; (2) North Central; (3) North Midwest; and (4) Northwest.

5. Office of Southern Health Services: Director – Angela Powell – will include 4 Divisions comprised of Regions IV, VI, VII, IX: (1) Southeast; (2) South Central; (3) South Plains; and (4) Southwest

The Federal Register Notice addresses the specific charges of each Office in detail. At this time it is unclear whether the reorganization will result in changes to project officer assignments.  It is also unclear whether these changes represent all of the structural modifications.  During the webcast, Mr. Macrae indicated that other changes could occur, such as development of offices based on “functions” (such as scope of project issues, assessment issues, etc.).  NACHC will provide additional detail regarding the impact of the reorganization on health centers as we obtain it.

OIG Issues Proposed Rule that Revises Safe Harbors under the Anti-Kickback Statute and Amends Regulatory Exceptions Related to Beneficiary Inducements

The OIG has issued a notice of proposed rulemaking (NPRM) that would revise the Medicare and Medicaid safe harbors under the anti-kickback statute and amend the civil monetary penalty rules pertaining to beneficiary inducement and gainsharing.  Among the revisions to the existing safe harbors to the Anti-Kickback Statute, the OIG intends to codify protection for certain cost-sharing waivers related to pharmacy services provided to financially needy Medicare Part D beneficiaries, protection for remuneration between Medicare Advantage organizations and FQHCs, and protection for free or discounted local transportation services that meet specified criteria.

In addition, the OIG would amend the definition of “remuneration” in the Civil Monetary Penalties (CMP) regulations related to the prohibition against patient inducements/incentives, promulgating the implementing regulations for the new exceptions to remuneration codified in the Affordable Care Act.  Among the changes, the OIG would extend protection to certain remuneration (i.e., patient incentives and inducements) that promotes access to care and poses a low risk of harm to patients and to federal health care programs, and to certain remuneration to financially needy individuals.  The OIG proposes to define “promotes access to care” as remuneration that improves a beneficiary’s ability to access medically necessary health care items and services (thus indicating that the remuneration must have a direct connection with access to care).  The OIG is considering expanding this definition to include remuneration that has an indirect connection by encouraging, supporting and/or assisting patients in accessing care, or making access to care more convenient for patients.  In this regard, the OIG has requested specific examples of remuneration to beneficiaries that would promote access to care under the broader definition while posing low risk of harm to Medicare and Medicaid beneficiaries and programs.

NACHC intends to comment on the NPRM as it provides FQHCs with an additional legal basis to waive cost-sharing obligations, accept donations from Medicare Advantage organizations, provide free or discounted local transportation services, and provide certain incentives to patients that would otherwise create exposures under either the Anti-Kickback Statute or CMP regulations related to the prohibition against beneficiary inducements.  Comments are due by December 2, 2014 at 5 pm EST.