What is an HHS OIG Investigation?

Posted by Steve Alder

An HHS OIG investigation is a criminal, civil, or administrative investigation into fraud or misconduct in a program run by the Department of Health and Human Services which affects the program, its operation, or its beneficiaries. HHS OIG investigations can result in criminal convictions, financial recoveries, civil monetary penalties, or exclusions from participation in Federal healthcare programs.

The Department of Health and Human Services (HHS) consists of twelve operating divisions which, between them, administer more than 100 programs. Since 1976, the HHS Office of Inspector General (OIG) has been responsible for protecting the integrity of the $2.4 trillion portfolio of programs and the well-being of program beneficiaries.

Within the HHS OIG is an Office of Investigations. The Office of Investigations can be alerted to potential fraud or misconduct by another Office within HHS OIG – for example, the Office of Audit Services – or via the OIG Hotline, which receives allegations of fraud, waste, and abuse in HHS programs from whistleblowers, the public, and HHS employees.

The HHS OIG receives thousands of allegations each year and cannot investigate them all. The Office of Investigations prioritizes allegations according to the nature and scope of the allegation, and the evidence provided to support the allegation. The Office then analyzes the allegation to determine whether it warrants a formal investigation or can be resolved informally.

The Formal HHS OIG Investigation Process

To start a formal HHS OIG investigation, the Office of Investigations issues subpoenas requiring a “target” individual or business to produce documents, conducts witness interviews with the targets, their employees, and/or patients, and visit the target’s offices to conduct inspections. Inspections are rarely announced so that investigators have the best chance of identifying fraud or misconduct.

Once all the relevant evidence has been collected, investigators review the documents, witness statements, and inspection reports to determine whether an unlawful event has taken place (such as a violation of the Stark Law or False Claims Act) or whether the target has violated healthcare regulations (such as issued under the No Surprises Act) to the detriment of a program beneficiary.

At this stage, there are three possible outcomes. The first is that the HHS OIG investigation finds insufficient evidence to support the allegation – in which case the investigation is dropped. The second is that the Office continues the investigation with the help of ancillary agents (i.e., cybersecurity or data analytics experts), and the third is that the Office pursues an enforcement action.

Office of Investigations Enforcement Actions

When the Office of Investigations pursues an enforcement action, the penalty can depend on factors such as the nature and scope of the offence, the amount of harm caused, the target’s cooperation during the formal HHS OIG investigation, and any campaign HHS is running to raise awareness of specific regulations (i.e., violations of the Emergency Medical Treatment and Labor Act).

At one end of the scale, an individual or the director/owner of a business can be sent to jail if an HHS OIG investigations uncovers violations of the Social Security Act §1177. At the other end of the scale, an individual can avoid a civil monetary penalty or addition to the HHS OIG Exclusion List by entering into a Corporate Integrity Agreement. Alternatively, agreeing to a Corporate Integrity Agreement can reduce the amount of a civil monetary penalty. For example:

  • In February 2019, Greenway Health LLC settled allegations it had violated the False Claims Act for $57.25 million and agreed to a five year Corporate Integrity Agreement.
  • In December 2017, 21st Century Oncology settled a self-reported violation of the Stark Law for $26 million and entered into a five year Corporate Integrity Agreement.
  • In September 2011, Hill-Rom Company Inc. settled allegations it had violated the False Claims Act for $41.8 million and agreed to a five year Corporate Integrity Agreement.

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Bipartisan Group of Senators Form Working Group to Address Medicare Physician Payment System

Posted by Steve Alder

A bipartisan group of senators has formed a Medicare payment reform working group which is working on new legislation that will bring long-term reforms to physician payments under Medicare. The new legislation will ensure that healthcare providers receive fair compensation for the services they provide.

For many years, physicians have complained that they are not fairly compensated for providing services under Medicare. The 2015 Medicare Access and CHIP Reauthorization Act (MACRA) made significant strides toward a value-based payment system from a system that paid on quantity, and it aimed to provide physicians with a stable payment system; however, MACRA has not achieved its goals and further action is required to address the reimbursement challenges that come with a system that aligns payment incentives with patient outcomes.

U.S. Sens. Catherine Cortez Masto, (D-NV); Marsha Blackburn, (R-TN); John Barrasso, (R-WY); Debbie Stabenow, (D-MI); Mark Warner, (D-VA); and Minority Whip John Thune, (R-SD) formed the group with the primary goal of investigating and proposing long-term reforms to the physician fee schedule (PFS) and updating MACRA. “As the health care system has evolved since the inception of the Medicare program, the physician payment system has failed to keep pace with the actual cost of care and the improvements in new services and technologies,” explained the Senators. “We believe Congress must make changes to the current Medicare physician payment system to ensure financial stability for providers, improve patient outcomes, promote access to quality care, and incentivize the utilization of emerging health care technology.”

One of the first steps will be to reach out to stakeholders to obtain their feedback on the current problems and potential solutions. The feedback collected will inform the development of policies that will address Medicare physician payment for the long term, increase compensation for physicians who provide services under Medicare, and improve the quality of care for patients.

Action needs to be taken. A 3.4% Medicare payment rate cut took effect on January 1, 2024, on top of a 2% payment reduction in 2023, and the Medicare Economic Index (MEI) was 3.8% last year and 4.6% this year, which is the highest level it has been this century. The American Hospital Association (AHA) recently highlighted that there has been an inflation-adjusted 30% decline in Medicare reimbursement rates since 2001 and the payment freeze will not end until 2026, while the cost of keeping practices open is continuing to soar. “Physicians always put patients first. It is time for our political leaders to prioritize our nation’s physician workforce by correcting the flaws in a Medicare system that unfairly penalizes doctors for the care they provide,” said the AHA. “We can, and must, do better.”

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FDA Issues Guidance on Reporting the Amount of Listed Drugs and Biological Products Under the FD&C Act

Posted by Steve Alder

The U.S. Food and Drug Administration (FDA) has issued draft guidance to help registrants of drug establishments in submitting reports to FDA on the amount of each listed drug manufactured, prepared, propagated, compounded, or processed for commercial distribution.

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted to aid response efforts and ease the economic impact of the Coronavirus Disease 2019 (COVID–19). One of the requirements of the CARES Act was to enhance the FDA’s ability to identify, prevent, and mitigate potential drug shortages by improving visibility into drug supply chains.

The CARES Act updated the Federal Food, Drug, and Cosmetic Act (FD&C Act) to require persons who register with the FDA under section 510 of the FD&C Act, including repackers and relabelers, to submit annual reports to the FDA on the amount of each listed drug that was manufactured, prepared, propagated, compounded, or processed by such person for commercial distribution.

“With earlier awareness of persistent or emerging supply chain challenges, FDA is better informed and able to take more targeted and timely actions to promote stronger supply chains and reduce drug shortage risks,” explained the FDA.

The guidance document – Reporting Amount of Listed Drugs and Biological Products Under Section 510(j)(3) of the FD&C Act – describes the process that should be used for submitting reports on listed drugs and clarifies who is required to submit reports, what the reports must include, and the timing of reports. While reports are a legal requirement under the FD&C Act, the guidance does not establish legally enforceable responsibilities, instead, it details the FDA’s current thinking and includes best practices that should be followed.

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