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Taxpayers Could See Billions Saved As the Result of HHS OIG Work, New Report Says

December 13, 2016

Contact: HHS OIG Media Communications
Media@OIG.HHS.GOV

Washington, DC-America's taxpayers could see several billion in misspent Medicare, Medicaid and other health and human services dollars saved in fiscal 2016 as the result of work by the Office of the Inspector General (OIG) of the Department of Health and Human Services (HHS), according to a report released recently.

This year's Semiannual Report to Congress boasts expected recoveries of more than $5.66 billion in investigative and audit receivables compared to $3.35 billion last year.

"The people served by HHS programs are at the center of OIG's oversight work and mission," said Inspector General Dan Levinson. "By identifying and recovering taxpayer dollars, investigating wrongdoing, and assessing program vulnerabilities, our work helps to ensure that HHS programs deliver services that millions of older and vulnerable Americans depend upon for their good health."

Of the $5.66 billion in expected recoveries, the report shows that for FY 2016, nearly $1.2 billion would be returned on the basis of program audit findings and about $4.46 billion in "investigative" receivables. Investigative receivables include expected recoveries from criminal actions, civil and administrative settlements, civil judgments, or administrative actions by OIG.

OIG attributed nearly $22.1 billion in estimated savings to policy decisions reflected in legislation, regulations, or other directives from prior years that are supported by OIG recommendations. Such savings generally reflect third-party estimates (such as those by the Congressional Budget Office) of funds made available for better use through reductions in Federal spending and/or avoidance of unnecessary expenditures.

In FY 2016, OIG reported 844 criminal actions against individuals or entities that engaged in crimes that affected HHS programs. OIG also reported 708 civil actions, which include false claims and unjust-enrichment lawsuits filed in Federal district court, civil monetary penalty (CMP) settlements, and administrative recoveries related to provider self-disclosure matters. CMP recoveries have increased almost fivefold over the past three years, the report says. The agency also excluded 3,635 individuals and entities from participation in Federal health care programs.

In addition to summarizing the full year's achievements, the semiannual report reviews OIG activities for the reporting period comprising the last half of fiscal year 2016 (April 1 - September 30).

During this reporting period, OIG expanded its focus on the quality and safety of care provided to vulnerable populations, including those in noninstitutional settings.

Care in homes and communities has become an increasing focus as a way to better serve beneficiaries and save money for programs. In fact, more than half of all spending on Medicaid long-term services and supports is now for home- and- community-based services (HCBS), exceeding spending on institutional services. Without appropriate safeguards and controls, several OIG reports showed that patients receiving care in noninstitutional settings may be susceptible to fraud, abuse, or neglect. Several states' group homes were examined this year, and gaps in quality of care were found.

Also during this reporting period, OIG released a data brief on common characteristics in home health fraud cases. The data brief identified more than 500 home health agencies and 4,500 physicians as outliers on multiple characteristics commonly found in OIG-investigated cases of home health fraud.

OIG continues to expand its use of data analytics to strengthen oversight efforts. Further, OIG's work highlights the critical role that complete, accurate, timely, and secure data must play in strengthening the performance of HHS programs. During this reporting period, OIG issued reports recommending that the Centers for Medicare & Medicaid Services (CMS) improve Medicare and Medicaid provider data systems, and OIG representatives testified before Congress about these recommendations. OIG also published reports on data and system security, examining, among other things, CMS's wireless networks and health insurance exchanges.

Additional highlights of OIG Work in the FY 2016 semiannual report include:

Largest National Health Care Fraud Takedown

In June 2016, the Health Care Fraud Strike Force led an unprecedented nationwide sweep in 36 Federal districts, with the assistance of 24 State Medicaid Fraud Control Units. The sweep resulted in criminal and civil charges against 301 individuals, including 61 doctors, nurses, and other licensed medical professionals, for their alleged participation in health care fraud schemes involving approximately $900 million in false billings. For more information on the takedown, visit the Strike Force website.

A Portfolio on Part D Opioid Spending

In June 2016, OIG issued a data brief on Medicare Part D that found spending for commonly abused opioids exceeded $4 billion in 2015. OIG also found that spending for compounded topical drugs increased more than 3,400 percent since 2006. The data brief updates information on spending for commonly abused opioids and provides data on the dramatic growth in spending for compounded drugs. OIG will continue to investigate and review the continuing problems created by opioid abuse and the emerging problems linked to compounded drugs. CMS has taken steps to combat the problems associated with commonly abused opioids, such as identifying outlier prescribers. However, the data brief concluded that CMS needs to take additional action, including fully implementing OIG's previous recommendations. CMS also needs to assess the implications of the compounded drug trends identified in the data brief and take action to protect the integrity of the Part D program.

Pharmaceutical Company Entered into $784.6 Million Settlement Agreement

Wyeth Inc. and Pfizer Inc. (the current owner of Wyeth) reached a $784.6 million settlement agreement with the United States to resolve allegations that Wyeth reported false pricing information and underpaid rebates that were due under the Medicaid drug rebate program. The Government alleged that Wyeth failed to report deep discounts that it offered to hospitals for bundled sales of oral and intravenous versions of the drug Protonix. This conduct allegedly led Wyeth to report false pricing information to CMS and underpay rebates due to the States.

Early Alert issued on FDA Food Recall Initiation Process

In June 2016, OIG issued an early alert after it determined that the Food and Drug Administration (FDA) does not have an effective food recall initiation process. FDA generally relies on firms to voluntarily recall harmful articles of food. Before 2011, FDA did not have the authority to require a firm to recall certain articles of food. However, in 2011 FDA gained authority to order a firm to issue a recall after FDA determines that there is a reasonable probability that food is adulterated or misbranded and that it will cause serious adverse health consequences or death to humans or animals.

Our ongoing audit of FDA's food recall program found that FDA did not have an efficient and effective recall initiation process that helps ensure the safety of the Nation's food supply. Specifically, FDA did not have policies and procedures to ensure that firms or responsible parties initiated voluntary recalls promptly. As a result, consumers remained at risk of illness or death for several weeks after FDA was aware of a potentially hazardous food in the supply chain. We suggested that FDA update its policies and procedures to instruct its recall staff to establish timeframes for FDA to request that firms voluntarily recall their products and for firms to initiate voluntary recalls.

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