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Transcript for audio podcast: OIG Outlook 2013 - Full Presentation

From the Office of Inspector General of Department of Health and Human Services

Hello and welcome to OIG Outlook 2013. I'm Roberta Baskin, Director of Media Communications for the Office of Inspector General. Consider this, health care expenditures account for nearly 25 percent of the Federal budget. So, the ability to maintain effective oversight to health care programs is crucial. Any one investigation can result in millions even billions of dollars returned to taxpayers. Over the next 30 minutes or so, I'll be talking to our senior leadership about the 2013 Work Plan and about OIG priorities for the year ahead; first a message from our Inspector General, Dan Levinson.

Dan Levinson: Hello and welcome. One of the key missions we undertake at the Office of Inspector General is to fight fraud, waste and abuse in health and human services programs. We also recommend ways to make these programs more efficient and effective. By doing so, we protect the millions of Americans who rely on these programs and the investment of our nation's taxpayers. We carry out this mission with a nationwide team of professionals with specialized expertise in auditing, criminal investigations and enforcement, program evaluation and compliance and data analysis. In just a moment our senior executives will provide the details on OIG's priorities over the coming year, our areas of focus and the trends we see developing.

For more than 30 years our commitment to this mission has remained unwavering, but over time our responsibilities have increased and our priorities have expanded as health care programs and practices evolve. And change in health care is more dynamic than ever. Electronic medical records improve quality of care and efficiency and help us uncover cases of fraud and abuse. At the same time, we must guard against the use of electronic records to cover up crimes. We must also be alert to cyber security threats. Targets can include medical records and also on-line payment systems. Medicare and Medicaid are testing new ways to improve quality of care and reduce costs through better care coordination, health information technology and evidence based medicine. We're using more sophisticated tools to protect Medicare from fraud waste and abuse.

For example, OIG analyzes data to discover new trends in criminal behavior and we're working to prevent payment errors and keep unscrupulous providers out of the Medicare program. As HHS programs continue to change, so will the way we conduct our business. But we have to rely on you as well. We share a common goal of making our health care programs work efficiently and effectively and your engagement matters. Now, stay tuned for our presentation. We hope you'll find it interesting and informative.

[Roberta Baskin] Joining me now is Larry Goldberg, our Principal Deputy Inspector General. In a sense, Larry is our chief operating officer and his job will be to coordinate the ambitious goals set in the work plan, among many other challenges. So, welcome Larry.

[Larry Goldberg] Thank you Roberta.

[Roberta Baskin] And with Health and Human Services programs accounting for almost one quarter of all Federal spending and touching the lives of virtually every American, how do you decide what the priorities are going to be in the year ahead?

[Larry Goldberg] Well, carrying out our mission in OIG to maximal impact really requires effective strategic planning and an agile response to unfolding events. Looking at the big picture, every year we assess the top challenges that are facing the department. So, for example, detecting and preventing fraud in the Medicare and Medicaid programs or protecting the nation's food supply. So, these become OIG priorities every year and also the areas that we recommend to the department, where they focus their attention, as well.

[Roberta Baskin] Well, the overwhelming body of OIG's work does focus on Medicare and Medicaid, but what drives that focus?

[Larry Goldberg] Well, Medicare and Medicaid are the largest programs that are operated by the department and together they serve one out of every four Americans. And congress created a special program called, "The Health Care Fraud and Abuse Control" program, specifically to attack fraud waste and abuse in the Medicare program. OIG gets about 80 percent of its resources from this program. So, we spent about 80 percent of our work focusing on Medicare and Medicaid issues.

[Roberta Baskin] Well, every year OIG issues its Work Plan in October. I'm curious, how do you take these big picture priorities and decide what you're going to focus on? How do you get to the details?

[Larry Goldberg] Sure, we are constantly assessing relative risks and potential impact. So, in other words we look to those areas where there's the greatest potential for fraud, waste and abuse and then we look to see where we can effectuate the most positive change. So, every time we start an audit or an evaluation we ask ourselves a number of questions. First of all, how many program dollars are at risk? How many individuals are affected by this particular program? Is anyone's life or health or safety at risk? And then do we have concerns because of previous work that we've done with respect to this program or that others have done? Now, in doing so we welcome input from the department, from congress, from the law enforcement community, health care providers and the public, because with our input that helps guide us to figure out what emerging trends there are, potential fraud issues and also where we should place our priorities.

[Roberta Baskin] The Work Plan details very specific projects when it comes to audits and evaluations and inspections. Although the public hears a lot about enforcement work, there's not so much detail about enforcement in the Work Plan. Why is that?

[Larry Goldberg] Right, well there are some good reasons why we don't talk about our enforcement activities and our investigations in our Work Plan. First of all, unlike audits and evaluations we don't plan our enforcement activities in advance. They really are the response to uncovering evidence of fraud. In addition, we don't really discuss our ongoing investigations or enforcement actions and that's for a couple of reasons. First of all, to protect the subject's due process rights during the course of the investigation and then to protect the investigation itself. If we're to be out there saying Dr. X is under investigation that could potentially compromise the investigation and lead to destruction of evidence and we might have an undercover operation going on in that case, as well.

[Roberta Baskin] Well, beyond responding to evidence of fraud then how do you plan enforcement action at a more strategic level?

[Larry Goldberg] We use data analysis, information from our agents in the field, our other government partners, vulnerabilities that we identify during the course of our audits and evaluations. All of this goes into planning our enforcement activities as well. So, for example, we establish Medicare fraud strike forces along with the Department of Justice in nine locations, the real fraud hotspots, and based on our data analysis and information from our agents, we figure out what the emerging fraud trends are and then we deploy our resources accordingly. We also very recently have focused on fraud by government contractors and grantees.

[Roberta Baskin] Larry, what do you see as the Work Plan's usefulness for various audiences? Are there any other resources that you want to highlight?

[Larry Goldberg] We recommend to our stakeholders that they use our Work Plan as a roadmap just to see where it is the OIG is focusing our attention. So, whether it's an HHS grantee or health care provider or someone subject to HHS regs, we recommend that people look at the questions we are asking in the Work Plan. So, for example, a hospital can look at some of the audits we are doing in the area of hospital billing. They can compare that to what they're doing in their own facilities and determine whether or not they're complying with Medicare rules. In addition, we report to congress twice a year on our completed work in these Semiannual Reports, different than our Work Plan, which is forward looking as to what we're going to do. It talks about the recommendations we've made, enforcement activities we've engaged in and what our findings are. And then once each year we publish a summary of our recommendations. Those have not yet been implemented by the department as to how the department can save money and improve programs.

[Roberta Baskin] Good information Larry. Thanks for your insights about what we're going to be doing in the year ahead.

[Larry Goldberg] Thank you Roberta.

[Roberta Baskin] Leading the office of Audit Services with 600 plus auditors, the largest civilian audit organization in the Federal government, is Gloria Jarmon, Deputy Inspector General, and welcome Gloria. I know that improper payment is a priority issue in the Federal government and especially in Health and Human Services, why is that?

[Gloria Jarmon] Well, first I want to let you know Roberta that an improper payment occurs in the Federal government whenever the wrong person is paid the wrong amount for the wrong reason, and we're talking about large dollars. Just in fiscal year 2011, the estimated improper payments in the Federal government were 115.3 billion dollars, that's billion with a "B."

[Roberta Baskin] Yea.

[Gloria Jarmon] And the Department of Health and Human Services with the size of the programs here made up over half of that estimated improper payments, about 65 billion of the improper payments--

[Roberta Baskin] Sixty five billion.

[Gloria Jarmon] Sixty five billion with most of that being Medicare fee for service and Medicaid programs.

[Roberta Baskin] Well, tell us about OIG's role on the issue of improper payments.

[Gloria Jarmon] OIG has been doing work in this area for many years. Our current work relates primarily to overseeing the improper payment error rate calculations that are done by the department. And we also do audits to make sure that the improper payment work is being done in accordance with the legislation. And we do audits also of individual providers, suppliers, organizations, that includes our hospital work and our work with community mental health centers and home health agencies.

[Roberta Baskin] Well, Medicaid is also a complex high priority for you and your auditors. Tell us a little bit about your Medicaid work.

[Gloria Jarmon] Well, the Medicaid program is a very large and complex program, which makes it more vulnerable to fraud and abuse. Medicaid insures about 62 million low income individuals and the size of the program is funded by both the Federal government and by the state government. In 2010 the Federal share was about 263 billion, again with a "B" and the state share was 126 billion. And we've been doing work in this area for a long time. A lot of our branches have been to the Center for Medicare and Medicaid Services, CMS, where we have asked them to revise their regulations so that the Medicaid rates paid to state operated centers are based on the cost. Our recent work in New York on developmental centers shows that it happened in 2009. The amount the Federal government would have paid would have been about 700 million dollars less than what was paid.

[Roberta Baskin] You only deal with very big numbers. What are some other arenas where you're looking at significant cost savings?

[Gloria Jarmon] We're also doing work related to durable medical equipment and supplies. This includes motor wheelchairs and also includes lower prosthesis, lower limb prosthesis and some of the work that we've done there recently have showed that if the rates for the Medicaid pays for test strips had been done based on competitive bids and manufacturer, using manufacturer's rebates in Ohio--

[Roberta Baskin] These are the diabetic testing--

[Gloria Jarmon] These are the diabetic test strips. Medicaid would have saved about eight million dollars in 2009. And so, we're also looking at other states and we're also looking at other medical supplies and equipment.

[Roberta Baskin] I know the grant oversight is becoming a bigger challenge and a bigger arena for you in oversight. What are your auditors doing in terms of grants oversight?

[Gloria Jarmon] Well, HHS is the largest grant making agency and in 2013 we're planning to do even more work looking at grant programs. We found some internal control problems. We'll be looking at AIDS relief. We'll be looking at colleges and universities where there's a lot of grants that are received and subsidized child care, and in cases where grant work and our auditors and evaluators do find any potential fraud, we always coordinate closely with our investigators and lawyers.

[Roberta Baskin] Finally, the Affordable Care Act has expanded your bandwidth, so what are you doing in terms of the new programs created by the Affordable Care Act, in terms of auditing work?

[Gloria Jarmon] We're trying to focus on areas of higher risk and where higher dollars are involved. Some of the larger Federal dollars are going to some of the programs like pre-existing insurance programs and also programs that relate to employer retirement, reinsurance programs, and the co-op program where loans are being given to non-profits and health organizations in all the States. And we're also looking at information technology issues, because, of course, a whole lot of data is being transmitted. We want to make sure it's being done as safe and secure as possible.

[Roberta Baskin] Thank you Gloria Jarmon. It sounds like you and your auditors have your work cut out for you in 2013.

[Gloria Jarmon] Thank you Roberta.

[Roberta Baskin] Leading the office of Evaluation and Inspections, which is like the academic branch of OIG's work, is Deputy Inspector General, Stuart Wright. And welcome to you Stuart, and let's just talk about those areas that you're going to focus on in the year ahead.

[Stuart Wright] Sure, thank you for having me. In terms of my office we conduct studies or evaluations of the department's programs. We approach our reviews by looking for instances of fraud, waste and abuse and review programs such as Medicare and Medicaid to insure that they're working effectively and in accordance with program requirements. In addition, we look at other areas of the program including FDA, CDC and NIH. Today, I'd like to talk to you about three areas: contractors, prescription drugs and quality of care.

[Roberta Baskin] Well, let's start with contractors and I know that they play a big role in oversight, but can you talk a little bit about what some of the vulnerabilities are that you've seen in the past?

[Stuart Wright] Certainly. We've done a large body of work related to contractors. These entities play critical functions for Medicare. They process all of the claims. They detect payment errors and they perform payment safeguard functions in terms of looking for instances of fraud, for purposes of making referrals to law enforcement. Over the years, we found a number of issues associated with these entities. For example, we found in some instances low numbers of proactive case development, low numbers of referrals to law enforcement and we found other problems associated with lack of access to data and inconsistent definitions related to broad terms.

[Roberta Baskin] How are you going to build on that work in terms of 2013?

[Stuart Wright] We plan a number of studies to look at the actual operations to determine whether these entities are operating in terms of what their supposed to be doing for the government. In addition, we plan to look at CMS's oversight of these entities. We also plan to look at recovery audit contractors, which are relatively new entities designed to detect and recover overpayments.

[Roberta Baskin] What about prescription drugs and Medicare? It's a huge program for your concern.

[Stuart Wright] Sure, with respect to prescription drugs or Part D of the program, we've done a number of oversight reviews looking at data, looking at the appropriateness of payments. In a recent review we reviewed all claims submitted from 60,000 retail pharmacies and identified 2600 pharmacies that had questionable billing characteristics.

[Roberta Baskin] Twenty six hundred.

[Stuart Wright] Twenty six hundred. These entities billed more than 5 billion dollars to the Medicare program and we identified instances where there were large numbers of prescriptions by individuals, you know, beneficiaries and other sorts of anomalies when those pharmacies were compared to their peers. We want to build on that work by continuing to look for payment errors in terms of duplicate payments. We plan to look at HIV/AIDS drugs and other oversight, you know, issues associated with that part of the program.

[Roberta Baskin] Saving money is obviously a theme in OIG's work, but quality of care as you mentioned, that's important, because we're talking about saving lives. What kind of work are you planning on that?

[Stuart Wright] In the last area, quality of care, we've obviously done a large body of work over the years and this has been a top priority for us. Recently we raised many concerns associated with the use of antipsychotic drugs in the nursing home population. In addition, in a separate review, we reviewed the care that Medicare beneficiaries received once they were admitted to hospitals and found that 13 percent of beneficiaries actually received care that was harmful and could result in permanent harm.

[Roberta Baskin] With 13 percent?

[Stuart Wright] Thirteen percent. In addition to those beneficiaries we found another 13 percent that had care that resulted in temporary harm. We plan to build on that work and review the care that Medicare beneficiaries receive once they're discharged from the hospital to other post-acute care settings, including skilled nursing facilities. We also plan to look at how CMS plans to handle poor performing nursing homes and look again at whether or not patients in nursing homes are being readmitted to hospitals and whether or not those readmissions were preventable.

[Roberta Baskin] Lots to do in 2013. Thank you Stuart Wright for giving us a glimpse of your priorities on evaluations in the coming year.

[Stuart Wright] Great, thank you.

[Roberta Baskin] With me now is Gary Cantrell. Gary is the Deputy Inspector General for the Office of Investigations, the top cop in OIG's law enforcement efforts; thank you Gary.

[Gary Cantrell] Thank you.

[Roberta Baskin] Just broadly speaking talk a little bit about the enforcement work that you have done and what's coming up in the year ahead.

[Gary Cantrell] Well, in the Office of Investigations our primary mission is to investigate and detect fraud against HHS programs. Primarily that relates to Medicare and Medicaid fraud. And our greatest resource in that fight against fraud, are our people. We have over 600 dedicated, resourceful men and women who are expert in this area of investigating fraud related to HHS programs.

[Roberta Baskin] Well, data analytics also is playing a bigger role along with the people skills that you have with your special agents. Talk a little bit about how the data analysis works and how it's become a bigger part of your work.

[Gary Cantrell] Data analytics has become a growing part of our work. It's always been a part of our work but even more today. We use data analytics to allocate our resources. So we identify where fraud hotspots exist geographically and we locate our resources to have a higher impact with our investigations.

[Roberta Baskin] Can you talk about a particular case recently where data analytics is what made it a success?

[Gary Cantrell] Sure. Data analytics also helps us in our investigations, and in a recent example in south Florida, we had a case where through the use of data we were able to identify over a million and a half dollars which had been submitted to the Medicare system (within a month of a fraudulent provider whose intent was only to commit fraud and never provide a service) and stop those payments from going out the door. So, while we continued to investigate this case, the payments had been stopped and we ended up arresting four people within two months.

[Roberta Baskin] Well, south Florida is where the strike force model was first tried out, and it's now spread across the country. Talk a little bit about how the strike force model works.

[Gary Cantrell] Well, the strike force model is a model that was developed in Miami and we have a team of individuals from OIG, the FBI, working with prosecutors from the Department of Justice; a team approach to investigating health care fraud. And then increased emphasis on the use of data to further these investigations more quickly than we did historically.

[Robert Baskin] Well, dozens of criminals steal millions of dollars and then flee the country and become fugitives. When that happens what do you do?

[Gary Cantrell] Well, unfortunately that's correct. Some of the individuals think they can get out of jail free by leaving the country. Unfortunately for them, we have a global reach and through our partners such as Interpol, we are able to locate and apprehend these individuals and bring them to justice back in the United States.

[Roberta Baskin] What about the OIG's Most Wanted website. What role does that play?

[Gary Cantrell] The OIG Most Wanted Fugitive site is great for us in alerting the public to the issues related to health care fraud. They can visit this site, see our 10 Most Wanted, and if they know anything about these individuals they can contact us to alert us to their location and help us apprehend them.

[Robert Baskin] Well, the headlines are made with Medicare and Medicaid. That's what we hear about the most. But what are some other arenas where you're doing detective work?

[Gary Cantrell] We're also very active in the child support enforcement arena. If a deadbeat parent fails to pay their child support obligations and leaves the state to avoid paying, it becomes a Federal case and we get involved. We also are very interested in the grants that the Department of Health and Human Services issues and fraud within those areas. HHS is the largest grant-making organization in the Federal government. So, there's lots of opportunity there for our work.

[Roberta Baskin] What kind of impact do you think the enforcement work is having on health care fraud?

[Gary Cantrell] I think we're having a tremendous impact. For every dollar invested in our anti-fraud efforts along with our partners, seven dollars is returned to the Medicare Trust Fund.

[Roberta Baskin] Gary Cantrell, thank you for giving us a glimpse of what you're going to be doing in the year ahead.

[Roberta Baskin] As Chief Counsel, Greg Demske leads a full service in-house legal counsel to OIG. Let's just talk about a kind of overview of the programs that you do in terms of compliance and protecting health care programs.

[Greg Demske] Sure, we in the Office of Counsel to the IG provide all the legal services for OIG and we have a specialized role with respect to certain enforcement and compliance matters such as exclusions.

[Roberta Baskin] Talk about exclusions; that's a big part of what you do and it is what any provider doesn't want to hear.

[Greg Demske] Federal health care programs will not pay for any items or services furnished by an individual or entity, which is excluded. And so that has a very broad application because that applies to someone like a physician who's directly billing for their services, but also to a nurse who's employed at a hospital or other institution, and even to companies like pharmaceutical companies that sell items that are then billed by other entities. So, these-- this is very important for us as the government to protect our programs respectively, because we've banned that payment and it basically keeps those untrustworthy people out of our programs.

[Roberta Baskin] You also play a large role in large settlements with large companies, pharmaceutical companies. Tell us a little bit about how that works.

[Greg Demske] Well, whenever the Department of Justice is pursuing a False Claims Act case to recover money on behalf of the government, we work closely with them and advise them about our perspective about how the case should be resolved, and importantly, we decide how to resolve the exclusion issue in a case. Usually with entities, we decide that the programs and our beneficiaries are better off letting an entity participate in our programs if they agree to certain measures. We enter into agreements, called Corporate Integrity Agreements or CIAs that require these entities to have compliance programs and systems and controls, and hire an outside entity to monitor their dealings with our program; and then we monitor whether they are complying with those CIAs.

[Roberta Baskin] So, what's the intended impact of a CIA? And give us an example of a large one that you've had recently, how it works.

[Greg Demske] Sure. CIAs are designed to put the entity at the frontline of promoting compliance. What they have to do is put in certain steps and hopefully put in the culture of compliance that comes from the top of the company.

[Roberta Baskin] So, you're not really thinking about it in a punitive way?

[Greg Demske] No, not at all. The exclusion is a remedy to protect the programs going forward, and when we enter into a CIA it's the same idea. The punishment takes place with criminal and civil enforcement. Our job is to decide what's the best way to protect our programs going forward.

[Roberta Baskin] So, an example would be the GlaxoSmithKline recent case, and you also had strengthened provisions in your Corporate Integrity Agreement. So, talk a little bit about that.

[Greg Demske] Sure, the largest health care fraud settlement ever is the GlaxoSmithKline case. The company paid three billion dollars to resolve their civil and criminal allegations against them. We did a Corporate Integrity Agreement that had some innovative provisions; two in particular that relate to how individuals at the company are compensated. First of all, before the settlement was finalized, the company actually changed the way that they compensate their sales people, and severed the relationship between sales that are generated for a particular product, and compensation to sales people. So now-- the salaries and bonuses of these employees are based on their knowledge, scientific knowledge, and the job that they do imparting accurate information to physicians. We are requiring them to continue that for the next five years. The other provision is what we call, "Clawback", which allows for the clawing back of bonuses that have been made by executives, where they were engaged in wrongdoing or a part of the business that they were responsible for was engaged in wrongdoing.

[Roberta Baskin: Quality of care plays a growing role in the CIAs. Can you talk a little bit about how that works?

[Greg Demske] Yes, absolutely. When we have a case that involves not only financial fraud but also potential harm to our beneficiaries we do enhanced CIAs, and most importantly we require the entity to hire an independent monitor. It goes in on-site and looks at the services being provided to our beneficiaries, and systems and controls that the entity has in place, and we then monitor and take enforcement action based on that.

[Roberta Baskin] And finally educating providers is gaining importance, what are some examples?

[Greg Demske] OIG has always believed that it's important to give information to the provider community to promote voluntary compliance. And we do that through advisory opinions, compliance program guidance, fraud alerts. But also increasingly over the last couple of years, more and more resources on our website, for example, videos that talk about a variety of compliance steps that providers can take. So they can look at those videos and use those for training that fits the needs of that particular provider.

[Roberta Baskin] Greg Demske, Chief Counsel, thanks for giving us a glimpse of how OIG works to promote compliance and protect the public. We have heard from OIG's leadership reflecting on our mission and Work Plan in the year ahead. As our Inspector General, Dan Levinson said at the start of our program, we want to hear from you. Please visit our website and weigh in on our feedback form. Tell us what you think is important in the health care arena. I'm Roberta Baskin, thanks for joining us.


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