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2015 Top Management & Performance Challenges

Annually, the Office of Inspector General (OIG) prepares a summary of the most significant management and performance challenges facing the Department of Health and Human Services. We refer to this summary as the Top Management Challenges (TMC). The TMCs and the Department's progress toward addressing them reflect continuing vulnerabilities that OIG has identified for HHS over recent years. TMCs also forecast new and emerging issues HHS will face in FY 2016 and beyond. The assessment is included as an appendix to the publicly available HHS FY 2015 Agency Financial Report.

1. Protecting an Expanding Medicaid Program from Fraud, Waste, and Abuse
Enrollment in Medicaid and CHIP programs has grown by 13.6 million people since October 2013. Medicaid remains a top management priority given long-standing program integrity issues and expanding eligibility. The Centers for Medicare and Medicaid Services (CMS) continues to make progress in addressing the challenges through new regulations and fresh dialogue with states. In addition to this progress, OIG has identified the following areas where CMS should take further action: oversight of Medicaid expansion, oversight of Medicaid Managed Care, improving the effectiveness of Medicaid data and systems, State policies that inflate Federal costs, and ensuring quality care for Medicaid beneficiaries.
2. Fighting Fraud, Waste, and Abuse in Medicare Parts A and B
In FY 2014, CMS made an estimated $45.8 billion in improper payments for Medicare fee for service (FFS) in Parts A and B. The deleterious effects of the 12.7 percent improper payment rate include payments for unnecessary services, billing and coding errors, and payments for claims that did not meet documentation or coverage requirements. The Department has taken steps to implement OIG's recommendations to reduce Medicare fraud, resulting in an estimated $15 billion in savings in FY 2014. However, challenges continue in preventing and deterring fraud and fostering economical payment policies. Moving forward, CMS needs to identify and recover these improper payments in a timely manner, make constructive changes to the Medicare appeals system by providing sufficient participation and consistent decisions in the appellate process, and ensure effective contractor performance to properly address this TMC.
3. The Meaningful and Secure Exchange and Use of Electronic Information and Health Information Technology
Health IT, including electronic health records (EHRs), offers opportunities for improved patient care, more efficient practice management, and improved overall public health. The Department continues to face challenges safeguarding privacy and security of health IT, improving information flow, and ensuring a return on health IT investments. The Department has made progress with respect to the privacy and security of its own systems and information, but threats to information privacy are ever-evolving and the Department should take additional measures to remain vigilant.
4. Administration of Grants, Contracts, and Financial and Administrative Management Systems
HHS is the largest grant-making organization in the federal government with over $402 billion awarded in FY 2014. The Department faces challenges with oversight of these federal program dollars, specifically in response to grants and contract management, financial statement audit revelations of defective system controls, and improper payments. Recently, the Department has worked to strengthen its grants and contracts program integrity efforts. However, more aggressive action needs to be taken to identify poorly performing grantees and those at risk of misspending federal dollars. More sustained focus is needed to address vulnerabilities and ensure that recipients use funds according to the award terms and consistent with the law.
5. Ensuring Appropriate Use of Prescription Drugs
CMS provides prescription drug coverage for 41 million Americans. The Department's oversight of its prescription drug programs faces numerous challenges in oversight, drug abuse and diversion, and questionable and inappropriate utilization. These ongoing challenges elicit concern for beneficiary and community safety in addition to the integrity of the benefit itself. CMS has taken steps to increase the security of its prescription drug programs. Further actions are needed to achieve effective oversight, such as requiring sponsors to report fraud, waste, and abuse data and actions taken to address it.
6. Ensuring Quality in Nursing Home, Hospice, and Home- and Community-Based Care
As Americans continue to live longer and with more chronic medical conditions, the Department must ensure that beneficiaries receive high-quality nursing home, hospice, and home- and community-based services (HCBS), including personal care services (PCS). Challenges persist with fraud, waste, and abuse with nursing home and hospice care and HCBS. The Department continues efforts to improve the quality of these services through implementation of new systems such as the Five Star Quality Rating System. OIG believes more should be done to prioritize quality care for this community to improve internal controls and offer better guidance and training for surveyors to ensure that nursing homes with recorded quality and safety issues correct their deficiencies.
7. Implementing, Operating, and Overseeing the Health Insurance Marketplaces
The health insurance marketplaces are critical components of the reforms enacted through the Affordable Care Act. Implementation, operation, and oversight of the marketplaces were among the most significant challenges for the Department in recent years. Looking forward, OIG anticipates challenges with payments, eligibility determinations, management and administration, and the security of the marketplaces. Recently, the Department has reported improvement in the operations of the federal marketplace; however, CMS must continue to work with its state partners to improve marketplace operations and ensure compliance with federal requirements.
8. Reforming Delivery and Payment in Health Care Programs
In January 2015, Secretary Burwell announced goals to foster better care, smarter spending, and healthier people. To do this, HHS set goals to tie 30 percent of traditional Medicare payments to alternative payment models (APM), such as Accountable Care Organizations or bundled payment arrangements, by the end of 2016 and 50 percent of these payments to models by the end of 2018. HHS also set goals to tie 85 percent of traditional Medicare payments to quality or value by the end of 2016 and 90% of these payments by the end of 2018. Challenges persist in developing clear guidance for providers on program requirements; administering financial, beneficiary alignment, and other systems necessary for effective operations; and testing, evaluating, and verifying model progress and outcomes. CMS must establish policy, infrastructure, data systems, program integrity and oversight mechanisms to successfully implement these and other changes.
9. Effectively Operating Public Health and Human Services Programs
The Department funds and operates public health and human services programs to promote health, and economic and social well-being. Effective management is essential to ensure that these programs achieve their goals and best serve the programs' intended beneficiaries. Specifically, the Department must focus on public health preparedness and emergency response, enabling access to and quality of services, and protecting vulnerable populations. OIG believes the Department should continue their collaborations with federal, state, and community stakeholders and initiatives aimed at disaster response.
10. Ensuring the Safety of Food, Drugs, and Medical Devices
The Department, through the Food and Drug Administration (FDA), must ensure the safety, efficacy, and security of drugs, biologics, medical devices, dietary supplements, tobacco, feed, and much of our Nation's food supply. Some areas are of particular high risk and pose challenges to the Department, including: compounded drugs, imported food and drugs, food facilities, off-label promotion and kickbacks, and dietary supplements. FDA has taken steps to enhance its authority, warn consumers and enforce actions. It must continue to protect consumers from potentially dangerous products.

Printable version of the 2015 Top Management & Performance Challenges

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Office of Inspector General, U.S. Department of Health and Human Services | 330 Independence Avenue, SW, Washington, DC 20201