The OIG publishes a Work Plan on an annual basis to provide a broad description of issues and concerns it plans to review during its upcoming fiscal year. The issues identified in the OIG's Work Plan for fiscal year 2006 (2006 Work Plan) represent areas that the OIG perceives are critical to the OIG's mission. The OIG's stated objective is to focus on projects that identify vulnerabilities in HHS programs. Overall, the Work Plan seeks to promote the economy, efficiency, and effectiveness of those programs. In addition to studying various issues, the OIG identified pharmaceutical fraud and quality-of-care issues for beneficiaries residing in care facilities as two major areas for investigations. The Work Plan also described much of the OIG's preparations for the debut of the Part D prescription drug benefit. Below is a summary of the OIG's investigative priorities as set forth in the 2006 Work Plan.

Hospitals
Graduate Medical Education Payments: The OIG is determining whether audit adjustments made by fiscal intermediaries are being properly reflected in the revised reimbursement.

Payments for Observation Services versus Inpatient Admissions for Dialysis Services: The OIG is determining whether payments were made for inpatient admission for dialysis services when the physician's orders stated the level of care as admission to observation status.

Medical Education Payments for Dental and Podiatry Residents: The OIG is continuing to review the appropriateness of Graduate Medical Education (GME) payments to hospitals for dental and podiatry residents. Such residents are excluded from caps on the number of residents that hospitals are allowed to claim for direct and indirect GME.

Nursing and Allied Health Education Payments: The OIG is determining the appropriateness of payments for Provider-operated Nursing and Allied Health Education Programs. Medicare pays hospitals on a reasonable cost basis for such programs. The OIG will focus on the validity of claims for these payments. The 2006 Work Plan also notes that the Office of Management and Budget has expressed interest in this area.

Inpatient Prospective Payment System Wage Indices: The OIG is determining whether hospital and Medicare controls sufficiently ensure the accuracy of the hospital wage data. The OIG believes that, in many metropolitan areas, the data used to calculate wage data may be significantly influenced by the information reported by a single hospital, rendering the wage indices inaccurate. Consequently, they will also investigate the effect on the Medicare program of incorrect DRG reimbursement resulting from inaccurate hospital wage indices.

Inpatient Rehabilitation Facilities Payments: The OIG is reviewing payments to inpatient rehabilitation facilities (IRFs) under PPS. These reviews examine (1) whether admissions to IRFs met specific regulatory requirements, (2) whether the facilities billed in compliance with PPS regulations, and (3) outlier payments. The OIG also is reviewing rural IRF patients' length of stay and cost of service to determine whether the Medicare payment increase is justified and whether claims of a discharge should have been paid as a transfer. Inpatient Hospital Payments for New Technologies: The OIG is reviewing the costs associated with new devices and technologies to determine if reimbursement is appropriate under Medicare laws and regulations.

Inpatient Psychiatric Hospitals: The OIG is reviewing outlier payments and payments made to psychiatric hospitals for interrupted stays to determine whether they were made in accordance with Medicare laws and regulations. The OIG also is reviewing the length of stay and cost of services at rural psychiatric hospitals to determine whether the Medicare payment is justified.

Inpatient Rehabilitation Payments - Late Assessments: The OIG is examining the accuracy of Medicare payments for inpatient rehabilitation when patient assessments are entered late. Under current rules, admission and discharge assessments must be entered and transmitted within a certain time or payment is reduced. The OIG is examining how the intermediaries make these adjustments and confirming their accuracy.

Long-term-care Hospital Payments: The OIG is reviewing the appropriateness of early discharge to home, interrupted stays, outlier payments, and payments made under arrangements to long-term-care hospitals.

Critical Access Hospitals: The OIG is reviewing hospital cost reports to examine the costs incurred by critical access hospitals for the time periods both prior and subsequent to their conversion to critical access hospital status.

Organ Acquisition Costs: The OIG is conducting a review of the accuracy and appropriateness of organ acquisition costs that were claimed on hospital cost reports. The OIG is concerned that hospitals may claim expenses not related to organ acquisition by shifting costs from post-transplant activities to pre-transplant activities and from other hospital cost centers to the organ acquisition center. The OIG also is examining Medicare payments related to organ procurement organizations and is identifying and reviewing controls and cost containment practices they use to acquire transplant organs.

Rebates Paid to Hospitals: The OIG is determining whether hospitals are properly identifying purchase credits as a separate line item in their Medicare cost reports. The OIG intends to visit large vendors, determine the amount of rebates paid to hospitals, and then examine a sample of hospitals' cost reports to determine if the rebates are properly credited.

Coronary Artery Stents: The OIG is conducting a medical review of arterial stent implantations to determine if the services were medically necessary and supported by adequate documentation. The OIG also is reviewing claims for stent implantations during multiple surgical procedures to determine if the implantations should have been performed simultaneously.

Outpatient Outlier and Other Charge-related Issues: The OIG is examining whether outlier payments to hospital outpatient departments and community mental health centers conform to the law and regulations and whether the current reimbursement mechanisms reimburse providers as intended.

Outpatient Department Payments: The OIG is reviewing the appropriateness of payments made for multiple procedures, repeat procedures, and global surgeries.

Unbundling of Hospital Outpatient Services: The OIG is examining the extent to which providers are submitting claims for services that should be bundled into outpatient services. Unbundling is prohibited under sections 9342 (c) and (g) of the Omnibus Reconciliation Act of 1986.

"Inpatient Only" Services Performed in an Outpatient Setting: The OIG is determining whether Medicare claims are appropriately denied for "inpatient only" and related services performed in an outpatient setting and assess the extent to which beneficiaries are held liable for these denied claims. The OIG also is assessing whether CMS computer edits required to implement to outpatient PPS were implemented.

Diagnosis-related Group Coding: The OIG is examining DRG codes to determine whether some hospitals exhibit aberrant coding patterns.

Hospital Reporting of Restraint-related Deaths: The OIG is assessing compliance with the July 1999 conditions of participation that require hospitals to report all patient deaths that might have been caused by restraint or seclusion. CMS's early experiences with hospital reporting and Medicare claims and enrollment data are being examined.

Home Health Agencies
Home Health Outlier Payments: To determine whether the current outlier metho- dology is equitable to all home health agencies, the OIG is evaluating the frequency of outliers in home health agency payments and whether the outliers cluster in certain home health resource groups or geographical areas.

Enhanced Payments for Home Health Therapy: The OIG is reviewing the number of therapy visits provided per episode period for home health agency patients to determine whether home health agency services met the therapy threshold for higher payments.

Medicare Home Health Agency Survey and Certification Deficiencies: The OIG is examining trends in home health agency survey and certification deficiencies and identifying whether any home health agencies show patterns of cyclical noncompliance.

Accuracy of Data on the Home Health Compare Web Site: The OIG is determining to what extent the Home Health Compare web site includes accurate and complete information. They will also examine how CMS identifies and updates missing and incorrect information.

Medicare Nursing Homes
Skilled Nursing Facility Rehabilitation and Infusion Therapy Services: The OIG, through medical review, is examining whether rehabilitation and infusion therapy services provided in SNFs were medically necessary, adequately supported, and actually provided.

Use of Additional Funds Provided to Skilled Nursing Facilities: In July 2003, CMS published a SNF payment rule which implemented an error correction rule that added an additional $6.9 billion in SNF payments over the next 10 years. The OIG is reviewing how those funds have been utilized and determining whether they have been spent on improving patient care.

Skilled Nursing Facilities' Involvement in Consecutive Inpatient Stays: The OIG is studying whether SNF care provided to Medicare beneficiaries with consecutive inpatient stays was medically reasonable and necessary.

Skilled Nursing Facility Payments for Day of Discharge: The OIG is assessing whether Medicare is inappropriately paying SNFs for services on the day of discharge.

Skilled Nursing Facility Consolidated Billing: Continuing prior OIG work, the OIG is determining whether controls are in place to preclude duplicate billings under Medicare Part B for services covered under SNF PPS and is assessing the effectiveness of Common Working file edits established in 2002 to prevent and detect improper payments.

Nursing Home Deficiency Trends: The OIG continues to examine the nature and extent of survey and certification deficiencies in nursing homes, updating its work from 2002, and identifying patterns of repeater noncompliance.

Nursing Home Residents Minimum Data Set Assessments and Care Planning: The OIG is examining the type, frequency, and severity of nursing home deficiencies related to Minimum Data Set assessments and care planning. The OIG also is examining methods used by state survey agencies in identifying assessments and care plans that do not address individualized needs of residents.

Enforcement Actions Against Noncompliant Nursing Homes: The OIG continues to examine the effectiveness of CMS and state enforcement actions. It is assessing compliance with and the effectiveness of nursing home plans of correction and determining if states appropriately refer nursing home cases to CMS.

Imaging and Laboratory Services in Nursing Homes: By reviewing a sample of services and examining utilization patterns in nursing facilities, the OIG is trying to determine the extent and nature of any medically unnecessary or excessive billing for imaging and lab services provided to nursing home residents.

State Compliance with Complaint Investigation Guidelines: States are required to investigate all allegations of immediate jeopardy within two days and all allegations of actual harm within ten days. The OIG is determining whether states follows CMS guidelines, as well as their own procedures, when investigating such abuse complaints.

Prescription Drug Plan Formularies and Dually Eligible Nursing Home Residents: The OIG is examining whether dual eligible nursing home residents are able to maintain their preexisting drug regimens after implementation of the Medicare Part D benefit, whether drug regimens changed for residents that were auto-enrolled in a prescription drug plan (PDP) and those who elected a PDP, and whether residents are aware they have the option to appeal PDP formulary decisions or change their PDP.

Medicare Hospice
Oversight of Hospice Providers: By examining what hospice provider oversight activities are performed, what hospice performance information is maintained by CMS, and to what extent CMS utilizes oversight information to track hospice performance, the OIG is determining to what extent hospice providers meet Medicare quality of care standards.

Hospice Payments to Nursing Facilities: The OIG has determined that nursing home patients receive 46 percent fewer nursing and aide services from hospice staff than home hospice patients, and is concerned about the appropriateness of the arrangements hospices have with nursing facilities. The OIG is examining what services are provided by the hospice and the nursing home, whether there is overlap in those services, and whether there has been duplication of Medicare or Medicaid reimbursement.

Physicians and Other Health Professionals
Billing Service Companies: The OIG is reviewing the relationships between billing companies and providers and determining the impact of these relationships on provider billings.

Medicare Payments to VA Physicians: Physicians employed by the VA may not bill Medicare for services rendered at other hospitals while they are on duty at a VA hospital. The OIG, using time reporting and payroll documentation, is investigating Medicare billings of VA physicians for conformance to this rule.

Care Plan Oversight: Reimbursement for care plan oversight increased from $15 million in 2000 to $41 million in 2001. The OIG is evaluating whether there are appropriate controls for Medicare payments for care plan oversight claims submitted by physicians.

Ordering Physicians Excluded from Medicare: Based on an OIG review that identified a significant number of services ordered by physicians excluded from the federal health care programs, the OIG is conducting another review to quantify the extent to which services ordered by excluded physicians are being paid for by Medicare Part B.

Physician Pathology Services: The OIG intends to focus on in-office pathology services to determine whether billing for those services complies with Part B requirements. It also is reviewing the relationships between physicians who furnish in-office pathology services and outside pathology companies.

Cardiography and Echocardiography Services: The OIG is reviewing whether physicians are correctly billing the professional and technical components of these services.

Physical and Occupational Therapy Services: The OIG is reviewing therapy claims to ensure the claims were reasonable and medically necessary, adequately documented, and certified by physician certification statements.

Payment to Providers of Care for Initial Preventive Physical Examination: The OIG is evaluating the impact of the initial preventive physical examination on Medicare payments and physician billing practices.

Part B Mental Health Services: Based on previous studies that revealed that mental health services provided in a physician's office accounted for 55 percent of Part B mental health services in 2002, and that $185 million was paid for inappropriate mental health services in the outpatient setting, the OIG is investigating whether mental health services provided in a physician's office were medically necessary and properly billed.

Wound Care Services: Medicare-allowed amounts for certain wound care services increased from $98 million in 1998 to $147 million in 2002. Accordingly, the OIG is evaluating whether claims for wound care services were medically necessary and appropriately billed. It also is examining the adequacy of controls intended to prevent inappropriate wound care payments.

"Long Distance" Physician Claims: The OIG is reviewing Medicare claims for faceto- face physician encounters in which a significant distance separated the practice setting and the beneficiary's location, to ensure that services were provided and accurately reported. Where warranted, the OIG intends to recommend enhancements to existing program integrity controls.

Durable Medical Equipment Payments for Beneficiaries Receiving Home Health Services: The OIG is determining whether suppliers appropriately used and maintained certificates of medical necessity and whether ordered items were reasonable and necessary.

Medicare Payments for Therapeutic Footwear: The OIG has, in a previous study, found that a significant percentage of payments for therapeutic footwear were insufficiently documented. In a new study, the OIG is examining whether furnished footwear was reasonable and necessary for the beneficiaries to whom it was provided.

Medical Necessity of Durable Medical Equipment: The OIG is evaluating the appropriateness of Medicare payments for power wheelchairs, wound care equipment, and glucose test strips, by reviewing whether the suppliers' documentation supports the claim, whether the item was medically necessary, and whether the beneficiary actually received the item.

Medicare Pricing of Equipment and Supplies: The OIG is comparing Medicare payment rates for wheelchairs, parenteral nutrition, wound care equipment and supplies, and oxygen equipment and supplies with the rates for other federal and state health care programs, as well as with wholesale and retail prices.

Home Blood Glucose Testing Supplies: The OIG is assessing the appropriateness of Part B payments made to a supplier for home blood glucose testing supplies, specifically test strips and lancets, to ensure that the supplied amounts conform to Medicare utilization guidelines.

Medicare Drug Reimbursement
Computation of Average Sales Price: The OIG is evaluating drug manufacturers' methodologies for computing the average sales price (ASP). The ASP is used for determining the Medicare reimbursement of certain drugs as required by the MMA.

Collecting and Maintaining Average Sales Price Data: Under the MMA, Medicare will base payments for most prescription drugs on ASP. Drug manufacturers are required to report accurate ASP information to CMS. The OIG is evaluating CMS's system for collecting and maintaining this data and its oversight of ASP reporting.

Effectiveness of Average Sales Price Cost Controls: The OIG is investigating why reported average sales prices are rising, how the increases reflect provider costs, and the extent to which rising costs have curtailed the cost reductions of the ASP program. Medicare Payments for Oral Antiemetic Medications: The OIG is assessing Medicare payments for oral antiemetic medications, which are covered under certain circumstances.

Monitoring of Market Prices for Part B Drugs: The OIG, as required under the MMA, is conducting studies, which may include market surveys, to determine market prices for Part B drugs, and comparing average manufacturer prices to average sales prices. Duplicate Payments for Part B Drugs Under the Competitive Acquisition Program: The OIG is determining if there are duplicate payments to physicians for Part B drugs purchased from vendors selected through a competitive bidding process and those directly reimbursed and evaluating what systems CMS has in place to prevent duplicate payments.

Medicare Reimbursement for End Stage Renal Disease Drugs: As part of an MMAmandated study, the OIG is determining the difference between Medicare reimbursement for select billable end stage renal disease (ESRD) drugs and the cost of these drugs to ESRD facilities and the growth rate of facilities' expenditures for the ESRD drugs.

Adequacy of Reimbursement Rate for Drugs Under the Average Sales Price: Under the MMA, the OIG is conducting a study to determine whether physicians' practices in the specialties of hematology, hematology/oncology, and medical oncology are able to purchase drugs at reimbursement amounts based on ASP.

Medicare Part D Administration
CMS Program Integrity Safeguards for Medicare Drug Plan Applicants: The OIG is assessing the safeguards that CMS uses to confirm that drug plan applicants qualify to provide Part D benefits and whether CMS sufficiently addresses program integrity concerns associated with the sponsors who apply to offer drug plan benefits. The OIG also is reviewing the regulations and guidance associated with the application process with an eye to business integrity and compliance.

Beneficiary Awareness of the Medicare Part D Low-income Subsidy: The OIG is evaluating whether beneficiaries are aware of the Part D low-income subsidy and analyze the methods used to educate beneficiaries about the subsidy. Tracking Beneficiaries' True Out-of-pocket Costs for Part D Prescription Drug

Coverage: The OIG will examine CMS's oversight of the calculation of true outof- pocket expenses that qualify toward catastrophic coverage and the accuracy of tracking these expenses in the Coordination of Benefits system. Prescription Drug Plan and Marketing Materials for Prescription Drug Benefits: The OIG is examining prescription drug plan marketing materials to ensure that they are clear and understandable to Medicare beneficiaries and in compliance with regulations and guidance.

Auto-enrollment of Dual Eligibles into Medicare Part D Plans: The OIG is studying CMS's auto-enrollment of dually eligibles, the proportion of dually eligibles that selected their own plan, and those who are not enrolled in any Part D plan.

Medicare Prescription Drug Benefit Pharmacy Access in Rural Areas: The OIG is studying Part D pharmacies in rural areas to ensure that there is sufficient beneficiary access and that the drug plans comply with minimum pharmacy access requirements. Monitoring Fluctuation in Drug Prices Under Prescription Drug Plans and Medicare Advantage Prescription Drug Plans: The OIG is studying fluctuations in drug prices and price variation patterns under the PDPs and Medicare Advantage Prescription Drug plans (MA-PDs).

Coordination and Oversight of Medicare Part B and D to Avoid Duplicate Payments: The OIG is examining Part D and Part B oversight to ensure that it will prevent duplicate payment for drugs.

Enrollee Access to Negotiated Prices for Covered Part D Drugs: The OIG is investigating whether Medicare Advantage and Part D enrollees are being given access to negotiated prices for covered drugs, including all discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations, regardless of whether the drug was paid for under the benefit.

Prescription Drug Plans' Use of Formularies: The OIG is investigating whether (1) the Pharmacy and Therapeutics committees that construct the formularies, (2) the breadth and depth of drugs in the formularies, and (3) the beneficiary management tools (including exception and appeal rights) conform to rules and regulations.

Coordination Between State Pharmaceutical Assistance Programs and Medicare Part D: The OIG is examining the coordination between State Pharmaceutical Assistance Programs and Part D to identify whether beneficiaries are able to obtain needed assistance and appropriate drug coverage.

Prescription Drug Plans' and Medicare Advantage Plans' Implementation of Required Programs to Deter Fraud, Waste, and Abuse: Following an OIG inspection to assess program integrity safeguards in the PDP and MA-PD application process, the OIG will evaluate PDPs' and MA-PDs' implementation of required programs to deter fraud, waste, and abuse, and CMS programs' integrity systems to oversee the PDP and MA-PD programs.

Prescription Drug Cards: The OIG is reviewing the processes and controls for the prescription drug discount card program, specifically addressing general and application system controls at CMS and for some program sponsors, identifying whether controls are in place to minimize fraud, waste, and abuse in transitional assistance payments. The discount program ended January 2006, and the OIG will present the results of its review as a "lessons learned" for use in the full prescription drug benefit.

Employer Subsidies for Drug Coverage: The OIG is assessing the strength of the controls that CMS will implement to administer employer subsidies to sponsors of qualified retiree prescription drug plans by verifying some of the sponsors' data, both the actuarial equivalency and qualified retiree information.

Medicare Part D Drug Benefit Payments: The OIG is sampling Part D beneficiaries' claim files to determine whether controls have been implemented and is working to ensure that (1) benefits are paid on behalf of eligible beneficiaries and (2) Medicare, as well as the beneficiaries paid appropriate amounts for drug coverage.

State Contribution to Drug Benefit Costs Assumed by Medicare: The OIG is reviewing the data used to calculate states' contribution payments, calculation of those payments, the states' payment amounts, and CMS and state controls related to contribution payments, in order to determine states' compliance with laws and regulations requiring them to make monthly payments under the MMA.

Medicare Part D Risk-sharing Payments and Recoveries: The OIG is determining whether CMS and the prescription drug plans have established adequate controls over Part D risk-sharing payments and recoveries to ensure that (1) the plans submit accurate and timely information to CMS; (2) CMS calculations are performed in accordance with applicable laws and regulations; and (3) payments and recoveries are made in accordance with applicable laws and regulations.

Prescription Drug Benefit: Many Medicare Advantage (MA) organizations currently offer a prescription drug benefit as a supplemental benefit when expected Medicare payments exceeded Medicare costs. While any supplemental benefits (prescription drug benefit under Part D or as an additional benefit under an MA plan) offered by the plan may be viewed as a single package of supplemental benefits, the two types of supplemental benefits are considered separately for bidding. The OIG is examining the bidding of prescription drugs when these two scenarios are present. It also is examining the impact of the amount a beneficiary must spend on Part D covered drugs to reach catastrophic coverage of prescription drugs available under an MA-sponsored plan and any other drug benefit provided as an additional benefit.

Other Medicare Services
Laboratory Services Rendered During an Inpatient Stay: The OIG is assessing the extent to which laboratory services rendered during an inpatient stay are unallowable. In response to a considerable increase in payment for laboratory services in 2001, the OIG is assessing what percentage of these costs are related to the unallowable technical component.

Independent Diagnostic Testing Facilities: Similar to a fiscal year 2003 Work Plan item, the OIG is reviewing the appropriateness of Medicare payments to independent diagnostic testing facilities. Medicare covers diagnostic services performed by independent testing facilities when the services are medically necessary and satisfy certain criteria related to physician supervision and qualifications of nonphysician personnel.

Therapy Services Provided by Comprehensive Outpatient Rehabilitation Facilities: The BBA required a PPS for all services provided in comprehensive outpatient rehabilitation facilities (CORFs). Prior OIG reviews have found that Medicare paid significant amounts for unallowable, highly questionable therapy services. Accordingly, the OIG is determining whether CORFs provided and billed physical therapy, speech language pathology, and occupational therapy services in accordance with Medicare eligibility and reimbursement requirements.

Follow-up on Medicare Part B Payments for Ambulance Services: The OIG is evaluating whether ambulance companies were paid for services provided to beneficiaries who were in an inpatient status. This review is being conducted for years 2001 and 2002 in response to recent survey results showing that, in 2001, Medicare Part B improperly paid ambulance services for periods when beneficiaries were inpatients.

Follow-up on Medicare Part B Payments for Radiology Services: The OIG is evaluating whether Medicare Part B paid for radiology services provided to beneficiaries who were in an inpatient status. This review is being conducted for years 2001 and 2002 in response to recent survey results showing that, in 2001, Medicare Part B improperly paid radiology services for periods when the beneficiary was an inpatient.

Emergency Health Services for Undocumented Aliens: The OIG is evaluating whether the $250 million appropriation enacted by the MMA for emergency health services furnished to undocumented aliens is appropriately distributed to each state and provider and is used for its intended purpose.

Separately Billable Laboratory Services Under the End Stage Renal Disease Program: The MMA requires a report on a bundled PPS for ESRD services that includes certain clinical laboratory tests that are currently separately billable. The current composite rate facility payments includes payments for certain routinely provided automated multi-channel chemistry (AMCC) tests that may be billed separately if they are medically necessary and not routinely provided. Prior OIG reviews found that providers were paid separately for AMCC tests that were included in the composite rate. To ensure that the new bundled PPS is based on valid data, the OIG is reviewing providers' current compliance with the payment policies for AMCC tests.

Ground Ambulance Services: The OIG is investigating whether ambulance services furnished by individual providers were reasonable, necessary, and furnished at the appropriate level.

Laboratory Proficiency Testing: The OIG is assessing compliance with CLIA requirements that laboratories participate in proficiency testing.

Rural Health Clinics: The OIG is examining changes in Medicare certification and reimbursement of rural health clinics. It is also examining recent trends in rural health clinic locations and billings and comparing them to its 1996 report.

Hospital Laboratory Service: The OIG is evaluating whether hospitals separately billed Medicare for laboratory services that were already included in their ESRD composite rate.

Medicare Pricing of Laboratory Services: Prior OIG work uncovered that Medicare paid significantly higher prices than other payors for certain laboratory tests, accordingly, in 2006 the OIG is comparing Medicare payment rates for certain laboratory tests with the rates of other federal and state health programs and private payers.

Quality of Care in Dialysis Facilities: The OIG is examining the level of oversight of ESRD facilities, especially those that show indications of a poor level of care. Preventive Care Services: The OIG is examining the access to and use of Medicare preventive screening services and monitoring whether appropriate controls are in place to identify inappropriate payments or utilization of these services.

Medicare Managed Care
Regional Plan Stabilization Fund: The OIG is assessing compliance with MMA requirements and CMS guidance pertaining to the establishment and management of the "Regional Plan Stabilization Fund," including the adequacy, propriety, and timeliness of CMS's review processes for evaluating Managed Care Organization (MCO) proposals and the awarding of stabilization funds.

Adjusted Community Rate Proposals: In a review carried over from the 2003 Work Plan, the OIG is examining whether modifications of the 2001 and 2004 Adjusted Community Rate Proposals were properly supported. MCOs may make one or more of the following proposals: reduced beneficiary premiums; reduced beneficiary cost sharing; enhanced benefits; additional payment amounts received after March 1, 2001 placed in a Benefit Stabilization Fund; or additional payment amounts used to retain providers or expand a provider network, as long as the stabilization or enhancement does not result in increased premiums, increased cost sharing, or reduced benefits. The OIG is verifying documentation that MCOs used the additional payments in accordance with these requirements and properly documented changes in adjusted community rate values to reflect updated per-month-permember cost, utilization, and membership assumptions.

Follow-up on Adjusted Community Proposals: The OIG is examining CMS's actions to resolve the problems identified in prior audits of adjusted community rate proposals to ensure that future proposals are accurate and that repayments or enhanced benefits are provided to account for audit findings.

Administrative Costs: Using the Federal Employees Health Benefits guidelines, the OIG is examining the administrative accounts currently claimed by MCOs. This is, in part, in response to Congress's expressed interest in how MCOs determine funding amounts to meet administrative costs, which must be allocable, reasonable, and limited under the program.

Managed Care Encounter Data: The OIG is assessing the accuracy of Part A encounter data on Medicare beneficiaries. MCOs are required to submit this data for CMS's use in developing a portion of each organization's monthly capitation rate, the risk-adjusted portion that will eventually comprise 100 percent of the monthly rate. As a result, incorrect encounter data could have a significant impact on future Medicare reimbursement.

Enhanced Managed Care Payments: The OIG is completing several reviews determining whether CMS made proper enhanced capitation payments to MCOs. The OIG review focuses on the accuracy of controls at both CMS and the MCOs regarding special status categories, such as ESRD status, dual eligibles, and institutionalized beneficiaries, warranting these enhanced payments.

Duplicate Medicare Fee-for-Service Payments: The OIG is investigating whether duplicate Medicare fee-for-service payments were made to providers for beneficiaries enrolled in MCOs operating under a risk-based contract, including whether CMS or its intermediaries have sufficient controls in place to prevent such duplicate payments.

Marketing Practices by Managed Care Organizations: The OIG is examining whether Medicare MCOs market their plans pursuant to CMS guidelines and how CMS monitors compliance. CMS prohibits discriminatory marketing activities that include selectively enrolling beneficiaries through monetary inducements, soliciting enrollment door-to-door, and using providers to distribute or accept plan materials. The OIG is concerned about this issue because a prior study found that 43 percent of beneficiaries were asked about health problems when applying with an MCO.

Medicare Capitation Payments to Managed Care Plans After a Beneficiary's Death: The OIG is examining to what extent payments are made to MA plans for deceased beneficiaries, the CMS processes that identify MA overpayments due to beneficiary deaths, and what portion of those payments are subsequently recovered by CMS.

Medicare Advantage Regional Plans: Availability, Physician Participation, and Beneficiary Enrollment in Rural Areas: The OIG is examining the availability of regional MA plans to rural beneficiaries, the extent to which rural beneficiaries enroll in MA plans, and whether physician practices in rural areas participate in regional MA plans.

Dissemination of Beneficiary Information Materials by Medicare Advantage Prescription Drug Plans: The OIG is examining the extent to which MA-PD plans meet statutory and regulatory requirements regarding the content of materials distributed to beneficiaries, and whether MA-PD marketing materials comply with CMS guidelines.

Medicare Contractor Operations
Preaward Reviews of Contract Proposals: Pursuant to a request of the CMS contracting officer, the OIG is reviewing the cost proposals of various bidders for Medicare contracts. The reports produced by these reviews should assist CMS in negotiating favorable and cost-beneficiary contract awards.

Contractors' Administrative Costs: At CMS's request, the OIG is reviewing administrative costs claimed by various contractors for their Medicare activities, with special attention to costs claimed by terminated contractors. The OIG is determining whether the costs claimed were reasonable, allocable, and allowable under the terms of the contract with CMS as well as applicable Federal Acquisition Regulations.

Pension Segmentation: At CMS's request, the OIG is assessing whether Medicare contractors have fully implemented contract clauses requiring them to determine and separately account for the assets and liabilities of the Medicare segments of their pension plans.

Pension Costs Claimed: At CMS's request, the OIG is assessing whether Medicare contractors have calculated pension costs claimed for reimbursement in accordance with their Medicare contracts and Cost Accounting Standards. The OIG also is assessing whether the costs claimed were allocable and allowable under Medicare contracts.

Unfunded Pension Costs: The OIG is assessing, as requested by CMS, whether Medicare contractors identified and eliminated unallowable costs when computing pension costs charged to the Medicare program. The OIG also is assessing whether pension costs that would have been tax deductible had they been funded were reassigned to future periods.

Pension Segment Closing: As requested by CMS, the OIG is reviewing Medicare carriers and fiscal intermediaries whose Medicare contracts have been terminated, resulting in the closing of their Medicare segments. The review is assessing the amount of any excess pension assets related to each Medicare segment as of the segment closing date.

Postretirement Benefits and Supplemental Employee Retirement Plan Costs: At CMS's request, the OIG is reviewing the postretirement health benefit costs and the supplemental employee retirement plans of fiscal intermediaries and carriers for the allowability, allocability, and reasonableness of the benefits and plans.

CMS Oversight of Contractor Performance: The OIG is evaluating CMS oversight of contractor performance. This includes reviewing performance evaluation findings and recommendations, corrective action plans, and CMS actions taken as a result of evaluation findings. The OIG also is assessing whether the evaluation process is an effective mechanism for monitoring contractor performance.

Program Safeguard Contractor Performance: The OIG is examining the effectiveness of CMS program safeguard contractors in identifying fraud and abuse. The OIG also is evaluating whether the contractors effectively coordinate information with CMS and its other contractors, determining whether inefficiencies result from any duplication of effort, and determining the adequacy of CMS oversight of these activities.

Accuracy of the Provider Enrollment, Chain and Ownership System: The OIG is assessing the accuracy of the provider enrollment information in the Provider Enrollment Chain and Ownership System to determine whether it contains providers that should have been deactivated in the system and whether the new system has simplified the enrollment process.

Duplicate Medicare Part B Payments: The OIG is assessing if carriers made duplicate payments for the same Medicare Part B services and whether CMS or its carriers have taken sufficient corrective actions to prevent such duplicate payments.

Handling of Beneficiary Inquiries: The OIG is assessing Medicare carriers' handling of the nearly 15 million beneficiary inquiries and complaints that carriers receive annually. The OIG is evaluating the accuracy of information provided by carriers and assessing beneficiary satisfaction with carrier services.

Provider Education and Training: The OIG is assessing Medicare carriers' efforts to educate and train providers in order to improve billing practices and reduce payment errors as intended under the MMA.

Medicare Appeals Process: In a series of reviews, the OIG is examining the early implementation of the changes it recommended for the Medicare Appeals Process in past years, including examining the timeliness and outcomes of appeal processing at various levels.

Medicaid
Medicaid Hospitals: The OIG is conducting several studies and investigations related to Medicaid hospitals, including studies reviewing the appropriateness of Medicaid GME payment programs, hospital outlier payments, Medicaid DRG payment windows, and Disproportionate Hospital Share eligibility and payments.

Medicaid Long Term and Community Care: The OIG is conducting several studies relating to payments to nursing homes under Medicaid. These studies will: (1) determine the adequacy of Medicaid payment to public nursing facilities in states with enhanced payment programs for such facilities; (2) review whether states have improperly claimed federal financial participation (FFP) for beneficiaries who reside in communities for the mentally ill or disabled; (3) review the appropriateness of payments made to home service providers who are providing services to residents of assisted living facilities; (4) investigate, at the request of CMS, whether home health care provider are being paid under Medicaid for services provided to dual eligibles that are already included in the Medicare home health PPS; (5) investigate whether state claims for targeted case management services were in accordance with federal requirements; (6) investigate whether states have improperly claimed FFP for personal care services; (7) investigate, at CMS's request, whether states claimed costs for home and community based services in accordance with regulations and whether they are properly monitoring compliance with program requirements; (8) determine, at CMS's request, whether one state established eligibility for additional reimbursement for the distinct part / nursing facilities of public hospitals and properly calculated the reimbursement amount pursuant to state regulations; and (9) evaluate, at CMS's request, how, and how effectively, federal and state agencies determine Medicaid eligibility for a working disabled individual.

Medicaid Mental Health Services: The OIG is conducting several studies regarding Medicaid payments for Mental Health Services. These studies will: (1) review, at the request of CMS, one state's methodology for claiming costs for services to mentally disabled persons; (2) examine, at the request of CMS, one state's claims for Medicaid reimbursement services for persons with mental illness to determine if those claims are allowable; (3) determine, at the request of CMS, whether payments to community mental health centers are made in accordance with state and federal regulations and guidance; (4) focus on states' Medicaid supplemental mental health payments to prepaid inpatient health plans to determine if those payments were in accordance with federal law and regulations; (5) examine nursing home compliance with the Preadmission Screening and Resident Review (PASRR) for Medicaid nursing facility residents between the ages of 22 and 64 with a mental illness or retardation and CMS's and state Medicaid agency oversight of PASRR programs; and (6) investigate whether psychiatric treatment facilities for children are complying with CMS's 2001 regulations regarding the use of restraints and seclusion and whether the states and CMS are providing sufficient oversight.

Medicaid / State Children's Health Insurance Program: The OIG is conducting several studies relating to State Children's Health Insurance Programs (SCHIPs). These studies will: (1) determine, at the request of CMS, whether states have received federal funds under both Medicaid and SCHIP for services provided to the same beneficiary, whether this problem exists in other states, and the financial impact of this problem (2) evaluate state compliance with federal regulations for detecting and investigating fraud and abuse and examine state experience with fraud and abuse; (3) assess state efforts to ensure the accuracy of the data reported in the Statistical Enrollment Data System, determine whether inaccuracies could cause incorrect federal reimbursement claims, and assess CMS oversight of these issues; and (4) determine the extent to which SCHIP programs used the National Correct Coding Initiative (CCI) edits or similar edits, and the extent to which SCHIP programs paid for services that would have been denied if they had used the edits.

Medicaid Drug Reimbursement: The OIG is conducting many studies related to Medicaid drug reimbursement. These include: (1) examining the average manufacturer price versus average wholesale price; (2) examining Medicaid drug rebates, especially manufacturers' methodology for computing AMPand best price; (3) indexing the generic drug rebate; (4) investigating manufacturers' classification of brand name drugs as generic drugs for rebate purposes; (5) investigating claims for beneficiaries who have received significant amounts of OxyContin, Hydrocodone, Xanax, Diazepam, Soma, and other drugs; (6) determining whether manufacturers are complying with the nominal price provisions of the Medicaid Drug Rebate Law; (7) examining Medicaid reimbursement for long term care pharmacies and estimating savings available to states who lower their reimbursement rates to amounts more in line with the actual costs of drugs; (8) examining the effect of authorized generic drugs and their effect on the Medicaid drug rebate program; (9) investigating HIV drugs to determine whether abusive conditions are occurring and whether one state is paying too much for HIV drugs; (10) examining whether states are properly collecting drug rebates for drugs with $0 unit rebate amounts; (11) assessing the extent to which CMS's Dispute Resolution Program has helped to resolve disputes between state Medicaid programs and drug manufacturers; (12) determining to what extent state programs have policies to encourage generic drug use; (13) evaluating if states are meeting federal upper limit requirements for drugs covered under Medicaid; and (14) determining how criteria differ among states for including drugs in maximum allowable cost (MAC) programs and how MAC amounts vary among states.

Other Medicaid Services: The OIG is performing several studies relating to Medicaid programs. These studies will: (1) determine, at the request of CMS, whether several states improperly claimed enhanced federal funding for family planning services and the impact of those improper claims; (2) determine whether Medicaid payments for school-based health services were in accordance with federal laws and regulations; (3) determine whether providers were reimbursed for improper outpatient alcoholism services, including, in some states, reviews at those providers who receive the most reimbursement; (4) determine whether states have improperly claimed federal reimbursement for inpatient alcoholism services in freestanding facilities; (5) investigate services provided to undocumented aliens to ensure that the services provided were necessary for an emergency condition; and (6) review and evaluate how state Medicaid agencies identify and refer suspected fraud cases to Medicaid Fraud Control Units.

Medicaid Administration: The OIG is performing many studies relating to Medicaid Administration. These studies will: (1) determine the extent to which state Medicaid agencies have contracted with consultants through contingency fee arrangements and the impact of these arrangements on the submission of questionable or improper claims; (2) determine how CMS's March 2001 revised upper payment limit (UPL) regulations have affected state enhanced payments, especially the amount of funding claimed as part of UPL programs and the use those funds are put to; (3) examine, at the request of CMS, state and health care-related taxes imposed on various providers to determine whether those taxes comply with regulations and are being used for the stated purposes; (4) review Medicaid payments to physicians and other practitioners who are state employees (an area in which the OMB has also expressed interest); (5) determine, at CMS's request, whether states have improperly claimed enhanced federal funding for skilled professional medical personnel; (6) determine whether improper or ineligible claims for physician assistant reimbursement have been made to Medicaid; (7) determine if states have improperly claimed FFP for providers who have been excluded from participation; (8) determine if state agencies are claiming indirect costs related to contracts with state universities as Medicaid administrative costs, even though state agencies do not pay these costs; (9) examine, at CMS's request, states' procedures for identifying, recording, and collecting Medicaid overpayments from providers; (10) evaluate, at CMS's request, the financial management of a demonstration project for a county with a large Medicaid population; (11) determine if states have effective controls in place to preclude duplicate payments; (12) determine if states are complying with federal regulations for claiming certified public expenditures; (13) determine whether states have turned off or overridden edits in Medicaid payment systems and the effects that those turned off or overridden edits may have had on the federal government; (14) determine the amount of common administrative costs included in the Temporary Assistance for Needy Families block grants; (15) determine whether states have adequate procedures for determining the appropriateness of beneficiary eligibility for Medicaid nursing home care and review state procedures for recovery of payment from individual estates; (16) review, at CMS's request, selected states' claims for county administrative services to determine whether they are allowable, allocable, and in accordance with applicable law and regulation; (17) review, at CMS's request, one state's buy-in program of Medicare Parts Aand B to determine whether that state had adequate controls to ensure that only Medicare premiums are paid for individuals eligible for state buy-in coverage of Medicaid services; (18) determine the appropriateness of Medicaid payments for beneficiaries with Medicaid eligibility in multiple states; (19) determine, at CMS's request, whether Medicaid Management Information System operational costs claimed by one state were allowable and adequately supported pursuant to law and regulation; (20) identify Medicaid expenditures for services such as home health, dental, personal care services, outpatient mental health, and personal care that are duplicative, unsupported, or unnecessary; (21) examine Medicaid provider enrollment controls for various services such as personal care, home, and mental health, in terms of potential vulnerabilities and whether federal and state provision of practice guidelines are being met; (22) assess payment safeguards used by state Medicaid programs for services such as dental and home and mental health and the state practices to detect and prevent improper Medicaid payments; (23) compare Medicaid payment rates for certain medical equipment and supplies among state Medicaid programs; (24) assess to what extent Medicaid fee-for-service payments are made for beneficiaries who are enrolled in capitated Medicaid managed care health plans and what controls states have in place to detect improper payments; (25) evaluate CMS regional oversight of Medicaid Home- and Community-based Service waivers; (26) examine the practices of many states that have taken advantage of loopholes in Medicaid regulations to generate additional federal revenues without an associated increase in state payments; and (27) conduct pilot reviews in three states to determine whether statistically valid error rates can be developed to project the number of beneficiaries who were not eligible for SCHIP benefits during the review period and assess the states' policies, procedures, and controls for verifying and re-determining eligibility.

Information System Controls
The OIG is performing several studies relating to Information System Controls. These studies will: (1) determine whether CMS has adequately addressed information systems security requirements as major new systems are designed, developed, acquired, and implemented; (2) determine, in two states, the integrity and completeness of eligibility and claim data in the Medicaid Statistical Information System; (3) conduct an ongoing assessment of the status of the analysis, design, and testing/implementation phases of CMS's development of the drug data processing system capable of supporting the MMA-mandated Medicare drug benefit; (4) assess, with contractor support, the sufficiency of project planning and monitoring by CMS in the development of information systems to support the new Prescription Drug and Medicare Advantage benefits; (5) assess, with contractor support, how CMS is addressing internal control issues in its plans for Medicare contractor reform; (6) review independent evaluations of information systems security programs of Medicare fiscal intermediaries, carriers, and administrative contractors; (7) assess information security controls at one or more large Medicaid fiscal agents; (8) evaluate state-based information controls over Medicaid claim processing and program eligibility; (9) assess, at CMS's request, the use of "smart card" technology in Medicare demonstrations as a means of creating portable, electronic patient medical records; (10) determine whether a university hospital's information and security systems meet HIPAA standards; (11) assess the security controls in the Health Care Quality Improvement (HCQI) System to ensure confidentiality, integrity, and availability within the Department's infrastructure; and (12) determine the uses, accuracy, and reliability of CMS's Fraud Investigative Database, following up on specific complaints and identifying corrective measures.

General Administration
The OIG is performing several studies relating to General Administration. These studies will: (1) determine whether CMS has produced a valid and reliable Medicare fee-for-service paid claims error rate estimate for fiscal years 2005 and 2006; (2) continue to examine how group purchasing organizations and their members used revenue from vendor fees and how they report these fees on cost reports; (3) evaluate contractual arrangements in which a supplier, such as a laboratory or durable medical equipment company, agrees to operate the service on behalf of a physician's practice or hospital; (4) review compliance audit work plans and annual audit reports submitted by health care providers as required by corporate integrity agreements; (5) determine whether state Medicaid agencies and Medicare contractors have complied with program requirements when paying dually eligible claims; (6) determine whether psychiatric facilities have been improperly certified as nursing homes and quantify any resulting inappropriate program payments; and (7) determine the extent to which CMS is able to assess the performance of State Health Insurance Assistance Programs.

Investigations-Health Care Fraud
The OIG will continue to focus on fraud and misconduct in 2006, especially individuals, facilities, or entities that bill Medicare or Medicaid for services not rendered; claims that manipulate payment codes in an effort to inflate reimbursement; false claims; and business arrangements that violate the antikickback statute.
Part D: The OIG has invested effort in training Special Agents so that they thoroughly understand the various aspects of the laws and regulations in preparation for future investigations and identifying program vulnerabilities. The OIG expected investigations to begin in January 2006 when the benefit became available, in areas such as kickbacks, billing for services not rendered, false statements, prescription shorting in institutional settings, and telephone scams. The focus on Part D issues is in addition to, not in lieu of, existing OIG investigations and surveys regarding Parts A and B and Medicaid fraud.

Pharmaceutical Fraud: The OIG continues to identify and investigate illegal schemes to market, obtain, use, and distribute prescription drugs. The OIG intends these investigations to ease drug price inflation, protect the Medicare and Medicaid programs from making improper payments, deter the illegal use of drugs, and curb the dangers associated with street distribution of addictive medications.

Nursing Home Quality of Care Issues: The OIG intends to increase its attention to quality-of-care issues for beneficiaries residing in nursing facilities, including scams involving identity theft related to the new prescription drug discount card.

Provider Self-disclosure: The OIG continues to encourage prompt provider selfdisclosure in 2006. The OIG continues to support and encourage providers who believe a potential violation of the law has occurred to refer to the flexible self-disclosure protocol the OIG released in October 1998.

Copyright© 2006, Ober, Kaler, Grimes & Shriver