OIG’s Compendium of Unimplemented Recommendations Highlights Opportunities for Action in FY2013

by King & Spalding
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The HHS Office of Inspector General (OIG) recently released its 2012 Compendium of Unimplemented Recommendations (the “Compendium”), a report that summarizes significant monetary and nonmonetary recommendations as a result of OIG audits and evaluations that, when implemented, will result in cost savings and/or improvements in program efficiency and effectiveness.  The Compendium updates the status of recommendations made through FY2011 that were not fully implemented as of December 2012 and that represent “significant opportunities for action in FY2013.” The OIG identifies the following recommendations among those that are “priority recommendations”—or recommendations that “represent the most significant opportunities to positively impact HHS’ programs.”       

  • Hospitals.  CMS should seek legislation or legislative authority to eliminate (or reduce) Medicare payments to hospitals for bad debt associated with beneficiaries’ failure to pay deductibles and coinsurance, and modify Medicare bad debt policies.  The HHS budget for FY2013 estimated $35.9 billion in savings over 10 years. 
  • Physicians.  CMS should adjust global surgery fees to reflect the number of evaluation and management services actually being provided by physicians to curb wasteful Medicare spending when Medicare’s fee schedule payments do not align with the number of E&M services provided.  According to 2005 data, savings would be $97.6 million per year.
  • Medical Equipment.  CMS should work with Congress to reduce the rental period for Medicare home oxygen equipment.  The OIG calculated savings of approximately $3.2 billion over 5 years if the rental period were reduced from 36 months to 13 months.  The Congressional Budget Office estimated savings at $11 billion over 10 years.
  • Medicare Advantage.  CMS should modify monthly capitation rates to a level supported by empirical data.  The OIG states that this longstanding recommendation would curb wasteful spending as a result of factors known to negatively impact the reasonableness of Medicare reimbursements for managed care that were not timely addressed, such as a high (14%) fee-for-service error rate that inflated the 1997 capitation base rate that was carried forward unadjusted into future years.  Savings for this recommendation are “probable but not estimated.”
  • Medicare Part D.  CMS should develop a comprehensive safeguard strategy for overseeing Part D prescription drug plans.  According to the OIG, its reviews of Part D indicate that program integrity efforts have been limited in scope and may not sufficiently protect the program.  Savings for this recommendation are “probable but not estimated.”   
  • Medicaid.  The OIG highlights several recommendations related to prescription drug use, including that CMS: (1) develop national pharmacy acquisition cost data as a benchmark for reimbursing prescription drug use; (2) establish a connection between the calculations of Medicaid drug reimbursements and rebates; and (3) extend the additional rebate payment provisions for brand-name drugs to generic drugs.  Savings for these recommendations are “probable but not estimated.”  

For a copy of the Compendium, please click here

Reporter, Kerrie S. Howze, Atlanta, +1 404 572 3594, khowze@kslaw.com.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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