On October 31, 2014, the Office of the Inspector General of the U.S. Department of Health and Human Services (OIG) released its annual Work Plan for Fiscal Year 2015. This year’s Work Plan identifies OIG’s key priorities and possible areas for audit and investigation of particular relevance to pharmaceutical and medical device companies and providers as follows:
Reviews Associated with Savings for Government Healthcare Programs
- ASP: As with previous years, OIG will perform its periodic review of Medicare Part B drug prices.
- 340B Discounts: OIG will study how much Medicare Part B prescription drug spending could be reduced if Medicare were able to take advantage of the discounts on 340B drugs.
- Pioneer ACO Model (New): OIG plans to conduct a risk assessment of the Pioneer Accountable Care Organization (ACOs) Model. This Model is administered by the Centers for Medicare and Medicaid Innovation and designed for healthcare organizations and providers experienced in coordination of care across multiple care settings. OIG’s study will be focused on internal controls over administration of the Pioneer ACO Model.
- Chemotherapy Drugs: OIG will review whether Medicare overpaid providers for chemotherapy and certain other drugs because of incorrect coding or overbilling of units.
- Part D and Medicaid Pharmacy Reimbursement and Drug Rebates: As a follow-up to previous work, OIG will review, for a sample of brand-name drugs, the reimbursement amounts paid to pharmacies by Medicare Part D sponsors and State Medicaid programs as well as the rebates amounts that Part D sponsors and Medicaid programs receive from manufacturers.
- Nebulizers and Related Drugs: OIG expects to complete its multi-year review of Medicare payments for nebulizers and related drugs this year.
- Diagnostic Radiology: OIG anticipates that it will conclude its review of Medicare payments for high-cost diagnostic radiology tests.
- Medicaid Equipment and Supply Cost: OIG plans to determine whether there are opportunities to lower Medicaid payments for some medical equipment and supplies, in part, by examining the potential for Medicaid savings through rebates, competitive bidding, and other means.
Reviews Associated with Quantifying Costs to Government Healthcare Programs
- Clinical Laboratory Billing Practices (New): OIG will begin an analysis of Medicare payments to clinical laboratories, targeting those with claims that it believes are at greater risk for overpayments.
- Medical Device Costs: OIG plans to continue its review of Medicare claims for the impact of costs related to the replacement of defective devices for both inpatient and outpatient services. The audit appears to be premised on the conclusion that any recalled item should be considered “defective.”
- Long-Term-Care Hospitals’ Adverse Events (New): In this new study, OIG will analyze the costs to the Medicare program of adverse events and temporary harm events in long-term-care hospitals. The study will seek to understand the contributing factors and preventable errors.
- Right Heart Catheterizations: OIG will continue its analysis of Medicare costs for right heart catheterizations and endomyocardial biopsies that are billed in the same procedures.
Reviews of Government Healthcare Program Oversight & Integrity
- Coverage Gap Discounts: OIG will analyze whether Medicare Part D sponsors are correctly calculating the coverage gap discounts to ensure beneficiary payments are correct.
- Pharmacy and Therapeutics Committees Conflicts of Interest (New): OIG will study whether CMS has taken steps to improve its oversight of Medicare Part D sponsors’ Pharmacy and Therapeutics (P&T) committee compliance with federal rules addressing conflicts of interest.
- Compendia Conflicts of Interest: OIG plans to determine whether the publishers of authoritative prescription drug compendia recognized by the Medicare program have transparent processes for evaluating anticancer drugs and identifying conflicts of interest related to the evaluation process.
- Part D Claims Processing Contractors: OIG plans to review CMS’ oversight actions and that of its claims processing contractors with respect to coverage of Medicare Part D drugs.
- Computerized Medical Devices: OIG will study whether CMS is exercising appropriate oversight of hospital security controls over computerized medical devices that integrate with electronic medical records and other similar health information systems.
- Medicaid DUR of Opiates: State Medicaid programs are required to establish drug utilization review (DUR) programs, and OIG will review the education and enforcement actions that States have taken on the basis of information generated by their DUR programs related to inappropriate dispensing and potential abuse of prescription opiates.
Reviews Associated with the Medicaid Drug Rebate Program
- Compliance with AMP Reporting: OIG will analyze whether drug manufacturer compliance with the AMP reporting requirements has changed and whether CMS has taken any actions to improve compliance with such requirements since an OIG review in 2008.
- Collection of Rebates of MCO Enrollees (New): OIG will review whether States are collecting the necessary information to seek Medicaid rebates on covered outpatient drugs dispensed to Medicaid MCO enrollees. Under the Patient Protection and Affordable Care Act (ACA), Medicaid MCOs are required to report enrollee drug utilization information to the State.
- Collection of Rebates on Physician Administered Drugs: OIG plans to determine whether States have taken proper measures to collect Medicaid rebates on physician-administered drugs, by studying their processes for collecting National Drug Code (NDC) information on claims forms and their processes for billing and collecting the related rebates from manufacturers.
- Increase in Rebates under ACA: OIG plans to determine the amount of the additional Medicaid rebates manufacturers have paid as a result of the increase in the basic Federal minimum Medicaid rebate amount under the ACA.
The OIG Work Plan reveals a continued focus on issues involving pharmaceutical and device manufacturers and providers. The results of these audits have a significant potential to affect regulatory and enforcement policy efforts.
For more on other breaking drug pricing related news, visit Sidley’s Global Drug Pricing page.
If you have any questions regarding this update, please contact:
William A. Sarraille
Mark B. Langdon
Trevor L. Wear
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