HHS’ Top Ten Management Problems Include Labs

Every year the Health and Human Services (HHS) Office of Inspector General (OIG) summarizes HHS' top management and performance challenges, which "reflect continuing vulnerabilities that the OIG has identified for HHS over recent years as well as new and emerging issues that HHS will face in the coming year."

The OIG's FY 2015 Top Management and Performance Challenges include clinical laboratories as a necessary focus of efforts to fight fraud, abuse and waste in Medicare. Specifically, the report notes that while "[f]raud schemes shift over time, … certain Medicare services have been consistent targets"—namely, clinical laboratories. Labs were included in a list of seven types of services ripe for fraud and abuse, including home health, ambulance transport, chiropractors and durable medical equipment suppliers. The OIG report notes "CMS is not realizing the full potential of contractors to proactively identify fraud and address other program integrity concerns."

Related challenges included reducing improper payments, which the report notes could be complicated by the recent transition to ICD-10 diagnosis coding. Additionally, "significant challenges in adjudicating provider appeals of Medicare overpayments … including a substantial backlog of appeals at the administrative law judge level" were also noted.

The OIG does commend the Health Care Fraud and Abuse Control Program for its ability to return $7.70 for every $1 invested in fighting fraud and abuse, the Fraud Prevention System which achieved $133 million in adjusted actual and projected savings and a $2.84 return on each $1 invested, as well as the establishment of the ICD-10 Coordination Center and appointment of an ICD-10 ombudsman as successful efforts by HHS to address the above challenges. However, the report asserted "more needs to be done" and the Centers for Medicare and Medicaid Services needs to identify and recover improper Medicare payments "in a timely manner" and implement safeguards to prevent recurrence.

"[M]eaningful and secure exchange and use of electronic information and health information technology" was another top concern. The OIG noted that HHS faces significant challenges with regard to ensuring privacy and security of information and improving information flow. Specifically, the OIG advised "[t]o make use of the benefits of the growing amounts of data in the health care context, data must be available, subject to appropriate privacy and security safeguards, where and when needed." The hurdles impeding this information flow include lack of interoperability, complex federal and state privacy and security laws, cost of information technology, information blocking and consumer unwillingness to share information. The report indicates this lack of information sharing can have patient safety implications; for example, if a patient undergoes additional invasive testing because prior results from a different provider aren't shared.

Not surprisingly reforming payment programs was also included among the top ten challenges facing HHS—including implementation of the "new market-driven payment system for laboratory services beginning in 2017." The report warned that substantial investment is being made into developing new payment models (a 10-year, $10 billion budget has been allocated to the Center for Medicare and Medicaid Innovation) and CMS "must establish policy, infrastructure, data systems, and oversight mechanisms to successfully implement these substantial changes." Among the steps the OIG says need to be taken are providing "clear guidance for providers on program requirements" and developing systems to ensure models are successfully implemented and problems or inefficiencies are identified and addressed. Data is also a concern. Noting the new payment models rely heavily on electronic health records, data and technology, the OIG warns that data must be secured and yet also integrated and shared.

Other challenges rounding out the top ten include Medicaid fraud and abuse; administration of grants; appropriate use of prescription drugs; quality nursing home, hospice and home- and community-based care; implementing and overseeing health insurance marketplaces; operating public health programs; and ensuring safety of food, drugs and medical devices (which included compound drugs, off-label promotion, kickbacks and dietary supplements, but notably didn't mention in vitro diagnostic devices or laboratory developed tests).

Takeaway: Once again laboratories are included as a top target for fraud and abuse enforcement; yet HHS and laboratories share common ground in facing significant challenges in the coming year while adapting to new payment models and making data work for the health care delivery system.