OIG Work Plan

 The U.S. Department of Health and Human Services (HHS) recently released the Office of Inspector General’s (OIG) Work Plan for Federal fiscal year (FY). This work plan summarizes new and ongoing reviews and activities that the OIG plans to pursue with respect to HHS programs and operations during the current fiscal year and beyond. Since a large extent of Executive Resources, LLC’s (EXEC) healthcare consulting practice involves HHS programs, operations, and financing, some pertinent issues extracted from the OIG’s Work Plan involving new and ongoing areas are viewed as critical to our clients.

The OIG was created to protect the integrity of HHS programs and operations and the well-being of beneficiaries by detecting and preventing fraud, waste, and abuse; identifying opportunities to improve program economy, efficiency, and effectiveness; and holding accountable those who do not meet program requirements or who violate Federal health care laws.  

The OIG has recently focused on the review of Community Health Centers (CHC) compliance with grant requirements of the Affordable Care Act, which EXEC views as critical to continued funding. New activities that will be pursued by the OIG include determination whether CHCs receiving funds pursuant to the ACA, § 10503, are complying with Federal laws and regulations. The OIG’s review will include determining the allowability of expenditures and the adequacy of accounting systems that assess and account for program income. The review is based in part on the requirements of the United States Public Health Service Act, § 330, and Federal regulations.

Other new activities and involving HRSA and CHCs include the following:

·         Duplicate discounts for 340B purchased drugs: 

o   The OIG will assess the risk of duplicate discounts for 340B-purchased drugs paid through Medicaid managed care organizations (MCOs) and describe States’ efforts to prevent them.

o   The ACA § 2501 required States to begin collecting rebates for drugs paid through Medicaid MCOs and prohibited duplicate discounts under the 340B Program for such drugs.

o   However, the OIG has indicated that existing tools and processes used to prevent duplicate discounts in fee-for-service Medicaid may not be sufficient for drugs paid through Medicaid MCOs.


·         Oversight of vulnerable CHC grantees:

o   The OIG will determine the extent to which HRSA awards grant funds to Health Center Program (HCP) grantees that have documented compliance or performance issues.

o   The OIG indicates that HRSA has a variety of processes in place to monitor HCP grantees on program compliance, clinical performance, and financial health.

o   The OIG indicates that even with all of these data available, HRSA may still continue to fund grantees with serious, ongoing compliance or performance issues.

Regarding prescription drugs, policies and practices, for FY, the OIG is focusing on sales prices and Part B payments purchased under the 340B Drug Pricing Program, the latter administered by HRSA’s Office of Pharmacy Affairs (OPA).


·         Relative to Medicare Part B, the OIG intends to review Medicare Part B drug prices by comparing average sales prices (ASPs) to average manufacturer prices (AMPs) and to identify drug prices that exceed a designated threshold.

o   In 2005, Medicare began paying for most Part B drugs using a new methodology based on the ASP.

o   The enabling law required that the OIG compare ASPs with AMPs (Social Security Act, § 1847A(d)(2)(B)).

o   Pursuant to the requirement, OIG conducts such reviews and issues quarterly and annual reports of its findings.

o    When the OIG finds that the ASP for a drug exceeds the AMP by a certain percentage (5%), the OIG notifies the HHS Secretary, who may disregard the ASP for the drug when setting reimbursement amounts (e.g., apply a price substitution policy).


·         Relative to Medicare Part B payments for drugs purchased under the 340B Program, the OIG will determine how much Medicare Part B spending could be reduced if Medicare were able to share in the savings for 340B-purchased drugs.

o   The OIG will calculate the amount by which ASP-based payments exceed 340B prices and estimate potential savings on the basis of various shared-benefit methodologies.

o   Previous OIG work revealed that some Medicaid State agencies have developed strategies to take advantage of the discounts on 340B drugs.

o   The 340B Program requires drug manufacturers to provide discounted outpatient drugs to approximately 10,000 covered entities.

o   Medicare Part B reimburses for almost all covered outpatient drugs (including those purchased by 340B entities) on the basis of the ASP, regardless of the amount paid for the drug.

o   Medicare Part B providers that purchase drugs under the 340B program can fully retain the difference between the ASP-based payment amount and the 340B purchase price.


Clearly, the newly released OIG Work Plan for Federal FY delineates new and ongoing reviews and activities that OIG plans to pursue with respect to HHS programs, operations, and finances, thereby impacting, not only HRSA, but EXECs Community Health Center (CHC) clients as well.  It has become ever more critical to prepare and submit comprehensive, timely, and accurate information relative to operations, finances, utilization, outcomes, governance, and management for inclusion into the Budget Period Progress Report (BPR), Service Area Competition (SAC), Change of Scope (CIS), and New Access Point (NAP) applications. 

Equally as critical are these specific applications’ Notice of Award (NOA)Terms and Conditions, whereby a CHC’s failure to comply with the special remarks and condition(s) in the NOA may result in a draw down restriction being placed on the CHC’s Payment Management System account or denial of future funding (330).  So may be the case with the OIG reports and findings regarding future funding based on the OIG’s audits of a CHC. 

EXEC’s healthcare consulting business involving HHS programs to CHC grantees encompasses addressing and if need be, correcting the pertinent issues involving new and ongoing areas that are critical to financial and operational viability of the clients that EXEC serves.   Since a large extent of EXEC’s healthcare consulting business involves HHS programs, operations, and financing, some pertinent issues extracted from the OIG’s Work Plan and addressed above involving new and ongoing areas are viewed as critical to our clients.

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