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OIG Report Discusses Inadequacy of CMS’ Collection of Medicaid Overpayments

On February 19, 2013, the Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) published OIG Report A-05-11-00071 (the “Report”), detailing the results of an audit to determine the adequacy of CMS’ collection of Medicaid overpayments identified in certain OIG audit reports.

Under federal regulations (specifically 42 C.F.R. § 433.304), the Secretary of HHS is required to recover the federal share of any Medicaid overpayment from the responsible state – this responsibility has been delegated to CMS. The process is as follows:

• The OIG performs audits of CMS’ expenditures, in this case specifically CMS’ Medicaid payments • The OIG identifies overpayments made by CMS through the Medicaid program • Audit results are reviewed by CMS and OIG. When an audit resolution is agreed upon, CMS then takes corrective action – in the case of overpayments, often by a refund from the state or (if necessary) a negative grant award – an offset against that state’s quarterly Medicaid grant
OIG Report A-05-11-00071 focuses on 152 OIG audit reports issued to 11 states (selected for their high amounts of overpayments) between the years 2000 and 2009. Five of these, handled by the Department of Justice, were excluded. The remaining 147 reports recommended an aggregate refund of overpayments totaling $1,213,085,167. Specifically, the Report reviewed CMS’ collection efforts on the 147 audit reports. The report found that CMS had collected $987,481,600 in overpayments, leaving $225,603,567 outstanding. The OIG noted this was because CMS had not pursued collection in a timely manner. Notably, the uncollected amount stemmed from 10 audit reports where the states involved did not agree to refund. The discrepancy also accounted for more than $7 million reported as collected, but without adequate supporting documentation by CMS.

In its Report, the OIG made specific recommendations that, in addition to collecting the remaining overpayment, CMS act more promptly on OIG audit recommendations and implementation of corrective actions. The Report also highlighted the need for CMS to maintain better supporting documentation of its collection of overpayments in accordance with the Office of Budget Management (“OMB”) Circular A-50 and CMS Standard Operating Procedures. Finally, the Report recommended educating states on properly reporting and documenting overpayments to CMS. This would involve improvement in CMS oversight as well.

CMS concurred in large part to the recommendations of OIG Report A-05-11-00071. However, it noted that the reason for delay in the 10 outstanding audit reports was due to continued review by CMS, including consideration of additional information supplied by the states involved, review of OIG supporting documentation, and internal deliberation. The OIG responded by arguing that delays of 3 to 7 years after initially concurring with the OIG’s recommendations were contrary to federal statutes, regulations, and circulars, as well as CMS’ own policies, in requiring timely collection of overpayments.

For more information regarding OIG Report A-05-11-00071, please contact Abby Pendleton, Esq. or Jessica Gustafson, Esq. at (248) 996-8510, or visit the HLP Website.

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