OIG - The Fraud Police!

By: Meredith Taylor, Esq., CIS Senior Compliance Consultant
meredithtaylor@cis-partners.com

The Office of the Inspector General published its Annual Performance Report on January 16, 2009 (available on the PCX at 2008 Annual Performance Report). This report provides information on the performance and progress in achieving the goals established in last year’s Annual Performance Plan.

Before delving into the Performance Report, let’s remind ourselves of who the OIG is and what it does. The OIG is a government agency created to “protect the integrity of Department of Health and Human Services (HHS) programs, as well as the health and welfare of the beneficiaries of those programs.” [i] The OIG investigates fraud by conducting audits, detailed investigations, and inspections. The OIG is what I like to call the “fraud police.”

The findings (Advisory Opinions) of OIG investigations are made public on the OIG website.[ii] Advisory opinions are legally binding on the company for which they were written, because they are based on legal standards applied to a distinct set of facts, similar to case law developed by a judge. How they differ from case law is that they will not technically set legal precedent (opinions cannot be applied to and bind third parties), but they do provide guidance for other companies about the intentions and expectations of the OIG. So, similarly situated companies should take heed.

After an investigation, and as a result of a settlement, the OIG may negotiate a Corporate Integrity Agreement (CIA). CIAs act as binding agreements between the OIG and another healthcare related entity (i.e., healthcare provider or manufacturer). If the entity participates in one of the Government Programs (i.e., Medicaid) and abides by the CIA, then the OIG will not exclude the entity from participation in the Program. [iii]

The OIG also, from time to time, publishes guidance that manufacturers are urged to follow; the most notable guidance document is the “OIG Guidance for Pharmaceutical Manufactures of 2003.”[iv] It sets forth the OIG’s expectations, but it is not legally binding. CIS always recommends that our clients use this document as a guide, because if the OIG comes knocking on your door and finds that your company is significantly deviating from these expectations, they will inevitably find some sort of fraud or misconduct under the law (i.e., False Claims Act).

So back to the Performance Report…

The purpose of this report is to illustrate the collaborative nature of the OIG and other agencies (i.e., the Department of Justice, Medicaid Fraud Control Unites, local law enforcement) necessary to reach the goals set for the previous year’s report. This report summarizes HHS receivables, audit recoveries, return on investment, and other performance results.

The following is a summary of the most significant findings taken directly from the report:

“In FY 2008, OIG’s contributions to safeguarding HHS programs from threats of fraud, waste, and abuse and to promoting economy, efficiency, and effectiveness in HHS programs included:

• $2.35 billion in HHS receivables were court ordered or agreed to be paid through civil settlements that resulted from cases developed by OIG investigators;
• $1.33 billion in audit recoveries were agreed to be pursued by HHS program managers as a result of OIG audit disallowance recommendations;
• The return on investment measuring the efficiency of OIG’s health care oversight efforts continued its trend of increasing returns and reached $17 to $1 in the reporting period ending in FY 2008; and
• HHS program managers accepted and agreed to implement 85 of OIG’s quality and management improvement recommendations.”[v]

I think the most significant finding above is the return on investment. This measures the direct financial benefits to the Government for funding OIG activities. This means, the more money collected, the more money the OIG has to conduct audits and investigations the next year, which means…..the more audits there will be. The return on investment is a ratio of expected recoveries TO the OIG’s annual budget.[vi] In 2008, the ratio is $17:$1, which means that for every dollar spent, $17 was collected.

The report also includes a number of audits and investigations that significantly contributed to these recoveries. I won’t go into those here, but I urge you to read the report, understand the trends, and prepare for 2009!

[i] http://www.oig.hhs.gov/organization.asp
[ii] http://www.oig.hhs.gov/fraud/advisoryopinions.asp
[iii] http://www.oig.hhs.gov/fraud/cias.asp
[iv] http://www.oig.hhs.gov/fraud/complianceguidance.asp
[v] OIG 2008 Annual Performance Report “Message from the Inspector General”
[vi] OIG 2008 Annual Performance Report, Page 5