Health Center Regulatory Issues

OIG Issues FY 2015; Includes Several Audits Impacting Health Centers

On October 31, 2014, the Office of the Inspector General (OIG) for the U.S. Department of Health and Human Services (HHS) published its Work Plan for FY 2015, summarizing new and ongoing reviews and activities that the OIG plans to pursue with respect to HHS programs and operations during the current fiscal year. Similar to previous years, this year’s Work Plan includes three new reviews that may impact the way in which health centers conduct certain aspects of their operations.

  • Health center compliance with grant requirements of the Affordable Care Act (ACA): The OIG will assess whether health centers that received grant funds pursuant to the ACA are complying with federal laws and regulations. In particular, the review will focus on the allowability of expenditures and the adequacy of accounting systems to assess and account for program income.  While similar reviews have been conducted previously over the last couple of years, these reviews will be the first ones conducted by the OIG on this topic subsequent to the publication in March 2014 of Policy Information Notice (PIN) 2013-01: Health Center Budgeting and Accounting Requirements (the “Total Budget” PIN).
  • Duplicate discounts for 340B purchased drugs: The OIG will assess the risk of duplicate discounts under 340B-purchased drugs paid through Medicaid managed care organizations and States’ efforts to prevent them. In particular, the OIG will assess whether existing tools and processes to prevent duplicate discounts under the Medicaid fee-for-service program are sufficient under managed care operations. While this review does not focus directly on health centers, as 340B eligible entities the results of the review could impact the way in which health centers account for certain 340B drugs. Further, when combined with the stated intention of the Office of Pharmacy Affairs to conduct an increased number of 340B compliance audits as well as the upcoming direct assessment of health centers’ compliance with 340B requirements (as discussed in the blog from November 5), it is apparent that the 340B program in general will be facing increased scrutiny.
  • Oversight of vulnerable health center grantees: The OIG will assess the extent to which HRSA awards grant funds to health center grantees that have documented compliance or performance issues. Although HRSA has a variety of processes in place to monitor grantees, the OIG is concerned that the agency may still continue to fund grantees with serious, ongoing compliance or performance issues. All health centers should be aware that HRSA intends to issue a revised Health Center Site Visit Guide in the near future to incorporate the new policies issued since January 2014 and should expect a potential increase in the number of Operational Site Visits conducted this year.

In addition to the health center-reviews discussed above, the OIG announced its intention to conduct reviews related to compliance with certain fraud and abuse and program integrity requirements, including, but not limited to: (1) whether CMS and its contractors have implemented enhanced screening procedures for Medicare providers pursuant to the ACA; (2) whether States are complying with a new requirement that they terminate Medicaid program providers that have been terminated under Medicare or by another state Medicaid program, as well as whether payments are being made to providers with allegations of fraud deemed credible by States and the sufficiency of suspension of payments processes in several States; and (3) whether HHS operating divisions are taking adequate precautions to ensure that individuals and entities suspended or debarred are not awarded federal grants or contracts.