OIG Rolls Provider Relief Fund Audits for Hospices

The U.S. Department of Health & Human Services (HHS) Office of the Inspector General (OIG) recently began to probe hospices in its initial phase of Provider Relief Fund (PRF) audits.

More than two years after the CARES Act established the $175 billion PRF, federal regulators are moving forward on audits that closely examine the ways that providers spent these dollars.

A sample of 30 hospice providers from various regions nationwide were included in the first phase, which followed a September OIG report indicating that the federal governments oversight of the program needed improvement.

OIG identified this first sample of providers based on location and the amounts of PRF payments they received, among other factors, according to Andrew Brenton, senior associate and hospice attorney at Husch Blackwell.

“In talking to the OIG as we’ve helped hospices through this auditing process, we’ve learned that the hospices selected were specifically selected based on geography and based on the amount [PRF] payment received,” said Brenton in a recent Husch Blackwell podcast. “But hospices that are affiliated with a health care system were not selected in this audit, because the other OIG teams doing these audits would have selected them as part of a bigger system.”

OIG is currently reviewing payments released during Phase 1 of the PRF, which distributed roughly $50 billion to Medicare-certified providers in 2020. Hospices, hospitals, and other health care providers were among those eligible to receive this initial funding round.

These first steps into OIG’s auditing process cover about $48 billion of funds dispersed to 323,498 providers between April 10 and December 17, 2020.

OIG’s audit procedures include interviews with officials and contractors from the Health Resources & Services Administration (HRSA), an HHS sub-agency, as well as a review of payment and attestation data. HHS is responsible for PRF program oversight and policy decisions, whereas HRSA provides day-to-day oversight and management of the program.

OIG requested that hospices selected for these initial audits provide narrative descriptions in response to various questions, according to Brenton. Providers were also asked to submit “a pretty ample document request list” that included roughly 20 document types, he added.

The OIG requests have so far mainly been aimed at obtaining documentation that substantiates the pandemic-associated expenses or lost revenue, Brenton said.

Hospices are not the only providers under the microscope, according to Howard Young, partner at the global law firm Morgan Lewis.

“Hospices are not being singled out by these OIG PRF audits,” Young stated in a blog. “OIG is conducting audits of other health care provider types that received and retained PRF general distribution payments.”

The OIG expects to publish additional findings during FY 2023). Providers that received money during the second and third PRF funding rounds will be next in line, including Medicaid providers and certain Medicare providers, along with dental, behavioral health and children’s health insurance program providers, according to the OIG.

All health care providers who received PRF payments must meet requirements that define “lost revenue” due to the pandemic, supporting documentation and the attestation of acceptance or rejection of payments, the OIG indicated in its September report.

“What it sounds like is going to happen is that towards the middle of next year, all the different OIG divisions working on these audits will put together a draft report that will not be at the provider level but at an aggregate level, so that it would not reflect provider-specific findings,” according to Brenton.

When responding to future provider relief auditing requests, hospices should stick to the point, be concise and not include any “extraneous information,” according to Bryan Nowicki, partner and hospice attorney at Husch Blackwell.

“When preparing to be deposed, you want to be honest and complete in your responses, but you don’t want to volunteer information,” Nowicki said during the podcast. “You want to give the auditor information on what they’ve asked for and leave it at that. Don’t guess at what other information may be helpful to them. Be concise and make sure you’re not telling a similar but slightly different story every time, because it’s hard to keep any narrative straight when you’re talking about years passed.”

Hospices are closely watching how OIG PRF audits are unfolding, and what the findings could signal on the horizon.

OIG and HRSA indicated in their September report that controls for certain PRF requirements had some “procedural weaknesses.” For instance, HHS set payment thresholds that were designed to trigger a manual review process for the information that providers submitted. But those were set at a level that resulted in reviews for only 2% of the providers who received funds.

Additionally, errors occurred when HRSA extracted providers’ tax identification numbers (TINs) from their applications, meaning that the government used incorrect TINs when the payments were calculated.

These shortcomings were caused in part by the speed at which HHS needed to distribute the funds to providers during the height of the pandemic. The urgent need complicated the agencies’ ability to understand and set spending requirements, the OIG indicated.

“We also understand that because of this statutory requirement, HHS and HRSA prioritized rapid disbursement of payments over the risk of making improper payments, because HHS and HRSA determined that activities to lower the risk would have delayed the payments,” the OIG reported. “However, as HRSA fully implements postpayment quality control review processes, it should consider the information and recommendations included in this report.”

The OIG in its report made five recommendations to HRSA, including that the agency continue to perform postpayment quality control reviews of selected providers, as well as a cost/benefits analysis of conducting reviews of payments that fell below existing thresholds.

HRSA has agreed with the OIG’s recommendations and has plans to address them. Among these actions is further examination of 189 providers the OIG flagged for possible overpayments.

If overpayments occurred, HRSA may seek to recoup those dollars, according to OIG.

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