HHS OIG’s Latest Work Plan: What to Look Out for in FY2017

November 22, 2016

By Serra J. Schlanger

The Department of Health & Human Services Office of Inspector General (“HHS OIG”) recently released its work plan for fiscal year 2017.  The annual work plan summarizes what HHS OIG plans to review during the upcoming year as part of its mission to protect the integrity of the Department of Health & Human Services and the Federal health care programs.  It is unclear whether HHS OIG’s priorities will change with the new administration; however, the work plan still provides insight into areas of potential concern.  Although much of the work plan focuses on health care providers (e.g., hospitals and home health agencies), below we’ve highlighted a few areas of interest for other players in the health care industry.

Medical Devices

HHS OIG is planning to review the “Medicare Costs Associated with Defective Medical Devices” as well as “Payment Credits for Replaced Medical Devices That Were Implanted.” Each of these areas of interest are related to the costs associated with defective or recalled medical devices and whether the Medicare program is properly paying for services associated with the replacement of such devices.

Clinical Diagnostic Laboratory Tests

Section 216 of the Protecting Access to Medicare Act of 2014 (PAMA) requires CMS to replace the current system of determining payment for Medicare Part B clinical diagnostic laboratory tests. Pursuant to PAMA, HHS OIG plans to conduct an analysis of the top 25 laboratory tests by Medicare payments to monitor the implementation of the new Medicare payment system for these tests.

Open Payments Reporting

The work plan includes two items related to the Physician Payment Sunshine Act and the Open Payments website. HHS OIG plans to analyze the 2015 data from the Open Payments website to determine the number and nature of financial interests.  Following this analysis, HHS OIG will determine how much Medicare paid for drugs and durable medical equipment ordered by physicians who had financial relationships with manufacturers and group purchasing organizations.

In a separate analysis, HHS OIG plans to determine the extent to which data in the Open Payments website is missing or inaccurate, the extent to which CMS oversees manufacturers’ and group purchasing organizations’ compliance with data reporting requirements, and whether the required data for physician and teaching hospital payments are valid.

Prescription Drugs

HHS OIG has identified a few new areas of interest related to prescription drugs. HHS OIG is concerned about the “Drug Waste of Single-Use Vial Drugs” and hopes to identify examples of single-use-vial drugs where a smaller vial size could significantly reduce waste.  HHS OIG also plans to examine “Potential Savings from Inflation-Based Rebates in Medicare Part B” by determining, for a sample of 50–100 Part B drugs, the amount the Federal Government could potentially collect from pharmaceutical manufacturers if inflation-indexed rebates were required under Medicare Part B as they are under the Medicaid Drug Rebate Program.

In the Medicare Part D context, HHS OIG plans to assess “Medicare Part D Rebates Related to Drugs Dispensed by 340B Pharmacies” and billing for topical compounded drugs. HHS OIG also plans to review increases in the prices for brand-name drugs by evaluating the rate of change in pharmacy reimbursement under Part D and the rate of inflation from 2011 to 2015.


The HHS OIG work plan also includes a short section for FDA-related reviews. HHS OIG states that “[a]reas of particularly high risk include food safety, drug compounding, a complex drug supply chain, and improper marketing activities.”  New and expanded FDA reviews may include “investigations of fraud and misconduct at FDA facilities; oversight of blood establishments and laboratory-developed diagnostic tests; management of IT modernization initiatives; hospital contracting with compounding pharmacies that have registered with FDA, and prescription drug user fees.”  HHS OIG identified eight FDA-specific reviews for the upcoming year.

A new area of HHS OIG review related to “Hospitals’ Reliance on Drug Compounding Facilities” will determine the extent to which hospitals obtain compounded sterile preparations from compounders and the extent to which these compounders have registered with the FDA as outsourcing facilities.

HHS OIG identified two revised plans to review networked medical device cybersecurity. In one review HHS OIG will examine FDA’s premarket review of the cybersecurity controls of networked devices.  In a separate analysis, HS OIG will examine FDA’s plans and processes for timely communicating and addressing a networked medical device cybersecurity compromise.

HHS OIG also plans to continue its review of FDA related to prescription drug user fees, the registration and listing of tobacco establishments under the Tobacco Control Act, domestic and imported food recalls, inspections of domestic food facilities, and drug traceability and the security of the drug supply chain.