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OIG Annual Report 2018: Policy and Government Division

Part VIII of the Office of the Inspector General's 2018 Annual Report

Table of Contents


The Policy and Government Division (“Division”) oversees the Office’s policy, healthcare and legislative initiatives. The Division also reviews programs and practices in state and local agencies to identify system-wide vulnerabilities and opportunities for improvement.

I. Healthcare Reviews

Each fiscal year, the state budget includes language requiring the Office to oversee and examine issues related to healthcare. Specifically, the language tasks the Office with reviewing the Health Safety Net (“HSN”) and Medicaid programs. (The federal government created the national Medicaid program in 1965 to provide medical assistance to low-income Americans, particularly children, through a shared state-federal commitment. The Massachusetts legislature created the Health Safety Net to pay for medically necessary services that acute care hospitals and community health centers provide to eligible low-income uninsured and underinsured patients). This may include reviewing eligibility requirements, utilization, claims administration and compliance with federal mandates. The budget language requires the Office to produce a report each March. Below are highlights from that report.

A. Adult Day Health

Adult day health is a community-based service that provides nursing care, supervision and health-related support services to eligible members in a structured group setting. After reviewing claims for approximately 100 adult day health providers, the Office found that certain providers, (1) billed for multiple days in a single claim without identifying the specific days the member attended the program; (2) billed too many 15-minute units in violation of Medicaid regulations and resulting in payments that exceeded the allowable daily rate; (3) included the same diagnosis for virtually all members attending a program; and (4) submitted claims for complex care for members whose primary diagnoses did not appear to support that level of billing. These issues are all indicators of potential fraud, waste or abuse of the adult day health program.

The Office recommended that MassHealth, the state agency that oversees the HSN and Medicaid programs, consider requiring providers to bill for adult day health services one day at a time. The Office also recommended that MassHealth evaluate how it is processing 15-minute-unit claims to prevent providers from improperly using this procedure code rather than the daily procedure code. Finally, the Office recommended that MassHealth review claims to determine if providers are accurately presenting member diagnoses and the need for complex care.

B. Adult Foster Care

Adult foster care allows eligible members to live with a caregiver who provides assistance with activities of daily living, instrumental activities of daily living, and other personal care. The Office reviewed the claim histories for a large sample of providers from fiscal year 2018. As a result of that review, the Office identified providers that were submitting claims with the same diagnosis for many, if not most, members, as well as providers that were submitting claims for complex care for members whose primary diagnoses did not appear to warrant that level of care. The Office recommended that MassHealth and its new provider oversight vendor improve on the current program integrity efforts. The Office also recommended that MassHealth improve its review of adult foster care claims for fraud, waste and abuse to determine if providers are engaging in questionable diagnosis practices, improper billing for complex care, or other billing activity that raises questions about the provision of adult foster care services. Finally, the Office recommended that MassHealth consider setting guidelines for the rate of compensation for the caregivers.

C. Dental Care

The Medicaid and HSN programs pay for dental care for some MassHealth members and HSN users. The Office reviewed certain aspects of the dental program and determined that MassHealth does not know which claims its vendor audits each quarter and therefore cannot verify the vendor’s results. A vendor should not audit itself; MassHealth must actively oversee its vendors. The Office also determined that some paid dental claims in MassHealth’s data warehouse did not contain tooth numbers or letters, which hampers MassHealth’s ability to properly oversee its vendor’s claim adjudication. The Office further identified that dental providers were improperly billing certain evaluations they were conducting on children under the age of three. The Office recommended that MassHealth conduct its own audits of dental claims instead of relying solely on its vendor to self-audit. At a minimum, it must require the vendor to provide a list of the claims that it includes in its self-audit so that MassHealth can verify the results. The Office also recommended that MassHealth work to address the communication issue between its claim adjudication system and its data warehouse so that it can conduct robust analytics on its dental claims. Additionally, the Office recommended that MassHealth seek to recoup from providers who improperly billed a procedure code that paid them more than they should have received for evaluations of children under three. Finally, the Office recommended that MassHealth analyze providers who erroneously billed a particular procedure code and determine if there are any outliers that require further scrutiny.

D. Optometry

MassHealth pays for its members to receive optometry care, including the diagnosis, prevention, correction, management and treatment of optical issues. For members who live in long-term care facilities, MassHealth allows optometrists to bill once per member for their travel to facilities when they provide optometry care to members living there. The Office reviewed all travel claims that optometrists billed for services provided from February 2007 and the end of December 2017. During this time, MassHealth paid 55 providers approximately $1.5 million for 177,108 travel claims.

The Office identified one servicing provider who billed the travel code substantially more than his peers, received substantially more reimbursement than his peers, and frequently used the same diagnosis for many of his patients. The Office recommended that MassHealth review patterns of servicing providers as a regular part of its program integrity activities. This includes analyzing the number of travel code claims that servicing providers submit as well as examining questionable patterns in the use of diagnosis codes. The Office also recommended that the MassHealth optometry program consult with other MassHealth programs that serve members outside of the office setting to analyze creating a standard payment methodology for travel across programs. Ultimately, if MassHealth decides to maintain a different payment methodology for each program, the Office recommended that MassHealth consider returning the optometry program to the pre-2007 practice of billing one travel code per location per day and adopting a reimbursement rate that would adequately compensate providers for the actual cost of traveling to provide these services.

E. Personal Care Attendants

The purpose of the personal care attendant (“PCA”) program is to help MassHealth members with permanent or chronic disabilities maintain their independence, reside in the community, and manage their own personal care. The Office requested data from MassHealth and the three fiscal intermediaries (“FIs”) that assist in the administration of the program, on three occasions. Each time, the Office identified problems with the accuracy of the data from each fiscal intermediary. Specifically, the Office identified social security numbers and dates of birth that did not belong to the PCAs; missing or placeholder dates of birth; PCAs with the same first name, last name, and social security number, but more than one date of birth; and multiple PCAs with the same last name and date of birth but unique social security numbers. The lack of accurate PCA information creates the risk of inaccurate reporting to state and federal taxation agencies; makes it impossible for MassHealth to conduct meaningful program integrity oversight of the FIs and the PCA program; and inhibits interagency cooperation to identify and reduce fraud, waste and abuse occurring in state- and federally-funded programs. The Office directed the PCA program to conduct a risk assessment to determine the source of these errors and to work with the FIs to ensure that the FIs have adequate systems in place to detect and prevent these errors from recurring.

II. Real Estate Transactions

Each year, the Office reviews a variety of public real property transactions, including dispositions, acquisitions and long-term leases, to ensure that the public’s interests are protected. In addition, the Legislature frequently mandates that the Office review and approve independent appraisals of real property that the Commonwealth, counties and municipalities propose to convey or acquire. The Office’s appraisal reviewers evaluate whether the analyses, opinions and conclusions in the appraisal are appropriate and reasonable. The Office provides a report on each appraisal to the Commissioner of DCAMM for submission to the House and Senate Committees on Ways and Means and the Joint Committee on State Administration and Regulatory Oversight. The Office also generally recommends that all real property appraisal reviews conducted at the direction of the Legislature follow the Uniform Standards of Professional Appraisal Practice. (The Uniform Standards of Professional Appraisal Practice, promulgated by The Appraisal Foundation, sets out voluntary industry standards for licensed appraisers of property rights.)  

Below are examples of transactions that the Division reviewed in 2018.

A. Sale of the Brudnick Neuropsychiatric Research Institute at the Former Worcester State Hospital

Chapter 367 of the Acts of 2016 authorized DCAMM to convey 44 acres of land at the former Worcester State Hospital campus to the Worcester Business Development Corporation (“WBDC”). WBDC designated New Garden Park, Inc. (“NGP”), a non-profit subsidiary, as the deed recipient. Pursuant to Chapter 367, in 2017, the Office reviewed the land disposition agreement and associated exhibits related to the sale. The land disposition agreement, in accordance with Chapter 367, included provisions related to a potential future disposition of the Brudnick Neuropsychiatric Research Institute (“BNRI”) parcel located adjacent to the 44 acres. Specifically, DCAMM gave NGP the opportunity to purchase the BNRI parcel if the University of Massachusetts Medical School (“UMMS”) did not accept control. In 2018, the UMMS decided not to accept control of the BNRI parcel. DCAMM subsequently submitted the related conveyance documents to the Office for review. The Office found that the terms and conditions of the sale – as reflected in DCAMM’s release deed, the first amendment to the land disposition agreement, and the second amended and restated easement agreement – were consistent with Chapter 367. DCAMM sold the parcel for $500,000.

B. Waltham Property

Pursuant to Chapter 156 of the Acts of 2017 (“Chapter 156”), DCAMM submitted an appraisal of a 1.426-acre parcel in the city of Waltham to the Office for review. The property contained improvements, such as a parking lot, rectory and garage; however, the improvements were not considered for purposes of valuing the property. Chapter 156 authorized DCAMM to convey the property to the Archdiocese of Boston for religious or conservation purposes. The Archdiocese had been using the property for many years and had previously conveyed it to Middlesex County; at the time of the Office’s review, the property was under the control of DCAMM. The Office reviewed the appraisal and approved the methodology and opinion of value presented in the appraisal.

C. Shrewsbury Property

Chapter 173 of the Acts of 2018 (“Chapter 173”) authorized DCAMM to sell all of the land (four parcels) associated with the Glavin Regional Center to the town of Shrewsbury and the Shrewsbury Youth Soccer Association, Inc. Chapter 173 restricted some of the land to agricultural and recreation purposes and some of the land to general municipal purposes. The Office reviewed the appraisal of the two parcels to be sold for general municipal purposes. The appraiser developed a valuation for the property, both as vacant, unrestricted land ready for development and as restricted to general municipal uses. Using the sales comparison approach, the appraiser found that there was a significant difference in cost-per-acre as restricted. The Office approved the methodology and opinions of value. Shrewsbury has begun constructing a new school on a portion of the site.

D. Boston Property

Pursuant to Chapter 281 of the Acts of 2014, the Office reviewed an appraisal of two state-owned land parcels to be conveyed to the Boston Planning and Development Agency and the city of Boston. Boston plans on disposing of the larger parcel, which is located in the Roxbury section of the city, for mixed-use development, subject to conservation and preservation restrictions. DCAMM will convey the smaller parcel so the city can assemble the property with an abutting parcel for historic preservation purposes. DCAMM will use the proceeds, in consultation with the Department of Conservation and Recreation, for improvements to Roxbury Heritage State Park in another area of the city. The Office approved the methodology and value conclusions in the appraisal.

III. Legislative Initiatives

Since it was established in 1981, the Office has reviewed and commented on proposed legislation during each legislative session. In addition, the Office regularly provides feedback to individual legislators who are developing both legislation specific to the districts they represent and legislation that affects the general operations of state and local government. The Office also responds to requests from the Governors Office to review legislation that the Legislature has passed and that is awaiting the Governors signature.

The Office continued to provide these important services throughout 2018. For instance, the Office reviewed and commented on more than 150 pieces of legislation for the 2017-2018 legislative session. In 2018, the Inspector General and his staff also provided testimony and guidance to legislative committees on issues related to training members of public boards and commissions, film and theater tax credits, real estate transactions, fraud controls, employee leave time policies, post-retirement work policies and the procurement of public supplies and services. In all cases, the Office stressed the importance of transparency in government and the need for safeguards to ensure the appropriate oversight of taxpayer dollars.

IV. Proposed Legislation: 2019-2020 Session

Chapter 30 of the Massachusetts General Laws permits the Office to file legislation in the November of even years for the upcoming legislative session. In November 2018, the Office filed the following bills for the 2019-2020 legislative session.

A. House 8, An Act Relative to Higher Education Boards and Trustees

This proposal would require every member of a board of trustees for a public institution of higher education in Massachusetts to participate in training from the Department of Higher Education on such issues as fiduciary responsibilities, the open meeting law, conducting public procurements and state ethics requirements. The proposal also states that membership on a board of trustees would terminate if a member failed to complete the required training. House 8 is an important step towards ensuring that board members understand the full extent of their roles and have the tools to oversee public institutions of higher education. This will help to protect universities and colleges from fraud, waste and abuse and will also assist in ensuring accountability, transparency and reliability in a system that serves to educate our children. As of the date of this report, House 8 has been referred to the Joint Committee on Higher Education.

B. House 9, An Act Relative to Chapter 12A

House 9 would amend the Office’s enabling statute. Modeled after the federal Inspector General Empowerment Act of 2016, Pub. L. No. 114-317, 130 Stat. 1595 (2016), the proposal strengthens the Office’s ability to carry out its mandate of preventing and detecting fraud, waste and abuse by clarifying that the Office has access to all records of a public body unless the General Court expressly limits the Inspector General’s right of access. The proposal would also allow the Office to refer a potential criminal matter to a district attorney in the same manner as a referral to the United States Attorney or the Attorney General.

Further, the proposal allows a member or designee of the Inspector General Council to attend a private session where testimony is given under oath, at the request of the Inspector General, but removes the attendance requirement. The role of the Inspector General Council otherwise remains the same, including approving summonses to take testimony under oath. Finally, the proposal extends whistleblower protections to non-public employees of state contractors who alert the Office to potential fraud, waste and abuse of public dollars. Any person who violates this section would be subject to a fine and may be liable for damages. House 9 clarifies and strengthens the Office’s capacity to conduct its work. The proposal will significantly increase the Office’s ability to prevent and detect fraud, waste and abuse. The Inspector General testified in favor of House 9 before the Joint Committee on State Administration and Regulatory Oversight on April 1, 2019.

C. House 10, An Act Relative to Chapter 30B

House 10 would increase the fine for causing or conspiring to enter into a contract in violation of Chapter 30B, the Uniform Procurement Act. Based on the Office’s investigations and reviews, those who conspire to violate Chapter 30B can earn tens of thousands of dollars as a result of their misconduct. Consequently, the current fine – $2,000 – is an insufficient deterrent to violating Chapter 30B. Raising the fine to $10,000 – as the Office proposes – would have a far greater deterrent effect.

This proposal also would update Chapter 30B to include correct statutory references based on recent amendments to other statutes. The bill would also strike a section of Chapter 30B that is duplicative. House 10 is needed to ensure that Chapter 30B remains properly aligned with other laws. The Inspector General testified in favor of House 10 before the Joint Committee on State Administration and Regulatory Oversight on April 1, 2019.

D. House 11, An Act Revising Chapter 30B

House 11 would augment certain sections of Chapter 30B, the Uniform Procurement Act, to promote best practices, fair competition and transparency. Under the proposed revisions, awarding authorities would be able to use requests for proposals for procurements in the $10,000 to $50,000 range. The proposal also clarifies that quotations solicited for goods and services cannot be negotiated. Further, awarding authorities that do not have written procedures for the disposal of surplus supplies would be required to use sound business practices to dispose of surplus supplies valued at less than $10,000. The proposal also would require contractors to notify the Office of the Inspector General when it has credible evidence of criminal conduct, civil violations or overpayments. Finally, the Office would be permitted to promulgate regulations related to the enforcement and interpretation of Chapter 30B.

House 11 would strengthen Chapter 30B’s provisions and provide local jurisdictions greater guidance and flexibility in selecting which procurement method to use without sacrificing the principles of good governance and accountability. The Inspector General testified in favor of House 11 before the Joint Committee on State Administration and Regulatory Oversight on April 1, 2019.