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In the latter half of 2017, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) released an Annual Report that identifies the Department’s top challenges.  Annually, the OIG prepares a summary of the most significant management and performance challenges arising across HHS programs and covering important HHS responsibilities.  Known as the Top Management Challenges (TMCs), the TMCs forecast new and emerging issues that HHS will face in the coming years.  The Annual Report also describes HHS’s progress towards addressing the TMCs and reflects the continuing vulnerabilities that OIG has identified over recent years.

The OIG identified the following TMCs for 2017:

  1. Ensuring Program Integrity in Medicare.
  • Medicare provided coverage for nearly 57 million beneficiaries, spending $679 billion in fiscal year (FY) 2016. Medicare’s Board of Trustees estimates that Medicare Part A’s Trust Fund will be depleted by 2029.  In addition, spending for Medicare Part B (medical insurance) is expected to grow by almost seven percent over the next five years, roughly two percent higher than the U.S. economy is expected to grow.  The OIG identified several targets to the challenge, including “reducing improper payments, combating fraud, fostering prudent payment policies, and implementing health care reforms and the promise of health information technology (Health IT).”
  1. Ensuring Program Integrity in Medicaid.
  • Medicaid serves 69 million beneficiaries, which is more than any other federal health care program. The Centers for Medicare and Medicaid Services (CMS) jointly administers and funds Medicaid at the federal level, in addition to the states.  CMS reported that total Medicaid expenditures were $574 billion for FY 2016.  The OIG recognizes several key challenges, including “fiscal controls, leveraging fraud prevention and, improving national Medicaid data to support program integrity.”
  1. Curbing the Opioid Epidemic.
  • Opioid abuse has been well-publicized as a national epidemic. The Centers for Disease Control and Prevention (CDC) estimated that the opioid death toll rose from 28,000 to 33,000, from 2014 to 2015.  The OIG indicates that the Department’s main challenges are “addressing inappropriate prescribing of opioids, combating fraud and diversion of prescription opioids and potentiator drugs, addressing inadequate access to treatment, addressing misuse of grant funds, and fighting fraud by treatment providers of opioid use disorder.”
  1. Improving Care for Vulnerable Populations.
  • Vulnerable populations comprise a significant portion of HHS program recipients. This includes individuals who receive nursing home care, group home care, hospice care, or home and community-based services, and children from low-income families in foster care.  HHS has a duty to ensure that these individuals receive high-quality care and are not abused in receiving care.  The OIG listed several key challenges, including “addressing substandard nursing home care, reducing problems in hospice care, mitigating risks to individuals receiving home and community-based services, and ensuring access to safe and appropriate services for children.”
  1. Ensuring Integrity in Managed Care and Other Programs Delivered Through Private Insurers.
  • Private insurance companies and sponsors who contract with CMS or states to deliver benefits and services provide coverage to a substantial portion of the population. There were roughly 18.6 million Medicare recipients who were Medicare Advantage (MA) beneficiaries in 2016, a three-fold increase since 2004.  In addition, private companies provided Medicare Part D (prescription drug) benefits to 39 million beneficiaries.  Medicaid managed care organizations (MCOs) provided most Medicaid beneficiaries with coverage.  Furthermore, over 10 million people used health insurance marketplaces (marketplaces) to procure coverage in 2017.  The OIG found that key challenges for HHS include “combating fraud, waste, and abuse by health care providers billing managed care plans; ensuring integrity and compliance by managed care and Part D sponsors; and overseeing the health insurance marketplaces.”
  1. Improving Financial and Administrative Management and Reducing Improper Payments.
  • HHS must ensure that, as life expectancy increases, beneficiaries receive high-quality nursing home, hospice, and home-and community-based services (HCBS), including personal care services (PCS). These services still suffer from fraud, waste, and abuse.  HHS has implemented a number of programs in efforts to improve care, including the Five Star Quality Rating System.  The OIG seeks to do more to prioritize quality care for the aging population, aiming to bolster internal controls and offer improved guidance and training for surveyors.  This will help to ensure that nursing homes with reported quality and safety issues actually correct their deficiencies.  The main areas that must be addressed are “weaknesses in financial management systems, addressing Medicare trust fund issues/social insurance, reducing improper payments, addressing concerns about contracts management, and implementing the Digital Accountability and Transparency (DATA) Act.”
  1. Protecting the Integrity of Public Health and Human Services Grants.
  • HHS awarded over $100 billion in grants through FY 2016. The 21st Century Cures Act authorized billions of dollars in new federal spending to address national public health needs.  The money was distributed to a number of pressing concerns, such as cancer initiatives, opioid abuse, the Precision Initiative, and neurological research.  Additionally, the Act authorized funds for smaller grants to address other public health needs, such as mental and behavioral health education training.  Key initiatives include “ensuring effective grants management within the Department and ensuring program integrity and financial capability at the grantee level.”
  1. Ensuring the Safety of Food, Drugs, and Medical Devices.
  • The FDA has a broad statutory mandate to protect the public health by ensuring the safety, efficacy, quality, and security of human and veterinary drugs, biological products, and medical devices, and by ensuring the safety of our nation’s food supply, cosmetics, and electronic products that emit radiation. FDA also regulates the manufacture, marketing, and distribution of tobacco products to protect the public health and to reduce tobacco use by minors.  FDA regulates products accounting for approximately 20 percent of all U.S. consumer spending.  FDA has the continuing challenge of ensuring the safety and security of our nation’s foods and medical products (including drugs, biological products, and medical devices), which directly affect the health of every American. The expansion of FDA’s authorities through legislation, including the 21st Century Cures Act in 2016, the Drug Quality and Security Act in 2013, and the Food Safety Modernization Act in 2010, adds to the agency’s mandate to protect the public health.  The OIG identified the key components of the challenge as ensuring food safety; ensuring the safety, efficacy, and quality of medical products; and overseeing the complex drug and medical device supply chain.
  1. Ensuring Program Integrity and Quality in Programs Serving American Indian and Alaska Native Populations.
  • In FY 2016, HHS administered $7 billion to serve the healthcare needs of American Indian and Alaska Native (AI/AN) communities, roughly half of all federal funds that served those communities. The Indian Health Service (IHS) is the largest of the HHS agencies that administer programs for AI/ANs through the federal government.  The IHS, in partnership with Tribes, provides or funds 2.2 million AI/ANs with healthcare.  Delivering these crucial services to AI/ANs and shielding funds from fraud, waste, and abuse is still considerably difficult for HHS.  The OIG notes that some key aspects of the challenge are “improving IHS quality of care, management, and infrastructure; combating fraud and misuse of funds, and ensuring adequate internal controls and staff training for HHS grant programs in Indian Country.”
  1. Protecting HHS Data, Systems, and Beneficiaries from Cybersecurity Threats.
  • Data security has become completely integral to HHS’s operations. Sensitive data has increased directly with the growing number of initiatives that HHS has undertaken in its attempts to leverage its data.  These challenges exist not only for HHS, but for states and other entities that seek to maintain data and use it to improve care.  Cybersecurity incidents and breaches compromise confidentiality, integrity, and availability of data, which may result in a number of adverse complications.  According to the OIG, “this includes impeding HHS’s ability to offer essential programs and services, threatening major elements of our country’s critical infrastructure, and placing the health and safety of patients at risk.” HHS must take special caution to take appropriate actions that protect its own data and systems from cybersecurity threats.  HHS has the larger challenge of fostering cybersecurity practices for other partners and stakeholders.  The OIG has identified that “protecting HHS’s data and systems and fostering a culture of cybersecurity beyond HHS” are the primary challenges for management.

The OIG’s Annual Report for 2017 is available at:

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