A new HHS Office of Inspector General (OIG) report has found that several companies bidding for zone program integrity contractor (ZPIC) contracts had conflicting business relationships with other segments of Medicare that could potentially affect CMS’ efforts to fight fraud.

The report claims that “one offeror’s parent company had a contract to offer technology-related implementation and operations work to a company that was a Part D plan sponsor.” In another instance, an offeror’s parent company owned Medicare Advantage and part D plans that operated in 50 states.

According to the report, CMS requires all offerors to report any companies that may create potential conflicts, and develop a plan to mitigate all conflicts. Some offerors and subcontractors failed to provide information regarding financial interests in other entities.

“Every ZPIC award has been protested for these reasons so the OIG did (this) analysis and report,” says Wayne van Halem, presidentof The van Halem Group in Atlanta and audit advisor to Waterloo, Iowa-based VGM Group.

The ZPICs should have been up and running for years but the program still isn’t fully implemented, van Halem says.  

Amongst several recommendations made by the OIG to rectify this issue, CMS agreed to consider amending its guidelines for offerors to include language that requests the offeror classify its business conflicts as potential or actual.

The OIG also recommended that CMS does the following to prevent conflicts:

  • Provide clearer guidance in the Request for Proposals to offerors and subcontractors regarding which business and contractual relationships should be identified as actual conflicts and which should be identified as possible conflicts.
  • Require offerors and subcontractors to distinguish those business and contractual relationships that they deem to be actual conflicts from those they deem to be possible conflicts.
  • State whether offerors and subcontractors need to report income amounts, periods of performance, and types of work performed for their contracts with CMS and income amounts generated from key personnel’s other employment.
  • Create a standardized format for reporting information in the Organizational Conflict of Interest Certificate and require its use by offerors and subcontractors.
  • Develop a formal, written policy outlining how conflict-of-interest information provided by offerors should be reviewed by CMS staff.

According to the report, CMS partially agreed with the first two recommendations, and fully agreed with the final three.