Federal Reports

The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) prohibits CMS from awarding a Competitive Bidding Program contract to a supplier of diabetes test strips if the supplier's bid does not cover at least 50 percent, by volume, of the types of diabetes test strips provided to Medicare beneficiaries. This is known as the "50-percent rule." MIPPA requires OIG to determine the market shares of the types of diabetes test strips before each round of competitive bidding to assist CMS in ensuring that bidding suppliers meet the 50-percent rule. Initially, compliance with the 50 percent rule was assessed using mail order claims only. The Bipartisan Budget Act of 2018 amended the 50-percent rule by requiring that, for bids on or after January 1, 2019, CMS must use data from the non-mail order Medicare market as well as the mail-order one. Since 2010, OIG has been conducting evaluations of the Medicare market shares of diabetes test strips provided via mail order. This is the first OIG evaluation of Medicare market shares for diabetes test strips provided via non-mail order.

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), assisted the U.S. Department of Justice (DOJ) and the U.S. Attorney’s Office for the Northern District of New York in a civil investigation of Gateway Funding Diversified Mortgage Services, LP, now known as Finance of America Mortgage, LLC (FAM).  Gateway was a Federal Housing Administration (FHA)-approved mortgage lender.  On May 31, 2015, FAM’s parent company acquired Gateway.  FAM has its principal place of business in Horsham, PA.On December 7, 2018, FAM entered into a settlement agreement with the Federal Government to pay $14.5 million to avoid the delay, uncertainty, inconvenience, and expense of lengthy litigation.  As part of the settlement, FAM agreed that Gateway engaged in certain conduct and omissions related to FHA-insured mortgages in connection with its origination and underwriting of single-family residential mortgage loans insured by FHA.  The settlement agreement was neither an admission of liability by FAM nor a concession by the United States that its claims were not well founded.As a result of Gateway’s conduct and omissions, HUD insured loans approved by Gateway that were not eligible for FHA mortgage insurance under the direct endorsement program and that HUD would not otherwise have insured.  HUD incurred substantial losses when it paid insurance claims on these loans.  Of the total $14.5 million settlement, HUD FHA received $7.23 million, and the remaining $7.27 million was paid to other Federal entities and the relator.

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While costs in general are expected to increase over time due to inflation, there were other factors that put downward pressure on the Postal Service’s transportation costs. Namely, the overall decline in mail volume and the reduction in First-Class Mail service standards. This led us to wonder how much costs should have been expected to change in response to two things: (1) the overall change in mail volume, including the decline in letters and flats and the increase in parcels; and (2) the overall change in transportation-related input costs, including fuel and driver wages. The OIG found that almost 40 percent of the increase in transportation costs over the last ten years cannot be explained by these two factors alone.

The Office of National Drug Control Policy’s (ONDCP) Circular, Accounting of Drug Control Funding and Performance Summary, requires each National Drug Control Program agency to submit to the ONDCP Director a detailed accounting of all funds expended for National Drug Control Program activities during the previous fiscal year. Williams, Adley & Company –DC, LLP (Williams Adley), under contract with the Department of Homeland Security OIG, issued an Independent Accountant’s Report on U.S. Coast Guard’s (Coast Guard) Detailed Accounting Submission. Coast Guard management prepared the Table of FY 2018 Drug Control Obligations and related disclosures in accordance with requirements of ONDCP Circular, Accounting of Drug Control Funding and Performance Summary, dated May 8, 2018 (the Circular). Based on its review, nothing came to Williams Adley’s attention that caused it to believe that the Coast Guard’s FY 2018 Detailed Accounting Submission is not presented in conformity with the criteria in the Circular. Williams Adley did not make any recommendations as a result of its review.

We conducted a limited scope audit of the Ohio Arts Council (OAC) for the period of July 1, 2015 through June 30, 2018. Limited scope audits involve a limited review of financial and non-financial information of NEA award recipients to ensure validity and accuracy of reported information, and compliance with Federal requirements. Our limited scope audit concluded that the OAC generally did not comply with the financial management system and recordkeeping requirements established by the OMB and NEA. Following is a summary of our findings: the OAC included unallowable costs on the Federal Financial Report (FFR) for award No. 15-6100-2037; the OAC included unsupported costs on the FFRs for award Nos. 15-6100-2037 and 16-6100-2044; the OAC included costs incurred outside the period of performance on the FFRs for award Nos. 15-6100-2037 and 16-6100-2044; the OAC did not provide accurate, current, and complete disclosure of the financial results of award Nos. 15-6100-2037 and 16-6100-2044; the OAC did not provide notice of Federal award participation to subrecipients of awards used to meet the Federal cost share/match; and the OAC generally did not administer NEA awards in compliance with NEA and Federal regulations.