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OIG Releases Work Plan for 2013

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Jennifer Kildea Dewane
Foster Swift Health Care Law E-News
November 16, 2012

Recently, the U.S. Department of Health and Human Services Office of Inspector General (the "OIG") released its Work Plan for Fiscal Year 2013 (the "Work Plan").  Health care providers have long been encouraged to review the OIG Work Plans in an effort to prepare for and address compliance issues that are on the OIG's radar.  The Work Plan describes the types of audits, evaluations, and investigations the OIG intends to conduct in 2013 in an effort to provide guidance to the health care industry. A copy of the complete Work Plan can be found here.  

Corporate compliance officers should carefully review the portions of the Work Plan applicable to their businesses.  In addition, third party payors should also carefully review the Work Plan to determine whether the OIG initiatives related to providers should be addressed in such payors' audit initiatives.

Below, we have highlighted issues that the OIG intends to address in 2013.


Among the initiatives related to hospitals, the OIG indicates that it will:

  • Analyze claims data to determine how much the Centers for Medicare & Medicaid Services ("CMS") could save if it bundled outpatient services delivered up to 14 days prior to an inpatient hospital admission into the diagnosis-related group ("DRG") payment; essentially expanding the "DRG window" from 3 days to 14 days;
  • Review Medicare claims to determine trends in the number of same-day hospital readmission cases;
  • Determine the impact of non-hospital-owned physician practices billing Medicare as provider-based physician practices, addressing concerns about the financial incentives presented by provider-based status;
  • Review Medicare payments to hospitals for beneficiary discharges that should have been coded as transfers to determine whether such claims were appropriately processed and paid, and review Medicare payments made to hospitals for beneficiary discharges that were coded as discharges to a swing bed in another hospital;
  • Determine the extent to which acute care hospitals discharge beneficiaries after a short stay to a hospice facility, since Medicare pays a full prospective payment system ("PPS") rate to hospitals that discharge beneficiaries for hospice care while Medicare only pays a hospital a reduced payment for shorter lengths of stay when beneficiaries are transferred to another PPS hospital or, or for certain DRGs, to post-acute care settings, such as a skilled nursing facility ("SNF");
  • Determine the cost incurred by Medicare related to inpatient hospital claims for canceled surgical procedures;
  • Review hospital inpatient outlier payments, examine trends of outlier payments nationally, and identify characteristics of hospitals with increasing rates of outlier payments;
  • Review provider data from CMS Intern and Resident Information System to determine whether duplicate or excessive graduate medical education payments have been claimed;
  • Determine whether hospitals have appropriately submitted inpatient and outpatient claims that included procedures for the insertion or replacement of medical devices since Medicare is not responsible to the full cost of the replaced medical device if the hospital receives a partial or full credit from the manufacturer related to the device's warranty; and
  • Review the extent to which hospitals acquire ambulatory surgical centers and then convert them to hospital outpatient departments.


With respect to nursing homes, the OIG intends to:

  • Estimate the national incidents of adverse and temporary harm events for Medicare beneficiaries receiving post-acute care in SNFs in inpatient rehabilitation facilities and identify contributing factors to these events and estimate the associated costs to Medicare;
  • Review how SNFs have addressed certain federal requirements related to quality of care;
  • Determine whether state survey agencies verify correction plans for deficiencies identified during nursing home recertification surveys;
  • Assess nursing homes' administration of atypical antipsychotic drugs; and
  • Identify questionable billing patterns associated with nursing homes and Medicare providers for Part B services provided to nursing home residents.


In the hospice arena, the OIG will:

  • Review hospices' marketing materials and practices and their financial relationships with nursing facilities since the OIG found that 82% of hospice claims for beneficiaries and nursing facilities did not meet coverage requirements; and
  • Review the use of hospice general inpatient care for 2011 to assess the appropriateness of hospices' general inpatient care claims.


In focusing on home health agencies in 2013, the OIG will:

  • Determine the extent to which home health agencies ("HHAs") are complying with the statutory requirement that physicians (or certain practitioners working with physicians) who certify beneficiaries as eligible for Medicare home health services have face-to-face encounters with the beneficiaries;
  • Determine the extent to which HHAs are complying with state requirements that criminal background checks be conducted with respect to HHA applicants and employees;
  • Review the OASIS data to identify payments for episodes for which OASIS data were not submitted or for which the billing codes on the claims are inconsistent with OASIS data; and
  • Review compliance with various aspects of the home health PPS, including the documentation required in support of the claims paid by Medicare. 


When addressing the durable medical equipment and supply industry, the OIG will:

  • Examine accreditation organizations' requirements and processes for granting accreditation to ensure that medical equipment suppliers meet each of Medicare's quality standards;  
  • Determine the appropriateness of Part B payments that Medicare made on the basis of specific service code modifiers that suppliers entered on the claims;
  • Review Medicare Part B payments for claims submitted by medical equipment suppliers for lower limb prosthetics to determine whether the requirements of Medicare were met;
  • Conduct a series of reviews related to power mobility devices and diabetes testing supplies;
  • Compare Medicare reimbursement amounts for the back orthosis procedure code to supplier acquisition costs to evaluate the reasonableness of Medicare's spending; and
  • Review claims for frequently replaced medical equipment supplies to determine whether medical necessity, frequency, and other Medicare requirements are met. 


The OIG will also:

  • Review outpatient physical therapy services provided by independent therapists to determine whether they were reasonable, medically necessary, or properly documented;
  • Identify questionable billing patterns for Medicare sleep study services provided in 2009 and 2010;
  • Determine the extent to which physician-owned distributors provide spinal implants purchased by hospitals and are associated with high utilization of such implants;
  • Examine Medicare claims data to identify questionable billing for ambulance services, such as transports that were potentially not medically reasonable and necessary and potentially unnecessary billing for advanced life support services in specialty care transport;
  • Review Medicare Part B claims for personally performed anesthesia services to determine whether they meet Medicare requirements;
  • Review Medicare claims data to identify questionable billing for ophthalmological services during 2011;
  • Review the appropriateness of Medicare payments for partial hospitalization program psychiatric services in hospital outpatient departments and free standing community mental health centers;
  • Review Part B payments for imaging services to determine whether they reflect the expenses incurred and whether the utilization rates reflect industry practices;
  • Review issues related to physician billing for "incident-to" services and coding of Medicare Part B claims for services performed in ambulatory surgical centers;
  • Review Medicare Part B payments for chiropractic services to determine whether such payments were in accordance with Medicare requirements; and
  • Review Medicare pricing and utilization related to renal dialysis services under the new bundled end-stage renal disease prospective payment system payment ("ESRD PPS") for renal dialysis services.


The OIG will focus on the following as relates to the prescription drug industry:

  • Review off-label and off-compendia use of certain Medicare Part B prescription drugs and determine the extent to which such provide support for coverage; and
  • Determine the extent of drug shortages in hospitals reported experiences with drug shortages.


In reviewing Medicare Advantage Plans ("MA"), the OIG will:

  • Review CMS's over sight of plans' enrollment practices and determine whether special-needs plans for beneficiaries with chronic or disabling conditions comply with enrollment requirements;
  • Review MA organizations' oversight of contractors that provide enrollment benefits, such as prescription drugs and mental health services, and determine the extent to which MA organizations oversee and monitor their contractors' compliance with regulations and examine the processes they use to ensure that contractors fulfill their obligations;
  • Review notices of denied requests for services or payments that MA organizations sent to beneficiaries to determine whether the notices clearly explained beneficiaries' right to request reconsideration and to appeal the ensuing determinations;
  • Assess the extent to which CMS uses bid reviews to ensure that MA bids are accurate;
  • Determine whether CMS properly adjusted payments to MA plans on the basis of the results of its data validation reviews; and
  • Review expenditures claimed on cost-reports by selected healthcare prepayment plans.


In determining compliance requirements for the Medicare Part D Prescription Drug Program, the OIG will:

  • Identify safeguards pharmaceutical manufacturer have in place to ensure that beneficiaries do not use copayment coupons to obtain prescription drugs for Medicare Part D;
  • Review the extent to which plan sponsors offering Part D prescription drug coverage have voluntarily reported Part D anti-fraud activity data to CMS since 2010;
  • Analyze the variation in prescription drug plans' specialty tier formulas and beneficiary cost sharing requirements; and
  • Review data submitted by Part D sponsors used in calculating the coverage gap discount and review the accuracy of the Part D sponsors' tracking of beneficiaries' true out-of-pocket costs.


When reviewing the Medicaid managed care industry, the OIG will:

  • Review how extensive managed care provider networks are for Medicaid managed care beneficiaries to ensure that managed care plans are maintaining and monitoring a network of providers that is sufficient to provide adequate access to all Medicaid services;
  • Review the extent to which states monitor Medicaid managed care entities' ("MCE") grievances and appeals systems for compliance with federal requirements, such as the opportunity for a fair hearing to any beneficiary whose Medicaid claims for assistance is denied or not acted upon promptly;
  • Determine how states ensure that Medicaid MCEs, prepaid inpatient health plans, and prepaid ambulatory health plans comply with credentialing and recredentialing requirements;
  • Review state Medicaid agencies' oversight policies, procedures, and activities to determine the extent to which states monitor Medicaid MCE's marketing practices and compliance in federal and state contractual marketing requirements;
  • Determine the extent to which Medicaid managed care and counter data included in Medicaid statistics accurately represents all services provided to beneficiaries;
  • Determine the extent to which OIG excluded individuals were employed by entities that provide services through the managed care entity provider networks in 2009;
  • Determine whether managed care organizations identified and addressed potential fraud and abuse incidents;
  • Determine the extent to which Medicaid managed care organizations use prepayment reviews to detect and deter fraud and abuse; and
  • Review managed care plans with contract provisions that require a minimum percentage of total costs to be expended for medical expenditures (medical loss ratio) to determine whether a refund was made to the state agency when the minimum medical loss ratio threshold was not met. 

In its compliance guidance to the health care industry, the OIG has consistently advised providers, supplier, and health plans to continually assess their risk areas.  The OIG Work Plan, while intimidating, is extremely instructive as to the industry's risk areas.  Therefore, corporate compliance officers should carefully review the Work Plan and ensure that their corporate compliance programs address those initiatives highlighted by the OIG that are applicable to their specialties.