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OIG releases work plan for FY 2015

December 2014
BY Mary M. Bearden and Allison Shelton, Brown & Fortunato, P.C.

On October 31, 2014, the Office of Inspector General (OIG) released its Work Plan for FY 2015. Every year, the OIG issues a Work Plan summarizing new and ongoing activities of the OIG.

The OIG was created to protect programs of the U.S. Department of Health and Human Services, including Medicare and Medicaid. To fulfill this obligation, the OIG conducts audits, evaluations, and investigations; collaborates with the Department of Justice and other federal and state agencies; and imposes civil monetary penalties. The OIG is very aggressive in this work. According to statistics cited in the Work Plan, the OIG expects to recover $4.9 billion from audits and investigations in FY 2014. During this time, the OIG brought 971 criminal actions and 533 civil actions against individuals and entities. Additionally, the OIG excluded 4,017 individuals and entities from federal health care programs.

In the Work Plan for FY 2015, the OIG identified a few new activities aimed at hospitals. For the first time, the OIG announced its plan to review (1) hospital controls over wage data reporting and (2) the incidence of adverse and temporary harm events involving Medicare beneficiaries in long-term-care hospitals. The third new activity concerns hospitals’ obligations under the Security Rule enacted as part of the Health Insurance Portability and Accountability Act (HIPAA).

The HIPAA Security Rule requires hospitals and other covered entities to develop contingency plans in order to protect electronic health information in the event of an emergency, such as fire, natural disaster, or system failure. Policies and procedures in the contingency plan must address data backup, emergency mode operations, disaster recovery, and data that must be available during an emergency. The OIG plans to evaluate the extent to which hospitals comply with their obligations for contingency planning.

The majority of hospital-specific activities listed in the Work Plan are ongoing priorities of the OIG that were identified in previous Work Plans. In the Work Plan for FY 2015, the OIG reiterated plans for 21 hospital- specific activities, including evaluations of and investigations into certain hospital policies, billing practices, and quality of care programs.

Two of the OIG’s ongoing activities concern provider-based facilities. When a facility qualifies for provider-based status, services provided by the facility may be billed as hospital outpatient services. As a result, Medicare reimbursement for the services is higher than if the services were performed in freestanding clinics. The OIG will determine the extent to which facilities claiming provider-based status actually satisfy the regulatory criteria for such a claim. Furthermore, the OIG will compare Medicare reimbursement to provider- based facilities with payments made to freestanding clinics for similar services.

The OIG plans to continue reviewing Medicare payments for several types of claims submitted by hospitals, including inpatient claims for certain Diagnosis Related Group (DRG) assignments that require mechanical ventilation. Medicare coverage for certain DRGs requires that the patient receive 96 or more hours of mechanical ventilation. In the past, the OIG has identified improper payments to hospitals that billed for beneficiaries who did not receive at least 96 hours of mechanical ventilation.

One activity identified by the OIG involves the review of billing practices related to the new inpatient admission criteria. In FY 2014, the “two midnight policy” went into effect. Under this policy, a physician should admit a Medicare beneficiary as an inpatient when the patient is expected to need at least two nights of hospital care. Otherwise, beneficiaries should be treated as outpatients. Previously, the OIG has identified millions of dollars in overpayments for failing to abide by Medicare’s criteria for inpatient admission. Therefore, the OIG plans to continue to evaluate hospitals’ billing practices relating to inpatient admissions.

The OIG will continue to evaluate graduate medical education payments made to hospitals. Specifically, the OIG will review the Intern and Resident Information System to determine whether duplicate or excessive graduate medical education payments were made to hospitals. Also, the OIG will review indirect medical education (IME) payments made to teaching hospitals. Such hospitals receive additional payments for each Medicare discharge due to certain indirect costs associated with teaching hospitals. The OIG has previously identified overpayments to hospitals that resulted from incorrect calculations of the IME adjustments.

Outpatient dental claims will be reviewed by the OIG in FY 2015. Medicare generally does not pay for dental services. There are few exceptions to this rule. For example, Medicare will cover the extraction of teeth when necessary to prepare the jaw for radiation treatment. In previous years, the OIG has identified hospital overpayments resulting from Medicare reimbursement of non-covered dental services.

The OIG will continue to review claims made for right heart catheterizations (RHC) and endomyocardial biopsies.

When performed during the same operative session, the RHC procedure is covered in the Medicare payment for the endomyocardial biopsy. Based on previous audits, the OIG is concerned that hospitals are receiving separate payments for RHC procedures when such procedures are covered in payments for endomyocardial biopsies.

The OIG plans to review payments to hospitals for (1) outpatient evaluation and management services; (2) patients diagnosed with kwashiorkor; and (3) bone marrow or stem cell transplants. In addition to reviewing billing practices of hospitals, the OIG will evaluate physicians’ coding on claims for services performed in ambulatory surgical centers and hospital outpatient departments. Specifically, the OIG will review place of service codes utilized by physicians on claims submitted to Medicare Part B. In the past, the OIG has found that physicians have failed to correctly code the place of service. Medicare offers higher reimbursement to physicians when services are performed in non-facility settings, such as the physician’s office. Therefore, incorrect place of service codes are a priority for the OIG because they can result in overpayments to physicians.

Finally, the OIG plans to continue to evaluate certain quality of care and patient safety programs. For example, the OIG plans to evaluate how hospitals assess medical staff applicants. Because “[r]obust hospital privileging programs contribute to patient safety,” evaluation of credentialing and privileging procedures at hospitals is a priority for the OIG.

Providers should review the OIG Work Plan to become aware of practices that concern enforcement authorities. Moreover, hospitals and other health care providers can use the OIG Work Plan to set priorities for internal audits and quality improvement projects. Such measures may help providers avoid being a statistic reported by the OIG in the next Work Plan.