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2016 OIG Work Plan: what does it mean for hospitals?

BY MARY M. BEARDEN AND ELIZABETH H. JEPSON Brown & Fortunato, P.C.

In November 2015, the Department of Health and Human Services and the Office of Inspector General (OIG) released its Work Plan for the fiscal year 2016. The Work Plan identifies areas that the OIG intends to research and investigate in the upcoming year and is an important tool for health care providers.

The Work Plan begins with a discussion of the results of the OIG’s work in 2015. The OIG anticipates recovering over $3 billion in 2015 and almost $1.13 billion of that amount will be from audit receivables, and about $2.2 billion will be from investigative receivables. Recoveries have decreased in 2015 from the OIG’s estimated amount recovered in 2014, which was $4.9 billion.

In 2015, the OIG excluded 4,112 individuals and entities from participation in federal health care programs. The OIG brought 925 criminal actions and 682 civil actions, including federal false claims cases, in 2015. There has been a marked increase in the number of civil actions pursued by the OIG in 2015. In 2014, the OIG brought 533 civil actions. This increase demonstrates the government’s reliance upon and involvement in actions brought by qui tam relators (which are also known as whistleblowers). It appears that the OIG’s pursuit of civil and criminal actions in the health care industry will only continue to increase.

Hospitals and practitioners should take note of the OIG’s reliance on data mining to detect and identify potential health care fraud. The OIG’s Work Plan appears to be heavily reliant on the use of computers to discover billing patterns and abnormalities that may be the result of fraud. The use of data mining is a cost-effective way for the OIG to identify potential fraud.

Many of the issues identified in previous Work Plans appear again in the 2016 Work Plan, including a review of outlier payments made by Medicare to hospitals. The OIG will determine whether the Centers for Medicare and Medicaid Services (CMS) made necessary reconciliations for outlier payments in a timely manner. The OIG will also analyze data from cost reports to identify salaries included in operating costs reported to and reimbursed by Medicare. As hospitals know, employee compensation may be an allowable cost, but only to the extent, it is reasonable remuneration for services related to facility operation and patient care.

The two-midnight rule continues to receive scrutiny by the OIG since the rule was implemented in 2013, and the OIG will determine how the use of inpatient and outpatient stays has changed in light of the two-midnight rule. The OIG will also look at how Medicare and patient payments for inpatient and outpatient stays have changed under the two-midnight rule.

The OIG will also analyze issues related to provider-based status, including CMS’ ability to oversee provider-based billing. With the provider-based attestation requirements, the OIG is interested in challenges with the process and the extent to which facilities actually meet the federal requirements for provider-based status. The agency will also review Medicare payments made for physician visits in freestanding and provider-based clinics. L The OIG is concerned about potential discrepancies between payments made in freestanding clinics and provider-based clinics for the same procedures.

The OIG will also review billing issues related to certain inpatient and outpatient claims, as well as inpatient claims for mechanical ventilation. Claims submitted by acute care hospitals have previously been identified as being potentially noncompliant, and the OIG will review compliance and recommend recovery of overpayments where applicable. The OIG will also look at inpatient hospital claims for mechanical ventilation to ensure that diagnosis-related group (DRG) assignments were appropriate. In the Work Plan, the OIG indicates that some DRGs require at least 96 hours of mechanical ventilation and that many payments have been improperly paid for beneficiaries who received less than 96 hours of mechanical ventilation.

Some new additions for hospitals in the 2016 Work Plan also relate to billing and payments. The OIG will evaluate medical device payments from Medicare for replaced medical devices, which are typically reimbursed at a lower rate than the initial implantations of the medical devices. According to the OIG, previous reviews have indicated that Medicare contractors have made improperly inflated reimbursements to hospitals for replaced medical devices.

Another new area of inquiry relates to Medicare payments to acute care hospitals for outpatient claims billed for services provided during inpatient stays. Many items and services provided to inpatients are covered by Medicare Part A and are inappropriate to submit to Part B for reimbursement for inpatients. However, the OIG believes, as the result of prior investigations, audits, and inspections, that many of these claims are submitted and paid incorrectly by Part B.

The OIG intends to evaluate Medicare payments for items and services provided to beneficiaries that are unlawfully present in the United States or are incarcerated. This evaluation is mandated by federal law and requires the OIG to submit a report to Congress on these specific matters.

In light of the requirements to convert to ICD-10 in 2015, the OIG will review CMS’ management of the implementation process. The agency has indicated it will look at how CMS and its contractors have assisted providers with the transition and at how the use of ICD-10 codes are affecting reimbursements.

The Work Plan also identifies an area of concern for hospitals regarding the quality of care and safety. The OIG will determine the extent to which CMS has validated hospital quality reporting data. As required by federal law, CMS conducts validations of its quality reporting program. Verification of the accuracy of the quality reporting program is important to the government, as CMS uses the quality data gathered for the hospital value-based purchasing program and the hospital acquired condition reduction program.

There are a number of other issues that affect hospitals and physicians in the Work Plan. Hospitals and health care providers should review the 2016 Work Plan to identify areas of investigation and inquiry that may impact their practices. A careful review of the Work Plan is important so providers can understand the government’s priorities and areas of concern in the health care industry in the new year.