Kusserow on Compliance: 13 Highlighted Items in the 2015 OIG Work Plan Relating to Hospitals

The HHS Office of Inspector General (OIG) released its annual Work Plan for 2015 on October 31, 2014, setting forth planned audits and evaluations with indicators for whether the work was in progress at the start of fiscal year (FY) 2015 or will be new going forward in FY 2015 and beyond. There is a considerable overlap in the OIG’s 2014 reviews with its 2014 Work Plan. The OIG directs a vast majority of its resources toward safeguarding the integrity of the Medicare and Medicaid programs. As in previous years, the hospital sector has a number of initiatives included in the Work Plan. The following highlight some of these:

  1. Reconciliations of Outlier PaymentsCMS reconciles outlier payments based on the most current cost-to-charge ratio from hospitals’ associated cost reports. The OIG plans to assess whether CMS reconciled payments in a timely manner.
  2. New Inpatient Admission Criteria—In FY 2014, CMS implemented criteria for inpatient admissions known as the “2-Midnight Rule.” The OIG will review its impact on hospital billing, Medicare payments, and beneficiary copayments, as well as determining billing inconsistencies and financial incentives for inappropriate billing.
  3. Medicare Costs Associated with Defective Medical Devices—The OIG will review Medicare claims to assess costs that result from additional utilization of medical services associated with defective medical devices.
  4. Analysis of Salaries Included in Hospital Cost Reports—There continue to be concerns about the cost of executive salaries at hospitals. The OIG will review compensation in its cost reports in allowable provider costs to the extent that it demonstrates reasonable remuneration. Note: Medicare does not have limits on the salary amounts that can be reported by the hospital in the cost report.
  5. Medicare Oversight of Provider-Based Status—Medicare rules allow facilities owned and operated by hospitals to bill as hospital outpatient departments; however, the additional payments for services delivered at provider-based facilities may increase beneficiaries’ co-insurance liabilities. The Medicare Payment Advisory Commission (MedPAC) expressed the opinion that Medicare should seek to pay similar amounts for similar services. The OIG will assess the extent to which provider-based facilities meet CMS’ criteria and the impact provider-based status has on Medicare billing.
  6. Comparison of Provider-Based and Free-Standing Clinic—Medicare often makes higher payments to provider-based status facilities than to freestanding clinics for certain services, and the OIG will assess and compare the difference in Medicare payments between physician office visits in provider-based clinics and freestanding clinics for similar procedures.
  7. Duplicate Graduate Medical Education Payments—Prior OIG reviews have found that hospitals have received duplicate or excessive Medicare payments for graduate medical education (GME). The OIG assess whether hospitals received duplicate or excessive GME payments.
  8. Indirect Medical Education Payments—Teaching hospitals receive indirect medical education (IME) payments for each Medicare discharge to account for the higher indirect patient care costs of teaching hospitals compared to those of nonteaching hospitals. The OIG will assess whether hospitals’ IME payments were calculated properly according to federal regulations and guidelines.
  9. Outpatient Evaluation and Management Services Billed at the New-Patient Rate—Medicare payment rates vary for evaluation and management (E/M) services dependent on whether patients are new or established based on previous encounters with the hospital. Prior work found overpayments due to hospital use of new-patient codes when billing for services to established patients and OIG intends to revisit this area to verify whether payments were appropriate and will recommend recovery of overpayments.
  10. Nationwide Review of Cardiac Catheterization and Endomyocardial Biopsies—The OIG will review Medicare payments billed during the same operative session to determine whether the procedures were billed in accordance with Medicare billing requirements.
  11. Review of Hospital Wage Data Used to Calculate Medicare Payments (New)—In the past, the OIG identified hundreds of millions of dollars in incorrectly reported wage data and intends to review hospital controls for accurate CMS calculation of wage index rates for Medicare payments.
  12. Participation in Projects with Quality Improvement Organizations—CMS contracts with Quality Improvement Organizations (QIOs) to “improve the efficiency, effectiveness, economy, and quality of services delivered to Medicare beneficiaries,” and the OIG will review the extent and nature of hospitals’ participation in quality improvement projects with QIOs and the extent to which they overlap with projects from other entities.
  13. Oversight of Hospital Privileging—Hospitals participating in Medicare are required to have an organized medical staff that operates under bylaws approved by a governing body. The OIG will assess how hospitals evaluate medical staff candidates before granting initial privileges, including verification of credentials and review of the National Provider Databank.

The Center for Public Integrity

The Center for Public Integrity is a nonpartisan, nonprofit investigative news organization founded in 1989 by Charles Lewis. Its stated mission is to serve democracy by revealing abuses of power, corruption, and betrayal of public trust by powerful public and private institutions, using the tools of investigative journalism. It provides nonprofit digital news and does no advocacy work. On many occasions, I have found their work to be very useful and enlightening. In fact, in a recent posting (“Increased Regulatory and Enforcement of Medicare Advantage Plans“), I relied greatly on the work they have done. I believe the Center offers information and insights derived from investigative journalism that is not to be found in the popular media.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.