The Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently published its Work Plan for fiscal year 2017 (2017 Work Plan), which furnishes key guidance to providers and suppliers (collectively referred to here as “providers”) and others doing business in the health care industry on the agency’s enforcement priorities for the upcoming year. Any issue that appears on the 2017 Work Plan likely will be subject to additional government scrutiny and thus creates the potential for increased exposure. As a result, providers should ensure that their compliance work plans and scheduled audit activities take into account the pertinent risk areas that have been identified by the OIG. Notably, the 2017 Work Plan contains numerous new and revised topics related to hospitals, nursing homes, hospice, laboratories, medical devices, supplies and pharmaceuticals, as well as various other issues.

While it is too early to tell what impact the Trump administration ultimately will have on the OIG’s enforcement activities, various laws and regulations continue to require the prompt return of overpayments and create the risk of potential False Claims Act liability, exclusion, and civil monetary penalties. To reduce the risk of exposure, health care organizations should carefully review the 2017 Work Plan to make sure that they are in compliance with all relevant issues.

The Work Plan is a lengthy document, divided into numerous subcategories, and it is important to review all potentially relevant areas. For example, issues relevant to hospitals may be listed under Medicare Parts A and B, Medicare Parts C and D, Medicaid, and other categories as well. In addition to new topics added in 2017, issues that remain on the Work Plan from prior years are still under examination and remain important to monitor. Moreover, even issues listed as “completed,” are often subject to ongoing government review or enforcement. As a result, compliance officers and legal counsel are well advised to review the entire 2017 Work Plan. Some of the significant 2017 initiatives relevant to particular providers and suppliers are summarized below.

Hospitals and Health Systems
The Work Plan announced four new hospital initiatives that the OIG will undertake in 2017. First, the OIG will review provider reimbursement for hyperbaric oxygen (HBO) therapy services to determine whether Medicare payments were in compliance with federal regulations. Prior OIG reports raised concerns that (i) beneficiaries had been treated for noncovered conditions, (ii) the medical documentation did not adequately support HBO treatments, and (iii) beneficiaries received medically unnecessary treatments.

The OIG also introduced an initiative to review Medicaid patient days claimed by hospitals. Because Medicare disproportionate share hospital payments are based on Medicaid patient days reported by hospitals on Medicare cost reports, the OIG is concerned that incorrect Medicaid patient days claimed could potentially result in overpayments.

The third new hospital initiative focuses on outlier payments to inpatient psychiatric facilities, whether freestanding or specialized hospital-based units. Citing a 28% increase in the number of inpatient psychiatric claims with outlier payments from FY 2014 to FY 2015, the OIG plans to conduct a nationwide review to determine if inpatient psychiatric facilities are complying with Medicare documentation, coverage, and coding requirements for stays with outlier payments.

The OIG also plans to evaluate a sample of inpatient rehabilitation hospital admissions to determine whether the patients actually participated in, and benefited from, intensive therapy. Further, the 2017 Work Plan describes a revised review for intensity-modulated radiation therapy (IMRT) that will determine whether Medicare outpatient IMRT payments complied with applicable requirements.

In addition to the OIG’s new initiatives, for the second consecutive year, the agency will review hospitals’ use of outpatient and inpatient stays under Medicare’s controversial two-midnight rule, and will examine the Centers for Medicare and Medicaid Services’ (CMS) validation of hospital-submitted quality reporting data. The OIG also will continue its nationwide review of cardiac catheterizations and endomyocardial biopsies, which has been on the OIG’s work plan for several years. Other long-standing hospital-related issues involve review of the hospital wage data used to calculate Medicare payments, Medicare costs associated with defective medical devices, comparison of provider-based and free-standing clinics, reconciliations of outlier payments, preparedness and response to high-risk infectious diseases, duplicate graduate medical education (GME) payments, outpatient dental claims, payments for kwashiorkor patients and selected inpatient and outpatient billing requirements.

Nursing Homes
The OIG’s new initiatives for nursing facilities focus on both quality and payment issues. One new review will assess the incidence of neglect and abuse of Medicare patients being treated in skilled nursing facilities, particularly whether these events were reported and investigated in compliance with federal and state law. Another review will evaluate whether State agencies are investigating the most serious nursing home complaints within the required timeframes.

The OIG also will be examining skilled nursing facility (SNF) reimbursement for therapy services in light of prior OIG reviews that found that beneficiaries were being provided unnecessary and excessive therapy services. SNFs assess patients’ needs for therapy and care using a tool called the Minimum Data Set (MDS) that classifies each patient into a resource utilization group (RUG) for payment. The OIG will be reviewing the documentation at certain SNFs to determine if it meets the requirements for the RUG at issue.

A revised initiative focuses on national background checks for long-term care employees, while projects remain related to the SNF prospective payment system requirement for a 3-day qualifying inpatient hospital stay and a review of nursing homes with high rates of patient transfers to hospitals for potentially preventable conditions.

Hospice Initiatives
There are three new hospice initiatives in the 2017 Work Plan. One project involves an evaluation of billing documentation and medical records to determine if payments for hospice services complied with Medicare requirements. In addition, the OIG has initiated an audit to determine whether registered nurse visits to the homes of Medicare beneficiaries receiving hospice services occurred every 14 days as required. Lastly, the OIG will provide a summary of OIG evaluations, audits, and investigations on hospices, focusing on payment, compliance, oversight, and quality concerns.

Medical Equipment and Supplies
The 2017 Work Plan contains several new initiatives related to medical equipment and supplies. The OIG will conduct a study on inappropriate Medicare Part B payments for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) provided during non-Part A stays in a SNF, i.e., after a beneficiary’s first 100 days in a SNF. This initiative will also include a review of CMS efforts to recoup any such inappropriate payments from suppliers.

Another review newly added in 2017 relates to positive airway pressure (PAP) device supplies. In light of prior audit findings that suppliers automatically shipped PAP supplies without physician orders for refills, the OIG will review claims for frequently replaced PAP device supplies to determine whether Medicare requirements are being satisfied, e.g., whether there is appropriate documentation for medical necessity and frequency of replacement. Numerous other audit topics remain related to issues such as orthotic braces, osteogenesis stimulators, power mobility devices, and nebulizer machines and related drugs.

Prescription Drugs
New OIG reviews related to prescription drugs appear in various places throughout the 2017 Work Plan, including the sections on Part B, Part D and Medicaid. In connection with Part B, the Medicare Claims Processing Manual provides policy, effective January 1, 2017, tracking the amount of reimbursed waste of Part B drugs and biologicals in single-use vials through the use of a new Medicare “JW” claims modifier. Under a new Work Plan initiative, the OIG will use this data to determine the amount of waste for the 20 single-use-vial drugs with the highest amount paid for waste.

In addition, the OIG will calculate the amount the government could collect from drug manufacturers if Medicare Part B had an inflation-indexed rebate program similar to that of Medicaid. As part of this audit, the OIG will review 50-100 Part B drugs and calculate the potential savings under various scenarios. Another long-term (and continuing) Part B drug audit relates to payments for immunosuppressive drug claims with “KX” modifiers.

In the section on Part D, the 2017 Work Plan describes a new rebate-related initiative. Currently, manufacturers often do not pay rebates for Part D prescriptions filled at 340B covered entities and contract pharmacies because the manufacturers are already providing a discount on the purchase price of the drug. However, the Part D program does not share in these purchase discounts. The OIG will review the savings that would result if Medicare Part D adopted rebate requirements similar to Medicaid’s. In another new Part D initiative, the OIG will review and identify pharmacies (and associated prescribers) with questionable Part D billing for compounded topical drugs. Another new audit relates to Part D payments for service dates after beneficiaries’ dates of death. Continuing Part D audits include those related to price increases for brand-name drugs, pharmacy enrollment, and documentation of pharmacies’ drug event data.

Other Providers and Suppliers
The 2017 Work Plan lists a large number of projects under the category of “Other Providers and Suppliers.” The new initiatives in this area include an audit related to transitional care management and another related to chronic care management, as well as a review of data submitted under the Physician Payments Sunshine Act to determine how much Medicare paid for pharmaceuticals and DMEPOS ordered by physicians with financial relationships with group purchasing organizations (GPOs) and drug manufacturers. Revised projects relate to ambulance services, inpatient rehabilitation facility payments, and histocompatibility laboratories (which provide testing related to bone marrow and solid organ transplantation). Various ongoing projects involve financial interests reported under the open payments program, ambulatory surgical centers (ASCs), payments for Medicare services and supplies referred or ordered by physicians, anesthesia services, selected independent clinical laboratory billing requirements, physical therapists, portable x-ray equipment, and sleep disorder clinics.

The fact that the OIG adds an issue to the Work Plan generally indicates government concern that there are compliance violations in this area. The Work Plan audit process educates government investigators and attorneys, making it much more likely that the issue will become a focus for government enforcement going forward. Moreover, government investigators are much more likely to infer that compliance violations in areas identified in the Work Plan are willful, i.e., the provider should have known this was a high risk area that had to be carefully handled to ensure compliance. As a result, providers should be sure to use the 2017 Work Plan as a guide to their compliance activities for the upcoming year.