The U.S. Department of Health and Human Services (HHS)--Office of Inspector General (OIG) released its 2015 Work Plan (Work Plan) on October 31, 2014, and included a broad range of focus areas featuring, among other things, adverse events and other quality issues at long-term care providers and significant oversight of Affordable Care Act (ACA) initiatives.

OIG Work Plans, released annually, summarize new and ongoing areas of regulatory review, and indicate areas of focus for the OIG in the coming year. In general, Work Plans provide healthcare stakeholders with a road map of regulatory focus, and signal areas where government audits, investigations and evaluations may be likely.

Providers whose policies, procedures and operations have not met the regulatory requirements that underpin the areas of review outlined in the Work Plan (in addition to failing to meet any other necessary requirements, whether or not named in the Work Plan) can be subject to assessments, civil monetary penalties and administrative sanctions, where appropriate.

In the Work Plan, areas of focus are divided by topic, and new issues are highlighted. In keeping with past years’ Work Plans, oversight relating to ACA initiatives includes the greatest number of new focus areas. Although OIG focus areas are generally on state and federal implementation of ACA initiatives, as many such initiatives are moving from their inception to early operational stages, it will be especially important for stakeholders to ensure that they are tracking and complying with any new regulatory guidance relating to the ACA.

For non-ACA areas of focus, the Work Plan includes a number of new issues, outlined below, and discusses focus areas that have been featured in past Work Plans that will remain priorities in 2015. While stakeholders should familiarize themselves with areas where regulators will be newly focusing their attention—the focus of this article—it is equally important to ensure compliance in areas that have consistently been considered key targets for regulator attention.

Key takeaways from the 2015 Work Plan are as follows:

1. Hospital-Related Policies and Practices

This year, the Work Plan added two new areas of focus in hospital-related policies and practices. The first is a review of hospital wage data used to calculate Medicaid payments, with a specific focus on how hospitals control wage data reporting, which is used to calculate Medicare payments. The Work Plan said incorrectly reported wage data totaled in the hundreds of millions, resulting in a change in policy on how hospitals report deferred compensation costs by the Centers for Medicare & Medicaid Services (CMS).

In addition, OIG added adverse and temporary harm events in post-acute care for Medicare beneficiaries receiving care in long-term care hospitals (LTCHs) to the Work Plan for 2015. The Work Plan provided that LTCHs are the third most common type of post-acute facility, accounting for around 11 percent of Medicare costs for post-acute care.

Adding adverse events in LTCHs to the Work Plan–which already provides for monitoring of such events in inpatient rehabilitation facilities–is in line with the sharp focus that has been placed on long-term care facilities in general in recent years. OIG, CMS and regional and local regulators have worked to root out fraud, bolster quality and control costs at these providers, which care for some of the most clinically complex (and costly) federal program beneficiaries.

In addition to the new areas of OIG inquiry, the Work Plan included areas of past inquiry that made headlines in 2014. For instance, the Work Plan noted that OIG will begin determining the impact of the controversial “two-midnight” rule, which provides that physicians should admit as inpatients only individuals who are expected to need at least two nights of hospital care. The Work Plan states that “previous OIG work identified millions of dollars in overpayments to hospitals for short inpatient stays that should have been billed as outpatient stays.” It also notes that the rule should impact hospital billing, Medicare payments and the calculation of co-payments.

Currently, the two-midnight rule’s enforcement mechanism is limited to the Probe and Educate process. In April, its enforcement date was extended through March 31, 2015. For providers hoping that enforcement would remain limited, the rule’s mention in the Work Plan may well signal the start of widespread enforcement of the unpopular legislation.

Another highly publicized area of inquiry relates to compounded drugs, which drew national attention after a contaminated compounded product caused a spinal meningitis outbreak in 2012. The Work Plan notes that OIG will evaluate whether Medicare’s oversight of acute care hospitals that compound products on-site addresses recommended practices for compounding oversight. While this focus area is currently on Medicare oversight of acute facilities that prepare compounded products, provider audits may not be far behind.

2. Nonhospital Providers

The Work Plan also identified as a new focus area independent clinical laboratory billing, noting that the aim of the inquiries would be to root out clinical laboratories that routinely submit improper claims to Medicare and request return of overpayments. The addition of this area to the Work Plan is in response to past audits and investigations, which have singled out clinical laboratories as high risk for noncompliance with Medicare billing requirements.

3. Part A and B Program Management

The Work Plan calls for scrutiny of the Pioneer Accountable Care Organization (ACO) Model, established as part of the ACA effort to coordinate care for—and reduce program costs related to—Medicare fee-for-service beneficiaries. OIG states that it will conduct risk assessments of internal controls over administration of the model. As discussed in greater detail below, this area of review focuses on program administration, rather than participating providers themselves.

4. Medicare Part D

With respect to Medicare prescription drug coverage under Part D, the Work Plan recommends that CMS improve its oversight of Medicare Part D plan sponsors’ Pharmacy and Therapeutics (P&T) committee conflict-of-interest procedures, in order to ensure that P&T committee members are not improperly influencing the prescription of certain drugs. The Work Plan cited an OIG report which found that CMS’s oversight of plan sponsors’ P&T committee compliance was lacking.

5. Medicaid Compliance

Of the four new areas of OIG focus relating to fee-for-service Medicaid, three were related to reforms under the ACA. In 2015, OIG plans to review whether states are collecting prescription drug rebates from pharmaceutical manufacturers for Medicaid MCOs. Prior to the enactment of the ACA, drugs dispensed to Medicaid MCO enrollees were excluded from this requirement.

OIG also will be reviewing payments made to states under the Community First Choice (CFC) state plan option, which was added by the ACA and permitted states to provide home- and community-based services and supports to individuals who would otherwise have required institutional care. Review in this area will focus on whether payments are proper and allowable.

In addition, OIG will be reviewing the expenditures states claimed under the Balancing Incentive Program (BIP), a program introduced in the ACA, which provided enhanced federal matching funds for eligible expenditures on long-term services and supports. In general, funds provided under the BIP were contingent on eligible states agreeing to make certain structural changes designed to increase access to long-term services and supports, and they were required to use funds to provide new or expanded offerings of such services.

In an area unrelated to the ACA, the OIG indicated that it would focus on transfers of Medicaid beneficiaries from group homes and nursing facilities to hospital emergency rooms, noting that high transfer incidents can correlate to poor quality of care.

With respect to Medicaid managed care, the Work Plan stated that OIG would seek to identify Medicaid managed care payments made on behalf of deceased beneficiaries and on behalf of beneficiaries ineligible for Medicaid.

6. ACA-Related Reviews

The Work Plan provides for broad oversight of ACA programs across HHS, in an effort to ensure that such programs meet the aims of providing access to health insurance, improving quality of and access to healthcare, and lowering healthcare costs. The Work Plan states that OIG is prioritizing its 2015 work in three main areas: the health insurance marketplaces (including financial assistance payments), federal program reforms and public program grant expenditures. In general, areas of OIG inquiry focus on reforms at the program management, rather than provider-specific, level.

The Work Plan indicates that areas of focus relating to health insurance marketplaces, financial assistance payments and market stabilization payments will be whether taxpayer funds are being used for intended purposes. This includes a range of review areas encompassing, but not limited to:

  • The accuracy of advance premium tax credits (APTCs) and cost-sharing reduction payments made to individual enrollees in the exchange marketplace;
  • Review of ACA establishment grants for state insurance marketplaces to ensure that the marketplaces were implemented in accordance with the terms and conditions of federal agreement; and
  • Whether CMS internal controls over APTCs are sufficient.

The Work Plan provides that OIG will review the effectiveness and efficiency of marketplace eligibility and enrollment systems. Inquiries will be made relating to premium tax credits, eligibility determinations and inconsistencies in data reported by applicants versus data received from federal sources.

Inquiries will also be made regarding the management and administration of insurance exchange marketplaces and of system controls to ensure that consumer data is kept safe.

In addition to the specific areas of focus set forth in the Work Plan, and summarized above, the Work Plan states that OIG will initiate “at least 5-10” additional reviews addressing ACA programs. According to the Work Plan, the reviews could focus on a range of topics, including emerging marketplace issues, Medicaid expansion, Medicare payment and delivery models or new grant programs.

7. No New Updates, Effective Date

There were no new areas of focus in the Work Plan in the following subject matter areas:

  • Nursing homes
  • Hospices
  • Home health services (Medicare)
  • Medical equipment and supplies
  • Prescription drugs
  • Part A and B contractors
  • Information technology security, protected health information and data accuracy
  • Medicare Advantage
  • Home health services and community-based care (Medicaid)
  • State management of Medicaid
  • Medicaid information system controls and security

The Work Plan, which is effective as of October 2014, also lists CMS-related legal and investigative actions, and addresses areas of compliance focus in more than 100 HHS-administered programs, including Administration for Children and Families, Centers for Disease Control and Prevention, Food and Drug Administration, and National Institutes of Health.

For further information on all aspects of the Work Plan, a full copy is available at