The Office of the Inspector General at the Department of Health and Human Services ("OIG") annually publishes a "Work Plan" describing the activities and audits on which the OIG will focus for the protection of federal health program integrity, to further the OIG’s goals to detect and prevent waste, fraud, and abuse, and hold accountable those who do not meet program requirements. OIG released the Fiscal Year 2011 Work Plan on October 1, 2010. While there are several new priorities, it largely builds on the objectives contained in the 2010 Work Plan.

The OIG Workplan will also be discussed in an upcoming Pillsbury webinar to be held on a date to be announced in January.

Highlights of this year’s plan include new topics related to provider quality and billing concerns: safety and quality of intensity-modulated radiation therapy ("IMRT") and image-guided radiation therapy ("IGRT"); brachytherapy reimbursement; and replacement of devices received at no cost or reduced cost. In addition, OIG plans to continue its focus on many items contained in the 2010 Work Plan, including: Part A hospital capital payments; critical access hospitals; Medicare disproportional share payments; outlier payments; duplicate graduate medical education payments; hospital acquired conditions and readmissions; and Medicare excessive payments.

It is important for health care providers to update their compliance initiatives to ensure that their compliance priorities address those of the OIG.

New Priorities

  • Replacement Devices. If a hospital receives partial or full credit from a device manufacturer either because the manufacturer recalled the device or because the device was covered under warranty, the hospital is required to use modifiers on the inpatient and outpatient claims. Medicare is not responsible for the full cost of a replaced medical device when a hospital receives a credit from the manufacturer of 50 percent or more for a replacement device. OIG will be reviewing these situations to ensure that the modifiers are used when required.
  • Radiation Therapy Quality and Safety Review. OIG plans review the safety and quality of IMRT and IGRT, as well as payments for brachytherapy, a form of radiotherapy, to determine whether the payments are in compliance with Medicare requirements.
  • Payments for Non-Physician Outpatient Services Under the Inpatient Prospective Payment System ("IPPS"). Medicare does not make separate payments for outpatient diagnostic services and admission-related non-diagnostic services rendered up to three days before the date of an inpatient admission. In addition, payments to non-IPPS hospitals for inpatient claims should include diagnostic services and other services related to admission provided the day immediately preceding the date of the patient’s admission. According to the Work Plan, prior OIG analyses of these areas found a significant number of improper claims. As such, OIG will review the appropriateness of the payments for non-physician outpatient services shortly before or during hospital stays.

Continued Priorities

The 2011 Work Plan retains a number of focus areas for hospitals that were in the 2010 Work Plan:

  • Provider-Based Status. OIG will review cost reports of hospitals claiming provider-based status for inpatient and outpatient facilities to determine the appropriateness of the designation and the potential impact on the Medicare program. Hospitals receiving "provider-based status" often receive higher reimbursement when they include the costs of a provider-based entity on their cost reports.
  • Payments to Critical Access Hospitals ("CAH"). OIG will determine whether CAHs meet the conditions of participation and whether CAHs have met the designation criteria in the Social Security Act.
  • Medicare Excessive Payments. OIG will continue to review Medicare claims with unusually high payments to determine their appropriateness. Prior work by OIG has found that Medicare claims with unusually high payments may be incorrect for a variety of reasons. OIG will review certain outpatient claims in which payments exceeded charges and selected Healthcare Common Procedure Coding System ("HCPCS") codes for which billings appear to be irregular.
  • Medicare Disproportionate Share Payments ("DSH"). Medicare DSH payments have been gradually increasing. OIG will examine to determine whether these payments have been made in accordance with Medicare requirements.
  • Medicare Outlier Payments. A number of whistleblower lawsuits resulting in millions of dollars in settlements from hospitals charged with inflating Medicare claims to qualify for outlier payments have led to the increased scrutiny of these payments. OIG plans to review outlier payments and identify national trends and characteristics of hospitals with high or increasing rates of outlier payments.
  • Duplicate Graduate Medical Education ("GME") Payments. OIG plans to review the provider data from CMS’s Intern and Resident Information System to determine whether duplicate GME payments have been claimed.
  • Hospital Capital Payments. OIG plans to review Medicare inpatient capital payments to determine whether capital payments to hospitals are appropriate.
  • Hospital Acquired Conditions ("HAC"). OIG will also review the early implementation of the CMS HAC policy, which states that CMS will not provide additional payment for certain HACs. OIG will review the Medicare claims data to identify the number of beneficiary stays associated with HACs and determine their impact on reimbursement.
  • Hospital Readmissions. CMS currently rejects subsequent claims for beneficiaries who are readmitted to the same hospital on the same day. OIG will review claims to determine readmission trends and evaluate the effectiveness of the rule.

In addition, the Work Plan includes a number of focus areas for other providers and suppliers:

  • Place-of-Service Coding. OIG plans to review place-of-service coding on Medicare Part B claims for hospital outpatient departments.
  • ASC Payment Rates. OIG will also review the appropriateness of the methodology for setting ASC payment rates under the revised ASC payment system.
  • Excluded Providers and Deceased Beneficiaries. With respect to excluded providers, OIG will assess the extent to which Medicare paid for services ordered or referred by excluded providers. In addition, OIG will continue to review claims with dates of service that occur after the beneficiary’s death.
  • Independent Physical Therapists. OIG will focus on independent physical therapists with high utilization rates for outpatient therapy services to assess compliance with Medicare regulations.
  • Skilled Nursing Facilities. OIG will review Medicare Part A payments to Skilled Nursing Facilities ("SNFs"). Part A SNFs are paid based on a system that categorizes each beneficiary into a Resource Utilization Group ("RUG"). Previous reports have concluded that 26 percent of claims had RUGs that were not supported by medical records, which amounted to approximately $542 million in overpayments. OIG plans to conduct a review to determine the medical necessity of claims, and whether the claims were sufficiently documented and correctly coded during Calendar Year 2009.
  • Nursing Homes. OIG will continue its oversight of poorly performing nursing homes and review the extent to which nursing home residents are hospitalized. Hospitalizations of nursing home residents are quite costly to Medicare and may point to poor nursing home quality. A 2007 OIG study found that 35% of hospitalizations during a SNF stay were caused by poor quality of care or unnecessary fragmentation of services. In addition, OIG will determine the extent to which nursing homes have employed individuals with criminal records.
  • Home Health. OIG plans to review Part B payments for services and medical supplies provided to beneficiaries in home health episodes and examine the adequacy of controls established to prevent inappropriate Part B payments for services and medical supplies.