On October 1, 2007, the Department of Health and Human Services Office of Inspector General (OIG) issued its 2008 Work Plan, which sets forth the projects planned for the next fiscal year. Many of the audits, evaluations, and inspections included in the 2008 Work Plan are continuations from work begun in previous fiscal years. Although the OIG’s 2008 Work Plan does not include a list of planned investigations (which are driven in large part by calls to the OIG hotline and qui tam cases rather than by the agency itself), the list of upcoming audits, evaluations, and inspections does provide some insight into those areas that the OIG believes have the greatest potential for overpayments, fraud, and abuse.

The OIG’s 2008 Work Plan demonstrates that long-term care hospitals (LTCH) continue to be a focus of the OIG’s resources, with two new projects focusing on LTCHs for fiscal year 2008. In addition, there are a number of new projects focusing on Medicare Part D, including reviews to determine whether the Part D program is paying for drugs that are also covered under Medicare Part A or Part B. Among the other new projects this year are reviews of the appropriateness of Medicare bad debt claimed by certain providers, the appropriateness of Medicare payments to hospitals for new technology, and a review of “Never Events.”

Below is a summary of the new projects identified by the OIG for FY 2008.1 We have excluded from this summary those projects that were started in prior fiscal years.

  • Hospitals
  • Home Health Agencies
  • Nursing Homes and Other Long-Term Care Services
  • Physicians and Other Health Professionals
  • Medical Equipment and Supplies
  • Part B Drug Reimbursement
  • Part D Administration
  • Other Medicare-Related Projects
  • Medicare Advantage
  • Medicaid Services
  • FDA


— Review of the appropriateness of Medicare inpatient capital payments, including the methodology used to update the capital rates and the appropriateness of the payment level

— Review Medicare payments made to hospitals for new services and technologies, including whether hospitals’ claims for Medicare’s new technology payments were submitted in accordance with section 1886(d)(5)(K) and (L) of the Social Security Act and 42 C.F.R. §§ 412.87 and 412.88

— Review whether the special Medicare payment provisions that are applicable to patients who are transferred from a long-term care hospital (LTCH) to a co-located (i.e., on-site) provider and then directly readmitted to the LTCH were appropriately applied

— Review whether the special Medicare payment provisions that are applicable to LTCHs operated as hospitals within hospitals and LTCHs that are located on the same campus as another hospital were appropriately applied. The special payment provisions limit an LTCH’s admission from its host hospital (or the hospital on whose campus the LTCH is located). This rule, which is being phased in over a four-year period that began in October 2004, establishes a 25 percent threshold for Medicare patients (up to 50 percent for certain host hospitals that discharge more than 25 percent of all Medicare inpatient acute care hospital discharges in the hospital’s metropolitan statistical area) admitted from the host hospital each year. LTCH hospitals within hospitals are paid the LTCH PPS rates for patients admitted from the host hospital when those patients are within the applicable threshold, but are only paid the acute hospital PPS rate (which is approximately 50 percent to 70 percent lower than the LTCH PPS rate) for Medicare patients admitted from the host hospital above the applicable threshold.

— Review of Medicare disproportionate share (DSH) payments made to hospitals, including a review of the components included in the methodology used in calculating DSH payments and a determination of whether the hospitals’ classifications are appropriate. This audit will also examine the total amounts of uncompensated care costs that hospitals incur.

— Review of Medicare payments made to inpatient psychiatric facilities to determine whether appropriate adjustments were made for facilities that operate emergency departments.

— Review of Medicare bad debts claimed by acute care inpatient hospitals, LTCHs, inpatient rehabilitation facilities, inpatient psychiatric facilities, and skilled nursing facilities to determine whether they were reimbursable in accordance with 42 C.F.R. § 413.89, including whether recoveries of prior year write-offs were properly used to reduce the cost of beneficiary services for the period in which the recoveries were made

— Review of a sample of Medicare Part B claims and the associated medical records to determine the appropriateness of payments for diagnostic x-rays and interpretations performed in hospital emergency departments

— Review of the extent and adequacy of the Centers for Medicare and Medicaid Services’ (CMS) policies and procedures regarding the Joint Commission hospital accreditation process

— Review of States’ use of DSH payments to determine the extent to which federal DSH funding is used to pay for services provided to individuals aged 21 to 64 residing in institutions for mental disease which, by law, may not exceed a hospital’s uncompensated care costs

— Review whether States appropriately determined provider eligibility for Medicaid reimbursement

— Review of Medicaid DSH payment distributions, including the Medicaid inpatient utilization rate used to determine eligibility for Medicaid DSH payments

Home Health Agencies

— Review the accuracy of the data on the Home Health Compare web site maintained by CMS

— Review the accuracy of coding and claims for Medicare home health services, including a review of the accuracy of assignments to particular home health resource groups and identification of potential patterns of upcoding

— Review of home health agency (HHA) claims for Medicaid reimbursement to determine whether providers met the minimum standards and conditions for HHA participation and whether beneficiaries of HHA services met eligibility criteria

Nursing Homes and Other Long-Term Care Providers

— Review of skilled nursing facility (SNF) cost reports and evaluation of CMS’s oversight of Medicare expenditures contained in the cost reports

— Review of the coding and claims for Medicare reimbursement to determine the extent to which Resource Utilization Groups (RUGs) included on SNF claims are accurate and supported by the SNF residents’ medical records

— Review of States’ use of civil monetary penalties (CMP) received from nursing facilities for failing to comply with federal requirements related to the health and safety of nursing facility residents to determine whether States are correctly applying the CMP funds to programs that protect the health or property of nursing facility residents as required by Section 1919(h)(2)(A)(ii) of the Social Security Act

— Review of State and federal oversight of Medicaid funding of assisted living facilities

— Review of nursing homes’ use of the federally required Minimum Data Set (MDS) and Resident Assessment Protocols to develop plans of care for Medicaid residents

Physicians and Other Health Professionals

— Review of Medicare payments for psychiatric services to determine whether services provided were reasonable and medically necessary

— Review of services furnished by clinical social workers to hospital inpatients and SNF residents to determine whether the services were improperly billed separately to Medicare Part B

— Review of the appropriateness of Medicare Part B payments for physician services, which may include surgery, consultations, and home, office and institutional calls

— Review the appropriateness of Medicare payments for polysomnography services (sleep studies), including an examination of the factors contributing to the rise in Medicare payments for polysomnography

— Review improper payments and potential cost savings for Medicaid physical and occupational therapy services, including a review of medical necessity, billing improprieties, and provider qualifications

— Review whether psychiatric services provided in an inpatient setting are being properly billed to Medicare

— Review whether Medicare Part B long distance physician services are inappropriately billed for beneficiaries of home health and skilled nursing facilities

— Examine the extent to which providers are billing beneficiaries in excess of amounts allowed by Medicare requirements in violation of assignment rule, including whether providers may be “balance billing” beneficiaries in violation of Medicare rules

— Review of services and billing patterns in geographic areas with high utilization of ultrasound services for medical necessity; examine the service profiles, provider profiles, and beneficiary profiles in areas of high utilization of ultrasound services

— Review of services and billing patterns in geographic areas with high concentrations of independent diagnostic testing facilities (IDTF); examine the service profiles, provider profiles, and beneficiary profiles in areas of high concentration of IDTFs

— Review the extent to which Medicare physicians reassign their benefits to other entities, including an examination of the extent to which the physicians are aware of reassignment requested on their behalf

Medical Equipment and Supplies

— Review the appropriateness of Medicare payments to durable medical equipment (DME) suppliers that submitted claims with modifiers, including a review to determine whether the suppliers have appropriate documentation on file to support the claims

— Review of Medicare Part B payments for home blood glucose test strips and lancet supplies

— Review of DME claims paid by Medicare to determine the adequacy of medical records and other supporting documentation used by the Comprehensive Error Rate Testing program to support CMS’s FY 2006 DME error rate, including a review of whether payments for power wheelchairs, orthotics, and other medical supplies were appropriate, whether the providers’ and suppliers’ documentation support the claims, and whether the items were medically necessary and/or whether the beneficiaries actually received the items

— Review of Medicare Part B pricing for enteral nutrition therapy as compared to pricing available to nursing homes, individuals, and other purchasers

Part B Drug Reimbursement

— Review of claims for chemotherapy drug administration services to determine whether drugs for chemotherapy services were also claimed

— Review of Medicare Part B drug claims for certain drugs and biologicals that have very high Medicare reimbursement levels to determine whether these drugs and biologicals are billed at aberrantly high dosages, including a comparison of the amounts of drugs billed to generally accepted dosages

Part D Administration

— Review the propriety of drug claims for individuals who are receiving hospice benefits under Medicare Part A and drug coverage under Medicare Part D in order to determine whether Part D payments are correct and not duplicated in hospice daily per diem amounts

— Review CMS’s controls to prevent duplicate Part D claims for the same beneficiary, particularly when a beneficiary changes plans, tries to enroll in more than one plan, or tries to enroll in a plan and a retiree-subsidy covered plan

— Review of payments made under Medicare Part D are correct and not duplicated in Part A and Part B

— Evaluation of whether there is sufficient coordination and oversight to prevent duplicate payments by Part B and Part D for drugs

— Review whether prescription drug plans and Medicare Advantage Prescription Drug Plans enrolled qualified beneficiaries into a medication therapy management program as required by 42 CFR § 423.453(d)(2) and whether the plans’ claims for administrative costs related to such programs were supported, reasonable, and allowable

— Review of aberrant Part D claims to determine how those claims relate to pharmacists, physicians, and/or beneficiaries, including a review of processing of claims for Schedule II drugs

— Review of whether Part D enrollees who reached the Part D catastrophic coverage limit were appropriately charged for drugs during the catastrophic coverage phase

— Review of the methodology used by CMS to review and approve bids submitted by Part D plan sponsors

— Review whether payments made to Part D plans are for deceased beneficiaries

— Comparison of drug prices under Part D and Part B for drugs covered under both programs

— Review of the coordination of benefits systems used by Medicare Part D prescription drug plans

— Review Medicare Part D utilization by dual eligible beneficiaries for possible inappropriate drug overutilization

— Review of the adequacy of Part D explanation of benefits (EOB) forms

— Review of CMS’s beneficiary complaint-monitoring systems for Medicare Part D prescription drug plans

Other Medicare-Related Projects

— Review of whether providers are complying with Medicare billing rules regarding separately billable laboratory services, including automated multichannel chemistry tests, under the End Stage Renal Disease (ESRD) program

— Review of whether Medicare payments were made to terminated providers and suppliers after their termination date for participating in the Medicare program

— Review of the extent to which ambulance services are used to transport ESRD beneficiaries to and from dialysis facilities, including the percent of the population using ambulance services, the feasibility of freestanding ESRD facilities to contract with ambulance suppliers, and the coverage policies of other health insurance programs

— Review of therapy services billed to Medicare Part B for home health beneficiaries in order to identify payments to outside suppliers that are included in the home health agency prospective payment and to examine the controls in place to prevent inappropriate Part B payments for such therapy services

— Review of the methodology used to calculate ambulatory surgical center payment rates — Review of Medicare payments for beneficiaries who have other insurance in order to assess the effectiveness of the procedures in place to enforce Medicare’s Secondary Payer rule

— Review of the incidents, facility response, and payments for “Never Events,” including an assessment of current State and voluntary reporting systems and CMS’s oversight of and processes for identifying and responding to “Never Events”

— Assessment of CMS’s efforts to promote the implementation and use of health information technology in physicians’ offices through Quality Improvement Organizations (QIOs)

Medicare Advantage

— Review of Medicare Advantage organization bids and supporting documentation to determine whether payments made to these organizations are correct and supported by the level of service claimed

— Review of the accuracy of frailty payment adjustments for Programs of All-Inclusive Care for the Elderly (PACE) organizations

— Examine the extent to which payments are made to Medicare Advantage plans for deceased beneficiaries

— Examine CMS and Medicare Advantage plan communications and beneficiary understanding of the lock-in provisions which limit the number of times and the time of year that beneficiaries may change health plans

— Review of CMS’s oversight of Medicare Advantage Plans’ marketing and sales practices, including an assessment of the sanctions imposed by CMS for marketing abuses, CMS’s efforts to work with the States to curb abuses, and the extent of complaints about such plans’ marketing and sales practices

Medicaid Services

— Review of children enrolled in Medicaid managed care plans to determine how the plans screen, refer, and provide mental health services to children under the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) benefit and to determine whether children received required mental health screenings

— Review of States’ use of the Average Manufacturer Price (AMP) to set Medicaid pharmacy reimbursement amounts

— Review of pharmacies’ ability to purchase Medicaid drugs at or near the AMP

— Review how changes to the Medicaid federal upper limit program have impacted Medicaid reimbursement to pharmacies to determine whether pharmacies are able to acquire drugs at or below the new federal upper limit amounts

— Review of Medicaid payments for medical equipment, including whether beneficiaries received the medical equipment billed on their behalf and whether the equipment was actually used and was necessary for the beneficiary’s condition

— Review of States’ use of the Indian Health Service (IHS) all-inclusive rate for reimbursing Medicaid prescription drug services provided by IHS and tribes

— Review of the appropriateness of Medicaid payments for physical therapy and occupational therapy services, including whether the services were medically necessary, billed properly, and rendered by qualified providers

— Review of supplemental payments under the upper payment limits (UPL) to determine whether States have ceased use of inappropriate financing mechanisms

— Review of the appropriateness of States’ level of care determinations in determining whether Medicaid beneficiaries are eligible for home- and community-based waiver services

— Review of States’ provider enrollment safeguards in enrolling providers to participate in the home- and community-based waiver program

— Review of State and federal oversight of the home- and community-based waiver program

— Review of States’ health care-related taxes imposed on Medicaid providers to determine whether the taxes comply with federal law

— Review of providers (including hospitals and independent laboratories) to determine whether there are Medicare and/or Medicaid overpayments in patient accounts with credit balances

— Review of CMS’s State Medicaid programs’ efforts to ensure Medicaid coverage for eligible working disabled individuals


— Review of FDA’s oversight and review of off-label drug promotion and enforcement

— Review the FDA’s adverse event reporting system for medical devices

— Review of FDA’s oversight and discipline of clinical investigators found to have engaged in research misconduct

— Review of the financial interests of clinical investigators disclosed to the FDA, including the extent to which applicants monitor their clinical investigators for financial interests and the extent to which FDA oversees the process