Late last week, the Department of Health and Human Services (HHS), Office of Inspector General (OIG), released its Fiscal Year 2010 Work Plan, identifying the priorities for new and continuing audits, evaluations, and investigations with respect to HHS programs. The FY 2010 Work Plan contains several significant new OIG initiatives that stand to impact a broad array of health care sectors and industries. We have highlighted some of those new initiatives below and encourage you to review the entire Work Plan.

Hospital Payments for Outpatient Services

Following previous work in which the OIG identified a “significant number of improper claims,” the OIG will review the appropriateness of payments for nonphysician outpatient services that are provided to beneficiaries shortly before or during Medicare Part A-covered stays at acute care hospitals. Generally, separate payments for outpatient diagnostic and certain other admissionrelated services rendered up to three days before an inpatient admission are not separately reimbursable.

Reliability of Hospital-Reported Quality Measure Data

Congress has mandated that hospitals report on specific quality measures established by HHS, and imposed reductions in Medicare payments for hospitals that fail to report this data. The OIG intends to review hospitals’ controls for ensuring the accuracy of data submitted pursuant to this requirement.

Coding and Documentation Changes Under the Medicare Severity Diagnosis Related Group System (MS-DRG)

OIG will examine coding trends under the new MS-DRG system to determine whether specific MSDRGs are vulnerable to potential upcoding.

Medicare Incentive Payments for E-Prescribing

In a review that “will lay a foundation” for the OIG’s reviews of payments authorized by the Recovery Act of 2009, including incentive payments to providers to implement electronic health records, the OIG will assess the extent to which incentive payments for e-prescribing activities were made to physicians in error in 2009. Only those physicians who report on CMS’s e-prescribing quality measures with respect to at least 50 percent of their Medicare Part B cases are “successful electronic prescribers” eligible for incentive payments. If erroneous payments were made, the OIG will assess CMS’s actions to remedy those payments and will use this information to assist CMS in preparing for future oversight.

Medicare Payments for Part B Imaging Services

OIG will review the practice expense component of selected imaging services under the Physician Fee Schedule, including the equipment utilization rate, to determine whether current payment levels accurately reflect the “actual expenses incurred and whether the utilization rate reflects current industry practices."

Laboratory Test Unbundling by Clinical Laboratories

OIG has developed a review to examine the extent to which clinical laboratories may be inappropriately unbundling laboratory profile or panel tests in an effort to maximize Medicare payments.

Physician Self-Referral for Durable Medical Equipment Services

OIG has commenced several reviews of Medicare payments for Durable Medical Equipment (DME) services to determine the extent to which DME referrals are tainted by inappropriate financial relationships with the referring physicians under the Physician Self-Referral (Stark) Law.

Payments for Off-Label Uses

There will be several reviews in this area. One review will focus on Medicare Part B payments for immunosuppressive drugs to determine whether these claims are being billed according to their FDA-approved labels. A separate review will look at the off-label use of anti-cancer chemotherapeutic regimens. Medicare may pay for “FDA-approved drugs used for off-label indications in anti-cancer chemotherapeutic regimens” only under certain circumstances. This particular review will focus on whether beneficiaries were first prescribed anti-cancer drugs approved for the indication being treated before being switched to an off-label treatment, and whether the patient actually showed any improvement with the on-label treatment such that Medicare might have saved money if the physician did not switch treatments.

Pharmaceutical Price Reporting Issues

OIG has committed to reviewing several issues of importance to pharmaceutical companies regarding price reporting. Specifically, there will be a review of selected manufacturers’ Average Manufacturer Price (AMP) and Best Price (BP) calculation methodologies and a review of the timeliness of AMP submissions; a review of the additional “inflation penalty” rebate calculation for innovator drugs to determine whether they are being properly calculated; and a review of the treatment of authorized generics in manufacturer AMP and BP calculations and their impact on Medicaid rebates.

Medicare Average Sales Price (ASP) Reporting

The Work Plan commits to reviewing CMS oversight of manufacturer ASP submissions, including an assessment of the impact of late ASP submissions. There also will be a review of the use of ASP-based reimbursement rates in the hospital outpatient setting, including reviewing the effect on hospitals eligible to access discounted pricing through the Public Health Service Act 340B program. Finally, OIG will begin comparing ASP rates to both the reported Widely Available Market Price and AMP.

Medicare Advantage and Part D Reviews

OIG has announced several new reviews in the area of Medicare Advantage and Part D. These projects will include a review of the extent to which Medicare Advantage plans oversee and monitor their contractors’ compliance with applicable Medicare laws and regulations; a review of the process that Part D sponsors and their pharmacy benefit managers (PBMs) use in auditing pharmacies; and a review of rebates negotiated between Part D sponsors/PBMs and pharmaceutical manufacturers in comparison to actual rebates paid so that OIG can analyze any discrepancies.

FDA Oversight of Foreign Clinical Trials and the IND Process Generally

Both Congress and the FDA are paying significantly greater attention to the regulatory controls over clinical development. Now the OIG will join that evaluation process as well. OIG will review the extent to which manufacturers use foreign clinical trials to support New Drug Applications (NDAs) and Biologic License Applications (BLAs) as well as how the FDA reviews such foreign clinical data. Also, the OIG will review FDA’s Investigational New Drug (IND) process. OIG will both assess the FDA’s timelines and identify challenges to the IND process.

FDA Oversight of Blood Establishments and the Complaint Investigation Process

 OIG also plans to review the extent to which the FDA oversees blood establishments to ensure the agency’s inspections and monitoring of licensed blood establishments are adequate. OIG will also conduct a review of FDA’s Complaint Investigation Process. This review will focus on whether complaints received by the agency are properly recorded and investigated as required by the FDA’s own internal policies.