On October 1, 2010, the Department of Health and Human Services (HHS), Office of Inspector General (OIG) released fiscal year 2011 Work Plan (Work Plan). The 2001 Work Plan provides an overview of priority areas in which the OIG intends to focus its enforcement activities with respect to programs and operations of HHS in the upcoming fiscal year. Physicians and other providers covered by this Work Plan should use the document as a guide in prioritizing and updating their own current compliance efforts.

These articles summarize areas in the 2011 Work Plan that are most relevant to physician practices. Many areas addressed in the 2011 Work Plan are consistent with items included in previous years’ work plans. In fact, for 2011, the Work Plan includes very few new initiatives as part of the OIG focus for 2011.  

The majority of the relevant provisions affecting physicians can be found in § I(i) Medicare Part A and Part B of the Work Plan. Areas of focus include the following.

Provider B Status Cost for Inpatient and Outpatient Facilities

For physicians who have become part of a hospital system, the Work Plan indicates that the Office of Audit Services (OAS) will review cost reports for hospitals that are claiming provider-based status for inpatient and outpatient facilities. This provision is particularly important for physicians who have been acquired by hospitals (and the hospitals that have acquired those physician practices) and whose services are billed under the Medicare Part B, as provider- based services, which entitles the hospital for entire reimbursement for the services. As this area has been identified as one ripe for potential abuse, its inclusion in the Work Plan is not surprising.

Place of Service Areas

As a repeat item, the Work Plan indicates the intent to review physician coding of place of services on Medicare Part B claims for services provided in ambulatory surgery centers (ASC) and hospital outpatient departments, as different levels of payment apply based on the site of service. Therefore, OAS is interested in determining whether there is proper coding taking place for services provided in ASCs and hospital outpatient departments.

Ambulatory Surgery Center Payment System

The Work Plan calls on OAS to examine changes to the revised ASC payment system and the rate-setting methodology used to calculate ASC payment rates. In large part, this item is a follow up on Section 626(b) of the Medicare modernization act, which required the Secretary to implement a revised payment system for ASC surgical services. This item could have significance for physicians who provide services or have ownership interests in ASCs.

Coding and Payments for Evaluation and Management Services

The Work Plan includes two items directly related to Evaluation and Management (E&M) Services. These items included a global review of E&M claims and payments to determine trends and justifications for certain codes and payments. In large part, these two items are included on the basis that E&M coding represents 19 percent of all Medicare payments—an expenditure of $25 billion. The Work Plan specifically notes that Medicare contractors are noticing an increased frequency of medical records with identical documentation across services. This concern potentially is problematic for providers using electronic health records because one of the benefits of such systems is that they ensure completeness of the records by a consistent format. However, as noted by the government, this consistency may be an indicator of fraud or other improprieties, if the physician is not actually performing the service necessary to support the claim.  

Evaluation and Management Services During Global Surgeries

As a recurring area of concern, this item focuses on E&M services provided by physicians that should be reimbursed as part of global surgery fee, rather than warranting a separate payment. OAS will focus on whether industry practices have changed since development of the global surgery fee concept was developed in 1992.

Medicare Payments for Part B Imaging Services

This new item is designed to review Medicare payments for Part B imaging services, particularly with respect to practice expense and utilization rates. OAS is interested in determining whether Medicare payments reflect the expense incurred and whether utilization rates reflect industry practices.

Billing and Affordable X-Ray Suppliers

The Work Plan calls for a review of portable x-ray suppliers with unusual claim patterns to identify questionable claims. The Office of Evaluations and Inspections (OEI) will examine all four components of these services— technical, professional, setup, and transportation—and the billing patterns of suppliers to identify those that merit additional scrutiny.

The Appropriateness of Medicare Payments for Sleep Studies

Medicare will follow-up on previous studies of the appropriateness of Medicare payments for sleep tests provided in clinics, which showed improper payments when certain modifiers are not reported with sleep tests. Additionally, as a new focus, OEI will examine factors contributing to a $173 million rise in payments for these studies over an eight-year period, along with provider compliance with Medicare requirements for these studies.

Excessive Payments for Diagnostic Tests

As a new item, the Work Plan charges OAS with reviewing Medicare payments for high cost diagnostic tests to determine whether they were medically necessary and whether they were ordered by primary care and specialty care physicians for the same treatment.

Bundling of Lab Tests & Trends in Lab Utilization

In 2011, OAS will be focusing to the extent to which clinical laboratories inappropriately unbundled laboratory profile or panel tests to maximize Medicare payments. This item is a new start issue and goes handin- hand with another item on the Work Plan to examine laboratory utilization trends. This second item is included in the Work Plan as a result of a 92 percent increase in Medicare payments for lab services over a 10-year period (1992–2008) to the tune of $7 billion payments in 2008 for such tests.

Independent Diagnostic Testing Facilities

The Work Plan includes several repeat items with respect to independent diagnostic testing facilities (IDTFs), namely the geographic location of those facilities and compliance with Medicare standards. OEI will focus on billing patterns in areas with a high density of IDTFs and IDTFs that were not compliant with sleeted Medicare standards, as well as the IDTFs’ compliance with regulatory requirements and billing patterns. This area of focus is attributed to a previous OIG review in 2006, which found improper payments totaling $71.5 million.

Medicare Providers, Compliance with Assignment Rules

OEI is charged with reviewing the extent to which providers are complying with assignment rules to determine whether beneficiaries are inappropriately billed in excess of amounts allowed by Medicare requirements. The Work Plan also indicates that OEI will assess beneficiaries’ awareness of rights and responsibilities of potential billing violations and Medicare coverage guidelines.


In two portions of the Work Plan, the OIG has indicated its intent to review usage of modifiers, specifically, the GA, GZ, and GY modifiers. For the GA or GZ modifier, the OEI will focus on whether the services were medically necessary. For example, a recent OIG study found that Medicare paid 72 percent of pressure-reducing support surface claims with GA or GZ modifiers, totaling $4 million in potentially inappropriate payments. In addition, part of the Work Plan indicates a focus on modifier GY for claims for services not covered by Medicare. In fiscal year 2008, Medicare received more than $75.1 million in claims with this modifier totaling $820 million. Accordingly, OEI will examine patterns and trends of physicians’ and suppliers’ use of modifier GYs.

Error-prone Providers

As a new item, OAS will review claims submitted by error-prone providers identifying using the Comprehensive Error Rate Testing (CERT) Program data. The CERT methodology helped identify providers that consistently submitted erroneous claims over a four-year period. OAS will select providers based on top-dollar error amounts, match them against the National Claims History file to determine the total dollar amount of claims paid, conduct a medical review of sample claims, and request refunds on projected overpayments.

Although the 2011 Work Plan does not contain any particular surprise items for physician practices’ compliance efforts, the continued focus on compliance in certain areas (particularly in light of the error-prone provider item and Patient Protection & Affordable Care Act of 2010 (PPACA) changes with respect to prosecutable intent, mandatory repayment, and mandatory compliance programs) should be high priorities for compliance monitoring and corrective action. For these reasons, compliance has been even greater in importance than it has in years past and physicians should take advantage of the opportunity to address these areas identified by Medicare.