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The OIG 2017 Work Plan Includes Focus on Hospitals
Corridors Newsletter April 2017

5.1.2017

The U.S. Department of Health and Human Services (DHHS) Office of Inspector General (OIG) has issued its Work Plan for Fiscal Year 2017. The annual Work Plan provides a summary of new, revised, and continuing reviews for DHHS programs and operations, including Medicare and Medicaid. It describes ongoing audits, evaluations, and specific legal and investigative matters. The release of the Work Plan provides an opportunity for hospitals to review their own operations and practices while comparing them to the objectives in the Work Plan in order to identify areas for compliance improvement.

The OIG conducts investigative activities that involve allegations of fraud, waste, and abuse in all of DHHS’s programs. Medicare and Medicaid constitute a significant amount of its work. Areas that the OIG can investigate include billing for services not rendered, provision of medically unnecessary services and misrepresented services, patient harm, and the solicitation and receipt of kickbacks. In addition to performing investigations, the OIG is involved in legal matters including the exclusion of individuals and entities from participation in Medicare, Medicaid, and other federal health care programs; False Claims Act cases; civil monetary penalties related to false claims; and corporate integrity agreements. The OIG will also issue advisory opinions and guidance to providers.

In the 2017 Work Plan, the OIG has added several risk areas and revised one for hospitals participating in the Medicare program. The additional areas include hyperbaric oxygen therapy services and inpatient psychiatric facility outlier payments, while the OIG revised its focus on intensity modulated radiation therapy.

Specifically, for hyperbaric oxygen therapy services, the OIG noted that prior reviews indicated that in some cases beneficiaries received treatment for non-covered conditions, medical documentation did not adequately support treatment, and beneficiaries received more treatments than were considered medically necessary. The focus by the OIG will be to determine whether Medicare payments were made according to federal requirements.

Another new area of focus will be inpatient psychiatric facility outlier payments. An outlier payment is generally an additional payment by Medicare to hospitals for beneficiaries who incur unusually high costs. Inpatient psychiatric facilities can be either freestanding hospitals or specialized hospital-based units that provide psychiatric care on an urgent basis for those with an acute mental health crisis. The OIG noted that the number of claims with outlier payments increased by 28% between FY 2014 and FY 2015, with a corresponding increase in outlier payments of 19%, or approximately $84 million, for that same time period. The OIG will focus on determining whether these facilities complied with Medicare documentation, coverage, and coding requirements for stays that resulted in outlier payments.

While the OIG added topics to its Work Plan, areas of continuing focus include reconciliation of outlier payments, use of outpatient and inpatient stays under the two-midnight rule, payments for overlapping Part A inpatient claims and Part B outpatient claims, and selected inpatient and outpatient billing requirements. With respect to the two-midnight rule, the OIG is continuing its review of the impact of hospitals’ use of the rule for determining outpatient and inpatient stays. Another focus area that will continue into 2017 involves payments for overlapping Part A inpatient claims and Part B outpatient claims. This has been identified previously by the OIG as a risk area for noncompliance. The OIG will review payments for outpatient claims billed to Medicare Part B for services provided during inpatient stays to determine compliance with federal requirements.

In addition, the OIG has identified several new risk areas in which it will be conducting case studies and reviews. One case review will include Medicare Administrative Contractors (MACs) and will determine whether the MACs are settling hospital cost reports, specifically Medicaid patient days, properly for disproportionate share hospital payments. Another case review will involve the review of inpatient rehabilitation hospitals to determine whether patients benefited from intensive therapy and why certain patients were not able to participate and benefit from the intensive therapy.

What does this mean for you?

The OIG focuses its Medicare and Medicaid oversight on reducing improper payments and preventing and deterring fraud, waste, and abuse. The Work Plan provides insight into the areas that could come under scrutiny and ultimately can help guide internal compliance activities for your hospital.

These audits and the increased focus serve as an important reminder that hospitals must remain vigilant with their documentation. Also, it is essential that hospitals are familiar with applicable requirements for the provision of services and remain current with policies, rules, and regulations. It is also a good time for hospitals to review their compliance plan and internal policies to verify that they address all necessary requirements for the provision of services.

Hospitals need to take steps now and review their operations to be better prepared for the current regulatory and audit environment, to minimize their chances for negative audit findings, and importantly, to provide proper and quality care.

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