2011 OIG Work Plan Targets New Risk Areas for Hospitals

Hinshaw Health Law Alert

October 20, 2010
Hinshaw Health Law Alert

The U.S. Department of Health and Human Services’ Office of Inspector General (OIG) is responsible for deterring fraud and abuse by identifying systemic weaknesses and vulnerabilities that can be mitigated through corporate compliance programs. The OIG also pursues criminal convictions and recovers damages and penalties through civil and administrative proceedings from individuals and entities that commit fraud or abuse.

Each year, the OIG publishes a work plan to identify and prioritize specific projects for future implementation. The OIG creates the work plan after completion of comprehensive financial and performance audits that identify systemic weaknesses that give rise to fraud, waste and abuse. The OIG Work Plan for Fiscal Year 2011 (2011 OIG Work Plan) identifies risk areas that the OIG will study, audit and/or investigate in fiscal year 2011, and provides valuable guidance for identifying high-risk compliance areas that apply to specified types of health care organizations. Health care organizations can mitigate their risk of False Claims Act or other fraud and abuse liability by assessing their operations in the context of current government priorities and identifying and correcting deficiencies in legal compliance. Listed below are summaries of the most significant new OIG Medicare Advantage Plan projects that will be implemented in 2011.

Provider-Based Status for Inpatient and Outpatient Facilities

The OIG will review cost reports of hospitals claiming provider-based status for inpatient and outpatient facilities. The OIG will also determine the appropriateness of the provider-based designation and the potential impact on the Medicare program and its beneficiaries of hospitals improperly claiming provider-based status for inpatient and outpatient facilities.

Hospital Payments for Nonphysician Outpatient Services Under the Inpatient Prospective Payment System

The OIG will review the appropriateness of payments for nonphysician outpatient services that were provided to beneficiaries shortly before or during Medicare Part A-covered stays at acute care hospitals.

Noninpatient Prospective Payment System Hospital Payments for Nonphysician Outpatient Services

The OIG will review the appropriateness of payments for nonphysician outpatient services that were provided to beneficiaries shortly before or during Medicare Part A-covered stays at non-Medicare Prospective Payment System (PPS) hospitals.

Part A Hospital Capital Payments

The OIG will determine whether capital payments to hospitals are appropriate.

Critical Access Hospitals

The OIG will review payments to critical access hospitals (CAH). Pursuant to Sections 1814(l)(1) and 1834(g) of the Social Security Act, the OIG will determine whether CAHs have met the CAH-designation criteria in Section 1820(c)(2)(B) of the Social Security Act, and conditions of participation (CoP) at 42 CFR pt. 485, subpart F, and whether payments to CAHs were in accordance with Medicare requirements.

Medicare Disproportionate Share Payments

The OIG will review Medicare Disproportionate Share (DSH) payments to hospitals and examine the total amounts of uncompensated care costs that hospitals incur. The OIG will determine whether DSH payments were in accordance with Medicare methodology in Section 1886(d)(5)(F)(v‐vii) of the Social Security Act.

Duplicate Graduate Medical Education Payments

The OIG will review provider data from CMS’s Intern and Resident Information System (IRIS) to determine whether duplicate graduate medical education payments have been claimed. If duplicate payments were claimed, the OIG will determine which payment was appropriate.

Hospital Occupational Mix Data Used to Calculate Inpatient Hospital Wage Indexes

The OIG will determine whether hospitals' reported occupational–mix data (used to calculate inpatient wage indexes) is in compliance with Medicare regulations.

Medicare Secondary Payer/Other Insurance Coverage

The OIG will review Medicare payments for beneficiaries who have other insurance. Pursuant to Section 1862(b) of the Social Security Act, Medicare payments for such beneficiaries are required to be secondary to certain types of insurance coverage.

Reliability of Hospital-Reported Quality Measure Data

The OIG will review hospitals’ controls for ensuring the accuracy of data related to quality of care that they submit to CMS for Medicare reimbursement. The OIG will determine whether hospitals have implemented sufficient controls to ensure that their quality measurement data is valid.

Medicare Brachytherapy Reimbursement

The OIG will review payments for brachytherapy — a form of radiotherapy where a radiation source is placed inside or next to the area requiring treatment — to determine whether the payments are in compliance with Medicare requirements.

Payments for Diagnostic Radiology Services in Hospital Emergency Departments

The OIG will review Medicare Part B-paid claims and medical records for interpretations and reports of diagnostic radiology services (X-rays, CTs, and MRIs) performed in hospital emergency departments to determine the appropriateness of payments. It will also determine whether diagnostic radiology interpretations and reports contributed to the diagnoses and treatment of beneficiaries receiving care in emergency departments.

Hospitals’ Compliance With Medicare Conditions of Participation for Intensity-Modulated and Image-Guided Radiation Therapy Services

The OIG will review hospitals’ compliance with Medicare requirements concerning the safety and quality of intensity-modulated radiation therapy (IMRT) and image-guided radiation therapy (IGRT) services.

Medicare Inpatient and Outpatient Hospital Claims for the Replacement of Medical Devices

The OIG will determine whether hospitals submitted inpatient and outpatient claims that included procedures for the insertion of replacement medical devices in compliance with Medicare regulations.

Observation Services During Outpatient Visits

The OIG will review Medicare payments for observation services provided during outpatient visits in hospitals. It will also assess whether and to what extent hospitals’ use of observation services affects the care that Medicare beneficiaries receive and their ability to pay out-of-pocket expenses for health care services.

Hospital Inpatient Outlier Payments

The OIG will review hospital inpatient outlier payments. Recent whistleblower lawsuits have resulted in millions of dollars in settlements from hospitals charged with inflating Medicare claims to qualify for outlier payments. The OIG will examine trends of outlier payments nationally and identify characteristics of hospitals with high or increasing rates of outlier payments. 
Inpatient Rehabilitation Facility Transmission of Patient Assessment Instruments

The OIG will determine whether inpatient rehabilitation facilities (IRF) received reduced payments for claims with patient assessment instruments that were transmitted to CMS’s National Assessment Collection Database more than 27 days after the beneficiaries’ discharges.

Recovery Act Compliance Reviews

OIG recovery act compliance reviews will review: (1) Medicare incentive payments to eligible hospitals for adopting electronic health records to prevent erroneous incentive payments; and (2) DSH payments to determine whether the expenditures claimed met Medicaid requirements.

Compliance Activities That Hospitals Should Undertake

Health care organizations should ensure that newly identified OIG projects contained in the 2011 OIG Work Plan receive priority in establishing future compliance efforts. In order to demonstrate that your compliance program is "effective" and is being updated to address new regulatory issues, we recommend that health care organizations take the following actions:


Hospitals should regularly review and update the implementation and execution of their compliance programs to ensure the programs’ effectiveness. An effective compliance program demonstrates a good faith effort to comply with applicable statutes, regulations, and other federal health care program requirements, and may significantly reduce the risk of unlawful conduct and corresponding sanctions. Hinshaw attorneys have assisted numerous health care organizations with the development, implementation and operation of corporate compliance plans, internal investigations, and responding to governmental investigations.

For further information, please contact Michael A. Dowell or your regular Hinshaw attorney.

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.

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