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The Office of Inspector General

The Office of Inspector General's 2013 Work Plan: New Projects Relevant to Health Care Providers

Health Care Law Note
(November 16, 2012)

Last month, the U.S. Department of Health and Human Services ("HHS") Office of Inspector General ("OIG") issued its Fiscal Year 2013 Work Plan (the "Work Plan"). The Work Plan sets forth projects planned with respect to HHS programs and operations, including the Centers for Medicare and Medicaid Services ("CMS"). This Law Note summarizes several new projects we believe are most relevant to health care providers. Health care providers should use the Work Plan to inform their compliance efforts, as it highlights the specific areas on which OIG intends to focus its legal and investigative activity.

Project Summary
The following new projects, categorized by provider type, combined with already existing projects of the Work Plan, emphasize OIG's continued focus on limiting Medicare and Medicaid overpayments, compliance with Conditions of Participation and coverage requirements, medical necessity, access to services, and quality of care.

  1. Hospitals.
    1. DRG Window. OIG will analyze claims data to determine how much CMS could save if it bundled outpatient services delivered up to 14 days prior to an inpatient hospital admission into the DRG payment.
    2. Non-Hospital-Owned Physician Practices Using Provider-Based Status. OIG will determine the impact of non-hospital-owned physician practices billing Medicare as provider-based physician practices and whether such practices comply with applicable CMS billing requirements.
    3. Compliance With Medicare's Transfer Policy. OIG will review Medicare payments made to hospitals for beneficiary discharges that should have been coded as transfers and determine whether such claims were appropriately processed and paid. OIG also will review the effectiveness of the MACs' claims processing edits used to identify claims subject to the transfer policy.
    4. Payments for Discharges to Swing Beds in Other Hospitals. OIG will review Medicare payments made to hospitals for beneficiary discharges that were coded as discharges to a swing bed in another hospital and, if appropriate, will recommend that CMS evaluate its policy related to payment for hospital discharges to swing beds in other hospitals.
    5. Payments for Canceled Surgical Procedures. OIG will determine costs incurred by Medicare related to inpatient hospital claims for canceled surgical procedures. Current Medicare policy does not preclude payment for these claims.
    6. Payments for Mechanical Ventilation. OIG will review Medicare payments for mechanical ventilation to determine whether the DRG assignments and resultant payments were appropriate. OIG will focus on selected Medicare payments to determine whether patients received at least 96 hours of mechanical ventilation, as is required by Medicare rules.
    7. Quality Improvement Organizations' Work With Hospitals. OIG will determine the extent to which Quality Improvement Organizations ("QIO") worked with hospitals either to conduct quality improvement projects or to provide technical assistance, and also will assess the barriers QIOs experience when engaging hospitals.
    8. Acquisitions of Ambulatory Surgical Centers: Impact on Medicare Spending. OIG will determine the extent to which hospitals acquire Ambulatory Surgical Centers and convert them to hospital outpatient departments and the impact such acquisitions have on Medicare payments and beneficiary cost sharing.
    9. Critical Access Hospitals – Payments for Swing-Bed Services. OIG will compare reimbursement for swing-bed services at Critical Access Hospitals to the same level of care obtained at traditional skilled nursing facilities to determine whether Medicare could achieve cost savings through a more cost effective payment methodology.
    10. Long-Term-Care Hospitals – Payments for Interrupted Stays. OIG will determine the extent to which Medicare made improper payments for interrupted stays in long-term-acute-care hospitals ("LTACHs") in 2011. OIG also will identify readmission patterns and determine the extent to which LTACHs readmit patients directly following the interrupted stay periods.
  2. Nursing Homes.
    1. State Agency Verification of Deficiency Corrections. OIG will determine whether State survey agencies verified correction plans for deficiencies identified during nursing home recertification surveys. A prior OIG review found that one State survey agency did not always verify that nursing homes corrected deficiencies identified during surveys in accordance with Federal requirements.
    2. Use of Atypical Antipsychotic Drugs. OIG will assess nursing homes' administration of atypical antipsychotic drugs, including the percentage of residents receiving these drugs and the types of drugs most commonly received. OIG also will describe the characteristics associated with nursing homes that frequently administer atypical antipsychotic drugs.
    3. Oversight of the Minimum Data Set Submitted by Long-Term-Care Facilities. OIG will determine whether and the extent to which CMS and the States oversee the accuracy and completeness of Minimum Data Set ("MDS") data submitted by nursing facilities. Certified nursing facilities are required to complete the MDS for all residents at specified intervals and submit data electronically to the State.
  3. Hospices.
    1. OIG will continue with its works in progress, which include a review of hospices' marketing materials and practices, their financial relationships with nursing facilities, and a review of the use of hospice general inpatient care to assess the appropriateness of hospices' general inpatient care claims.
  4. Home Health Services.
    1. Face-to-Face Requirement. OIG will determine the extent to which home health agencies ("HHA") are complying with the statutory requirement that physicians (or certain practitioners working with physicians) who certify beneficiaries as eligible for Medicare home health services have face-to-face encounters with beneficiaries. The encounter must occur within 120 days, either within the 90 days before beneficiaries start home health care or up to 30 days after care begins.
    2. Employment of Home Health Aides with Criminal Convictions. OIG will determine the extent to which HHAs are complying with State requirements that criminal background checks be conducted with respect to HHA applicants and employees. Nearly all States have laws prohibiting certain care-related entities from employing individuals with prohibited criminal convictions.
  5. Medical Equipment and Supplies.
    1. Quality Standards – Accreditation of Medical Equipment Suppliers. OIG will examine accreditation organizations' requirements and processes for granting accreditation to ensure that medical equipment suppliers meet each of Medicare's quality standards.
    2. Lower Limb Prostheses – Supplier Compliance With Payment Requirements. OIG will review Medicare Part B payments for claims submitted by medical equipment suppliers for lower limb prosthetics to determine whether the requirements of CMS's Benefits Policy Manual were met.
    3. Power Mobility Devices – Supplier Compliance With Payment Requirements. OIG will conduct a series of reviews focusing on whether Medicare payments for Power Mobility Device claims submitted by medical equipment suppliers were reasonable.
    4. Vacuum Erection Systems – Reasonableness of Medicare's Fee Schedule Amounts Compared to Amounts Paid by Other Payers. OIG will determine the reasonableness of the Medicare fee schedule amount for Vacuum Erection Systems ("VES") and identify potentially wasteful spending by comparing Medicare payments made for VES to the amounts paid by non-Medicare payers, such as private insurance companies and the Department of Veteran Affairs. OIG will estimate the financial impact on the Medicare program and on beneficiaries of aligning the fee schedule payments for VESs with those of non-Medicare payers.
    5. Continuous Positive Airway Pressure Supplies – Reasonableness of Medicare's Replacement of Supplies Compared to That of Other Federal Programs. OIG will determine the extent to which Medicare's supply replacement schedules for supplies related to continuous positive airway pressure machines vary from those of Medicaid, VA, and Federal Employees Health Benefits programs. OIG also will identify savings that might be achieved by adopting alternative schedules to avoid wasteful spending.
    6. Diabetes Testing Supplies – Improper Supplier Billing for Test Strips in Competitive Bidding Areas. OIG will determine the extent to which suppliers improperly billed Medicare non-mail-order diabetes test strips in Competitive Bidding Areas ("CBAs") in 2011. OIG also will describe billing trends for test strips in CBAs between 2010 and 2011 and the extent to which suppliers conducted activities that OIG determined to be inappropriate.
    7. Diabetes Testing Supplies – Supplier Compliance With Requirements for Non-Mail-Order Claims. OIG will determine whether Part B payments for non-mail-order diabetes testing supplies (e.g., supplies purchased from suppliers that have physical locations) were made in accordance with Medicare requirements.
  6. Other Providers and Suppliers.
    1. Program Integrity – Onsite Visits for Medicare Provider and Supplier Enrollment and Reenrollment. OIG will determine how often onsite visits occur as part of the Medicare enrollment or reenrollment process. CMS reserves the right, when deemed necessary, to perform onsite inspections of a provider or supplier to verify enrollment information submitted to CMS. Moreover, CMS is authorized to expand the role of unannounced preenrollment site visits.
    2. Program Integrity – Improper Use of Commercial Mailboxes. OIG will determine the extent to which Medicare Part B providers and suppliers had practice locations that matched commercial mailbox addresses in 2011. To combat fraud, Medicare providers and suppliers are required to establish physical business facilities of adequate size and with permanent, visible signs and must provide CMS with specific street addresses (not mailboxes) recognized by the U.S. Postal Service.
    3. Program Integrity – Payments to Providers Subject to Debt Collection. OIG will review providers and suppliers that received Medicare payments after CMS referred them to the Department of the Treasury for failure to refund overpayments. OIG will determine the extent to which they ceased billing under one Medicare provider number but billed Medicare under a different number after being referred to the Treasury. CMS may deny a provider's or supplier's enrollment in the Medicare program if the current owner, physician, or nonphysician practitioner had an existing overpayment at the time of filing an enrollment application.
    4. Anesthesia Services – Payments for Personally Performed Services. OIG will review Medicare Part B claims for personally performed anesthesia services to determine whether they were supported in accordance with Medicare requirements. OIG also will determine whether Medicare payments for anesthesiologist services reported on a claim with the "AA" service code modifier (used for anesthesia services personally performed by an anesthesiologist) met Medicare requirements, or whether the "QK" modifier (used for medical direction of two, three, or four concurrent anesthesia procedures by an anesthesiologist) should have been used instead.
    5. Ophthalmological Services – Questionable Billing. OIG will review Medicare claims data to identify questionable billing for ophthalmological services during 2011 and the geographic locations of providers exhibiting questionable billing for ophthalmological services in 2011.
    6. Rural Health Clinics – Compliance With Location Requirements. OIG will determine the extent to which Rural Health Clinics ("RHCs") do not meet basic location requirements. As CMS has yet to promulgate the final regulations allowing for the removal of RHCs not meeting location requirements, OIG will determine the extent to which such reimbursements are occurring.
    7. Electrodiagnostic Testing – Questionable Billing. OIG will review Medicare claims data to identify questionable billing for electrodiagnostic testing and also will determine the extent to which Medicare utilization rates differ by provider specialty, diagnosis, and geographic area for these services.
    8. Claims Processing Errors – Medicare Payments for Part B Claims With G Modifiers. OIG will determine the extent to which Medicare improperly paid claims from 2002 to 2011 in which providers entered GA, GX, GY, or GZ service code modifiers, indicating that Medicare denial was expected. A recent OIG review found that Medicare paid for 72 percent of pressure-reducing support surface claims with GA or GZ modifiers, amounting to $4 million in potentially inappropriate payments.
  7. Part A and Part B Contractors.
    1. Overview of CMS's Contracting Landscape. In fiscal year 2009, CMS awarded $4 billion to contractors helping it carry out its basic mission, including administration, management, and oversight of its health programs. Recent Government Accountability Office reports have found pervasive deficiencies in CMS's contract management internal control. OIG will review the contracting landscape at CMS and determine the number, types, and dollar amount of active CMS contracts and examine how CMS maintains all of its contract information.
    2. CMS's Compliance With Contract Documentation Requirements. OIG will determine the extent to which CMS complies with contract documentation requirements. It also will determine how CMS ensures that contract file documentation is maintained as required by regulation.
    3. Medicare Administrative Contractors – CMS's Assessment and Monitoring of Performance. OIG will determine the extent to which CMS conducted performance assessment and monitoring of Medicare Administrative Contractors ("MACs"). OIG also will describe the extent to which MACs met, did not meet, or exceeded performance standards and determine the extent to which CMS identified and MACs addressed performance deficiencies.
    4. Medicare Administrative Contractors – Use and Management of System of Edits. OIG will determine whether MACs fulfilled their contractual obligations specific to system edits in 2010 and 2011. It also will describe how MAC error rates varied across regions compared to differences in MAC's implementation, application, and evaluation of edits in 2010 and 2011.
    5. Claims Processing Contractors – Failure to Conduct Prepayment Reviews in Response to Edits. OIG will determine the number of Part B claims that were suspended for manual prepayment review on the basis of system edits but on which the reviews were not conducted.
    6. Zone Program Integrity Contractors – CMS's Oversight of Task Order Requirements. OIG will review CMS oversight of fraud and abuse task order requirements for Zone Program Integrity Contractors ("ZPICs"). Prior OIG work on benefit integrity contractor evaluations found that evaluations contained little information about performance results related to the detection and deterrence of fraud and abuse.
  8. Other Part A and Part B Management and System Issues.
    1. Payments for Incarcerated Beneficiaries. OIG will determine whether Medicare payments for incarcerated beneficiaries complied with Federal requirements. Medicare, in general, does not pay for services rendered to incarcerated beneficiaries; however, the regulation does permit Medicare payment where an incarcerated beneficiary has an obligation for the cost of care.
    2. Payments for Alien Beneficiaries Unlawfully Present in the United States on the Dates of Service. OIG will determine whether Medicare payments were made on behalf of beneficiaries who were unlawfully present in the United States on the dates of services. Medicare payment may not be made for items and services furnished to alien beneficiaries who were not lawfully present in the United States.
    3. Payments for Services After Beneficiaries' Death. OIG will review Medicare claims dates to determine whether Medicare payments were made for deceased beneficiaries in 2011. It also will identify trends of Medicare claims with service dates after beneficiaries' dates of death.
    4. Medicare Integrity Program – CMS's Overall Strategy. OIG will review CMS's overall strategy to maintain the integrity of Medicare. The Medicare Integrity Program requires CMS to contract with entities to carry out various program integrity activities to safeguard against fraud, waste, and abuse in Medicare Parts A and B. Over the past few years, Congress has submitted multiple letters to CMS questioning the effectiveness of the program integrity efforts of these contractors.
  9. Medicaid.
    1. Some of the new OIG efforts in the Medicaid arena include reviews into duplicate payments by Medicare and Medicaid for home health services, communicable disease care in nursing facilities, opportunities to reduce Medicaid payment rates for medical equipment and supplies, and performance of RACs.

The complete 2013 OIG Work Plan is available at If you have any questions regarding the contents of this Law Note or would like further information regarding other health care legal issues, please contact Justin Puleo at (919) 755-8802 or, Toni Peck at (919) 755-8801 or, or any of the other members of our Health Care team.

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