Corporate Compliance

Note from the Instructor: Update on FY 2015 OIG enforcement actions and priorities

Medicare Insider, June 2, 2015

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This week’s note from the instructor is written by Judith L. Kares, JD,regulatory specialist for HCPro.  
The OIG of the HHS is the primary enforcement arm of the HHS. As stated in the recently released FY 2015 Work Plan Mid-Year Update (the “Update”), the OIG was created to protect the integrity of HHS programs and operations and the well-being of federal healthcare program beneficiaries by doing the following:
  • Detecting and preventing fraud, waste, and abuse;
  • Identifying opportunities to improve program economy, efficiency, and effectiveness; and,
  • Holding accountable those who do not meet program requirements or who violate federal healthcare laws.
In FY 2014, more than 75% of the OIG’s budget was directed at oversight of the Medicare and Medicaid Programs. Periodically, the OIG assesses the resources available and prioritizes the issues to be addressed, primarily by establishing a work plan for each FY, which is reviewed and updated at midyear. The OIG also provides a report to Congress, generally on a semi-annual basis, on its progress to date. The Semiannual Report to Congress (the “Report”) for the first half of FY 2015 was released last week. 
In this note, we will focus on key updates relating to services provided to Medicare beneficiaries by hospitals and critical access hospitals (CAH), including recent OIG auditing and recovery activities.
Overview of initiatives relating to hospitals and CAHs included in the Update
The Update continues to divide hospital initiatives into the following previously existing categories (no separate categories for CAHs), and sub-categories, and adds two new initiatives:
Hospital-Related Policies and Practices
  • Reconciliations of outlier payments
  • Hospitals’ use of outpatient and inpatient stays under Medicare’s 2-midnight rule
  • Medicare costs associated with defective medical devices
  • Analysis of salaries included in hospital cost reports
  • Medicare oversight of provider-based status
  • Comparison of provider-based and free-standing clinics
Hospitals—Billing and Payments
  • Inpatient claims for mechanical ventilation
  • Duplicate graduate medical education payments
  • Indirect medical education payments
  • Outpatient dental claims
  • Nationwide review of cardiac catheterizations and endomyocardial biopsies
  • Payments for patients diagnosed with Kwashiorkor
  • Bone marrow or stem cell transplants
  • Review of hospital wage data used to calculate Medicare payments
  • NEW Intensity-modulated radiation therapy

o   The OIG will review Medicare outpatient payments for intensity-modulated radiation therapy (IMRT) to determine whether the payments were made correctly. IMRT is an advanced mode of high-precision radiotherapy that uses computer-controlled linear accelerators to deliver precise radiation doses to a malignant tumor or specific areas within the tumor. To be processed correctly and promptly, a bill must be completed accurately. In addition, certain services should not be billed when they are performed as part of developing an IMRT plan. (See Medicare Claims Processing Manual, Ch. 1, § and Ch. 4, § 200.3.2 for more detailed guidance.)

Hospitals—Quality of Care and Safety
  • Inpatient rehabilitation facilities—Adverse events in post-acute care for Medicare beneficiaries
  • Long-term-care hospitals—Adverse events in post-acute care for Medicare beneficiaries
  • NEW Hospital preparedness and response to high-risk infectious diseases
o   The OIG will describe hospitals’ efforts to prepare for the possibility of public health emergencies resulting from infectious diseases. Several HHS agencies, including the CDC, the Office of the Assistant Secretary for Preparedness and Response (ASPR), and CMS provide resources for hospitals as they prepare. Additionally, the OIG will determine hospital use of HHS resources and identify lessons learned through recent experiences with pandemic or highly-contagious diseases, such as Ebola.
Overview of OIG auditing, enforcement, and other oversight activities relating to hospitals and CAHs
In the Report, the OIG noted several areas of concern relating to hospital and CAH payments, including the following:
  • Reconciliation of hospital outlier payments—Medicare contractors Pinnacle Business Solutions (Pinnacle), Noridian Healthcare Solutions (Noridian), and National Government Services (NGS) did not always refer Medicare cost reports whose outlier payments qualified for reconciliation to CMS. In addition, the three contractors did not always reconcile the outlier payments associated with cost reports whose outlier payments qualified for reconciliation. The financial impact to Medicare of the unreconciled outlier payments and cost reports was approximately $14.4 million (Pinnacle), $31.8 million (Noridian), and $19 million (NGS).
  • Swing-bed usage at CAHs—Medicare spending for swing-bed services at CAHs steadily increased to almost four times the cost of similar services at alternative facilities. Medicare could have saved $4.1 billion over a six-year period at CAHs if swing-bed services were reimbursed using the skilled nursing facility prospective payment system rate (SNF PPS). CAHs ensure beneficiaries in rural areas have access to a range of hospital services. CAHs provide swing-bed services, which are the equivalent of services performed at a SNF. Medicare reimburses CAHs at 101% of their reasonable costs for providing services to beneficiaries rather than at rates set by Medicare’s PPS or Medicare’s fee schedules. Although CMS did not concur, the OIG continues to recommend that CMS seek legislation to adjust CAH swing-bed reimbursement rates to the lower SNF PPS rates paid for similar services at alternative facilities.
  • Beneficiary cost sharing for CAH services—Beneficiaries typically pay more in coinsurance for outpatient services received at CAHs than for outpatient services received at other acute care hospitals. For example, for 10 frequently provided outpatient services at CAHs, beneficiaries paid between two and six times the amount in coinsurance that they would have for the same services at acute-care hospitals. Without a change in how coinsurance for CAH outpatient services is calculated, beneficiaries will continue to pay more for these services. CMS neither concurred nor non-concurred with the OIG’s recommendation to seek legislative authority to modify how coinsurance is calculated for outpatient services received at CAHs.
In other reports of recent auditing activity, the OIG has focused on the following compliance issues:
Outpatient hospital services
  • Improper payments for sleep study services that did not meet Medicare reimbursement requirements;
  • Failure of hospitals to seek credit available against the cost of replacement devices for outpatient services;
  • Failure of hospitals to report credit received against the cost of replacement devices for outpatient services;
  • Billing for excess units/inappropriate use of certain drugs (e.g., Herceptin, Aflibercept); and
  • Inappropriate reporting of modifiers without supporting documentation, resulting in overpayments.
Inpatient hospital services
  • Failure of hospitals to seek credit available against the cost of replacement devices for inpatient services;
  • Failure of hospitals to report credit received against the cost of replacement devices for inpatient services;
  • Upcoding inpatient claims, resulting in higher DRG assignment than justified by the medical record;
  • Incorrectly billing as inpatient under Part A when stay was not reasonable and necessary under inpatient criteria;
  • Billing same-day discharge and related re-admission to same hospital on two separate claims; and
  • Incorrect reporting of diagnosis code for Kwashiorkor, not justified by medical record.
Keeping up with the OIG
If you have not already done so, hospitals and CAHs are encouraged to subscribe to the OIG List Serv, which can be accessed through the link on HCPro’s links page, under “Listserve Subscriptions.” Click here to access HCPro’s links page.

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