OIG 2011 Work Plan: 17 Key Areas of Focus for Hospitals

The Department of Health & Human Services' Office of Inspector General has released its 2011 Work Plan, which outlines what activities that will be started or continued with respect to programs and operations under HHS the in fiscal year 2011.

The Work Plan includes a number of areas of focus for hospitals under Medicare Part A and Part B and Medicaid.

Some of the most relevant areas of focus under Medicare Part A & Part B outlined by the Work Plan for acute-care hospitals include the following:

• Payment for observation services. The OIG will review payment for observation services during outpatient hospital visits to determine how the use of observation status by hospitals affects patient care and out-of-pocket costs. Some providers have recently come under fire by the media for keeping patients on observation status, rather than admitting them, because under Medicare rules, if a beneficiary is transferred to a nursing facility without being admitting, his or her stay there is not covered to the same extent.
• Hospital inpatient outlier payments. The OIG will review inpatient outlier payments for patients and identify characteristics of hospitals with high or increasing rates of outlier payments. Outlier payments currently account for about 5 percent of Medicare inpatient payments, and a number of recent whistleblower suits for improper outlier payments may have put these under increased scrutiny. Separately, the OIG will review Medicare outlier payments to determine whether they have been appropriately reconciled using the most recent cost-to-charge ratio from the hospital's cost report, as is required.
• Provider-based status. The OIG will review the appropriateness of the provider-based designation and the impact of hospitals improperly claiming provider-based status. Provider-based status permits hospitals that own multiple provider-based facilities (such as skilled nursing facilities, outpatient physician offices, etc.) in different sites to operate as a single entity, and they currently may receive higher reimbursements as a result.
• Payments for non-physician outpatient services under the IPPS. Under the Inpatient Prospective Payment System, hospitals are prohibited from receiving any additional reimbursement for non-physician outpatient services, and outpatient providers contracted from the hospital are restricted from submitting claims to Medicare Part B for services to inpatient beneficiaries. In response to previous OIG work suggesting significant improper claims in this area, the OIG will review the appropriateness of payment for non-physician outpatient services shortly before or during hospital stays.

The Work Plans also identifies other areas of focus relevant for acute-care hospitals, including:

• Hospital capital payments. The OIG will review Medicare Part A inpatient capital payments, which reimburse a hospital for certain expenditures, to determine whether or not they are appropriate.
• Payments to critical access hospitals. The OIG will review payments to CAHs, to determine whether CAHs meet designation requirements and conditions of coverage, and whether their payments meet Medicare requirements.
• Medicare Disproportionate Share Payments. The OIG will review the appropriateness of DSH payments under Medicare methodology. DSH payments are additional payments to hospitals that serve a disproportionate number of low-income patients. The OIG says these payments have been "steadily increasing."
• Duplicate graduate medical education payments. The OIG will review provider data from CMS' Intern and Resident Information System to determine if duplicate graduate medical education payments have been claimed. Medicare compensates teaching hospitals for Medicare's share of direct and indirect medical education costs. These payments are based on a per-FTE resident amount, and a review of the IRIS will determine if any residents or interns were counted as more than one FTE.
• Hospital occupational mix data.The OIG will determine whether hospitals reported occupational-mix data, which is used to calculate inpatient hospital wage indexes, is compliant with Medicare regulations. Occupational-mix data is used to calculate the wage index under the Medicare prospective payment system.
• Medicare secondary payor/other insurance coverage. If a Medicare beneficiary has other health insurance coverage, Medicare payments are required to be secondary to other types of coverage. The OIG will review these payments for appropriateness and evaluate procedures for preventing inappropriate payments.
• Hospital-reported quality measures. The OIG will review hospitals' controls for ensuring accurate quality data reported to CMS. Hospitals must currently report on 10 indicators or be subject to a 2 percent payment reduction.
• Hospital readmissions. CMS currently rejects subsequent claims for beneficiaries who were readmitted to the same hospital on the same day. Hospital are only allowed to bill for one DRG payment in these instances The OIG will review claims to determine readmission trends and evaluate the effectiveness of the rule.
• Transferring patients with present-on-admission diagnoses. The OIG will review claims to identify specific providers that transfer a high number of patients with POA diagnoses to hospitals.
• Early implementation of policy on hospital-acquired conditions. The OIG will review its policy not to provide additional payment for certain HACs (effective Oct. 2008) and will identify the number of stays associated with HACs as well as the reimbursement.
• Hospital reporting of adverse events. The OIG will review hospital reporting of adverse events and determine the extent to which reporting systems captured events and reported them to external patient safety oversight entities.
• Claims for replacement of medical devices. The OIG will review for compliance of inpatient and outpatient claims submitted by hospitals for the insertion of replacement medical devices. Medicare does not reimburse for devices where the hospital received a full or partial credit from the manufacturer for the device.
• Brachytherapy reimbursement. The OIG will review payments for brachytherapy for compliance.

The Work Plan included fewer, but similar, areas of review for acute-care hospitals under Medicaid, including: hospital outlier payments, provider eligibility for Medicaid reimbursement, supplemental payment to private hospitals and potentially excessive Medicaid payments for inpatient and outpatient hospital services.

View the OIG 2011 Work Plan here (pdf).