By Ken Yood and Lynsey Mitchel

The mission of the Office of the Inspector General ("OIG") is to protect the integrity of the programs and operations of the Department of Health & Human Services, for example Medicare, by detecting and preventing waste, fraud and abuse, and identifying opportunities to improve program economy, efficiency and effectiveness. The Work Plan describes both the ongoing and new audits and evaluations that the OIG plans to address in fiscal year 2011.

Below are highlights from the Work Plan applicable to hospitals and other facilities, and physicians and physician groups. 

Hospitals & Other Facilities

New Audits and Evaluations:

  • Medicare Outlier Payments: The OIG will review Medicare outlier payments to determine whether CMS appropriately reconciled the payments. Outliers are additional payments made for beneficiaries who incur unusually high costs. 
  • Medicare Secondary Payor/Other Insurance Coverage: The OIG will review Medicare payments for beneficiaries who have other insurance and assess the effectiveness of procedures in preventing inappropriate Medicare payments for beneficiaries with other 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. 
  • Hospital Reporting for Restraint and Seclusion Related Deaths: The OIG will review hospital-reported restraint and seclusion-related deaths to determine the volume of reports and their outcome. The Patient’s Rights Hospital Condition of Participation rule require that hospitals report to CMS each death that occurs while a patient is in restraint or seclusion, as well as each death that occurs within 24 hours after a patient has been removed from restraint or seclusion. 
  • Observation Services During Outpatient Visits: The OIG will review Medicare payments for observation services provided during outpatient visits in hospitals. The OIG will assess whether and to what extent hospitals’ use of observation services, payable under the Hospital Outpatient Prospective Payment System ("OPPS"), affects the care Medicare beneficiaries receive and their ability to pay for out-of-pocket expenses for health care services. 

Ongoing Audits and Evaluations

  • Hospital Capital Payments: The OIG will review Medicare inpatient capital payments to determine if payments are appropriate. Capital payments reimburse a hospital’s expenditures for assets such as equipment and facilities. 
  • Provider-Based Status for Inpatient and Outpatient Facilities: The OIG will review cost reports of hospitals claiming provider-based status to 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. Prior work in this area found significant numbers of improper claims. 
  • Ambulatory Surgical Center Payment System: The OIG will review the appropriateness of the methodology for setting ASC payment rates under the revised ASC payment system. 

Physicians and Physician Groups

New Audits and Evaluations:

  • Medicare Payments for Part B Imaging Services: The OIG will review Medicare payments for Part B imaging services. Physicians are paid for services pursuant to the Medicare physician fee schedule, which covers the major categories of costs, including the physician professional cost component, malpractice costs, and practice expenses. For selected imaging services, the OIG will focus on the practice expense components, including the equipment utilization rate. The OIG will determine whether Medicare payments reflect the expenses incurred and whether the utilization rates reflect industry practices. 
  • Appropriateness of Medicare Payments for Polysomnography: The OIG will review the appropriateness of Medicare payments for sleep studies. Sleep studies are reimbursable for patients who have symptoms consistent with sleep apnea, narcolepsy, impotence or parasomnia. Medicare payments for polysomnography increased from $62 million in 2001 to $235 million in 2009. 
  • Excessive Payments for Diagnostic Tests: The OIG will review Medicare payments for high-cost diagnostic tests to determine whether they were medically necessary. The OIG will examine the extent to which the same diagnostic tests are ordered for a beneficiary by their primary care physicians and physician specialists for the same treatment. 
  • Trends in Laboratory Utilization: The OIG will review trends in laboratory utilization under the Medicare program. In 2008, Medicare paid $7 billion for clinical laboratory services, which represents a 92% increase from 1998. Much of the growth is attributed to an increased volume of ordered services. 

Ongoing Audits and Evaluations

  • Coding of Evaluation and Management ("E&M") Services: The OIG will review E&M claims to identify trends in the coding of E&M services. Medicare paid $25 billion for E&M services in 2009, representing 19% of all Medicare Part B payments. Providers are responsible for ensuring that the codes they submit accurately reflect the services they provide. 
  • Payments for E&M Services: The OIG will review the extent of potentially inappropriate payments for E&M services and the consistency of E&M medical review determination. Medicare contractors have noted an increased frequency of medical records with identical documentation across services. The OIG will also review multiple E&M services for the same providers and beneficiaries to identify electronic health records documentation practices associated with potentially improper payments. 
  • Medicare Payments for Sleep Testing: The OIG will review the appropriateness of Medicare payments for sleep test procedures provided at sleep disorder clinics. A preliminary OIG review identified improper payments when certain modifiers are not reported with sleep test procedures. The OIG will examine Medicare payments to physicians and independent diagnostic testing facilities for sleep test procedures to determine whether they were in accordance with Medicare requirements.  

Audits and Evaluations Related to the American Recovery and Reinvestment Act of 2009

The OIG will also be examining the following as a result of the American Recovery and Reinvestment Act of 2009 ("Recovery Act"):

  • Medicare Incentive Payments for Electronic Health Records: The OIG will review Medicare incentive payments to eligible health care professionals and hospitals for adopting electronic health records ("EHR") and CMS safeguards to prevent erroneous incentive payments. The Recovery Act authorizes Medicare incentive payments over a 5-year period to physicians and hospitals that demonstrate meaningful use of certified EHR technology. 
  • Breaches and Medical Identify Theft Involving Medicare Identification Numbers: OIG will review CMS’ policies and procedures on breaches and medical identify theft. The Recovery Act defines a "breach" as an "unauthorized acquisition, access, use, or disclosure of protected health information which compromises the security or privacy of the protected health information." The Recovery Act requires covered entities to notify individuals whose unsecured protected health information has been or is reasonably believed to have been accessed, acquired, or disclosed as a result of a breach. 
  • Medicare and Medicaid Health Information Data Privacy: The OIG will review Medicare and Medicaid program providers’ implementation of the Privacy Rule standards of HIPAA. The Health Information Technology for Economic and Clinical Health Act ("HITECH"), part of the Recovery Act, strengthened and expanded Privacy Rule protections. The Office for Civil Rights ("OCR") is responsible for overseeing compliance with and enforcement of the Privacy Rule. The OIG will review the adequacy of the OCR’s oversight of the Privacy Rule. 

For further information, please contact Ken Yood at (310) 228-3708 and Lynsey Mitchel at (310) 228-3745.