United States: OIG Issues 2006 Work Plan

Impact: The 2006 Work Plan identifies the areas that the OIG perceives as critical to its mission to improve the Department of Health and Human Services’ programs and operations by protecting against fraud, waste and abuse. Medicare providers and suppliers are encouraged to scrutinize the Work Plan to confirm their own compliance in the targeted areas.

On November 16, 2005, the United States Department of Health and Human Services ("HHS"), Office of Inspector General ("OIG"), released its Work Plan for Fiscal Year 2006 ("Work Plan"). The Work Plan details project areas targeted by the OIG for audit, evaluation and investigation during the federal fiscal year 2006. The Work Plan can be accessed in its entirety on the OIG’s website at
www.oig.hhs.gov/publications/docs/ workplan/2006/WorkPlanFY2006.pdf.

The areas targeted for OIG review in the Work Plan cover virtually all categories of health care providers and suppliers, as well as a focus on Medicare Part D administration, and Medicare and Medicaid reimbursement for drugs, and clinical trials.

As in years past, the OIG’s 2006 Work Plan is divided into sections based upon programs and provider or supplier type. Areas noted are a combination of new topics for this year, as well as certain areas from previous Work Plans that continue to attract the OIG’s attention. Many of these areas reflect recent investigations of, and settlements with, health care entities. Because the Work Plan highlights the OIG’s current priorities, providers and suppliers participating in federally funded health care programs are encouraged to review it in its entirety for relevance to their current operations. The Work Plan should also be viewed as a roadmap for potential future enforcement activity. Briefly summarized below are various sections of the 2006 Work Plan which are likely to have a significant impact on the health care community.

Adjustments for GME Payments. The OIG will determine if audit adjustments made by fiscal intermediaries for the costs of direct and indirect graduate medical education (while settling Medicare cost reports) were properly reflected in the revised notices of program reimbursement issued to the hospitals.

Payments for Observation Services versus Inpatient Admissions for Dialysis Services. The objective of this audit will be to determine whether payments were made for inpatient admissions for dialysis services when the physicians’ orders stated the level of care was admission for observation status.

Inpatient Hospital Payments for New Technologies. The OIG will review the costs associated with new devices and technologies to determine if the reimbursement was appropriate.

Inpatient Psychiatric Hospitals. The OIG will examine outlier payments made to psychiatric hospitals, payments made for interrupted stays, rural psychiatric hospitals’ patients’ length of stay and cost of services to determine whether the Medicare payment was justified.

Inpatient Rehabilitation Payments - Late Assessments. Under the inpatient rehabilitation facility prospective payment system, admission and discharge assessments must be entered and transmitted within defined time limits or payment is reduced. The OIG will determine the accuracy of Medicare payments for inpatient reha bilitation stays when patient assessments were entered, determine how fiscal intermediaries made these adjustments, and confirm that payments were accurate.

Outpatient Department Payments. The OIG will review payments to hospital outpatient departments under the prospective payment system to determine the extent to which they were made in accordance with Medicare laws and regulations. Specifically, the OIG will review the appropriateness of payments made for multiple procedures, repeat procedures, and global surgeries.

Unbundling of Hospital Outpatient Services. The OIG will determine the extent to which hospitals and other providers are submitting claims for services that should be bundled into outpatient services. The unbundling of services could lead to unnecessary Medicare expenditures.

"Inpatient Only" Services Performed in an Outpatient Setting. The OIG will determine if Medicare payments are appropriately denied for "inpatient only" and related services performed in an outpatient setting and assess the extent to which Medicare beneficiaries were held liable for denied inpatient claims for those services.

Diagnosis-Related Group Coding. The OIG will examine DRG codes to determine whether some acute care hospitals exhibit aberrant coding patterns. Under the prospective payment system, DRGs for inpatient acute care depend on accurate coding of diagnoses and procedures, as inaccurate coding can lead to Medicare overpayments.

Areas of focus from previous years which also appear in the OIG’s 2006 Work Plan include:

• State calculations of Medicaid DSH payments to verify that those payments comply with approved state plans and do not exceed statutory limits (DSH payments to an individual hospital may not exceed that hospital.s uncompensated care costs).

• Whether states are appropriately determining hospitals. eligibility for Medicaid DSH payments in accordance with the eligibility standards contained in § 1923 of the Social Security Act.

• The accuracy of the hospital wage data used for calculating wage indices for the prospective payment system.

• Payments to inpatient rehabilitation facilities (.IRFs.), the extent to which admissions to IRFs met specific regulatory requirements, and whether IRFs billed for services in compliance with the prospective payment system.

• Payments to long term care hospitals including the appropriateness of early discharges to home, interrupted stays, outlier payments and payments made under arrangements to long term care hospitals.

Billing Service Companies. The OIG will identify and review the arrangements between billing companies and physicians (and other Medicare providers who use such services) to determine the impact of those arrangements on physicians’ billings.

Payment to Providers of Care for Initial Preventive Physical Examination. Section 611 of the 2003 Medicare Prescription Drug, Improvement, and Modernization Act ("MMA") provides for coverage under Part B of an initial preventive physical examination ("IPPE"). For new Medicare beneficiaries with established relationships, the physician is presented with the opportunity to claim a higher payment for IPPE for services that may have been performed in a past evaluation and management visit. The OIG will evaluate the impact of IPPE on Medicare payments and physician billing practices.

"Long Distance" Physician Claims. The OIG will review Medicare claims for face-to-face physician encounters where a significant distance separated the physician’s practice setting and the beneficiary’s location, and examine those claims to confirm that services were provided and accurately reported.

Potential Duplicate Physical Therapy Claims. The OIG will assess whether CMS’s systems are able to identify and prevent payment for potential duplicate physical therapy claims submitted by providers. In May 2004, CMS issued a fraud alert regarding physical therapy suppliers switching their submission of claims between Part A and Part B. The OIG will also review the current Common Working File operations to determine whether edits are adequately identifying potential duplicate physical therapy claims submitted to Part A and Part B contractors.

The following project areas pertaining to physicians and other health professionals will continue to attract the OIG.s focus in 2006:

• Claims submitted by physicians for care plan oversight.

• The extent of services ordered by physicians excluded from participation in federal health care programs.

• Billings for pathology services performed in physicians’ offices.

• Payments for cardiography and echocardiography services to determine whether physicians billed appropriately for the professional and technical components of the services.

• Medical necessity reviews of therapy services provided by physical and occupational therapists, wound care services and mental health services provided in physicians’ offices.

Skilled Nursing Facilities’ Involvement in Consecutive Inpatient Stays. The OIG will determine whether skilled nursing facilities ("SNFs") care provided to Medicare beneficiaries with consecutive inpatient stays was medically reasonable and necessary.

Skilled Nursing Facility Payments for Day of Discharge. Medicare regulations state that the day of discharge is not a day of billable services for SNFs. The OIG will determine if Medicare is inappropriately paying SNFs for services provided on the day of discharge.

Skilled Nursing Facilities’ Deficiency Trends. The OIG will examine the nature and extent of survey and certification deficiencies in SNFs and will also identify patterns of repeated noncompliance with federal quality standards.

Skilled Nursing Facilities’ Residents Minimum Data Set Assessments and Care Planning. The OIG will examine the type, frequency, and severity of SNFs’ deficiencies related to Minimum Data Set assessments and care planning; examine methods the state survey agencies use in identifying assessments; and care plans that do not address individualized needs of residents.

Imaging and Laboratory Services in Skilled Nursing Facilities. The OIG will determine the extent and nature of any medically unnecessary or excessive billing for imaging and laboratory services provided to SNFs’ residents. The following risk areas from the 2005 Work Plan will continue to be reviewed by the OIG in 2006:

• Duplicate Part B billings under the SNFs consolidated billing rules.

• The effectiveness of CMS and state enforcement actions taken against noncompliant SNFs.

• The medical necessity of rehabilitation and infusion therapy services provided to Medicare beneficiaries in SNFs.

Medicare Home Health Agency Survey and Certification Deficiencies. The OIG will examine trends and patterns in home health agencies survey and certification deficiencies. The OIG will also identify whether any home health agencies show patterns of cyclical noncompliance with certification standards.

Durable Medical Equipment Payments for Beneficiaries Receiving Home Health Services. The OIG will review medical records of durable medical equipment ("DME") suppliers for items and supplies furnished to beneficiaries receiving home health agency services to determine whether the items and supplies were reasonable and necessary for the beneficiaries’ conditions.

Medical Necessity of Durable Medical Equipment and Supplies. The OIG will determine the appropriateness of Medicare payments for certain items of DME, such as power wheelchairs, wound care equipment and supplies, and glucose test strips.

Medicare Pricing of Durable Medical Equipment and Supplies. The OIG will compare Medicare payment rates for certain DME and supplies with the rates of other federal and state health programs, as well as with wholesale and retail prices. The OIG’s review will cover such items as wheelchairs, parenteral nutrition, wound care equipment and supplies, and oxygen equipment and supplies.

The OIG will continue to review the extent to which CMS ensures that hospice providers meet Medicare quality of care standards. The OIG will also determine the accuracy of payments made for hospice services provided to dually eligible patients residing in SNFs.

The OIG will conduct an assessment of laboratories’ compliance with the requirements of the Clinical Laboratory Improvement Amendments of 1988 ("CLIA") to participate in proficiency testing. The OIG will also conduct a comparison study of Medicare payment rates for certain laboratory tests with the rates of other federal and state health programs and private payers.

The OIG will continue its review of the medical necessity of services delivered by independent diagnostic testing facilities ("IDTFs"), to determine whether: individual facilities met all necessary Medicare approval requirements to provide services; the designated level of physician supervision was properly provided; and the nonphysician personnel who performed the diagnostic tests were appropriately licensed.

The OIG will continue its review of whether comprehensive outpatient rehabilitation facilities ("CORFs") provided and billed physical therapy, speech language pathology, and occupational therapy services in accordance with Medicare eligibility and payment requirements.

The OIG will continue to review ambulance companies to determine whether they were paid for services provided to beneficiaries who were inpatients in calendar years 2001 and 2002. The OIG will also continue its review of ambulance services furnished by individual providers, to determine whether the services were reasonable and necessary, and furnished at the appropriate level.

The OIG will examine the current level of CMS oversight of dialysis facilities, especially facilities evidencing indications of possible poor quality of care.

Medicare Capitation Payments to Managed Care Plans after a Beneficiary’s Death. The OIG will determine the extent to which payments were made to Medicare Advantage ("MA") plans for deceased beneficiaries. The OIG will also examine the processes and systems used by CMS to identify MA overpayments due to beneficiaries’ deaths and assess the proportion of payments subsequently recovered by CMS.

Medicare Advantage Regional Plans: Availability, Physician Participation, and Beneficiary Enrollment in Rural Areas. The OIG will determine the availability of regional MA plans for beneficiaries residing in rural areas; assess the extent to which Medicare beneficiaries residing in rural areas choose to enroll in MA plans; and whether physicians’ practices in rural areas participate in regional MA plans.

Collecting and Maintaining Average Sales Price Data. The OIG will evaluate CMS’s system for collecting and maintaining the average sales price ("ASP") data. Medicare Part B currently covers some prescription drugs furnished incident to physician services, prescription drugs used with DME, and other statutorily covered drugs. Under MMA, Medicare will base payments for most of these drugs on the ASP and manufacturers are required to report accurate ASP information to CMS.

Effectiveness of Average Sales Price Cost Controls. The OIG will also examine why reported ASPs are rising; how these increases reflect providers’ costs; and the extent to which these price changes have affected the expected cost reductions of the ASP program.

Duplicate Payments for Part B Drugs Under the Competitive Acquisition Program. The OIG will determine if duplicate payments are made to physicians for Part B drugs purchased from vendors selected through a competitive bidding process and those directly reimbursed under the ASP system.

Medicare Reimbursement for End Stage Renal Disease Drugs. The OIG will determine the difference between Medicare reimbursement for selected billable end stage renal disease ("ESRD") drugs and the acquisition cost of these drugs to ESRD facilities.

Drug Rebate Impact from Drugs Incorrectly Classified as Generic. The OIG will determine whether drug manufacturers are incorrectly classifying brand-name drugs as generic drugs for rebate purposes.

Effect of Nominal Pricing on Medicaid Drug Rebates. The OIG will also examine how drug manufacturers are complying with the nominal price provision of the Medicaid Drug Rebate law.

States Compliance with Federal Upper Limit Requirements. The OIG will evaluate states to ensure they are meeting the federal upper limit requirements for drugs covered under the Medicaid program.

Integrity Safeguards for Medicare Drug Plan Applicants. The OIG will assess the safeguards that CMS has implemented to identify if Medicare drug plan applicants qualify to provide drug benefits under Medicare Part D.

Prescription Drug Plan and Marketing Materials for Prescription Drug Benefits. The OIG will determine whether marketing materials for Medicare prescription drug plans are in compliance with CMS’ regulations and guidelines. The OIG will also examine whether the prescription drug plans’ marketing materials are clear and understandable to Medicare beneficiaries pursuant to CMS guidelines.

Coordination and Oversight of Medicare Part B and D to Avoid Duplicate Payments. The OIG will determine whether there is sufficient coordination and oversight of Medicare B and Part D to prevent duplicate payments for drugs.

Enrollees Access To Negotiated Prices for Covered Part D Drugs. OIG will examine compliance with the requirement that prescription drug plans and MA drug plans must provide enrollees access to negotiated prices for covered Part D drugs, including all discounts, direct or indirect subsidies, rebates, and direct or indirect remuneration, regardless of whether the drug was paid for under the benefit.

Medicare Part D Drug Benefit Payments. To determine whether Part D drug benefit policies, procedures, and payment systems are working as intended, the OIG will sample Part D beneficiaries’ claim files to determine whether controls have been implemented and are working to ensure that: benefits are paid on behalf of eligible beneficiaries; and Medicare, as well as beneficiaries, paid appropriate amounts for drug coverage.

Medicare Part D Risk-Sharing Payments and Recoveries. The OIG will examine whether CMS and the prescription drug plans have established adequate controls over Medicare Part D risk sharing payments and recoveries to ensure that: the drug plans submit accurate and timely information to CMS; CMS’ calculations are performed in accordance with applicable laws and regulations; and payments and recoveries are made in accordance with applicable laws and regulations.

Clinical Trial Data Bank. The OIG will evaluate the drug industry’s compliance with statutory requirements to furnish information of clinical trials involving life-threatening or serious conditions to the clinical trials data bank maintained by the National Library of Medicine.

Integrity of Research involving Human Subjects. The OIG will continue to review whether the Federal Drug Administration ("FDA") is assuring that research involving human subjects is conducted in a manner consistent with applicable laws, regulations and policies.

Financial Disclosure Requirements for Clinical Investigators. FDA regulations require clinical investigators who conduct studies in support of a product to disclose their financial interest in the product. The OIG will assess the nature of financial interests disclosed by clinical investigators to the FDA; the extent to which drug, biologic, and device applicants monitor their clinical investigators for conflicting financial interests; and the extent to which the FDA monitors the financial interests disclosed by clinical investigators.

All health care providers and suppliers participating in federal health care programs should review the 2006 Work plan to determine their own compliance with the targeted areas.

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