Health Care Legal Update   November 2004

OIG 2005 Work Plan Targets May Impact You: Update Your Compliance Plan Now!

The Office of Inspector General ("OIG") of the Department of Health & Human Services ("HHS") recently issued its Work Plan for Fiscal Year 2005 ("Work Plan"). The Work Plan identifies areas that the OIG will study, audit and/or investigate in fiscal year 2005, and provides valuable guidance for identifying high risk compliance areas that apply to specified types of health care organizations. The following summarizes the most significant OIG projects in 2005.

Hospitals

The OIG will initiate a broad-ranging review of provider-based entities, including billing practices and compliance with provider-based criteria. Other significant hospital issues that the OIG will review in 2005 include the following:

  • Diagnosis-Related Group Coding Review. The OIG will review DRGs that are susceptible to miscoding for acute care hospitals, using analysis of hospital coding patterns and incorporating recent work by quality improvement organizations
  • Inpatient Rehabilitation Facility Payments. The OIG will review payments to inpatient rehabilitation facilities to evaluate the facilities' compliance with Medicare laws and regulations concerning admission standards and interrupted stays
  • Consecutive Inpatient Stays. The OIG will examine the extent to which Medicare beneficiaries receive acute and post-acute care through sequential stays at different hospitals
  • Rebates Paid to Hospitals. The OIG will determine whether hospitals are properly identifying purchase credits as a separate line item in their Medicare cost reports
  • Medical Necessity of Inpatient Psychiatric Stays. The OIG will conduct audits to determine the extent of any improper Medicare payments for inpatient psychiatric stays due to medical necessity or coverage issues

Additionally, significant risk areas from previous years that remain under scrutiny include outpatient cardiac rehabilitation services, hospitals' reporting of organ acquisition costs, inpatient and outpatient outlier payments, coronary artery stents, Medicare payments to acute care hospitals for discharged patients who are admitted to post-acute care settings, and the appropriateness of Medicare payments to long-term care hospitals.

Physicians and Other Health Care Professionals

The OIG has added the following subject areas to its Work Plan relating to physicians:

  • Billing Service Companies. Identification and review of the relationships among billing companies and the physicians and other Medicare providers who use their services
  • Physician Pathology Services. The OIG review will focus on pathology services performed in physicians' offices. The OIG will identify and review the relationships between physicians who furnish pathology services in their offices and outside pathology companies.
  • Laboratory Services Rendered During an Inpatient Stay. The OIG will review whether and to what extent physicians are impermissibly billing Medicare for the technical component of laboratory services provided during a beneficiary's inpatient stay
  • Physician Services at Skilled Nursing Facilities. Examination of Medicare Part A & B claims with overlapping services for skilled nursing facility patients to determine whether duplicate payments were made to either the physicians or the nursing homes for the same patient services

Additionally, significant risk areas from previous years that remain under scrutiny include the OIG's review of "long distance physician claims," excluded physicians ordering services and physician coding.

Independent Diagnostic Testing Facilities

The OIG will review the medical necessity of Medicare services provided to beneficiaries by independent diagnostic testing facilities. The OIG will determine whether (1) individual facilities provided services for which they had prior approval, (2) the designated level of physician supervision was provided, and (3) the non-physician personnel who performed the diagnostic tests were properly licensed.

Managed Care Plans

The OIG will review whether Medicare managed care plans are complying with the Medicare+Choice program's prompt pay requirement for non-contracting providers, and will evaluate plans' general and application controls over electronic transmission of patient data to determine compliance with HIPAA security requirements. The OIG will review the marketing methods of managed care organizations, specifically identifying any suspected violations of marketing standards that may involve selective enrollment of healthier enrollees.

Compliance Activities Health Care Organizations Should Undertake

In order to demonstrate that your compliance program is "effective" and is being updated to address new regulatory issues, we recommend that health care organizations take the following actions in light of the 2005 OIG Work Plan:

  1. Compliance Committee. Convene a compliance committee meeting to discuss the OIG's 2005 Work Plan, with particular emphasis on risk areas that impact your health care organization. Document these efforts by keeping written minutes of such meeting.
  2. Compliance Program Amendments. Carefully review your compliance program to consider whether amendments to the compliance program should be made. New risk areas identified in the Work Plan should be added to risk or audit areas set forth in the compliance program. All such compliance program amendments should be documented.
  3. Audits. Initiate internal and/or external audits of the areas of the OIG Work Plan that impact your health care organization to evaluate your compliance in those areas. Document these efforts by preparing a written summary of the methodology and results of such audits, and any corrective actions taken as a result.
  4. Educate Personnel. Educate management, professionals and staff with respect to new risk areas and the need to develop mechanisms to reduce the risk of noncompliance. Document all efforts in connection with any educational program or seminar offered regarding compliance issues.

If you require our assistance or have any questions please contact Michael Dowell at mdowell@tocounsel.com or the lawyer in the firm who generally handles your health care legal matters.