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OIG Issues Work Plan for 2013

October 12, 2012

On October 2, 2012, the Department of Health and Human Services Office of Inspector General (OIG) published its Work Plan for the 2013 fiscal year. The Work Plan identifies the specific areas on which the OIG will focus during the fiscal year beginning October 1, 2012 through September 30, 2013. Click Hereto view the Work Plan. Below is a summary of OIG focus areas affecting hospitals and other health care providers.


New areas of focus include the following:

  • Inpatient Billing for Medicare Beneficiaries – The OIG will assess how hospital billing for inpatient stays changed from FY 2008 to FY 2012. The OIG will also assess how billing for inpatient stays in FY 2012 varied among different types of hospitals and how hospitals ensure compliance with Medicare requirements for inpatient billing.
  • Diagnosis Related Group (DRG) Window – The OIG will analyze claims data to determine how much the Centers for Medicare and Medicaid Services (CMS) could save if it bundled outpatient services delivered up to 14 days prior to an inpatient hospital admission into the DRG payment. Medicare currently bundles all outpatient services delivered 3 days prior to an inpatient hospital admission. The OIG notes that its prior work “has also concluded that CMS could realize significant savings if the DRG window was expanded from 3 days to 14 days.”
  • Non-Hospital-Owned Physician Practices Using Provider-Based Status – The OIG will determine the impact of non-hospital-owned physician practices billing Medicare as provider-based physician practices, and will also determine the extent to which practices using the provider-based status satisfied CMS billing requirements.
  • Compliance With Medicare’s Transfer Policy – The OIG will review Medicare payments made to hospitals for beneficiary discharges that should have been coded as transfers and determine whether such claims were appropriately processed and paid. The OIG will also review the effectiveness of the Medicare Administrative Contractor’s (MAC) claims processing edits used to identify claims subject to the transfer policy.
  • Payments for Discharges to Swing Beds in Other Hospitals – The OIG will review Medicare payments made to hospitals for beneficiary discharges that were coded as discharges to a swing bed in another hospital. Swing beds are inpatient beds that can be used interchangeably for either acute care or skilled nursing services. Currently, Medicare pays a hospital the full DRG amount when a beneficiary is discharged from the hospital; Medicare pays the hospital a reduced payment for a shorter length of stay when a beneficiary is transferred to another prospective payment system (PPS) hospital. However, Medicare currently does not pay the reduced graduated per diem rate if the beneficiary was discharged to a swing bed in another hospital. The OIG notes that it may recommend that CMS evaluate its policy related to payment for hospital discharges to swing beds in other hospitals.
  • Payments for Canceled Surgical Procedures – The OIG will determine costs incurred by Medicare related to inpatient hospital claims for canceled surgical procedures. The OIG notes that its preliminary analysis of Medicare claims data for inpatient stays demonstrated significant occurrences of an initial PPS payment to hospitals for a canceled surgical procedure followed by a second, higher PPS payment to the same hospitals for the rescheduled surgical procedure. The OIG also identified inpatient claims with canceled surgical procedures for stays of less than 2 days that were not followed by subsequent inpatient admissions to the same hospitals for the rescheduled surgical procedures. Current Medicare policy does not preclude payment for these claims.
  • Payments for Mechanical Ventilation – The OIG will review Medicare payments for mechanical ventilation to determine whether the DRG assignments and resultant payments were appropriate. The OIG will review selected Medicare payments to determine whether patients received fewer than 96 hours of mechanical ventilation. Mechanical ventilation is the use of a ventilator or respirator to take over active breathing for a patient. For certain DRG payments to qualify for Medicare coverage, a patient must receive 96 or more hours of mechanical ventilation.
  • Quality Improvement Organizations’ (QIO) Work With Hospitals – The OIG will determine the extent to which QIOs worked with hospitals either to conduct quality improvement projects or to provide technical assistance. The OIG will also assess the barriers QIOs experience when engaging hospitals.
  • Acquisitions of Ambulatory Surgical Centers (ASC): Impact on Medicare Spending – The OIG will determine the extent to which hospitals acquire ASCs and convert them to hospital outpatient departments. The OIG will also determine the effect of such acquisitions on Medicare payments and beneficiary cost sharing. Medicare currently reimburses outpatient surgical services performed in hospital outpatient departments at a higher rate than similar services performed in ASCs. The OIG notes that hospitals may be acquiring ASCs and providing outpatient surgical services in that setting.
  • Critical Access Hospitals (CAH) - Payments for Swing-Bed Services – The OIG will compare reimbursement for swing-bed services at CAHs to the same level of care obtained at traditional skilled nursing facilities (SNF) to determine whether Medicare could achieve cost savings through a more cost effective payment methodology. 
  • Long -Term-Care Hospitals (LTCH) - Payments for Interrupted Stays – The OIG will determine the extent to which Medicare made improper payments for interrupted stays in LTCHs in 2011. The OIG will also identify readmission patterns and determine the extent to which LTCHs readmit patients directly following the interrupted stay periods. The OIG notes that its prior work has identified vulnerabilities in CMS’s ability to detect readmissions and appropriately pay for interrupted stays.

Areas of focus from previous years that the OIG will continue to monitor include the following:

  • Acute-Care Inpatient Transfers to Inpatient Hospice Care – The OIG will continue to review inpatient hospital claims where the beneficiary was transferred to a hospice, and, if appropriate, will recommend that CMS evaluate its policy related to the payment for hospital discharges to hospice facilities.
  • Admissions With Conditions Coded Present on Admission – The OIG will continue to examine Medicare claims to determine whether acute care hospitals are frequently transferring patients with certain diagnoses that were coded as being present when patients were admitted (referred to as “present on admission”) to another acute care hospital. Medicare requires acute care hospitals to report on their claims which diagnoses were present when patients were admitted.
  • Payments – The OIG will continue to examine hospital inpatient outlier payments and evaluate national trends of such payments to identify the characteristics of hospitals with high or increasing rates of outlier payments. The OIG will also continue to review high-payment claims, payments for graduate medical education to determine whether duplicate or excess payments were made, and payments to acute care hospitals to determine compliance with selected billing requirements.
  • Critical Access Hospitals (CAH) – The OIG will continue to review CAHs to profile variations in size, services and distance from other hospitals, and will examine the numbers and types of patients that CAHs treat. Currently, limited information exists about the structure and type of services provided by CAHs.
  • Medicare Outpatient Dental Claims – The OIG will continue to review hospital outpatient payments for dental services to determine whether such payments comply with Medicare requirements. Generally, dental services are excluded from Medicare coverage. Recent OIG audits indicate that providers have received significant overpayments in this area.
  • In-Patient Rehabilitation Facilities (IRF) – The OIG will continue to review the appropriateness of IRF admissions and the level of therapy provided in IRFs.
  • Readmissions – The OIG will continue to examine Medicare claims to determine trends in the number of same-day hospital readmission cases.
  • Calculation of Inpatient Hospital Wage Indexes – The OIG will determine whether hospitals reported occupational-mix data used to calculate inpatient wage indexes in compliance with Medicare regulations and the effect on Medicare of inaccurate reporting of occupational-mix data. Hospitals must accurately report data every 3 years on the occupational mix of their employees. CMS uses data from the occupational-mix survey to construct an occupational-mix adjustment to its hospital wage indexes.
  • Hospital Claims for the Replacement of Medical Devices – The OIG will determine whether hospitals submitted inpatient and outpatient claims that included procedures for the insertion of replacement medical devices in compliance with Medicare regulations. Medicare is not responsible for the full cost of a replaced medical device if the hospital receives a partial or full credit from the manufacturer either because the manufacturer recalled the device or because the device is covered under warranty. Medicare requires hospitals to use modifiers on their inpatient and outpatient claims when they receive credit from the manufacturer of 50 percent or more for a replacement device.


A new area of focus includes the following:

  • Onsite Visits for Medicare Provider and Supplier Enrollment and Reenrollment – The OIG will assess how often onsite visits occur as part of the Medicare enrollment or reenrollment process. Currently, CMS reserves the right to perform onsite inspections of Medicare providers and suppliers to verify enrollment information. Additionally, pursuant to the Affordable Care Act, CMS is authorized to expand the role of unannounced pre-enrollment site visits.

Areas of focus from previous years that the OIG will continue to monitor include the following:

  • High Cumulative Part B Payments – The OIG will continue to examine high cumulative Medicare Part B payments (meaning an unusually high payment made to an individual physician or supplier over a specified period of time) to determine if such payments are reasonable and necessary.
  • Incident-to-Services – The OIG will continue to evaluate physician billing for “incident-to” services to assess whether payments for such services had a higher error rate than that for non-incident-to services.
  • Place-of-Service Coding – The OIG will review physician coding on Medicare Part B claims for services performed in ASCs and hospital outpatient departments to determine whether they properly coded the place of service.
  • Part B Imaging Services – Medicare payments for Part B imaging services will be evaluated to determine whether they reflect expenses incurred, and whether the utilization rates reflect industry practices.
  • Hospices – The OIG will continue to review hospices’ marketing practices and their financial relationships with nursing facilities. Areas of particular concern include aggressive marketing of hospice services to nursing facility residents and compliance with hospice coverage requirements. The OIG will also review the use of hospice general inpatient care in 2011, and will assess the appropriateness of hospices’ general inpatient care claims.
  • Ambulances - Questionable Billing for Ambulance Services – The OIG will continue to examine Medicare claims data to identify questionable billings such as transports that were potentially not medically reasonable and necessary, and potentially unnecessary billing for Advanced Life Support Services and specialty care transport.
  • ASCs and Hospital Outpatient Departments (HOPD) – Safety and Quality of Surgery and Procedures – The OIG will continue to evaluate the safety and quality of care for surgeries and procedures performed at ASCs and HOPDs, and will identify health care adverse events for both ASCs and HOPDs.
  • Review of Payment – The OIG will continue to evaluate the methodology for setting ASC payment rates, and will assess whether a payment disparity exists between the ASC and hospital outpatient department payment rates for similar surgical procedures provided in both settings.

The Work Plan also discusses the OIG’s review of other types of health care providers such as Durable Medical Equipment (DME) suppliers, home health agencies and nursing homes. If you have questions regarding the Work Plan or seek assistance in bringing your facility or practice into compliance with the areas identified in the Work Plan, please contact any member of our Health Care Department listed here.