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Editor’s Note: This is part of a week long series exploring the impact of the OIG 2013 Work Plan on different types of providers and organizations.

Each year, the Department of Health and Human Services Office of Inspector General (OIG) releases a Work Plan for the upcoming fiscal year. The Work Plan outlines reviews and activities that the OIG plans to conduct in the upcoming fiscal year, and shows the current OIG areas of focus. On October 3, 2012 the OIG released its Work Plan for fiscal year 2013, which included some new issues that did not appear on the FY 2012 Work Plan.

Among the new issues the Work Plan outlines are some that will affect hospitals. The Work Plan states that the OIG will examine:

Diagnosis Related Group Window: The OIG will examine claims data for bundled outpatient services prior to an inpatient hospital admission. Medicare currently bundles outpatient services delivered by the admitting hospital three days prior to inpatient admission into the same diagnosis related group (DRG). This three day span is known as the DRG window. The OIG will review the possibility of expanding the DRG window to outpatient services delivered 14 days prior to inpatient admission, and how much that would reduce Medicare payments.

Compliance with Medicare’s Transfer Policy: The OIG will review Medicare payments made to hospitals that were coded as discharges, but should have been coded as transfers. The review will examine whether the payments were appropriate and the effectiveness of transfer claims processing edits. The DRG amount paid for a discharge could be greater than the DRG payment for a transfer.

Hospitals should also be aware of other issues that appear in the Work Plan. These include:

  • Inpatient Billing for Medicare Beneficiaries
  • Non-Hospital-Owned Physician Practices Using Provider-Based Status
  • Payments for Discharges to Swing Beds in Other Hospitals
  • Payments for Canceled Surgical Procedures
  • Payments for Mechanical Ventilation
  • Quality Improvement Organizations’ Work With Hospitals
  • Acquisitions of Ambulatory Surgical Centers: Impact on Medicare Spending
  • Critical Access Hospitals–Payments for Swing-Bed Services

Hospitals can expect OIG review of these issues to lead to additional focus by CMS and its contractors. It is important that providers implement compliance plans to help prevent recoupment of funds or even legal action.
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Editor’s Note: This is part of a week long series exploring the impact of the OIG 2013 Work Plan on different types of providers and organizations.

Recently, the Department of Health and Human Services Office of Inspector General (OIG) released the OIG’s annual Work Plan. The Work Plan includes the reviews and activities that the OIG plans to conduct during fiscal year 2013. The OIG’s 2013 Work Plan will likely affect long term care providers because some of the issues, as described below, target long term care providers.

HHAs–Home Health Face-to-Face Requirement:
The OIG will examine the frequency with which home health agencies are complying with face-to-face requirements. Physicians, or permissible allied health practitioners, are required to have face-to-face encounters with beneficiaries receiving home health care within statutorily mandated time frames. Past OIG reviews have indicated that compliance with face-to-face requirements has been low.

Long -TermCare Hospitals–Payments for Interrupted Stays:
The OIG will determine if inappropriate payments were made by Medicare for interrupted stays in long-term care hospitals, and attempt to identify patterns of readmission directly following interrupted stays. When a patient is discharged from a long-term care hospital to receive services that are not available at the long-term care hospital, and then readmitted, Medicare payment amounts can be affected. Past OIG reviews have identified weaknesses in the ability to detect these inappropriate payments.

Home Health Services–Duplicate Payments by Medicare and Medicaid:
The OIG will determine the frequency with which both Medicare and Medicaid have paid for the same Medicare-covered home health services.

Long term care providers should also be aware of other issues that appear in the 2013 Work Plan. These include:

• Nursing Homes–State Agency Verification of Deficiency Corrections • Nursing Homes–Use of Atypical Antipsychotic Drugs • Nursing Homes–Oversight of the Minimum Data Set Submitted by Long-Term-Care Facilities • HHAs–Employment of Home Health Aides With Criminal Convictions

Long term care providers should anticipate that OIG review of these issues may to lead to additional focus by CMS and its contractors. Long-term care providers should review current compliance programs or implement a compliance program if they do not already have one to prepare for CMS’ increased attention.
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Editor’s Note: This is part of a week long series exploring the impact of the OIG 2013 Work Plan on different types of providers and organizations.

The Department of Health and Human Services Office of Inspector General (OIG) announced in its recently released 2013 Workplan that it intends to continue to focus on several issues impacting ambulance suppliers. Specifically, the OIG stated that it intends to examine levels of transport, including Advanced Life Support (“ALS”) and Specialty Care Transport (“SCT”), to determine whether these levels were reasonable and necessary.

The OIG also indicated that it would examine relationships between ambulance companies and other providers, presumably related to the anti-kickback statute.

Ambulance suppliers can expect to see continued focus on these issues, which have been the focus of Medicare audits and OIG scrutiny for some time. Effective compliance programs can help ambulance providers to assess their risk related to these and other areas of scrutiny.
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On September 26, 2012 The Department of Health and Human Services Office of Inspector General (OIG) issued a report on Schedule II drugs inappropriately billed to Medicare Part D. The report found that Medicare Part D inappropriately paid for $24.6 million in Schedule II drugs billed as refills, despite federal law prohibiting refills of Schedule II drugs.

OIG Report on Schedule II Drug Refills.pdf

Schedule II drugs are the second most controlled drugs under the Controlled Substances Act. They are classified as drugs which have a medical use, but have a high potential for abuse and may lead to severe psychological or physical dependence. Schedule II drugs with the highest number of refills billed to Medicare in 2009 include fentanyl, oxycodone-acetaminophen, morphine sulphate, and methadone HCI.

According to the report, 12,356 pharmacies billed for refills of Schedule II drugs, of which six percent were long-term-care pharmacies. Despite consisting of only six percent of the pharmacies that billed for refills of Schedule II drugs, long-term-care pharmacies were responsible for seventy-five percent of the refills. The report raises the possibility that some of these pharmacies actually incorrectly billed partial fills as refills. Partial fills are permitted for Schedule II drugs because of prohibitions on the amount a pharmacy can keep on hand at any one time. As a result, pharmacies will do partial fills of a prescription over a period of time, rather than filling the whole thing at once. In the CMS response to the report, CMS urged that it was likely that a majority of the refills were actually partial fills that were incorrectly billed. In turn, the OIG responded that even if that were the case it is still illegal to bill a refill of a Schedule II drug, regardless of the circumstances.

The OIG report further found that more than 25,000 refills of Schedule II drugs that were billed had invalid prescriber information. Prescriptions for Schedule II drugs require the name, address, and signature of the prescriber. Refills without proper prescriber information accounted for $1.4 million paid by Medicare Part D in 2009.

In 2009, the report concluded, 75% of all Medicare Part D sponsors paid for Schedule II drugs billed as refills, which indicates there are not appropriate safeguards in place to stop refills. The OIG made the following recommendations to CMS:

1. Issue guidance to sponsors to prevent billing of Schedule II refills and to ensure accurate billing of partial refills.

2. Exclude Schedule II refills when calculating payments to sponsors.

3. Monitor sponsors to ensure that they validate prescriber numbers for Schedule II drugs.

4. Follow up on sponsors and pharmacies with high numbers of refills of Schedule II drugs.

In response to these recommendations, CMS indicated that it will not work with sponsors and pharmacies to determine why there are not controls in place to prevent Schedule II refills. CMS will instead explore the use of PDE edits to prevent billing. CMS also did not agree to exclude Schedule II drugs billed as refills from payments to sponsors, and indicated that it will instead examine PDE edits to alert sponsors to inappropriate refills.
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The Obama administration, through a strongly worded letter signed by Attorney General Eric H. Holder Jr. and Secretary of Health and Human Services Kathleen Sebelius, warned healthcare providers of “troubling indications” that hospitals are using electronic health records to game the Medicare and Medicaid reimbursement system. The letter was sent to five major hospital trade associations, and follows a New York Times report that the use of electronic records might be contributing to a rise in Medicare billing, particularly in hospital emergency rooms. The administration claims that the use of electronic records, which were introduced to reduce costs and improve care, have lead to false documentation and inappropriate coding.

Throughout the letter, the government vowed to vigorously prosecute doctors and hospitals that are implicated in fraud. Regulators will examine the significant increase in billing for the most expensive evaluation services. The federal government obtained $2.4 billion from health care fraud settlements and judgments last year, and prosecutions against fraud are up 75% since 2008.

Specifically, the letter claims that hospitals are “cloning” electronic medical records, where information of one patient is repeated in other records, and also using electronic records to “facilitate upcoding of the intensity of care or severity of a patient’s condition as a means to profit with no commensurate improvement in the quality of care.” As evidence, the letter cites that hospitals received $1 billion more in Medicare reimbursements in 2010 compared to 2005, and attributes that increase to billing codes that classify more patients as sicker and needing more care.

Conversely, healthcare providers contend that “the new systems allow them to more accurately record information about their patients, leading to higher payments for the services they provide.” The hospital trade associations agree that the alleged practices are unacceptable and cannot be tolerated. However, experts criticize the government for not providing more guidance to both healthcare providers and the software companies developing the electronic records.

The concerns of Regulators, including the Office of Inspector General for Health and Human Services, demonstrate the government’s intention to “ensure payment accuracy and to prevent and prosecute healthcare fraud” and a continuing trend by the government to carefully scrutinize services billed by hospitals and physicians.
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The U.S. Department of Health and Human Services (HHS) recently agreed to a $1.5 million settlement with the Massachusetts Eye and Ear Infirmary for violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Security Rule.

The HIPAA Security Rule protects electronic health information by requiring HIPAA-covered entities to use various safeguards to ensure that electronic protected health information remains private and secure. The Privacy Rule, by contrast, grants individuals rights over protected health information, and sets rules for who may view that information.

MEEI submitted a HIPAA breach report, as required by HIPAA’s Breach Notification Rule, following the theft of an unencrypted personal laptop. The laptop contained electronic protected health information (ePHI), including patient prescriptions and clinical information.

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On September 14, 2012 the Office of Management and Budget (OMB) issued a report to Congress pursuant to the Sequestration Transparency Act of 2012 (STA). The report indicates that under the Budget Control Act of 2011 (BCA), Medicare spending could be cut by almost $11.1 billion in fiscal year 2013 if a plan is not enacted to reduce the national deficit by $1.2 trillion.

The BCA requires that the Joint Select Committee on Deficit Reduction propose a plan to reduce the deficit by $1.2 trillion, and that Congress enact that plan. If a plan is not enacted by January 2, 2013, automatic spending cuts, known as sequestration, will occur on that date. Medicare direct spending is budgeted at almost $554.3 billion. The BCA limits the amount by which Medicare non-administrative spending can be cut to 2%. This would equal roughly $11.1 billion in fiscal year 2013. Because the sequestration would apply to non-administrative spending, providers would likely see a majority of the effects of the sequestration. Medicaid is exempt from sequestration.

It appears that efforts will continue to be made to enact a deficit reduction plan before Congress adjourns at the end of 2012.

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On Wednesday, the Centers for Medicare & Medicaid Services (CMS) will host a Special Open Door Forum (ODF) to provide healthcare suppliers and providers an opportunity to learn more and ask questions about Medicare’s Prior Authorization for Power Mobility Devices Demonstration Program. CMS’ new demonstration program, which applies to orders written on or after September 1st, creates a prior authorization process for specified medical equipment provided to Medicare beneficiaries in California, Florida, Illinois, Michigan, New York, North Carolina, and Texas. CMS identified these states as containing the highest populations of fraud- and error-prone providers, and the new program seeks to ensure that CMS pays appropriately for medical equipment.

The demonstration will examine whether a beneficiary’s medical condition warrants the medical equipment under existing coverage guidelines. CMS also notes that the program will preserve Medicare beneficiaries’ ability to receive quality products from accredited suppliers.

In order to participate, dial (800) 837-1935 and use the conference ID: 34258271. Following the ODF, a transcript and recording will be available on CMS’ website.

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On September 11, 2012 the United States Court of Appeals for the Ninth Circuit held that a Recovery Audit Contractor’s (RAC’s) initial decision to reopen a claim is not subject to judicial review. The case, Palomar Medical Center v. Sebelius, involved Palomar Medical Center arguing that a RAC has to establish good cause for an initial reopening decision. The Court of Appeals affirmed the ruling of the United States District Court for the Southern District of California, which held that the issue of good cause for reopening a claim cannot be raised after the audit’s conclusion and the revision of a paid claim.

Palomar v Sebelius.pdf

In 2007, the RAC notified Palomar that a claim from 2005 totaling $7,992.92 was under review and that records were requested to support medical necessity. Subsequently, after it submitted the requested documentation, Palomar was notified that an overpayment had been identified and the overpayment must be repaid. The overpayment was affirmed at the redetermination and reconsideration levels. Palomar then requested a hearing with an Administrative Law Judge (ALJ).

The ALJ affirmed that the services were not medically necessary, but found that the RAC did not make a showing of good cause for the late reopening. Finally, the Medicare Appeals Council (MAC) decided that:

1. Neither the ALJ nor the MAC had jurisdiction to assess whether good cause existed for reopening because the RAC’s decision to reopen was not subject to the administrative appeals process, and
2. The services were not medically reasonable and necessary.

Palomar appealed to the District Court and then the Court of Appeals on the issue of reviewability of the reopening, but not on the issue of medical necessity of the services.

The Court of Appeals for the Ninth Circuit held that because Congress established the RAC program, and expressly stated that reopenings were allowed under regulations promulgated by the Secretary, the regulations would control. Since the regulations explicitly state that there may be no appeal of a reopening decision because reopening decisions are final, the question of good cause to reopen a claim cannot be litigated after a RAC has revised a claim determination.

Although the court determined that the issue of good cause for reopening is not appealable, the court conceded that it was not an easy question to answer because of two competing principles: (1) Congress wanted an effective recovery audit program to reduce Medicare payments with resulting benefits for Medicare beneficiaries and taxpayers, under procedures set by the Secretary and (2) the provider has a legitimate interest in finality of determinations on its revenue for medical services. Despite the competing principles, the court ultimately concluded that to allow a provider to challenge the good cause for reopening during the appeals process could lead to the waste of resources and administrative inefficiency if the good cause was later rejected during the appeals process.
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On September 4, 2012 the Department of Health and Human Services Office of Inspector General (OIG) issued a report in which it found that during calendar years 2009 and 2010 Medicare made overpayments to Inpatient Rehabilitation Facilities (IRFs) totaling an estimated $8.4 million.

The Centers for Medicare and Medicaid Services (CMS) establish a prospective payment rate for specific case-mix groups to which each beneficiary is assigned based on their expected clinical resource needs. IRF patient data is transmitted through Patient Assessment Instruments (PAIs) which contain the data on each beneficiary that is necessary to assign each to a case-mix group. IRF claims are processed and paid through Medicare Administrative Contractors (MACs). The IRF must submit the PAI data to the MAC within 27 days from the beneficiary’s discharge date. If PAI data is submitted after the 27 day window, a 25% late assessment penalty is applied to the case-mix group.

In the report, the OIG published the results of an audit conducted over calendar years 2009 and 2010 which examined whether IRFs received the reduced case-mix group payments for claims with PAIs that were submitted after the 27 day window. During the audit timeframe, 2,414 claims were transmitted after the 27 day window which totaled $41.6 million. The audit examined a 108 claim sample, of which 88 did not receive the 25% case-mix reduction. From this sample the OIG estimated that $8.4 million in overpayments were made to IRFs.

The OIG made recommendations to CMS which included the following:

1. Adjust the 88 sampled claims for overpayments of $696,371 to the extent allowed under the law.
2. Work with the OIG to resolve the remaining 2,306 nonsampled claims with potential overpayments estimated at $7.7 million and recover overpayments.
3. Continue to provide specific education to IRFs on the importance of reporting the correct PAI transmission dates on their claims.
4. Support the MACs’ and RACs’ efforts to conduct periodic postpayment reviews of IRF claims.

In response to the report, CMS concurred with the findings of the OIG and outlined implementation possibilities for the recommendations.
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