OIG 2004 Work PlanOIG 2004 Work PlanHospital FocusHospital Focus

http://www.oig.hhs.gov/publications/workplan.html

22

Topics CoveredTopics Covered

• What is the Work Plan?What is the Work Plan?• What to do if contacted by OIG as What to do if contacted by OIG as

part of an Audit or Studypart of an Audit or Study• Will not address every Hospital OIG Will not address every Hospital OIG

Work Plan item, but will address Work Plan item, but will address those we feel are most significant to those we feel are most significant to compliance professionalscompliance professionals

• Adequate time for Q&A at endAdequate time for Q&A at end

33

OIG 2004 Work PlanOIG 2004 Work Plan

What Does It Mean?What Does It Mean? Not necessarily a “Fraud” RoadmapNot necessarily a “Fraud” Roadmap A “Plan” for Where OIG will invest A “Plan” for Where OIG will invest

its resources in coming year (may its resources in coming year (may change).change).

A Valuable Tool for Compliance A Valuable Tool for Compliance ProfessionalsProfessionals

44

What Is the Work Plan?What Is the Work Plan?

• OIG duties and responsibilitiesOIG duties and responsibilities• Concerns of the Department of Concerns of the Department of

Health and Human ServicesHealth and Human Services• ““various project areas that [OIG] various project areas that [OIG]

perceives as critical to [its] mission”perceives as critical to [its] mission”

• Roadmap for providers and Roadmap for providers and compliance professionalscompliance professionals

• Divided into distinct sections (e.g. Divided into distinct sections (e.g. CMS)CMS)

55

Interaction with OIG on Work Plan Interaction with OIG on Work Plan ItemItem

• OIG sends auditors and analysts into OIG sends auditors and analysts into the field. the field.

• May request records and seek May request records and seek interviewsinterviews

• Will typically provide chance to Will typically provide chance to comment on preliminary findingscomment on preliminary findings

• Can have attorney present during Can have attorney present during questioning (judgment call)questioning (judgment call)

66

Medicaid GMEMedicaid GME

• Numerous states provide hospitals reimbursement for Numerous states provide hospitals reimbursement for medical education costs through a state plan medical education costs through a state plan amendment or CMS approved waiveramendment or CMS approved waiver

• Initial OIG evaluations have indicated that Medicaid Initial OIG evaluations have indicated that Medicaid and Medicare payments have reimbursed hospitals in and Medicare payments have reimbursed hospitals in excess of overall medical education program costs excess of overall medical education program costs

• OIG plans to conduct evaluations across 15 states to OIG plans to conduct evaluations across 15 states to determine appropriateness of reimbursement for determine appropriateness of reimbursement for GME/IMEGME/IME

• Hospitals should internally assess reimbursement from Hospitals should internally assess reimbursement from all payers for IME/GME.all payers for IME/GME.

• Recognize that IME costs are incurred by providers by Recognize that IME costs are incurred by providers by having excessive ancillary costs associated with tests having excessive ancillary costs associated with tests ordered by residentsordered by residents

77

GME – Dental & PodiatryGME – Dental & Podiatry

• Relevant Issues in Final 2004 IP PPS Rule Relevant Issues in Final 2004 IP PPS Rule • GME / Dental and Podiatry ResidentsGME / Dental and Podiatry Residents

• Exempt from resident caps for GMEExempt from resident caps for GME• BBA of 1997 exempted Dental and Podiatry residents from BBA of 1997 exempted Dental and Podiatry residents from

resident cap calculationsresident cap calculations• Hospitals took on Dental and Podiatry residency programs Hospitals took on Dental and Podiatry residency programs

and claimed residents for GME reimbursementand claimed residents for GME reimbursement• CMS sites Prohibition Against Redistribution of CostsCMS sites Prohibition Against Redistribution of Costs

• Once community assumed educational costs, these costs Once community assumed educational costs, these costs could not be incurred / reported by Provider as allowable could not be incurred / reported by Provider as allowable costscosts

• CMS is preventing Providers from claiming residents in CMS is preventing Providers from claiming residents in non-provider settings if Provider did not historically incur non-provider settings if Provider did not historically incur the coststhe costs

• January 1, 1999 is effective date for FIs to determine January 1, 1999 is effective date for FIs to determine whether Provider or other entity has been incurring the whether Provider or other entity has been incurring the costs of trainingcosts of training

88

GME – Dental & PodiatryGME – Dental & Podiatry

• Relevant Issues in Final 2004 IP PPS Rule Relevant Issues in Final 2004 IP PPS Rule • GME / Dental and Podiatry Residents (cont.)GME / Dental and Podiatry Residents (cont.)

• CMS DirectiveCMS Directive• If FI identifies redistribution of costs, FI will disallow If FI identifies redistribution of costs, FI will disallow

portion of GME and IME payments related to those portion of GME and IME payments related to those residentsresidents

• Redistribution of Costs not to apply to a “new” Redistribution of Costs not to apply to a “new” programprogram

• Redistribution of Costs for IME applies only to non-Redistribution of Costs for IME applies only to non-provider settingsprovider settings

• CMS to apply policy as of October 1, 2003CMS to apply policy as of October 1, 2003• After October 1, 2003, rule applies to all residents After October 1, 2003, rule applies to all residents

with exception of those residents that began with exception of those residents that began training prior to October 1, 2003training prior to October 1, 2003

99

Inpatient Capital PaymentsInpatient Capital Payments

• $6 Billion paid annually to hospitals for Medicare $6 Billion paid annually to hospitals for Medicare Capital reimbursement Capital reimbursement • Acute care hospitals are currently reimbursed 100% Acute care hospitals are currently reimbursed 100%

based off of a national federal rate for capital costs (no based off of a national federal rate for capital costs (no longer actual cost factored into reimbursement)longer actual cost factored into reimbursement)

• OIG to evaluate the process that CMS has established OIG to evaluate the process that CMS has established for updating capital reimbursement amountsfor updating capital reimbursement amounts

• Likely that hospital site-visits would occur to complete Likely that hospital site-visits would occur to complete auditsaudits

• Verify if hospitals are using capital reimbursement for Verify if hospitals are using capital reimbursement for intended purposes (Capital expenditures vs. operating intended purposes (Capital expenditures vs. operating subsidy)subsidy)

• Replenishment of plantReplenishment of plant• Addition of new equipmentAddition of new equipment

1010

IP and OP Charging PracticesIP and OP Charging Practices

• OIG to evaluate impact, if any, of provider OIG to evaluate impact, if any, of provider charges on Medicare reimbursementcharges on Medicare reimbursement• Medicare regulations have been revamped to Medicare regulations have been revamped to

preclude providers from maximizing reimbursement preclude providers from maximizing reimbursement (on outliers) as a result of new regulations(on outliers) as a result of new regulations

• OP APC payments can still be impacted by charging OP APC payments can still be impacted by charging practices and high increases in charge practicespractices and high increases in charge practices

• Commerce Committee has launched an Commerce Committee has launched an investigation to evaluate impact of charge practices investigation to evaluate impact of charge practices on self-insured patient populationon self-insured patient population

• OIG has proposed new regulations to evaluate OIG has proposed new regulations to evaluate charge practices for consideration of provider charge practices for consideration of provider exclusion from governmental programsexclusion from governmental programs

1111

IP and OP Charging PracticesIP and OP Charging Practices

• The Committee on Energy and The Committee on Energy and Commerce Investigation Commerce Investigation

• 20 health systems nationally are 20 health systems nationally are participating in special investigation by participating in special investigation by Commerce CommitteeCommerce Committee

• Investigation centers around potential Investigation centers around potential billing inequalities for the uninsuredbilling inequalities for the uninsured

• Many Hospitals still in the process of Many Hospitals still in the process of collecting the requested informationcollecting the requested information

1212

IP and OP Charging PracticesIP and OP Charging Practices

• OIG Proposed Rule: Claims with Excessive OIG Proposed Rule: Claims with Excessive ChargesCharges• Published in September 15, 2003 Federal RegisterPublished in September 15, 2003 Federal Register• Proposed Rule amends OIG exclusion regulations Proposed Rule amends OIG exclusion regulations

addressing excessive claims by defining/clarifying:addressing excessive claims by defining/clarifying:• ““Usual Charges”Usual Charges”• ““Substantially in excess” andSubstantially in excess” and• The “good cause” exceptionThe “good cause” exception

• ““Usual Charges” include amounts billed to:Usual Charges” include amounts billed to:• Cash paying patientsCash paying patients• Indemnity insured patients with no contractual Indemnity insured patients with no contractual

arrangements with Providerarrangements with Provider• Any fee-for-service rates it contractually agrees to accept Any fee-for-service rates it contractually agrees to accept

including discounted rates with Managed Care plansincluding discounted rates with Managed Care plans• Discounted contract rates are a Providers “charge” to Discounted contract rates are a Providers “charge” to

those patientsthose patients

1313

IP and OP Charging PracticesIP and OP Charging Practices

• OIG Proposed Rule: Claims w/ Excessive OIG Proposed Rule: Claims w/ Excessive Charges (cont.)Charges (cont.)• ““Usual Charges” should not include:Usual Charges” should not include:

• Charges for services provided to uninsured patients Charges for services provided to uninsured patients free or substantially reducedfree or substantially reduced

• Capitated paymentsCapitated payments• Rates based on hybrid fee-for serviceRates based on hybrid fee-for service• Fees set by Medicare, Other Federal and State health Fees set by Medicare, Other Federal and State health

care programscare programs

• ““Substantially in Excess” Substantially in Excess” • Charges or costs that are more than 120% of the Charges or costs that are more than 120% of the

Providers usual charges or costs Providers usual charges or costs • If more than 120%, exclusion is not mandatoryIf more than 120%, exclusion is not mandatory• It is at the OIG’s discretionIt is at the OIG’s discretion

1414

Consecutive Inpatient StayConsecutive Inpatient Stay

• Analyzing claims to identify Analyzing claims to identify consecutive stays that may be consecutive stays that may be attempts to circumvent PPS – attempts to circumvent PPS – “questionable patterns of inpatient “questionable patterns of inpatient and long-term care.”and long-term care.”

1515

Organ Acquisition CostsOrgan Acquisition Costs

• Accurate allocation of costs to pre-transplant Accurate allocation of costs to pre-transplant cost centerscost centers• Costs of physician services (must maintain adequate Costs of physician services (must maintain adequate

documentation)documentation)• Periodic/annual time studies or time sheets covering all hours?Periodic/annual time studies or time sheets covering all hours?

• Administrative costs (salaries)Administrative costs (salaries)• Allocation of space costsAllocation of space costs• Employee benefitsEmployee benefits• Allocation of costs from other departments (e.g., lab)Allocation of costs from other departments (e.g., lab)

• Audit of Medicare Costs for Organ Acquisitions Audit of Medicare Costs for Organ Acquisitions at Tampa General Hospitalat Tampa General Hospital, OIG Audit Report , OIG Audit Report A-04-02-02017 (April 17, 2003)A-04-02-02017 (April 17, 2003)

• Sharp Memorial Healthcare Corporate Integrity Sharp Memorial Healthcare Corporate Integrity Agreement Agreement (February 2003)(February 2003)

1616

Medical Necessity in Inpatient Medical Necessity in Inpatient Psychiatric FacilitiesPsychiatric Facilities

• Holdover studyHoldover study• Psych – 58% error rate in acute care Psych – 58% error rate in acute care

hospital’s hospital’s outpatientoutpatient psych services psych services• 42% error rate in psych hospital 42% error rate in psych hospital

outpatientoutpatient services services• Also looking at inpatient psychAlso looking at inpatient psych

1717

Medical Necessity in Inpatient Medical Necessity in Inpatient Rehab FacilitiesRehab Facilities

• Holdover studyHoldover study• $4 billion in Medicare payments in 2000$4 billion in Medicare payments in 2000• QIOs (f/k/a/PROs) ceased its med. QIOs (f/k/a/PROs) ceased its med.

Necessity reviews of PPS exempt Necessity reviews of PPS exempt hospitals and units in 1995hospitals and units in 1995

• OIG concerned that no one was OIG concerned that no one was watching the storewatching the store

• 75% Rule nexus and recent FI LMRPs on 75% Rule nexus and recent FI LMRPs on IRF Medical NecessityIRF Medical Necessity

1818

DRG Payment LimitsDRG Payment Limits

• Assessment of Medicare contractors Assessment of Medicare contractors ability to limit payments to hospitals for ability to limit payments to hospitals for patient who are discharged with a patient who are discharged with a qualifying DRG and subsequently qualifying DRG and subsequently admitted to a post acute care settingsadmitted to a post acute care settings

• Qualifying DRGs up from 10 to 29 in Qualifying DRGs up from 10 to 29 in 2003.2003.

• Prior reviews by OIG found significant Prior reviews by OIG found significant overpaymentsoverpayments

1919

Update on DRG CodingUpdate on DRG Coding

• Review for inaccurate DRG codingReview for inaccurate DRG coding—“inaccurate coding may lead to —“inaccurate coding may lead to Medicare overpayment”Medicare overpayment”

• OIG has now identified 20 DRG pairsOIG has now identified 20 DRG pairs

2020

Coronary Artery Stents (new)Coronary Artery Stents (new)

• Medical NecessityMedical Necessity• Consecutive proceduresConsecutive procedures• Increased Medicare spending on drug-Increased Medicare spending on drug-

eluting stents (by Oct. ’03, 69% of eluting stents (by Oct. ’03, 69% of coronary artery stents would be drug coronary artery stents would be drug eluting). eluting).

• $4,859 higher payment than for bare metal $4,859 higher payment than for bare metal stents.stents.

2121

Diagnostic Testing in the ED Diagnostic Testing in the ED

• Medicare spends $85M on standard imaging Medicare spends $85M on standard imaging (x-rays) and $70M on advanced imaging (MRIs, (x-rays) and $70M on advanced imaging (MRIs, CT)CT)

• What will standard be for medical necessity?What will standard be for medical necessity?• Over-utilization?Over-utilization?• Failure to document contemporaneous Failure to document contemporaneous

interpretation?interpretation?

• OIG Draft Report: “Medicare’s Reimbursement OIG Draft Report: “Medicare’s Reimbursement for Interpretations of Hospital Emergency for Interpretations of Hospital Emergency Room X-rays” (OEI-02-89-01490) (May 11, Room X-rays” (OEI-02-89-01490) (May 11, 1993)1993)

2222

Outpatient PPSOutpatient PPS

• OIG to review several impacts from OIG to review several impacts from implementing OP PPS system on August 2000implementing OP PPS system on August 2000• Numerous providers will go through focused Numerous providers will go through focused

reviews for the following:reviews for the following:• Appropriateness of outlier paymentsAppropriateness of outlier payments• Billing multiple procedures during one encounterBilling multiple procedures during one encounter• Transitional pass through paymentsTransitional pass through payments• Overall OP claims assessment (30 claims – very Overall OP claims assessment (30 claims – very

comprehensive)comprehensive)• Refer to several OAS reports on OP evaluations Refer to several OAS reports on OP evaluations

(10/23/03 and 7/31/03)(10/23/03 and 7/31/03)

• Providers need to evaluate current charge practices Providers need to evaluate current charge practices and documentationand documentation

2323

Outpatient cardiac Outpatient cardiac rehabilitation servicesrehabilitation services

• At At request of CMSrequest of CMS, will review cardiac , will review cardiac rehabilitationrehabilitation services provided by services provided by outpatient departmentsoutpatient departments

• ““incident-to” a physician’s professional incident-to” a physician’s professional service, nonphysician services must be service, nonphysician services must be furnished under physician’s furnished under physician’s “direct “direct supervision”supervision”• The audit reports all point to no direct The audit reports all point to no direct

supervision in finding overpaymentssupervision in finding overpayments

2424

Outpatient cardiac Outpatient cardiac rehabilitation servicesrehabilitation services

• ““Direct supervision” - physician must Direct supervision” - physician must be in the exercise program area and be in the exercise program area and immediately available and accessible immediately available and accessible for a medical emergency at all times for a medical emergency at all times during exerciseduring exercise

• Even OIG has recently conceded that Even OIG has recently conceded that “incident to” rules are confusing“incident to” rules are confusing

2525

Grant FundGrant Fund

• Office of Investigations devoting Office of Investigations devoting increased resources (e.g., recent Mayo increased resources (e.g., recent Mayo Clinic subpoena)Clinic subpoena)

• Direct and indirect HHS grants (e.g., Direct and indirect HHS grants (e.g., NIH)NIH)

• Greater interaction with NIHGreater interaction with NIH• Proposal to issue Compliance Program Proposal to issue Compliance Program

Guidance re: Grant RecipientsGuidance re: Grant Recipients

2626

Howard Young, Esq.Former Deputy Chief of Civil Recovery and Senior Counsel of the OIG.Currently PartnerSonnenschein, Nath & Rosenthal, LLP, Washington DCEmail hyoung@sonnenschein.com

John Dugan, CPAPartner PricewaterhouseCoopers Philadelphia, PA Email john.k.dugan@us.pwc.com

Steven Ortquist, CHCVP, Ethics and Compliance & Chief Compliance Officer Banner Health Phoenix, AZ Email Steven.Ortquist@bannerhealth.com