THIS MONTH IN HEALTHCARE LEGAL NEWS—Part 1

On October 2, 2012, the Department of Health and Human Services Office of Inspector General (OIG) published its comprehensive 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 Here to view the Work Plan. Below is a summary of OIG focus areas affecting hospitals and other health care providers in this 7 part Work Plan.

                  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 may also recommend CMS evaluate its policies for such transfers.

                   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 will continue to evaluate the methodology for setting ambulatory service center 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 OIG will also review physician coding on Medicare Part B claims for services performed in ambulatory service centers and hospital outpatient departments to determine whether they properly coded the place of service.

                  Calculation of Inpatient Hospital Wage Indexes –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. The OIG will assess whether this was accurately reported by hospitals. 

                  Comparable Payments on a National Scale– 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.

                  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.

                  Diagnosis Related Group Window Extenstion –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.”
 

                  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.

                  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.
 

                  Inpatient Billing for Medicare Beneficiaries – The OIG will assess how hospital billing for inpatient stays changed from FY 2008 to FY 2012 for various hospitals and how those hospitals have ensured compliance with Medicare requirements.

                  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. This could be a cost-saving measure for Medicare in its Work Plan.

                  Quality Improvement Organizations’ Work With Hospitals – The OIG will determine the extent to which these organizations worked with hospitals either to conduct quality improvement projects or to provide technical assistance along with the barriers they experience in engaging hospitals.

                  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.
 

                  Readmission Patterns and Interrupted Stays– The OIG will determine the extent to which Medicare made improper payments for interrupted stays in long term health care centers last year. The OIG will also identify readmission patterns and determine the extent to which patients are directly readmitted 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.

                   

                  Swing Bed Services– Swing beds are inpatient beds that can be used interchangeably for either acute care or skilled nursing services. The OIG will review Medicare payments made to hospitals for beneficiary discharges that were coded as discharges to a swing bed in another hospital. 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. Furthermore, the OIG will compare reimbursement for swing-bed services at critical access hospitals to the same level of care obtained at traditional skilled nursing facilities to determine whether Medicare could achieve cost savings through a more cost effective payment methodology. 

                   

                  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. It will also continue to evaluate and bring more knowledge to the forefront regarding the structural framework of critical access hospitals, inpatient rehab facilities, and other institutions.

                  Click Here to view the Work Plan in its entirety.