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It’s early October in the United States, and we have something that arrives with the reliability of death and taxes: the OIG’s annual Work Plan.

This year’s plan brings 148 pages of new and old areas of focus, making it slightly smaller than last year’s plan. Let’s jump right in and discover what areas we can expect to be scrutinized during the next fiscal year.

The hospital world already is up in arms about one particular aspect of the OIG’s Part A plan. The OIG is going to analyze claims data to determine how much money could be saved by the Centers for Medicare & Medicaid Services (CMS) “if it bundled outpatient services delivered up to 14 days prior to an inpatient hospital admission into a DRG payment.” Currently, the DRG payment window is set at three days.

In my mind, if this is the first step toward a proposed rule on a 14-day payment window, hospitals across the country that were planning to build wholly owned and operated ambulatory surgical centers (ASC) more than likely will wind up scrapping their plans.

Those hospitals that currently own their ASCs probably are going to redraw their contracts to bring in new partial ownership to make certain that services performed there never fall under the new DRG window. In the OIG’s world, if a patient undergoes a procedure in a hospital-owned ASC, then goes home and within two weeks has a complication necessitating an inpatient stay, suddenly the ASC services would be bundled into the DRG payment. Worse yet, if CMS and the OIG define a complication as being acquired at the facility, this conceivably could lead to CMS paying nothing for either encounter under their desired future payment paradigm. For hospitals, it is comparable to being hit by a bus while crossing the street only to be sent flying across the double yellow lines into the path of a Peterbilt truck.

In 2011, the OIG Work Plan touched on the use of swing beds within a hospital. This year’s plan expands on that, looking at transfers from one hospital into a swing bed at another. Specifically, the OIG wants to know if these cases are being handled as discharges by the first hospital, rather than being treated as proper transfer procedures. Additionally on this topic, the OIG is going to look at payments for swing-bed services in critical-access hospitals, comparing them to payments to skilled nursing facilities in an attempt to identify savings.

Also new to the hospital realm within the work plan are the following:

  • An analysis of the changes in inpatient stays from FY 2008 to FY 2012;
  • Review of payments for hospital discharges that should have been coded as transfers;
  • A closer look at what happens, from a payment perspective, when a surgical procedure is cancelled during an inpatient stay;
  • The appropriateness of Medicare payments for mechanical ventilation;
  • Assessing the work product of contracted Quality Improvement Organizations (that’s $1.1 billion in contracts!); and
  • Hospital acquisition of ASCs and possible subsequent conversion to hospital outpatient departments, leading to higher rates of reimbursement.

Continuing in the Part A realm, the OIG once again is revisiting the administration of atypical antipsychotic drugs, with a closer look at the characteristics of the nursing homes that use them more frequently than others (I think we used to call them “communes”).

Let’s delve a little bit into Part B, though. I’d like to start with some of the new issues on the program integrity front. The OIG wants to know how often on-site visits are happening for providers and suppliers during the enrollment/re-enrollment process. In a prior review, the OIG found that 33 percent of DME suppliers in South Florida did not have a physical facility to match an address. As an adjunct to this finding, the OIG also will be looking at the improper use of commercial mailboxes opened with the specific intent of defrauding the Medicare program.

A few specialties are on the radar for the first time. Anesthesiologists billing with the “AA” modifier for services (indicating that the services were performed personally, rather than merely supervised) will have their claims reviewed to verify that this information is correct. Ophthalmologists, who were paid $6.8 billion in FY 2010, will have their claims reviewed for what the OIG calls “questionable billing.” A similar probe will be performed for needle EMGs and nerve conduction studies, which puts neurologists and neurosurgeons on notice nationally.

Some issues are continuing from previous years, such as reviews of providers that have proven to be error-prone in CERT testing, in the high utilization of sleep testing procedures and in ASC payment methodology.

The ongoing drug shortages arising throughout the country now also are drawing the attention of the OIG. In addition to studying the experiences of physicians and hospitals dealing with these shortages, the OIG is looking at manufacturer sales of drugs in short supply. With drugs often being vastly overpriced thanks to manufacturer-friendly language in the law that created Medicare Part D, the OIG is looking into instituting a drug rebate program for Part B drugs (similar to what is in effect for Medicaid). Along the same lines, the OIG is continuing its investigation into the differences between average sale price and average manufacturer price.

Long overdue is a two-front investigation of Medicare Administrative Contractors, a move that will assess MACs’ performance and their use and management of system edits for claims processing. When considered along with the OIG’s intention to review CMS’s contracting landscape, looking into whether contractors are meeting requirements for error-rate reductions, it would appear that a new front has been opened up in investigating why the Medicare payment error rate remains ridiculously high.

In addition to the work plan, the OIG is planning a free webcast on Oct. 24 as a follow-up to the plan’s release. More information on this can be found here. Enjoy perusing the pages of the new Work Plan, as past plans have provided a foundation for longstanding audit issues.

The Work Plan is never strictly the bearer of bad news, but rather also a useful road map for future planning.

About the Author

J. Paul Spencer is the Compliance Officer for Fi-Med Management, Inc., a national physician practice financial management company based in Wauwatosa, WI. Paul has over 20 years of experience across all facets of healthcare billing, including six years spent with insurance carriers. In his current role with Fi-Med, he acts as a physician educator on issues related to E/M level of service and documentation audits by CMS and other outside entities. Paul has carried the CPC and CPC-H credentials from the American Academy of Professional Coders since 1998.

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RAC Prepayment Review: Understanding Inpatient Short Stays


J. Paul Spencer, CPC, COC

J. Paul Spencer is a senior healthcare consultant for DoctorsManagement. Is the national correspondent for Monitor Mondays, the live Internet radio broadcast produced by RACmonitor.

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