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Thus, what was previously a long, drawn-out process (remember “shadow audits?”) is now quick and payback-focused/driven.

Of course, as a healthcare provider you also must be concerned that if you have a long-standing billing/documentation practice that is inconsistent with accepted billing/documentation standards, one potentially could argue that you have a “pattern or practice” of billings that could subject you to further reviews with the potential for larger paybacks plus fines and/or penalties – and all of the negative exposure that entails. In some instances, it is not beyond the realm of possibility that criminal investigations could ensue if a provider has behaved in a manner that shows intent to defraud the government.

Conversely, one similarity shared by the RAC initiative and previous investigations/areas of focus is that all providers still have the opportunity to utilize the Office of Inspector General’s Model Hospital Program Compliance (first published in 1998 with a supplemental document published in 2005) as a proactive resource/planning tool.

An important component of a compliance program is effective education to emphasize the importance of compliance and to assist, via learned individuals, the identification of potential risks or areas that need to be reviewed/monitored/investigated. These educational efforts and training programs typically utilize the annual OIG Work Plan to assist in developing strategies. This year’s OIG Work Plan indicates some very interesting areas of focus – even several that are very similar to the RACs’!

Consider the following excerpts from the 2010 OIG Work Plan that may be helpful to your compliance education and RAC preparation efforts.

    A Message From the

    Office of Inspector General

    We are pleased to present the Office of Inspector General (OIG) Work Plan for fiscal year (FY) 2010. This publication describes activities that we plan to initiate or continue with respect to the programs and operations of the Department of Health and Human Services (HHS) in the next year. To place the Work Plan in context, we describe below our mission and activities, organization, program integrity resources, work-planning process, and related matters.

    Mission and Activities

    OIG’s operational mission is to protect program integrity and the well-being of program beneficiaries by detecting and preventing waste, fraud, and abuse; identifying opportunities to improve program economy, efficiency, and effectiveness; and holding accountable those who do not meet program requirements or who violate Federal laws. We carry out our mission by conducting audits, evaluations, and investigations; providing guidance to industry; and, when appropriate, imposing civil monetary penalties (CMP), assessments, and administrative sanctions. We work closely with HHS and its Operating and Staff Divisions; the Department of Justice (DOJ); and other agencies in the executive branch, Congress, and States to bring about systemic changes, successful prosecutions, negotiated settlements, and recovery of funds.

    The size and scope of the Medicare program place it at high risk for payment errors. To ensure both the solvency of the trust funds and beneficiaries’ continued access to quality services, correct and appropriate payments must be made for properly rendered services. Our targeted audits and evaluations continue to identify significant improper payments and problems in specific parts of the program. These reviews have revealed payments for unallowable services, improper coding, and other types of improper payments.

    Medicare Part A and Part B Contractor Operations

    Recovery Audit Contractors’  Referrals of Potential Fraud and Abuse

    We will review CMS’s oversight of Recovery Audit Contractors (RACs) during a three-year demonstration program to determine the extent to which RACs, which are responsible for identifying Medicare overpayments and underpayments, also identified and reported potential fraud and abuse to CMS. Section 306 of the MMA directed the Secretary of HHS to conduct a demonstration project using RACs to identify Medicare underpayments and overpayments.

    Following the conclusion of the RAC demonstration program, CMS made the RACs a national program. For both the demonstration and national RACs, we will examine the number of cases referred to CMS, CMS’ processing of those referrals, CMS’ guidance and training to the demonstration RACs to identify and report potential fraud, and CMS’s guidance and training to national RACs on appropriately reporting potential fraud.

    (OEI; 03-09-00130; expected issue date: FY 2010; work in progress)


    Observation Services During Outpatient Visits

    We will review Medicare payments for observation services provided during outpatient visits in hospitals. The Social Security Act, §§ 1832(a) and 1833(t), provides for Part B coverage of hospital outpatient services and reimbursement for such services under the Hospital Outpatient Prospective Payment System (OPPS). CMS’s “Medicare Claims Processing Manual,” Pub. No.

    100-04, ch. 4, § 290, provides the billing requirements. We will assess whether and to what extent hospitals’ use of observation services affects the care Medicare beneficiaries’ receive and their ability to pay out-of-pocket expenses for health care services.

    (OEI; 00-00-00000; expected issue date: FY 2011; new start)

    Coding and Documentation Changes Under the Medicare Severity Diagnosis Related Group System

    We will review the impact of the Oct. 1, 2007 implementation of the Medicare Severity Diagnosis Related Group (MS-DRG) system. CMS revised its hospital inpatient reimbursement system to improve recognition of severity of illness and resource consumption, as recommended in a March 2005 MedPAC report. As a result, the number of DRGs has increased from 538 to

    745. We will examine coding trends and patterns under the new system and determine whether specific MS-DRGs are vulnerable to potential upcoding.

    (OEI; 00-00-00000; expected issue date: FY 2011; new start)

Moving Forward

If the delay in the RACs’ requests for medical records and subsequent reviews of complex cases has caused a malaise to your institution’s RAC preparation efforts, or if your colleagues still “don’t understand the threat of the RACs,” consider utilizing these aforementioned aspects of the 2010 OIG Work Plan in your compliance education efforts.

About the Author

Bret S. Bissey, MBA, FACHE, CHC, is a nationally recognized expert in healthcare compliance. He is the author of the Compliance Officer’s Handbook, published in 2006, and has presented at more than 40 regional and national industry conferences/meetings on numerous compliance topics. He has more than 25 years of diversified healthcare management, operations and compliance experience.

Contact the Author:



Bret Bissey, MBA, FACHE, CHC

A veteran in healthcare compliance (since 1997), Bret Bissey has served as senior vice president and chief ethics compliance officer at UMDNJ in Northern New Jersey. The author of the Compliance Officer’s Handbook, he has been a thought leader and popular speaker at industry conferences and meetings for many years. Bissey has more than 30 years of diversified healthcare management, operations, consulting, and compliance experience.

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