Introduction

Each year the Office of the Inspector General of the Department of Health and Human Services (OIG) issues a comprehensive Work Plan describing the issues on which it will focus its review for the next fiscal year. In the recently released 2009 Work Plan, the OIG identified numerous areas relevant to hospitals for scrutiny in 2009.  Notably, almost half of the 26 hospital topics listed in the 2009 Work Plan are new, including issues related to provider-based status, hospital ownership of physician practices, inpatient rehabilitation facility payments, compliance with the Emergency Medical Treatment and Active Labor Act (EMTALA), and several quality of care-related issues. The numerous items related to long-term acute care hospitals in the 2008 Work Plan have been eliminated as has the issue related to patient care in physician-owned specialty hospitals, among others. Since subsequent government enforcement efforts often reflect Work Plan initiatives, hospitals are well advised to carefully review the 2009 Work Plan in light of their operations, and consider auditing one or more of the identified issues as part of their compliance program efforts. To facilitate review, some of the more significant issues in the 2009 Work Plan – most likely to concern hospitals – are briefly summarized below.

New Hospital Topics for 2009

The new hospital issues the OIG plans to address in 2009 include:

• Additional Part A Medicare Capital Payments for Extraordinary Circumstances.  Hospitals may request additional Medicare capital payments for unexpected expenses over $5 million resulting from extraordinary circumstances such as a flood, fire or earthquake. The OIG will assess whether capital payments to hospitals for extraordinary circumstances satisfied federal requirements.

• Provider-Based Status for Inpatient and Outpatient Facilities. Hospitals with provider-based facilities may receive higher reimbursement and other benefits. The OIG plans to review the impact on Medicare and its beneficiaries when hospitals improperly claim provider-based status for inpatients and outpatients.

• Hospital Ownership of Physician Practices. This topic focuses on hospital-owned physician practices that have been designated as provider-based. The OIG will investigate several related issues, e.g., whether these hospitals have met applicable federal requirements for the provider-based designation, the impact on Medicare of reimbursement under the hospital outpatient prospective payment system (OPPS) to such provider-based practices, and the extent to which hospital-owned physician practices that do not have provider-based designation have been improperly reimbursed under the OPPS.

• Inpatient Rehabilitation Facility Payments. The OIG plans to review inpatient rehabilitation facilities’ (IRFs) claims for reimbursement for patient transfers from IRFs to other IRFs, long term care hospitals, acute inpatient hospitals or nursing homes. Federal regulations require adjustments to the prospective payment system (PPS) payments when IRF patients are transferred under certain circumstances.  Specifically, the OIG will examine whether claims that should have been paid as transfers led to IRFs making improper claims under the IRF prospective payment system. 

• Interrupted Stays at Inpatient Psychiatric Facilities Payments. CMS adjusts the PPS per diem payment so that reimbursement for the earlier days of an inpatient psychiatric facility (IPF) patient’s stay is higher than for the later days. To prevent IPFs from discharging and then readmitting patients to increase reimbursement, federal regulations require the transfer of a patient from one IPF to the same or another IPF, within three days of discharge, to be treated as one continuous stay.  The OIG plans to review whether coding errors for claims that should have been paid as transfers led to improper IPF claims submission.

• Reliability of Hospital-Reported Quality Measure Data. Hospitals must report to CMS quality of care measures for a set of ten indicators to avoid a Medicare payment reduction. The OIG plans to assess whether hospital controls are sufficient to ensure valid quality measurement data.

• Oversight of Hospitals’ Compliance with EMTALA. CMS is responsible for reviewing EMTALA complaints and referring the cases that warrant investigation to state licensing authorities. Since a  recent OIG review raised concerns about CMS’s EMTALA oversight, the OIG will examine any regional variations in the number of EMTALA cases referred to States, assess CMS’s methods for tracking complaints and determine whether requisite peer reviews have been conducted prior to CMS’s termination of noncompliant providers from Medicare.

• Coding and Documentation Changes Under the Medicare Severity Diagnosis Related Group System. The OIG plans to review the impact of the Medicare Severity Diagnosis Related Group (MS-DRG) system, implemented on October 1, 2007, which increased the number of DRGs to 745 from 538. The OIG will scrutinize coding trends and patterns which have emerged due to the new system and determine whether specific MS-DRGs are vulnerable to potential upcoding.

• Serious Medical Errors (“Never Events”). The OIG plans to conduct a series of studies related to “never events” as required under the Tax Relief and Health Care Act of 2006, specifically those issues, policies and practices related to “never events” that occur in hospitals. In addition the OIG will review hospital compliance by identifying various hospital-acquired conditions using the Present on Admission coding system. 

• Financial Status of Hospitals in the New Orleans Area. As New Orleans rebuilds its health care infrastructure in the aftermath of Hurricane Katrina, the OIG plans to review the financial status of hospitals in the area to assess the hospitals' needs and the options for policymakers. The OIG will determine whether hospitals in the area that received federal grants effectively used them to compensate health care providers and to help recruit additional health care professionals to the area.

• Medicaid: Supplemental Payments to Private Hospitals. The OIG intends to review Medicaid supplemental payments made to private hospitals by individual states.  These payments are limited to the applicable aggregate upper payment limit (UPL), and federal funds are not available for Medicaid payments that exceed these limits.  Due to errors identified in prior OIG work involving supplemental payments to public hospitals, the OIG will determine whether errors also exist involving supplemental payments to private hospitals.

• Medicaid: Potentially Excessive Medicaid Payments for Inpatient and Outpatient Services. Prior OIG studies involving Medicare inpatient and outpatient claims revealed that many claims that led to excessive payments to hospitals were due to errors in billing on the claims submitted, such as inaccuracies in various types of coding, charges and number of units billed. The OIG intends to examine whether similar vulnerabilities exist in the State agencies’ controls for detection of potentially excessive payments by Medicaid.

Areas of Continued OIG Scrutiny

The following are areas the OIG identified in the 2008 Work Plan and will continue to focus on in 2009.

Medicare Hospitals:

• Part A Hospital Capital Payments;

• Part A Inpatient Prospective Payment System Wage Indices;

• Payments to Organ Procurement Organizations;

• Inpatient Hospital Payments for New Technologies;

• Critical Access Hospitals;

• Medicare Disproportionate Share Payments;

• Inpatient Psychiatric Facility Emergency Department Adjustments;

• Provider Bad Debts;

• Medicare Secondary Payer; and

• Payments for Diagnostic X-Rays in Hospital Emergency Departments.

Medicaid Hospitals:

• Hospital Outlier Payments;

• States’ Disproportionate Share Hospital Payments for Care for Individuals in Institutions for Mental Diseases;

• Provider Eligibility for Medicaid Reimbursement; and

• Medicaid Disproportionate Share Hospital Payment Distribution.

Areas No Longer Identified for Review by OIG

The following hospital-related issues were listed in 2008 but eliminated from the 2009 Work Plan:  

• Medicare-Dependent Hospital Program;

• Adjustments for Graduate Medical Education Payments;

• Nursing and Allied Health Education Payments;

• Compliance with Medicare’s Transfer Policy;

• Patient Care and Safety in Physician-Owned Specialty Hospitals;

• Oversight of the Joint Commission Hospital Accreditation Process;

• Long Term Care Hospital (LTCH) Payments for Interrupted Stays;

• LTCH Short Stay Outliers;

• Special Payment Provisions for Patients Transferred to Onsite Providers and Readmitted to LTCHs;

• Special Payment Provisions for LTCHs Discharging Beneficiaries to Co-located or Satellite Providers; and

• Medicaid: Hospital Eligibility for Disproportionate Share Hospital Payments.

Conclusion

The 2009 OIG Work Plan indicates numerous areas of likely OIG scrutiny during the coming year. Hospitals and their compliance personnel are well-advised to review their operations in connection with each of the listed areas. 

If you any questions or would like additional information on these issues, please contact any of the Arent Fox attorneys listed below:

Linda A. Baumann
baumann.linda@arentfox.com
202.857.6239

Lisa Edwards 
edwards.lisa@arentfox.com
202.857.6346