Healthcare

Contact: von Briesen & Roper, s.c. (Wisconsin, USA)

The United States Department of Health and Human Services ("HHS") Office of Inspector General ("OIG") released its Fiscal Year 2014 Work Plan ("2014 Plan") on January 31, 2014. The OIG releases a work plan annually to identify the new and ongoing investigative, enforcement and compliance activities that it will undertake during that fiscal year ("FY").¹ Providers may find the work plan to be a useful resource for focusing their compliance efforts and reviews.

The OIG's annual work plan provides an indication of OIG enforcement priorities during the year. In FY 2013, the OIG reported expected recoveries of over $5.8 billion, including nearly $850 million in audit receivables and approximately $5 billion in investigative receivables. The OIG also reported FY 2013 exclusions of 3,214 individuals and entities from participation in Federal health care programs; 960 criminal actions against individuals or entities that engaged in crimes against HHS programs; and 472 civil actions, including false claims and unjust enrichment lawsuits, civil monetary penalty settlements and administrative recoveries related to provider self-disclosure matters.

The 2014 Plan includes many ongoing initiatives, continued from previous years. It also includes new initiatives for FY 2014, including initiatives for hospitals, physicians, institutional providers and others, as well as reviews for Medicare Parts C and D, Medicaid, the Affordable Care Act ("ACA"), and the Recovery Act. This Update summarizes new initiatives and highlights of the 2014 Plan.

Medicare Parts A and B

Hospitals and Institutional Providers
The 2014 Plan includes a number of new FY 2014 initiatives aimed at hospitals and institutional providers, including: new inpatient admission criteria, defective medical devices, analysis of salaries included in hospital cost reports, provider-based and freestanding clinics, outpatient evaluation and management ("E/M") services, hospital privileging, and assisted living facilities. Highlights of the 2014 Plan include:

• Two-Midnight Rule Review. The OIG intends to review the impact of the two-midnight rule on hospital billing and Medicare and beneficiary payments. The OIG will also look at variations in hospital billing under the two-midnight rule. For more on the two-midnight rule, see the von Briesen Health Law Blog.
• Costs Associated with Defective Medical Devices. The OIG previously expressed concern about the costs to Medicare for replacement of defective medical devices. New for FY 2014, the OIG will assess the effect of such costs and claims on the Medicare program.
• Employee Compensation. The Medicare program only permits hospitals to include on the hospital's cost report those employee costs that are reasonable. New for FY 2014, the OIG will determine the effect on the Medicare program if the program limited employee compensation.
• Provider-Based Payments. The OIG will compare reimbursement for physician office visits in provider-based clinics versus free-standing clinics and the impact on the Medicare program. The OIG will continue to review the impact of provider-based billing on costs.
• Billing and Payment Initiatives. In FY 2014 the OIG intends to study several areas related to billing and payment. New for FY 2014, the OIG will conduct an analysis of billing E/M services at new-patient rates for established patients in order to determine appropriateness of rates and recommend recovery of overpayments. Additional new FY 2014 billing and payment reviews include review of cardiac catheterization and heart biopsies to determine if hospitals complied with billing requirements, review of claims including a diagnosis of Kwashiorkor, review of claims for bone marrow or stem cell transplants, and analysis of whether indirect medical education payments are compliant.
• Hospital Privileging. Also new for FY 2014, the OIG will review how hospitals assess medical staff candidates prior to granting privileges, including hospitals' verification of credentials and review of the National Practitioner Data Bank.
• Skilled Nursing Facility ("SNF") Billing. Citing previous studies on billing inaccuracies, the OIG will analyze SNF billing overall as well as variation among SNFs.
• Hospice Services in Assisted Living Facilities. Under the ACA, the Centers for Medicare and Medicaid Services ("CMS") is required to reform hospice payments. Accordingly, the OIG will review hospice patients receiving services in assisted living facilities, including length of stay, levels of care received, and common terminal illnesses.

The 2014 Plan also outlines continued initiatives targeting critical access hospital swing-bed and outpatient services as well as interrupted stays in long-term care hospitals, duplicate graduate medical education payments, and adverse events in post-acute care.

Other Providers and Suppliers
In addition to the OIG's initiatives aimed at hospitals and institutional providers, the 2014 Plan outlines new initiatives targeting medical equipment and supplies as well as ambulance, chiropractic, sleep disorder, and dialysis providers.

• Ambulance Services. Due to identification of fraud schemes and trends indicating overutilization and medically unnecessary payments, the OIG will review OIG investigations and guidance related to ground ambulance transport services paid by Part B in order to offer recommendations to improve detected vulnerabilities and minimize inappropriate payments for ambulance services.
• Chiropractic Services. The OIG will compile results of prior audits, evaluations, and investigations of chiropractic services paid by Medicare to offer recommendations for identified trends in payment, compliance, and fraud vulnerabilities. The OIG will also review Part B billing and payments for chiropractic services related to questionable billing, maintenance therapy billing, and non-covered services.
• Dialysis Facility Survey Process. Based on researchers' concerns regarding state agency survey processes and failures to identify poorly performing facilities, the OIG will assess the extent, nature, and outcomes of the Medicare survey and certification process of dialysis facilities.
• Sleep Disorder Clinics (Hospitals, Outpatient Departments and IDTFs). The OIG will examine compliance with Medicare payment requirements for sleep-testing procedures to assess appropriateness of payments for high utilization sleep-testing procedures.
• Reasonableness of Medicare Fee Schedule Amounts for Medical Equipment. New in FY 2014, the OIG will review the reasonableness of the Medicare fee schedule for various medical equipment items compared to amounts paid by non-Medicare payers.
• Diabetes Testing Supplies. The OIG plans to complete a review in FY 2014 to determine the market share of diabetic testing strip types and review appropriateness of Part B payments for home blood glucose test strips and lancets.
• Other Equipment and Supplies. The OIG will review compliance with power mobility device Part B payment requirements for power mobility devices, including face-to-face examination requirements and medical necessity. The OIG will also review compliance with Part B payment requirements for nebulizer machines and related drugs, including medical necessity.

The OIG will continue to review compliance with the home health prospective payment system and employment of individuals with criminal convictions. In FY 2014, the OIG will also continue to determine rural health clinic compliance with location requirements and the extent to which Medicare reimbursement to such clinics is occurring. The OIG will continue to review payments for evaluation and management services for inappropriate payments and record documentation vulnerabilities.

Prescription Drugs
The 2014 Plan summarizes new initiatives targeting the 340B Program as well as average sales price reporting and covered uses for Part B drugs.

• Part B Payments for 340B Program Drugs. New for FY 2014, the OIG will determine how much Part B spending could be reduced if Medicare were able to share in the savings for 340B-purchased drugs. The OIG will calculate the amount by which average sales price-based payments exceed 340B prices and estimate potential savings on the basis of various shared-benefit methodologies.
• Payment for Compound Drugs. The OIG will examine Medicare Administrative Contractors' policies and procedures for reviewing and processing Part B claims, as well as appropriateness of claims for compounded drugs.

In addition, the OIG will determine the potential effect on average sales price reporting if all manufacturers of Part B drugs were required to submit average sales prices to CMS. The OIG will also review oversight actions by CMS and claims processing contractors to ensure payments for Part B drugs meeting coverage criteria.

Information Technology Security, Protected Health Information and Data Accuracy
Not unexpected with the continued transition to electronic medical records, clinical integration, and transparency, the 2014 Plan outlines a number of technology driven initiatives.

• Networked Medical Device Controls. New for FY 2014, the OIG will determine whether hospitals' security controls over networked medical devices (e.g., dialysis machines, radiology systems, and medication dispensing systems integrated with electronic records) are sufficient to effectively protect electronic protected health information ("PHI") and ensure beneficiary safety.
• Physician Compare Website Accuracy. The OIG will review CMS's efforts to ensure that the Physician Compare website contains accurate information on health care providers.
• Security of Portable Devices. Due to recent reported breaches, the OIG will continue to review security controls at hospitals to prevent loss of PHI stored on portable devices and media (e.g., laptops, jump drives, backup tapes, and equipment considered for disposal).

Please also see Recovery Act Reviews below for a summary of additional IT-related initiatives.

Other Part A and B Initiatives
The 2014 Plan also outlines additional Part A and B initiatives for contractors and providers, including:

• Contractor Executive Compensation. Medicare requires its contractors to apply a senior executive compensation benchmark. The OIG will determine if cost savings could result from applying the compensation benchmark to all contractor employees.
• Benefit Integrity Contractor, ZPIC, and PSC Performance. The OIG will review performance of benefit integrity contractors, including Zone Program Integrity Contractors and Program Safeguard Contractors.
• Provider Eligibility Enhanced Screening Process. The OIG will collect data on and report the number of initial enrollments and enrollment revalidations approved and denied by CMS before and after the implementation of the enhanced screening procedures required under Section 6401 of the ACA.

In the context of federal regulations permitting CMS to deactivate billing privileges for idle providers, the OIG will also identify active Medicare providers who have not billed Medicare for more than one year. The OIG will also continue to assess Medicare secondary payer compliance.

Medicare Parts C and D

The majority of the 2014 Plan initiatives for Medicare Parts C and D are continued initiatives from previous work plans. However, highlights include the following:

• Part C Compliance with Risk Adjustment Data Requirements. Based on previous reviews, the OIG will continue to review medical record documentation for compliance with federal requirements including sufficient support of diagnoses in risk adjustment data submitted to CMS.
• Pharmacy Reimbursement and Rebates. New for FY 2014, the OIG will follow up on previous work and compare pharmacy and rebate amounts for a sample of brand-name drugs paid by Part D and Medicaid.

The OIG will continue to review sufficiency of Part D sponsors' documentation supporting administrative costs included in annual bid proposals and compliance with Medicare requirements for reporting direct and indirect remuneration. The OIG will also review CMS policies and processes for reopening final payment determinations and determine the adequacy of sponsor compliance and sponsor-submitted data.

Medicaid

In FY 2014, the OIG will continue its focus on prescription drugs, long-term and community care, and other items that have been the subject of previous work plans. The 2014 Plan has the following new initiatives:

• Drug Claims for Herceptin. The OIG will review claims to learn whether providers have properly billed Medicaid programs for multiuse vials of Herceptin, a drug used to treat breast cancer. The OIG noted that prior audits revealed provider noncompliance with Medicare billing requirements.
• Preventive Screening. The OIG will review claims for Early and Periodic Screening, Diagnosis and Treatment ("EPSDT") for children enrolled in Medicaid. The OIG has previously found that in some states, three of four children did not receive all required medical, vision, and hearing screenings. The OIG will determine what steps CMS has taken to address the OIG's recommendation to improve delivery of these services.
• Enhanced Federal Assistance. The ACA authorized states to claim 100% of Federal Medical Assistance Percentage ("FMAP") for persons newly eligible because of Medicaid expansion. New for FY 2014, the OIG will review state Medicaid claims to see whether states correctly applied the ACA's FMAP.
• Medicaid Eligibility. The OIG will review Medicaid eligibility in selected states with a focus on eligibility determinations for beneficiaries who are newly Medicaid-eligible under the ACA. The OIG will review whether states made correct determinations.
• National Correct Coding Initiative ("NCCI"). The OIG will review selected states' implementation of the NCCI. The NCCI's purpose is to promote correct coding of health care services. The OIG will review claims and describe CMS's oversight of NCCI edits.
• Information Systems Security. The OIG will review CMS's oversight of states' Medicaid system and information security controls. The OIG will try to determine whether CMS has ensured that proper security controls have been implemented.
• Managed Care. The OIG will review states' managed care plan payments to determine whether managed care organizations are correctly reimbursed. The review will include analysis of data used to set rates.

The OIG will also continue to work on a variety of ongoing initiatives, including reviewing matters relating to: appropriate use and payment (including rebates) of prescription drugs, appropriate eligibility enrollment in and payment for home health and other community-based services, compliance with requirements for transportation services, and state program integrity efforts and compliance with federal requirements.

Affordable Care Act Reviews

The OIG introduced a number of new initiatives in FY 2014 aimed at review of ACA programs related to Health Insurance Marketplaces ("Marketplaces"), eligibility, data security, and Medicaid expansion. Highlights include the following:

• Advanced Premium Tax Credits and Cost Sharing Reductions. New for FY 2014, the OIG will assess the effectiveness of HHS internal controls to pay Advanced Premium Tax Credit and Cost Sharing Reduction subsidies, which vary according to income, marital status, household composition, and eligibility for government or employer sponsored coverage.
• Risk Corridor Program Oversight. Under the ACA temporary risk corridor program, qualified health plans ("QHPs") set target amounts and must pay HHS if costs fall below 3% of targeted amounts. Based on previous work identifying problems with Medicare Part D risk corridors, in FY 2014 the OIG will assess CMS's efforts to ensure accurate reporting and payment in the risk corridor program, including an examination of amounts paid under the program. Providers and payers can expect to see additional OIG initiatives targeted in this area because the OIG also reports that it will develop additional work in FY 2014 to examine: CMS's administration of payment system, calculation of subsidy payments of consumers whose circumstances change, payments associated with individuals who move between Medicaid and Marketplace coverage, treatment of subsidy payments when consumers drop coverage, and accuracy of information received from State exchanges upon which federal payments are based.
• ACA Enrollment Safeguards and Manual Verification Procedures. Also new for FY 2014, the OIG will assess effectiveness of internal controls in place to ensure accurate information is used by Marketplaces to determine consumer eligibility for enrollment and subsidy payments. The OIG will conduct an internal control review of Federally-Facilitated Marketplace ("Federal Marketplace") and two State Based Marketplaces ("State Marketplaces") and will expand the review to other State Marketplaces in subsequent work. The OIG will also determine how and to what extent Marketplaces manually verify applicants' eligibility to enroll in QHPs and eligibility for tax credits and cost sharing reductions.
• Contract Management and Performance. The 2014 Plan summarizes a number of new initiatives related to planning, acquisition, contraction, management, and performance of the Federal Marketplace. The OIG will review efforts in planning, coordinating, and implementing the Federal Marketplace; the procurement process and rationale for selections; the extent to which HHS and its contractors had mechanisms to communicate problems or concerns about the Federal Marketplace; and payments and oversight of Federal Marketplace contractors.
• Marketplace Security Controls. The OIG will conduct a vulnerability scan of the HealthCare.gov website and State Marketplaces as well as review reports related to prior vulnerably assessments in order to assess adequacy of information security controls and whether identified vulnerabilities were timely remediated.

As described above, the OIG will also undertake a number of Medicaid reviews based on changes to the program under the ACA, including review of the enhanced FMAP percentage and error rates in eligibility determination.

Recovery Act Reviews

The OIG received funds under the American Recovery and Reinvestment Act of 2009 ("ARRA") for discretionary oversight of HHS programs that received ARRA funds. While the OIG does not plan to initiate new reviews, it will continue its current reviews. These include reviews of Medicare and Medicaid Meaningful Use incentive payments for electronic health record ("EHR") adoption, security of EHRs, and oversight by the Office for Civil Rights regarding covered entity compliance with the Health Insurance Portability and Accountability Act ("HIPAA") Privacy Rule and Breach Notification Rule.

To review the full set of the OIG initiatives for FY 2014, the 2014 Plan is available here. A video released by the OIG's senior executives discussing emerging trends, the OIG's top priorities, and the 2014 Plan is available here. Stay up to date on the progress of these initiatives and new guidance at vonbriesenhealth.com.

For more information, please contact any one of the authors or your von Briesen Health Law Attorney.

von Briesen & Roper Legal Update is a periodic publication of von Briesen & Roper, s.c. It is intended for general information purposes for the community and highlights recent changes and developments in the legal area. This publication does not constitute legal advice, and the reader should consult legal counsel to determine how this information applies to any specific situation.