2014 OIG Work Plan Released: Our Observations on Enforcement (Part 2)

February 27, 2014

In continuation from our Part 1 piece recently distributed, the Office of the Inspector General (OIG) of the Department of Health and Human Services (HHS) recently released its Work Plan for Fiscal Year 2014 (the “Work Plan”). The OIG usually issues the Work Plan each October, but budget pressures delayed this year’s release. The Work Plan provides an annual view into the OIG’s planned areas of focus for investigation and enforcement activities in the coming year.

Below are our continued interesting observations from this year’s Work Plan.

7. Ambulatory Surgical Center (ASC) versus HOPD Payments. The OIG will continue its efforts to review the appropriateness of the ASC payment system (currently modeled on the hospital outpatient prospective payment system (PPS)) compared with hospital outpatient department (HOPD) payments. Although the payment systems are similar, MedPAC has found that Medicare pays hospital outpatient departments (on average) 78 percent more than it pays ASCs for the performance of similar surgical services. The OIG will evaluate whether patient acuity and other factors justify divergent rates for similar services provided in the different environments. The OIG is expected to release its report later this year.

8. End Stage Renal Disease (ESRD) Bundled Payments. The OIG will continue reviewing payments for ESRD services and drugs under its bundled PPS rate. CMS has been implementing an ESRD PPS over a four-year transition period. As part of the PPS rate, CMS utilizes Bureau of Labor Statistics’s (BLS) wage and price proxy data for annual updates. Previously, the OIG had questioned the accuracy of the BLS’s data to measure a facility’s costs in acquiring ESRD drugs. The OIG’s review of payment accuracy comes as ESRD facilities adjust to lower payments beginning in calendar year 2014. The OIG’s findings may impact future calls for ESRD payment changes.

9. Anesthesia Service Billing for Personally Performed Services. The OIG continues its investigation into billing anesthesia services as personally performed by an anesthesiologist (service code AA) in contrast with services under his or her medical direction (service code QK). Medicare pays for AA-coded services at a rate that can be up to double the rate for QK-coded services. The OIG fears this incentivizes improperly billed AA services when the anesthesiologist does not actually personally perform the service. Meanwhile, the industry hopes the report also helps to highlight certain payment ambiguities in the 20-year-old service codes, including how to bill a service that begins as medically directed but ends as personally performed.

10. Laboratory Tests Billing Under Part B. The OIG will continue reviewing Part B clinical laboratory tests for questionable billing practices. Medicare covers most lab tests and pays 100 percent of allowable charges. Past OIG reports have suggested Medicare pays 18 percent to 30 percent more than other insurers for these tests. Such high reimbursement may be one reason Medicare payments for lab services grew 92 percent between 1998 and 2008. According to a past OIG report, paying equivalent to the lowest insurer in 2011 for 20 common tests would have saved taxpayers approximately $910 million. In an area with growing costs and potentially recognizable savings, the OIG will likely target this area for the foreseeable future.

11. Hospital Networks Security. The OIG has added a new research initiative focused on hospitals’ control of networked medical devices. These devices often contain large amounts of sensitive electronic protected health information (PHI). One would not be surprised that the OIG is concerned in light of recent high-profile data security breaches. This should be a signal to all healthcare providers (and not just hospitals) that steps should be taken to safeguard PHI.

12. Medicaid Dental Services. The OIG continues to focus on Medicaid pediatric dental services. Medicaid covers comprehensive dental care for 30 million low-income children through the program’s early and periodic screening, diagnosis and treatment program. Past OIG reports found three out of four children had not received all of their required screenings. The OIG plans to determine if CMS’s response has been effective. In addition, the OIG will continue investigations into inappropriate Medicaid dental billing. Past reports found 31 percent of dental services “resulted in improper payments” (albeit, most were documentation errors). Last year, Senators Baucus and Grassley released a report on a similar topic, suggesting continued interest among key policymakers to reform these Medicaid benefits.

Please contact one of the authors if you have questions regarding the 2014 OIG Work Plan or the information contained in this client alert.