Stay Current Evaluating Healthcare Audit Priorities

Stay Current Evaluating Healthcare Audit Priorities

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October 2007Evaluating Healthcare Audit Priorities: The OIG Issues Its 2008 Work Plan By Paul A. Gomez Recently  the  Office  of  Inspector  General  of  the  $48.3 million in 2004. Department  of  Health  and  Human  Services  (“OIG”) Patient Care and Safety in Physician-Owned released its “areas of special concern” for the 2008 fiscal Specialty Hospitals year. As a guidepost to the OIG’s current and future audit initiatives, the 2008 Work Plan is essential reading  The  OIG  intends  to  review  patient  care  and  safety  in for  compliance  officers  and  provider  administrators  physician‐owned specialty hospitals. The OIG noted that charged with setting audit priorities for their internal  concerns regarding the growth of specialty hospitals led corporate  compliance  programs.  As  described  by  the  Congress to impose an 18‐month moratorium on referrals OIG,  a  healthy  compliance  program  is  constantly  to new physician‐owned specialty hospitals. It also noted identifying new risk areas for investigation and audit.  that in June 2005 CMS issued a memorandum suspending The OIG issues the Work Plan as a catalog of risk areas  the processing of provider enrollment applications for new designed  to  guide  hospitals  and  other  healthcare  specialty hospitals. The OIG did not elaborate about what providers  and  suppliers  in  the  operation  of  their  particular concerns led to its apparent concern for patient individual compliance plans.  ...

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October 2007
Evaluating Healthcare Audit Priorities: The OIG Issues Its 2008 Work Plan
By Paul A. Gomez RecentlytheOfficeofInspectorGeneraloftheDepartmentofHealthandHumanServices(“OIG”)releasedits“areasofspecialconcern”forthe2008fiscalyear.AsaguideposttotheOIG’scurrentandfutureauditinitiatives,the2008WorkPlanisessentialreadingforcomplianceofficersandprovideradministratorschargedwithsettingauditprioritiesfortheirinternalcorporatecomplianceprograms.AsdescribedbytheOIG,ahealthycomplianceprogramisconstantlyidentifyingnewriskareasforinvestigationandaudit.TheOIGissuestheWorkPlanasacatalogofriskareasdesignedtoguidehospitalsandotherhealthcareprovidersandsuppliersintheoperationoftheirindividualcomplianceplans.Inthe2008WorkPlan,theOIG’sauditprioritiesforCentersforMedicareandMedicaidServices(“CMS”)programscoverwellover60pagesofdenselywrittentext.ArecitationofalltheprioritiesisbeyondthescopeofthisClientAlertandisbetterlefttoareviewoftheWorkPlanitself.However,thefollowingisanabridgedreviewofareasofparticularinterestintheWorkPlan.Payments for Diagnostic X-Rays in Hospital Emergency Departments TheOIGwillreviewasampleofMedicarePartBclaimsandmedicalrecordsfordiagnosticXraysperformedinhospitalemergencydepartmentstodeterminewhetherpaymentsareappropriate.Theconcernapparentlystems,inpart,fromtestimonygivenbytheMedicarePaymentAdvisoryCommissioninitsMarch2005testimonybeforeCongress,inwhichitreportedconcernsabouttheincreasingcostsofimagingservicesforMedicarebeneficiariesanditsconcernaboutpotentialoveruse.AccordingtotheOIG,diagnosticXraysinemergencyroomsincreased9.6percentbetween2001and2004,costingMedicareapproximately
$48.3millionin2004.
Patient Care and Safety in Physician-Owned Specialty Hospitals
TheOIGintendstoreviewpatientcareandsafetyinphysicianownedspecialtyhospitals.TheOIGnotedthatconcernsregardingthegrowthofspecialtyhospitalsledCongresstoimposean18monthmoratoriumonreferralstonewphysicianownedspecialtyhospitals.ItalsonotedthatinJune2005CMSissuedamemorandumsuspendingtheprocessingofproviderenrollmentapplicationsfornewspecialtyhospitals.TheOIGdidnotelaborateaboutwhatparticularconcernsledtoitsapparentconcernforpatientsafety,butdidindicatethatitplanstoreviewstaffingrequirementsatspecialtyhospitals,amongotherthings.
Medicare Providers and Assignment Rules
TheOIGwillreviewwhetherMedicareprovidersarefollowingrelevantassignmentrulesinbillingMedicarebeneficiaries.ProviderswhoacceptassignmentmustacceptMedicare’spaymentandbeneficiarycopayment(theMedicare“allowedamount”),aspaymentinfullforallcoveredservices.Providersarenotpermittedto“balancebill”beneficiariesforamountsinexcessoftheMedicareallowedamounts.TheOIGplanstoassessthedegreetowhichthispracticehasoccurred,aswellasbeneficiaryawarenessofthesekindsofpotentialviolations.Business Relationships and the Use of Magnetic Resonance Imaging Under the Medicare Physician Fee Schedule
TheOIGplanstoreviewarrangementsunderwhichmagneticresonanceimaging(“MRI”)isprovidedundertheMedicarePhysicianFeeSchedule.TheOIGintendstoreviewrelationshipsamongphysicians,billingprovidersandotherswhocollaboratetoprovide
18 Offices Worldwide|Paul, Hastings, Janofsky & WalkerLLP|www.paulhastings.com
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imagingservicestodeterminewhethertheserelationshipsaffectratesofutilization.TheOIGisparticularlyinterestedinfinancialrelationshipsamongtheseparties.Medicare Disproportionate Share Payments
MedicaremakesadditionalpaymentstoacutecarehospitalsthatserveasignificantlydisproportionatenumberoflowincomeMedicareandMedicaidpatients.TheOIG,asitdidlastyear,onceagainidentifieddisproportionatesharepaymentsasanareaofparticularconcern.AccordingtotheOIG,disproportionatesharepaymentshavebeenincreasingsteadily.TheOIGintendstodeterminewhetherdisproportionatesharepaymentshavebeenmadeinaccordancewithMedicarecriteriaandwhetherhospitals’classificationsareappropriate,anditwillreviewthetotalamountsofuncompensatedcarecoststhathospitalsbear.Medicaid Disproportionate Share Hospital Payment Distribution
TheOIGwillreviewtheMedicaidinpatientutilizationrateusedtodetermineeligibilityforMedicaidDisproportionateShareHospital(“DSH”)payments.HospitalsarerequiredtohaveaMedicaidinpatientutilizationrateofnotlessthanonepercentbeforebeingeligibletoreceiveMedicaidDSHpayments.Baseduponitsreview,theOIGmayrecommendchangestotheprogram,includingthethresholdrequirementforhospitalstoqualifyforMedicaidDSHpayments.Medicaid Hospital Outlier Payments
TheOIGwillreviewstateMedicaidpaymentsforhospitaloutliers,whicharecasesthatincurextraordinarilyhighcosts.TherearecertainstatesthatmakesupplementalMedicaidpaymentsforhospitaloutliersbasedonmethodologiesthataresimilartoMedicaremethodologies.AccordingtotheOIG,ithaspreviouslydeterminedthattherewerecertainvulnerabilitiesinvolvingMedicarehospitaloutlierpayments.Asaresult,theOIGintendstodeterminewhethertherearesimilarvulnerabilitiesinvariousstateMedicaidagencies’methodologiesofcomputinginpatienthospitalcostoutlierpayments.High Utilization of Ultrasound Services
TheOIGplanstoreviewservicesandbillingpatternsingeographicareaswithhighutilizationofultrasound
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servicespaidundertheMedicarePhysicianFeeSchedule.ItwillfocusondisproportionatelyhighMedicareallowedchargesandservicesperbeneficiaryanddisproportionatelyhighpercentagesofbeneficiariesreceivingultrasoundservicesrelativetotherestofthecountry.Inareasofhighutilization,theOIGintendstoexamineserviceprofiles,providerprofilesandbeneficiaryprofiles.High Density of Independent Diagnostic Treatment Facilities
TheOIGwillexamineservicesandbillingpatternsingeographicareaswithhighconcentrationsofindependentdiagnostictreatmentfacilities(“IDTFs”).AccordingtotheOIG,oneofitspreviousreviewsidentifiedseveralproblemswithIDTFs,includingnoncompliancewithMedicarestandardsandpotentiallyimproperpaymentsof$71.5million.TheOIGintendstoreviewserviceprofiles,providerprofiles,beneficiaryprofilesandbillingpatternsinIDTFhighdensityareas.Physician Reassignment of Benefits
TheOIGwillreviewtheextenttowhichMedicarephysiciansreassigntheirbenefitstootherentities.TheOIGcitedinvestigationsinSouthFloridathat,accordingtotheOIG,revealedschemesinwhichfraudulentprovidersobtainidentifyinginformationaboutlegitimatephysiciansandrequestreassignmentontheirbehalf.TheOIGbelievesthatalargenumberofreassignmentsmayindicatefraudulentorabusiveactivity.Evaluation of “Incident To” Services
Consistentwithlastyear’sWorkPlan,theOIGremainscommittedtoidentifyingandreviewingservicesperformed“incidentto”selectedphysicians’professionalservicesandwilldeterminetheextenttowhichtheservicesmetMedicarestandardsformedicalnecessity,documentationandqualityofcare.TheOIGwillalsoreviewtheappropriatenessandqualificationsofthestaffwhoperform“incidentto”services.Medicare Part D Duplicate Claims
TheOIGindicatedthatitwillreviewCMScontrolstopreventduplicatePartDclaimsforthesamebeneficiary.AccordingtotheOIG,inJanuary2007,thereweremorethansixmillionbeneficiariesduallyeligibleforMedicareandMedicaidassignedtoPartD
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plans.Thesebeneficiariesarepermittedtochangetheirenrollmentinprescriptiondrugplansmonthly,andtheOIGwantstomakesurethatthepaymentsmadetoplansarecorrectandnotduplicated.Duplicate Medicare Part A And Part B Claims Included With Part D Claims
TheOIGwillreviewanddeterminewhetherPartDclaimsarealsobeingsubmittedunderMedicarePartAandPartB.DrugsprescribedforaPartDbeneficiaryarenottobepaidforunderPartDifthedrugwasprescribedanddispensedoradministeredunderPartAorPartB.TheOIGwilldeterminewhetherpaymentsmadetoPartDarecorrect,supportedandnotduplicatedinPartAandPartB.Coordination and Oversight of Medicare PartB and PartD to Avoid Duplicate Payments
TheOIGwilldeterminewhetherthereissufficientcoordinationtopreventduplicatepaymentsforprescriptiondrugs.DrugsthatarepayableunderPartBshouldnotbecoveredunderPartD.TheOIGwillreviewCMS’scoordinationandoversightprocessesanddeterminewhethertheyareadequate.Prescription Drug Plan Sponsors’ Detection and Reporting of Fraud and Abuse
TheOIGwillreviewtheextenttowhichprescriptiondrugplan(“PDP”)sponsorsdetectandreportMedicarePartDfraudandabusetoCMS.AccordingtotheOIG,oneofitspriorreportsfoundthatsomePDPsponsors’complianceplansdidnotaddressallrequiredelementsregardingfraud.Laboratory Services Rendered During an Inpatient Stay
TheOIGwillreviewMedicarePartBpaymentsforlaboratoryservicesrenderedduringaninpatientstay.Insupportingitsfocusonthesepayments,theOIGnotedthatlaboratoryservicesfurnishedtohospitalinpatientsaregenerallyincludedinhospitals’MedicarePartApayments.Separately Billable Laboratory Services Under the End Stage Renal Disease Program
TheOIGwillreviewproviders’compliancewithcurrentpaymentpoliciesforautomatedmultichannelchemistry(“AMCC”)testsfurnishedtoendstagerenaldisease
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(“ESRD”)beneficiaries.Thecurrentfacilitypayment,thecompositerate,includespaymentsforcertainAMCCtestsperformedroutinelyatspecifiedfrequencies.AnyAMCCtestsperformedinexcessofspecifiedfrequenciesornotincludedinthecompositeratearetobebilledseparately,providedthatmedicalnecessityisdocumented.AccordingtotheOIG,priorreviewsithasconductedfoundthatproviderswerepaidseparatelyforAMCCtestsincludedinthecompositerate.Monitoring Medicare Part B Drug Prices: Comparing Average Sales Prices to Widely Available Market Prices TheOIGwillreviewwidelyavailablemarketprices(“WAMPs”)forcertainprescriptiondrugscoveredbyPartBandcomparethemtoaveragesalesprices(“ASPs”).InaccordancewiththeMedicarePrescriptionDrug,ImprovementandModernizationAct,theOIGwillnotifytheSecretaryofHHSiftheASPforaselecteddrugexceedstheWAMPbyathresholdoffivepercent.ItwillalsocompareASPstoWAMPsandidentifydrugpricesthatexceedthethreshold.Changes in Average Sales Price for Part B Drugs TheOIGwillreviewtheextenttowhichASPsforMedicarePartBdrugsfluctuatefromquartertoquarter.ItwillalsoidentifytheASPswiththegreatestquarterlyfluctuations.Calculation of Average Manufacturer Prices TheOIGintendstoreviewcertaindrugmanufacturerstoassessthemethodologiestheyusetocalculatetheiraveragemanufacturerprices(“AMPs”)fortheMedicaiddrugrebateprogramandforMedicaiddrugreimbursementinordertodeterminelevelsofcompliance.Pharmacies’ Ability to Purchase Drugs at the Average Manufacturer Price TheOIGwillassesspharmacies’abilitytopurchaseMedicaiddrugsatorneartheAMP.LegislationmandatesthatAMPdatabemadeavailabletoallstatesonamonthlybasis,withtheapparentintentbeingthatgreatertransparencyofpricinginformationwillfostergreatercompetitionindrugpricing.AccordingtotheOIG,moststateMedicaidprogramshavebasedpharmacyreimbursementonapercentageoftheaveragewholesale
StayCurrentOversight of Medicare Advantage Plans’ price(“AWP”),whichtheOIGbelievesisaflawedMarketing Practices methodologybecausepharmacies’paymentstodrugmanufacturersarelowerthantheAWPs.TheOIGplanstoreviewCMS’soversightofmarketingSkilled Nursing Facility Consolidated BillingandsalespracticesconductedbyMedicareAdvantage(“MA”)plans.RegulationsprohibitMAplansfromAsitwasinlastyear’sWorkPlan,theOIGisconcernedengagingindiscriminatoryactivityandfromconfusingoraboutimproperbillingunderMedicarePartBforitems,misleadingthepublic.Violationsoftheseprohibitionsmaysuppliesandservicesprovidedtobeneficiariesduringresultinsanctions.TheOIGwillevaluatethesanctionsthatPartAMedicarecoveredstays.AsitalsostatedlastCMShasimposedforsuchviolations,theextenttowhichyear,theOIGwillassesstheeffectivenessofCommonCMShasworkedwithstategovernmentstocurbtheseWorkingFileeditsestablishedin2002topreventandviolations,andtheextentofcomplaintsaboutmarketingdetectimproperpayments.andsalespractices.™™™It may be wise for healthcare providers and suppliers to reassess the priorities and quality of their compliance programs in light of the publication of the 2008 Work Plan. Although it is not practical or realistic to expect that one could implement internal investigations relating to all the Work Plan’s audit priorities, the Work Plan, along with operational experience, may assist providers and suppliers to thoroughly assess their respective compliance plans’ priorities.
If you have any questions concerning these developing issues, please do not hesitate to contact:
18 Offices Worldwide
Los Angeles
Paul A. Gomez 213-683-6132 paulgomez@paulhastings.com
Paul, Hastings, Janofsky & Walker LLP
www.paulhastings.com
StayCurrent ispublished solely for the interests of friends and clients of Paul, Hastings, Janofsky & Walker LLP and should in no way be relied upon or construed as legal advice. For specific information on recent developments or particular factual situations, the opinion of legal counsel should be sought. These materials may be considered ATTORNEY ADVERTISING. Paul Hastings is a limited liability partnership. Copyright © 2007 Paul,Hastings, Janofsky & Walker LLP.
IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations governing tax practice, you are hereby advised that any written tax advice contained herein or attached was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.
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