Knowledge Base Article

The OIG “is an independent and objective oversight organization that promotes economy, and effectiveness in the programs and operations of the U.S. Department of Health and Human Services (HHS or the Department).” In 1997 the Health Care Fraud and Abuse Control (HCFAC) was created. Since HCFAC’s creation “approximately 80 percent of OIG’s annual funding and workload have been dedicated exclusively to oversight and enforcement activities with respect to health care fraud and abuse in the Medicare and Medicaid Programs” (Source: Fiscal Year 2013 Office of Inspector General Justification for Estimates for Appropriations Committees)

Did you know?

• The OIG has been on the forefront of the Nation’s fight against waste, fraud and abuse in Medicare, Medicare and over 300 other HHS programs since 1976?
• In 2011 the OIG launched a “Most Wanted Fugitives” list seeking over 170 fugitives on charges for healthcare fraud and abuse.
• In 2011 the OIG announced that during the first half of 2007 Medicare spent $95 million on claims for power wheelchairs that were either medically unnecessary or there was insufficient documentation to determine medical necessity.
• The OIG has a Compliance 101 web page offering “free educational resources to help health care providers,practitioners, and suppliers understand the health care fraud and abuse laws and the consequences of violating them.”
• When settling Federal health care program investigations the OIG will negotiate Corporate Integrity Agreements (CIA) with providers and in exchange the OIG agrees to not seek provider exclusion from participation in Medicare, Medicaid, or other Federal health care programs.
• In 2012 the OIG introduced a “Most Wanted” list of Deadbeat Parents
• In the Semiannual Report to Congress for October 1, 2011 – March 31, 2012 the Inspector General, Daniel R. Levinson indicated that:
• “Over the past 6 months, OIG has stepped up our focus on data analytics as a critical tool for enhanced fraud, waste, and abuse activities.”
• “OIG’s data warehouse is a key component of our strategic use of information technologies. Among other things, the warehouse integrates data from Medicare Parts A, B, and D so we can develop a more comprehensive picture of beneficiaries’ histories of medical care and providers’ billing patterns.”
• In the first half of Fiscal Year 2012 the OIG reported expected recoveries of about $483.1 million in audit receivables.

Is your Hospital prepared for an On-Site OIG Compliance Audit?

Medicare compliance reviews are listed in the 2012 OIG Work Plan as a new aspect of the plan under “Medicare Inpatient and Outpatient Payments to Acute Care Hospitals.” The first of these audits began in 2011 and have continued in earnest in 2012. The OIG is required to make all hospital audit results publically available at http://oig.hhs.gov. The OIG has indicated that the objective of these audits is “to determine whether the Hospital complied with Medicare requirements for billing inpatient and outpatient services on selected claims.” The good news is that it is possible that the OIG will complete a review and make no recommendations as was the case with the review of Regional Medical Center at Memphis for calendar years 2009 and 2010. The bad news is that they can also find just over $1 million in overpayments as was the case in the review of Boston Medical Center for calendar years 2009 and 2010. Common items in all of these audit reports include:

OIG Examples of Risk Areas:

• Inpatient short stays,
• Inpatient same-day discharges and readmissions,
• Inpatient claims billed with high severity level DRG codes,
• Inpatient and outpatient claims paid in excess of charges,
• Inpatient hospital-acquired conditions and present on admission indicator reporting,
• Inpatient and outpatient manufacturer credits for replaced medical devices,
• Outpatient claims billed for Lupron injections,
• Outpatient claims billed with evaluation and management (E&M) services,
• Outpatient claims billed with modifiers, and
• Outpatient claims billed on the date of an inpatient admission.

OIG Audit Methodology:

• Review applicable Federal laws, regulations and guidance,
• Extract Hospital inpatient and outpatient paid claim data from CMS’s National Claims History File for the time period of the review,
• Use computer matching, data mining, and analysis techniques to identify claims potentially at risk for noncompliance with selected Medicare billing requirements,
• Select a judgmental sample for detailed review,
• Review available data from CMS’s Common Working File for sampled claims to determine whether or not the claims had been cancelled or adjusted,
• Review itemized bills and medical record documentation provided by the Hospital to support the paid claims,
• Request the Hospital conduct its own review of the sampled claims to determine whether or not the services were billed correctly,
• Utilize Medicare contractor medical review staff to determine whether a limited selection for sampled claims met medical necessity requirements,
• Review Hospital procedure for assigning HCPCS codes and submitting Medicare claims,
• Discuss incorrectly billed claims with Hospital personnel to determine the underlying causes of noncompliance with Medicare requirements,
• Calculate the correct payments for those claims requiring adjustment; and
• Discuss the results of the review with Hospital officials.

Billing Errors Associated with Inpatient Claims:

• Billing Medicare Part A for stays that should have been billed as outpatient or outpatient with observation services.
• Billing Medicare separately for related discharges and readmissions within the same day.
• Billing Medicare for incorrect DRG codes.
• Hospitals reporting medical device credit for a replaced device from a manufacturer without adjusting its inpatient claims with the proper value and condition codes to reduce payment as required.

Billing Errors Associated with Outpatient Claims:

• Drug injections
• Billing incorrect number of units of service
• Billing incorrect HCPCS codes

• Billing Medicare for E&M services that arepart of the usual preoperative and postoperative care associated with aprocedure.
• Incorrect use of the -59 and -91 Modifiers
• Billing for services without sufficient documentation in the medical record to support the service.

OIG Recommendations:

• Refund to the Medicare contractor identified overpayments, and
• Strengthen controls to ensure full compliance with Medicare requirements.

At the end of each audit is an Appendix that include the Hospital’s comments regarding the report.

Next steps for Hospitals:

• Review your PEPPER Reports for any outlier areasspecific to Inpatient Short Stays and Medical and Surgical DRGs with CC andMCC.
• Consider Emergency Department Case Management to assist Physicians 7 days a week.
• Provide Coding staff with continuing education opportunities and the resources (i.e. Coding Clinic and the most current ICD Official Guidelines for Coding and Reporting) needed to remain current in
  coding updates and revisions. This will be especially important with the transition to ICD-10-CM/PCS on October 1, 2014.
• Verify that outpatient drugs are billed with the correct HCPCS codes and units.
• Educate staff on the correct application of modifiers.
• Work with physicians and ancillary departments to obtain complete documentation to support the services provided and billed.