Knowledge Base Category -

The Office of Inspector General (OIG) began reporting Hospital Medicare Compliance Reviews in March of 2011. Almost three years into these reviews the OIG has posted results from seventy-nine (79) hospitals. To date, hospitals in thirty states have been subject to a Compliance Review, three hospitals have had the amount to be returned to the Contractor extrapolated and only one hospital “generally complied with Medicare requirements for billing.”

In keeping with the holiday spirit instead of “remembering our favorite things,” here are the Twelve (12) top Inpatient (IP) and Outpatient (OP) “at risk issues for noncompliance” that the OIG has been looking at during their reviews:

• IP Short Stays,
• OP & IP claims paid in excess of charges,
• OP & IP manufacturer credits for replaced medical devices,
• IP claims billed with high severity level DRG codes,
• OP claims billed with Modifier 59,
• IP same-day discharges and readmissions,
• IP transfers,
• IP claims with payments greater than $150,000,
• OP claims paid in excess of $25,000,
• OP claims billed with E&M services,
• IP hospital-acquired conditions and POA reporting, and
• IP Psychiatric Facility (IPF) ED adjustments.

In the past several weeks we have written several articles about the 2014 IPPS Final Rule, including the Probe and Educate Program that is effective from October 1, 2013 through March 30, 2014. During this time Medicare Administrative Contractors (MACs) will be conducting pre-payment probes for medical necessity of IP stays with a 0 – 1 midnight length of stay. During this time the Recovery Auditors (RA) are not allowed to review claims within this time period. A word of caution, this has been the top issue for OIG Medicare Compliance Reviews and the OIG can and probably will continue to review this risk area as they are not impacted by the Probe and Educate Program.

2-Midnight Benchmark and Psychiatric Services

Question:

Does the new 2-Midnight Benchmark apply to Inpatient Psychiatric Services?

Answer:

Yes, per the excerpt from the 2014 IPPS Final Rule below, the 2-Mignight Benchmark does apply to Inpatient Psychiatric Services.

“Comment: Commenters questioned the applicability of the proposed rule to differing types of hospital facilities. Commenters specifically requested clarity regarding application of the rule to IRFs and IPFs. Commenters further asserted that this distinction may conflict with State laws requiring inpatient admissions post 24 hours, and such States should be granted exception.

Response: In the proposed rule, our reference to section 1861(e) of the Act was intended to specify that CAHs were included in the proposed policies, not that we were proposing that IPFs or other non-IPPS hospitals should be excluded. Having considered the public comments to the proposed rule, we believe that all hospitals, LTCHs, and CAHs, with the exception of IRFs, would appropriately be included in our final policies regarding the 2-midnight admission guidance and medical review criteria for determining the general appropriateness of inpatient admission and Part A payment. Due to the inherent differences in the operation of and beneficiary admissions to IRFs, such providers must be excluded from the aforementioned admission guidelines and medical review instruction. We disagree with the commenters’ assertion that the 2-midnight admission and medical review policies conflict with existing state laws regarding observation. The 2-midnight benchmark does not prohibit physicians from ordering inpatient admission in accordance with state law; rather, this policy indicates when Medicare payment will be deemed appropriate. To the extent that State law requires admission in situations where Medicare payment would not be appropriate, providers should work with their States to resolve those discrepancies.”

Source: Federal Register / Vol. 78, No. 160 / Monday, August 19, 2013 / Rules and Regulations 50949

Question:

If there is no stop time for an infusion, how is this to be reported?

Answer:

If there is no stop time for an infusion, it should be reported as an IV push.

However, be sure to look for other documentation that might support the duration of the infusion service, such as:

• Periodic drug titrations
• Nurse’s notes that the infusion is still in progress
• Nurse’s notes that the infusion continued at the time of transfer
• Documentation of the total hours infused (the most recent guidelines from Cahaba GBA indicate they will accept documentation of “total hours infused”)

Remember, the time the IV is discontinued or removed is not necessarily the same as the infusion stop time.

Last month we wrote about Saint Thomas Hospital in Nashville, TN being the first hospital that the Office of Inspector General (OIG) extrapolated their Medicare Compliance Review findings. Since then they have done it again. This time Baptist Medical Center South in Montgomery, Alabama was subjected to extrapolation. This resulted in an increase in their amount to be refunded from an initial $242,514 to $1,784,982.  

OIG Medicare Compliance Reviews by the Numbers:

In addition to extrapolating findings what else is occurring in these Medicare Compliance Reviews?

After completing an extensive review of all reviews to date, here is a list of interesting facts by the numbers:

• One: The number of hospitals with no identified overpayments during a review
• Regional Medical Center at Memphis, Tennessee
• One: The number of hospitals where the OIG identified overpayments as well as potential underpayments to the hospital during the review.
• University of Alabama Hospital at Birmingham, Alabama
• Two: The number of hospitals who have now had their Medicare Compliance Review Findings extrapolated.
• Saint Thomas Hospital in Nashville, Tennessee, and;
• Baptist Medical Center South in Montgomery, Alabama
• Three: The number of hospitals that have been revisited for additional reviews by the OIG.
• Fletcher Allen Health Care, Inc. in Burlington, Vermont,
• Boston Medical Center in Boston, Massachusetts; and
• Tufts Medical Center in Boston, Massachusetts.
• Eleven: The highest number of hospitals within a single state to undergo an OIG Medicare Compliance Review (Massachusetts).
• Twenty-Six: Number of states that have had at least one hospital subject to an OIG Medicare Compliance Review.

• Sixty-Three: The total number of Medicare Compliance Reviews completed and reported on the OIG website as of July 17, 2013.
• Eight in 2011, Thirty-Nine in 2012 and Sixteen thru July 17 of 2013
• $12,222: The lowest overpayment amount identified to date was at Sanford University of South Dakota Medical Center.
• $2,244,649: The highest overpayment amount identified to date was at Cedars Sinai Medical Center. Note, this amount was not an extrapolated amount.
• $26,979,529: The amount identified as overpayments for all hospitals to date requiring payback to the Contractor without extrapolation being applied.
• $29,420,885: The amount identified as overpayments for all hospitals to date requiring payback to the Contractor with extrapolation being applied to Saint Thomas and Baptist Medical Center South.

Has Your Hospital Been Subject to an OIG Medicare Compliance Review?

Clicking the link below will show a table of all Medicare Compliance Reviews displayed on the OIG website to date. This table includes a link to the OIG reports, the “risk areas” looked at in the audit and the amount the OIG recommended the hospital refund.

OIG Medicare Compliance Reviews as of July 17, 2013

This material was compiled to share information. MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.

Saint Thomas Hospital in Nashville, TN has the unique or unfortunate distinction of being the first hospital that the Office of Inspector General (OIG) has extrapolated their Medicare Compliance Review findings. Through extrapolation the payback amount to the Medicare Administrative Contractor increased from $293,359 for the actual records reviewed to an extrapolated amount of $1,092,248.

Background of OIG Medicare Compliance Reviews:

The mission of the OIG is mandated by Public Law and “is to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the health and welfare of beneficiaries served by the programs. This statutory mission is carried out through a nationwide network of audits, investigations, and inspections conducted by” the Office of Audit Services, Office of Evaluation and Inspections, Office of Investigations and Office of Counsel to the Inspector General.

Hospital specific Medicare Compliance Reviews are performed to review Medicare payments to hospitals for selected claims for inpatient and outpatient services.

The OIG has indicated that they identify claims at risk for noncompliance through computer matching, data mining, and analysis techniques. Examples of risk areas include:

• Inpatient short stays,
• Inpatient claims billed with high severity level DRG codes,
• Inpatient claims pain in excess of charges,
• Inpatient same-day discharges and readmissions,
• Inpatient and outpatient manufacturer credits for replaced medical devices, and
• Outpatient claims with payments greater than $25,000.

Saint Thomas Compliance Review Findings and Recommendations:

In this review, the OIG found that the Hospital complied with Medicare billing requirements for 206 of 250 claims reviewed and that the remaining 44 claims resulted in $293,359 in overpayments to the Hospital. Reasons identified resulting in overpayments included the following:

• Billing claims as Medicare Part A that should have been billed as outpatient or outpatient with observation services,
• Incorrect DRG code assignment,
• Incorrect reporting of medical device credits,
• Billing separately for related discharges and readmissions on the same day; and
• Incorrect HCPCS code assignment.

Complete details can be found in the Medicare Compliance Review of Saint Thomas Hospital for Calendar Years 2009 and 2010.

The OIG made two recommendations:

• First, that the Hospital refund $1,092,248 in estimated overpayments; and
• Second that the Hospital strengthen controls to ensure complete compliance with Medicare billing requirements.

Saint Thomas Says:

Saint Thomas indicated that they were not made aware until “towards the end of the audit process that the sample was statistical and the findings would be estimated.”

Saint Thomas disagreed with the recommendation to refund the $1,092,248 in estimated overpayments and indicated in their comments that “in reviewing the Medicare Compliance Reviews audit reports the OIG has issued in the past two years, all of them were based on a “judgmental” sampling methodology. In some cases, it was noted that some hospitals had no extrapolation even though their overpayment audit results appeared to exceed those of STH.”

Further complicating the OIG findings Saint Thomas found that their “sample frame included several claims that the Recovery Audit Contractors (RAC) had also reviewed. The Hospital believed that including RAC claims in our sample frame, especially claims that the Hospital had already repaid, would result in the Hospital repaying Medicare twice.”

Ultimately, Saint Thomas indicated that they did not agree with the sampling methodology but would make any final payment necessary as a result of the statistical sampling.

The OIG Says:

The OIG indicated “at our entrance conference on June 26, 2012, we informed the Hospital that we would use statistical sampling techniques to select claims for review. In addition, during the course of the audit, we discussed with a Hospital official our plans to “project” the sample results across the population.” Additionally, they indicated that “as this hospital compliance review initiative has matured, we have refined our audit methodologies. Some reviews are statistical sampling and estimation techniques to draw conclusions about a larger portion of a hospital’s claims while other reviews are judgmental sampling. Each hospital review is unique, and the sampling method used in each of these reviews will vary.”

The OIG indicated that they did identify claims in the sample under RAC or Department of Justice (DOJ) review and as such these claims were considered “non-errors.”

Ultimately, the OIG maintained that Saint Thomas should pay bay the $1,092,248 in estimated overpayments.

Key Takeaways for our Clients:

• Be involved with the OIG staff from the beginning of an audit to understand the sampling techniques that will be used,
• Be aware of the potential “risk areas” identified by the OIG and internally assess for potential break-downs in processes; and
• Be aware that the days of paying back overpayments for only the claims reviewed appears to no longer hold true.

I remember from my first year as a compliance officer, a hospital representative lecturing at a national compliance conference explained how her facility made unintentional errors in the assignment of Medicare patients’ discharge statuses that were interpreted by the government as fraudulent activity. Now she could have presented a skewed interpretation and I am, in no way, questioning the government’s conclusion of any of the cases below. I am just acknowledging that sometimes, different parties have differing interpretations of how certain activities are classified.

The Health Care Fraud and Abuse Control Program 2012 Annual Report, a collaboration between the Department of Health and Human Services and the Department of Justice, highlights the successes of the government’s program to identify, prosecute, and prevent healthcare fraud and abuse. Below is a summary of the issues that resulted in settlements by hospitals to resolve claims and allegations under the False Claim Act (FCA).

1. Two settlements (almost $25M) relating to inflated fees for services that resulted in inappropriate Medicare “outlier” payments. The report states that both hospitals manipulated their charge structures to make it appear as though their treatment of certain patients was unusually costly, when in fact it was not.
2. Four settlements (over $31M) resulting from medically unnecessary inpatient admissions for patients that could have been treated as hospital outpatients. These cases include patients receiving Gamma Knife stereotactic radiotherapy and patients having kyphoplasty, a minimally-invasive procedure used to treat certain spinal fractures, or other surgical procedures that could have been performed on an outpatient basis.
3. Four settlements (approximately $6.7M) for a variety of other issues including:
4. Medically unnecessary and dangerous endovascular procedures
5. Surgical services performed in an Ambulatory Surgery Center (ASC), but billed as hospital outpatient surgeries
6. The drug Lupron® billed with the wrong HCPCS code (note also that even after becoming aware of the issue, these hospitals never self-disclosed or attempted to pay back monies received in error)
7. Improper physician recruitment arrangements.

You can read the full report on the OIG website at HCFAC Report.

Case Mix Index

Question:

What is Case Mix Index (CMI)?

Answer:

CMI is the sum of the relative weights of all DRGs assigned to Medicare inpatient cases, billed by the hospital in a given time-frame, divided by the total number of cases.

Formula for CMI:Total Relative Weights ÷ Total DRGs Coded = CMI

CMI:

•Measures the cost or resources needed to treat patients

•Calculated from billed data

•Reveals how sick your patients really are

•The higher the CMI the more complex the patients are, indicating that they have utilized costly and/or complex resources

Clarification of Thoracentesis CPT Codes 32421 and 32422

Question:

When reporting CPT code 32422 “thoracentesis with insertion of tube including water seal when performed”, is this referring to a chest tube that is left in place after the thoracentesis is completed?

Answer:

The key to answering this question is to look back at the November 2003 CPT Assistant addressing coding guidelines for CPT codes 32000 and 32002. (In 2008, these CPT codes were revised to 32421 and 32422, respectively. The code descriptions remained the same, but the codes were renumbered in CPT.)

In the article, it is noted that CPT code 32002 (now 32422) “thoracentesis with insertion of tube including water seal when performed” represents a procedure where tube is removed at the end of the thoracentesis.

Therefore, 32422 would not be appropriate for reporting a thoracentesis where a chest tube was left in after the procedure. This information is supported by a 2009 SIR article and a 2007 article from Chest Journal.

In most of the procedure reports seen by MMP, Inc., the physician indicates a thoracentesis was performed with drainage occurring through a “catheter” – with the catheter removed at the end of the procedure. CPT code 32422 is the appropriate CPT code for this procedure.

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Question:

When should CPT code 32421 be used (thoracentesis, puncture of pleural cavity for aspiration)?

Answer:

CPT code 32421 describes a procedure where a needle is inserted and a smaller amount of fluid is aspirated, usually for diagnostic purposes (whereas CPT code 32422 is for therapeutic purposes). Again, in 32421, the needle is removed at the end of the aspiration procedure. SIR 2009 indicates the difference between CPT code 32421 and 32422 is -32421 is thoracentesis performed with a needle, usually for diagnostic purposes to obtain pleural fluid for analysis and diagnosis

-32422 is thoracentesis performed via catheter, usually for therapeutic purposes of relieving a pleural effusion. Pleural fluid may also be submitted for analysis.

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.

Self-Administered Drugs Used as Supplies

Question:
Is it ever appropriate to bill for self-administered drugs (SADs) as covered services?

Answer:
Yes, when these drugs function as supplies. This occurs when the drugs provided are an integral component of a procedure or are directly related to it, i.e., when they facilitate the performance of or recovery from a particular procedure

For example, drugs used as supplies would include:

• sedatives administered to prepare a patient for a procedure
• antibiotic ointment placed on a wound/incision at the completion of a procedure.

See the July 2012 OPPS update (MLN Matters MM7847) for more examples of when self-administered drugs would and would not be separately billable to Medicare. Drugs paid as supplies should be reported under the revenue code associated with the cost center under which the hospital accumulates the costs for the drugs (most hospitals use revenue code 0250).