OIG Releases Work Plan for 2017

January 24, 2017 | Health Services

The Department of Health and Human Services, Office of Inspector General (“OIG”) has released its Work Plan for Fiscal Year 2017 (the “Plan”). The Plan, available through the OIG website, summarizes new and ongoing audits, investigations and evaluations that OIG will prioritize in the upcoming year. Some of the new initiatives that OIG intends to address in 2017 are summarized below.

Medicare Part A and Part B

OIG will continue its efforts to identify and prevent fraud and improper payments that are made under Medicare Part A, for inpatient services, and Medicare Part B, for outpatient care. These efforts will include: (i) increased oversight of hospice care to ensure that certification surveys are properly performed and hospice workers are properly licensed; (ii) oversight of skilled nursing facilities to ensure they are in compliance with patient admission requirements; and (iii) review of the Centers for Medicare and Medicaid Services’ (“CMS”) Fraud Prevention System. In addition, OIG will evaluate the following new areas:

  • Hyperbaric oxygen therapy treatment—to ensure that Medicare claims are only reimbursed when the treatment is for a covered condition and medically necessary;
  • Hospitals that serve a disproportionate share of low-income patients—to ensure that such hospitals receive the proper share of payments based on the share of low-income patients they treat during Medicaid patient days;
  • Inpatient psychiatric facilities, organized as either free-standing hospitals or specialized units within a hospital—to determine whether Medicare claims submitted by such facilities are supported by proper documentation and comply with coding and coverage requirements;
  • Intensive therapy in inpatient rehabilitation hospitals—to review whether patients who received such therapy were suitable candidates and benefited from it;
  • Continued changes to inpatient and outpatient stays under the two-midnight rule, which became effective on October 1, 2013 and generally requires hospital care to be categorized as outpatient, rather than inpatient, when the patient is expected to stay in the hospital for less than two consecutive nights;
  • Unreported incidents of abuse and neglect in skilled nursing facilities—to ensure that all incidents are adequately reported, investigated and prosecuted when appropriate;
  • Hospice care—to ensure that the care received by patients at the end of life conforms to patients’ needs, quality of life standards and other Medicare requirements;
  • Payments for Clinical Diagnostic Laboratory Tests—to comply with Section 216 of the Protecting Access to Medicare Act of 2014, which requires CMS to implement a new market-based system for determining payment rates for clinical diagnostic laboratory tests based on rates paid by private payors;
  • Payments for chronic care management that pay for services related to conditions that place a patient at a high risk of death or functional decline and are expected to last at least 12 months or until death—to ensure that duplicate payments are not made for such services as transitional care management, home health care, hospice care or end-stage renal disease services;
  • Data submitted in 2015 to the CMS Open Payments System, which requires manufacturers and group purchasing organizations to report ownership and investment interests held by physicians—to determine the amount that Medicare paid for drugs and durable medical equipment ordered by physicians who had such financial relationships with manufacturers and group purchasing organizations; and
  • Implementation of MACRA, which established a new payment system under which physicians may receive positive or negative Medicare payment adjustments based on their performance and achievement of certain quality measures—to assist CMS in successfully implementing the new payment system and to analyze how Medicare payments will change.

Medicare Part C and Part D

With respect to Part C Medicare Advantage plans (the “MA plans”), OIG will continue to assess the integrity of the MA plans by focusing on two new areas of review:

  • Prospective payments made after a patient’s death—to ensure that such payments are made in accordance with federal regulations, which require MA plans to dis-enroll Medicare beneficiaries as of the first day of the month immediately following the patient’s death; and
  • Capitated payments made on a payment per person, rather than per service basis—to review services that were denied, appealed and overturned and determine whether capitated payment systems create a financial incentive for MA plans to underserve enrolled beneficiaries.

In addition, as an effort to reduce the cost of prescription drug benefits under Medicare Part D, OIG will analyze the following:

  • Drug manufacturer rebates for prescriptions filled at 340B pharmacies;
  • Payments made for prescription drugs after a patient’s death; and
  • Other questionable billing trends, such as billing for compounded topical drugs, which increased by over 3,400 percent in the last 10 years.


OIG is also responsible for oversight of state Medicaid programs. In order to promote effectiveness and efficiency of Medicaid programs, OIG will review the following new areas:

  • Delivery System Reform Incentive Payments (“DSRIP”)—to ensure that incentive payments made by states to hospitals and providers that have developed programs for cost-effective health care are consistent with outcome determinations and other state and federal requirements;
  • Payments made to third party payors—to ensure that Medicaid is a payor of last resort when beneficiaries have additional health insurance through third party payors and that states are taking reasonable steps to identify and reduce any third party liability with respect to Medicaid payments; and
  • Reporting and collection of overpayments—to ensure that states properly recoup and report to CMS any identified Medicaid overpayments.

Providers should be mindful that, in addition to the new audits and evaluations OIG will undertake in 2017 (as outlined above), OIG will continue to identify and prevent fraud and abuse in Medicare and Medicaid through legal action, which may include: excluding providers from the programs; imposing monetary penalties; entering into Corporate Integrity Agreements with providers; encouraging providers to minimize cost and disruption of potential OIG audits and investigations by self-disclosing potential fraudulent and suspicious activity; and issuing advisory opinions and other guidance to help providers comply with applicable rules and regulations.

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