OIG Work Plan for 2016

January 1, 2016 | Health Services

The Department of Health and Human Services, Office of Inspector General (“OIG”) has released its Work Plan for Fiscal Year 2016 (“Plan”). The Plan summarizes new and ongoing audits, investigations and evaluations that OIG will prioritize in the upcoming year.

While many of the areas of focus addressed in the Plan are similar to those that were addressed in 2015, the most significant revisions and changes for 2016 are set forth 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: (1) increased oversight of hospice care to address concerns that hospice facilities are billing for services that are not medically necessary for the type of palliative rather than curative care that they are intended to provide; (2) oversight of Skilled Nursing Facilities to ensure they are in compliance with patient admission requirements; and (3) review of the Centers for Medicare and Medicaid Services’ (“CMS”) Fraud Prevention System.

In regards to hospital oversight, OIG will also evaluate the following areas:

  • Changes to hospitals’ use of inpatient and outpatient care under the two-midnight rule, which was implemented on October 1, 2013, and defines inpatient care as care that requires hospitalizations for at least two consecutive nights;
  • Effects of defective medical devices on quality of care and Medicare costs associated with replacement and additional services that are needed to remedy the defect;
  • How CMS can oversee billing practices of provider-based facilities that are owned by hospitals—such facilities bill as hospital outpatient departments, which can result in higher Medicare payments and conflicting financial incentives for the facilities;
  • Billing practices for acute care hospitals to ensure that outpatient services provided during inpatient hospitalization are properly billed and paid for; and
  • Adverse events in post-acute care for Medicare beneficiaries in inpatient rehabilitation facilities and long-term care hospitals, including analysis of contributing factors, preventative measures, and associated costs to Medicare.

OIG will also evaluate CMS’ price determination and billing process for certain medical equipment and supplies. In particular, OIG will review billing trends for ventilators. The number of Medicare beneficiaries who receive ventilators has increased from 8,633 in 2013 to 19,085 in 2014. According to CMS’ National Coverage Determination Manual, ventilators are only covered under Medicare to treat severe conditions. OIG predicts that suppliers may be inappropriately providing and billing for ventilators that are not used to treat life-threatening conditions, and therefore, are not medically necessary.

The Plan also addresses concerns with oversight and billing practices of ambulatory surgical centers. OIG will review Medicare’s methodology for calculating payment rates for such centers and will look for disparities in payment rates for similar procedures provided in ambulatory surgical centers versus hospital outpatient departments.

OIG will also continue to compare Medicare Part B drug sale prices with manufacturer prices, as it is obligated to do under the Social Security Act § 1847A(d)(2)(B). For 2016, this comparison will also include drugs that are purchased under the 340B Medicare Program. Under the program, eligible providers purchase drugs at discounted prices and then charge insurers and patients full market price. Currently, the discounted rate is retained by the provider, but policymakers have speculated whether some of the savings should be passed down to Medicare beneficiaries.

OIG will also assess CMS’ implementation of the 10th Internal Classification of Diseases (“ICD-10”) codes for Medicare Part A and Part B which went into effect on October 1, 2015. It contains over 70,000 diagnostic codes, which is a significant increase from the 15,000 that were contained in ICD-9. OIG will review how the transition to ICD-10 will affect claim processing. CMS has already announced that for the first twelve (12) months it will pay providers as long as they use the correct “family” of codes.

Finally, OIG will conduct two new reviews in 2016 that have been mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”). The first review is for payments made for services provided to Medicare beneficiaries who are unlawfully present in the United States. Past OIG investigations found that $91.6 million was improperly paid by Medicare for services provided to illegal aliens, which is prohibited by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. The second mandated review will involve payments made for services rendered to incarcerated Medicare beneficiaries. Medicare did not have a legal obligation to pay such claims under the Social Security Act of 1862. However, under MACRA, the Department of Health and Human Services is required to establish procedures to ensure that payments are not made for incarcerated beneficiaries. OIG investigations found that such payments amounted to $33.6 million between 2009 and 2011.

Medicare Part C and D

With respect to Part C Medicare Advantage Plans, OIG will analyze provider networks for the plans that were established in Puerto Rico. The plans must meet several federal requirements, such as the requirement to disclose to beneficiaries the number and distribution of providers within the plan’s service area on an annual basis.

OIG will also review CMS’ oversight of Part D pharmacies. In 2015, OIG charged over 240 cases of health care fraud, many of which involved Part D pharmacies. OIG will ensure that CMS’ oversight is effective to prevent such fraud in the future. In addition, OIG will evaluate price fluctuations for brand name drugs covered under Part D between 2010 and 2014. In 2013 alone, many brand name drugs increased in price by almost 13%. OIG will analyze factors that caused the increase and see how it compares to the rate of inflation for any given year.


OIG will continue to review the Medicaid program to promote effectiveness and efficiency as the number of Medicaid beneficiaries continues to increase. Review of the Medicaid program in 2016 will include:

  • Review of enforcement actions taken by state authorities against inappropriate and abusive dispensing of prescription drugs, including opiates.
  • Evaluation of payment rates for specialty drugs to determine whether there are discrepancies in payment rates among different states. Specialty drugs are used to treat rare conditions and often require special handling, which increases costs. CMS’ National Average Drug Acquisition Cost, which states use to determine pharmacy reimbursement rates, does not include specialty drugs. Therefore, OIG predicts that payment rates vary significantly among states.
  • Review of the Express Lane Eligibility option for Medicaid, which allows states to use eligibility determinations from other programs, such as Head State or Temporary Assistance for Needy Families, as reliable support for Medicaid eligibility. OIG will calculate the rate of error for this express lane option and associated costs to Medicaid.
  • Review of CMS oversight of provider enrollment in Medicaid to determine whether CMS checks exclusion lists as necessary. OIG will also review whether states are effectively using payment suspensions against providers who are investigated for fraud. Under the Social Security Act § 1903(i)(2), states are required to suspend payment when they determine that fraud allegations against a provider are credible. States are also required to report the allegations to Medicaid Fraud Control Units.

Finally, OIG will review federal authorities’ oversight of electronic protected health information (“ePHI”) to ensure that ePHI is adequately protected and secured. In particular, it will review the Office of Civil Rights’ policies regarding unauthorized use or disclose of ePHI under the Health Information Technology for Economic and Clinical Health (“HITECH”) Act. OIG will also analyze policies of the Food and Drug Administration, which focuses its efforts on oversight of computerized medical devices. Such computerized devices can be easily hacked and therefore, create a large threat to the security of ePHI. OIG aims to minimize such risks and associated costs as ePHI becomes more prevalent in health care settings.

For further guidance on the types of audits, investigations and evaluations that OIG will conduct in 2016, the entire Plan can be viewed at http://www.oig.hhs.gov/reports-and-publications/archives/workplan/2016/oig-work-plan-2016.pdf.

Share this article:
  • Christopher J. Kutner
  • Ada Janocinska

Related Publications

Get legal updates and news delivered to your inbox