Corporate Compliance Update – 2013

Compliance remains a major focus of the Department of Health and Human Services.  Through CMS, the OIG and others, oversight of Medicare and Medicaid reimbursement continues unabated and, in fact, expands.  This article summarizes and provides guidance on some of the recent efforts of these departments.

A review of the 2013 Office of Inspector General work plan

Its October again and, as we all expected, the 2013 OIG audit list relative to possible healthcare fraud and abuse has been published.  The document is filled with a plethora of new topics and proposed audit activities as well as continuation of audit activities on subjects from years past.  The continuation of reviews indicates that the OIG has not satisfied their objectives for the review and does not appear to be winding down or losing interest in its ongoing activities.

This fiscal year’s list is quite similar to prior years but holds a few surprise categories with the OIG not providing much clarification or specifics related to the subject to be reviewed. So that healthcare providers may be better prepared in scheduling their own internal monitoring and reviews, we have prepared an overview of some of the more significant 2013 OIG audit topics highlighting the issue and providing insight into the subject matter.

Hospital concerns and guidance


Three day window

The OIG is going to determine cost savings to the Program should the infamous three day window expand to a 14 day window.  Hospitals should watch the outcome of this review carefully.  This review will be done through data analysis of the OIG’s extensive data base.

Present on Admission (POA)

The OIG plans to review the accuracy of hospital POA reporting submitted on the acute inpatient hospital claims.

POA indicators are required to be reported for each diagnosis (ICD-9) code.  Medicare reimbursement is reduced when certain hospital acquired conditions are identified.

Hospitals should assure current DRG Validation processes, which are traditionally part of Hospital Compliance internal reviews, include validating the present on admission indicator reported on the claim based on documentation in the medical record.

Inpatient Outlier Payments

Hospitals receiving inpatient outliers will be examined nationally, identifying the characteristics of hospitals with high or increasing percentages of cost outlier.  Whistleblower lawsuits have increased over the last few years and have resulted in large monetary settlements. Some of the hospitals involved in these lawsuits have been found to have inflated claim charges to qualify for outlier consideration.

Hospitals should adopt policies relating to price setting within the hospital chargemaster.  Price setting should be reasonable and have some basis in cost of service.

Review of inpatient and outpatient payments (PPS)

The OIG proposes to use their sophisticated data mining tools as well as computer system matching programs to select claims failing to conform to specific CMS billing requirements.  They will focus on those failures to comply with billing instructions that result in hospital overpayments.

This type of review is broad and, without more specific criteria, hospitals will be open to an aggregate of potential review issues.  Hospitals are advised to monitor and review billing requirements as published in the Internet Only Manuals.

Acute hospital/post acute transfers

The government will continue to review payments made for post acute care transfer DRGS to assure appropriate coding of patient status at discharge.  Reviews will center on reviewing the status codes to assure the correct payment calculation to ensure that no overpayments exist based on discharge status.

Hospitals should review their transfer coding policies to ensure compliance with associated rules.

Outpatient hospital dental claims

Medicare considers dental services to be excluded from Medicare coverage.  The OIG plans to investigate hospital outpatient claims adjudicated to payment for dental related services and possible provider overpayments.

Hospitals should assure procedures are in place in the billing office to prevent claim submissions to Medicare for non-covered statutory excluded services. This process should include screening for non-covered services but also related and incidental services associated with these non-covered services.

Critical access hospitals

Eligibility requirements

Critical access hospitals (CAHs) are not exempt from OIG scrutiny.  A new objective this year will be to review CAHs in order to profile them as to their size, the number of patients, services provided and their distance from other hospitals.  The OIG will also be reviewing compliance with the CAH conditions of participation.

From what little guidance has been provided, it appears the OIG is not only ensuring that CAHs continue to meet the fairly strict eligibility requirements, but is also gathering somewhat general data on the types of services provided (to be used down the road?).  CAHs should ensure they meet all distance, bed size and average length of stay requirements as well as other CoP.

Swing beds

The OIG is also concerned with the payment methodology for CAH swing beds.  It is initiating a review of this methodology to ensure payment to CAHs for this level of service is reasonable and appropriate.

Long-term care hospitals

The OIG wants to determine the extent to which Medicare made improper payments for interrupted stays in long-term -care hospitals (LTCH) in 2011. It also plans to identify readmission patterns and determine the extent to which LTCHs readmit patients directly following the interrupted stay periods.  An interrupted stay occurs when a patient is discharged from an LTCH for treatment and services that are not available at the LTCH and is readmitted after a specific number of days.  In the past, the OIG has identified vulnerabilities in CMS’s ability to detect readmissions and appropriately pay for interrupted stays.


The Work Plan adds topics of interest and continues to support the OIG’s concern and continuation of reviews associated with State Medicaid program involvement with drug rebate programs, State coverage under the Home Community and Personal Care services, State provider and supplier reimbursement policies, provider termination and the Medicaid integrity program audits.

Physician concerns and guidance

Place of service errors

The OIG continues to review place of service assignment for services rendered in ambulatory surgical centers and outpatient departments of hospitals. Since physician, including non-physician practitioner (NPP), reimbursement is paid at a higher rate when services are rendered in the non-facility setting such as the office, the OIG is concerned that physician practices are not assigning the correct place of service when patients receive care in outpatient departments of a hospital or other non-office settings.

This can be a major issue if your practice has become a department of a hospital (known in Medicare parlance as a Provider Based Entity (PBE)). As a PBE, the practice becomes integrated into the facility and, as such, holds itself out as a department of the hospital. Medicare patients are considered hospital outpatients when they receive services at a PBE and, as such, their visits must be billed with an outpatient place of service code.

OIG issue: incident-to services

This is not a new issue for the OIG but continues to be a concern. The OIG wants to find out if services not personally performed by a physician but billed under the physician’s name (incident-to) are being reported appropriately. It states its concern as: there is no way to confirm from claims data which services billed are performed incident-to; a 2009 OIG review found 21 percent of services reviewed were performed by non-qualified personnel.

Medicare defines incident-to as the services or supplies that are furnished as an integral although incidental part of the physician’s professional services.

Incident-to requirements include: the service must be an integral part of the physician’s plan of care (services may not be for a new patient or a new problem); on-going physician involvement; direct personal supervision by the physician. In addition, both the physician and NPP/auxiliary personnel must have a direct employment relationship or is a leased employee or must be employed by the same group AND the physician must be present in the office suite and immediately available if needed. Service must be provided in the office or in the home, other non-hospital or SNF setting.  If these requirements are met, the service may be billed under the supervising physician’s name. See the Medicare Benefit Policy Manual (pub 100-2), Chapter 15, Covered Medical and Other Health Services, Subsection 60, Service and Supplies for more information.

Let’s not forget; the person performing the service must be qualified and the services must be medically necessary. That means different things depending upon what services are performed. For example, it is within the scope of a registered nurse’s license to perform the insertion of a non-indwelling bladder catheter but not in a medical assistant’s scope. So, in this example, if the physician ordered the insertion of the catheter for a sterile urine specimen, the service could be considered a billable incident-to procedure if performed by a RN (if all the other incident-to requirements are met) but non billable if performed by a medical assistant.

To support billing services incident-to documentation must include: the name of the physician whose care plan is being followed, the reason for the visit, a description of the services being rendered and the name of the physician/NPP who is supervising at the time the service is being provided. NHIC, our J-14 MAC, also requires that the supervision provider co-sign the note.

Incident to is not allowed in a hospital setting just a free standing physician office.  Hospitals should continue to educate your staff on the specific requirements surrounding incident-to services and billing. Make sure documentation supports the incident-to service. You may have to revise your documentation templates and workflows to make sure you are being compliant.

Evaluation and management services (multiple issues)
Trends in Coding of Claims

The OIG continues to review E/M services for aberrant billing patterns.  The goal is to confirm that the appropriate level and type of E/M service is being billed.

We have been living with this type of scrutiny for decades, but with EHRs becoming more prevalent, the level of review is becoming more intense. The key is to provide ongoing education and training to your practitioners and continue your chart review activities to ensure compliance.

Services Provided During Global Surgery Periods

This is a continued review of practices related to the number of follow-up E/M services provided by physicians as part of the global surgery period to determine whether the practices have changed since the global surgery fee concept was introduced.

Use of Modifiers during the Global Surgery Period

This is a natural addition related to the review of global surgery periods. The only way to pull a service out of the global window for separate payment is to append a modifier (i.e. 24, 57). The OIG wants to determine if services provided during a global surgical period and billed with any of the aforementioned modifiers are being reimbursed appropriately. The concern is that the application of one of these modifiers is correctly identifying the service billed as being outside and/or unrelated to the global procedure.

Potential Inappropriate Payments

As electronic health records (EHRs) proliferate, the OIG says it will continue to target over documented/ “cloned” E/M services as an area for review.

Per Medicare IOM Manuals 100-04 Chapter 12 Section 30.6.1.A: “Medical necessity of a service is the overarching criterion for payment in addition to the individual requirements of a CPT® code. It would not be medically necessary or appropriate to bill a higher level of evaluation and management service when a lower level of service is warranted. The volume of documentation should not be the primary influence upon which a specific level of service is billed. Documentation should support the level of service reported.”

The take home on this one is to make sure you review your EHR to identify how/if copying of previous visits are allowed. If information is copied forward, is it identified as historical data or treated as “brand new” for that date of service?  Critically look at your templates. Are they overly prefilled? Does the practitioner’s history of present illness contradict the review of systems? Does the history contradict the exam? Most importantly, does the acuity of the medical decision making support the level of service billed? In simple terms, was it medically necessary to document a comprehensive history and exam for a patient with a stubbed toe?

Expect this issue to continue to be an area of review as EHR’s implementation continues. Due diligence is going to be required to assure that acuity supports the code billed.

Other Physician Issues in Brief

Ophthalmological reviews:  Claims will be reviewed to identify over-utilization and other coding errors, particularly with the use of E/M codes as opposed to “eye” codes.  2011 data will be utilized for this review.

Compliance with Assignment Rules: The OIG will continue to review whether providers are complying with assignment rules and determine to what extent beneficiaries are inappropriately billed in excess of amounts allowed by Medicare.

Part B Imaging Services: Part B imaging services will continue to be reviewed to determine whether the services reflect expenses incurred and whether the utilization rates reflect industry practices.

Diagnostic Radiology Services: Medical necessity will continue to be reviewed for high dollar imaging as well as reviews of duplicate services being ordered by different specialists.

Sleep Testing: the OIG is concerned that there has been an expediential increase in the number of sleep studies billed from 2001-2009. They are reviewing to confirm the medical necessity of sleep studies billed.

Summary of the OIG Work Plan

In its spring 2012 report to Congress (covering the 6 month period ended March 31, 2012), the OIG reported expected recoveries of approximately $1.2 billion. It further accomplished 1,264 individual/entity exclusions from participation, 384 criminal convictions and 164 civil actions.  It is increasing its use of its extensive data base to data mine for more efficiency and effectiveness in pinpointing its oversight efforts.

It is clear, based on the successes described in its semi-annual report to Congress and on its website, that the OIG will remain extremely active in its audit and review activities of all provider types.

Other compliance considerations, in brief

3 Day Payment Window: CMS has clarified in its final inpatient PPS rule that the 3 day payment window applies to both preadmission diagnostic and non-diagnostic services furnished to patients by physicians that are wholly owned or wholly operated by the admitting hospital.  This can have significant implications for those physicians and physician practices that are not provider-based entities but are wholly owned or operated by a hospital.

PEPPER reports: A hospital’s PEPPER report (Program for evaluating payment patterns report) can be a very effective tool for assisting in compliance with case management of inpatient care. If aberrations are identified on this report, hospitals can use this information to help prioritize internal compliance efforts.


The Department of Health and Human Services, through its agencies, is remaining ever vigilant in its oversight of Medicare and Medicaid payments to healthcare providers across the continuum of care.  The future appears no different and, in fact, appears to include even more oversight than currently exists.  Providers should carefully review and analyze each of the many work plans and rules that have been published in the past few months in order to determine applicability to each individual circumstance.  The result should be to proactively assess the impact to the individual organization as proper planning and oversight is instrumental to a successful compliance outcome.

For more information contact your BNN healthcare advisor at 1.800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, investment, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.

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