2014 OIG Work Plan – “new” hospital projects

OIG 2014 Work Plan for Hospitals

The 2014 OIG Work Plan, released on January 31, came out a full sixteen months since the prior year’s edition. The timing was an intentional four month delay beyond the traditional early October publishing date.  As was pointed out in our initial post on this topic, “The OIG Work Plan 2014 – an introduction“, there are many reasons why this annual document is so relevant.  And, as always, this year’s plan consists of somethings old and somethings new, and is laid out project by project across several different categories.

You may wish to have a quick look at an overview of the items covered in the 2014 OIG Work Plan, or even better yet, we encourage you to download a copy of the full plan.  However, in this post we’ll specifically focus on those hospital projects that are listed as “new” in 2014.

Hospital project categories in the 2014 OIG Work Plan

The Hospitals section of the 2014 OIG Work Plan includes a total of twenty-three projects, over half of which are new, and is divided into three parts:

  • Hospital – Related Policies and Practices
  • Hospitals – Billing and Payments
  • Hospitals – Quality of Care and Safety

Below is summary of each of the “new” projects concerning hospitals …

 Hospital – Related Policies and Practices

  • New inpatient admission criteria:  Previous OIG studies found overpayments for short inpatient days, as well as inconsistent billing practices among hospitals.  Beginning in 2014 there is substantial new billing criteria that requires physicians to only admit for inpatient care when the beneficiary is expected to need at least two nights of hospital care.  This year the OIG will study the impact and compliance with this new criteria.
  • Analysis of salaries included in hospital cost reports:  The OIG intends on studying the potential impact of establishing limits on the amount of employee compensation that can be submitted on cost reports.
  • Medicare costs associated with defective medical devices:  Here the OIG is looking at the additional costs related to medical services provided due to defective medical devices.
  • Comparison of provider-based and free-standing clinics:  This is essentially a side by side comparison of  Medicare payment patterns for similar procedures provided during a physician office visit in “provider-based” clinics vs. those in “free-standing” clinics.  At issue here is the impact of hospitals claiming “provider-based” status, which often receive payments that are higher than there clinic-based counterparts.

Hospitals – Billing and Payments

  • Outpatient evaluation and management services billed at the new-patient rate:  Based on earlier audits, the 2014 OIG Work Plan will now key in on out-patient payments made to hospitals for evaluation and management (E/M) services stemming from  visits that were billed at the “new-patient” rate.  A new-patient is one who has not been seen either as an in or out-patient in the previous three years.  The purpose of this focus is to determine appropriate billing and to recommend recovery of overpayments.
  • Nationwide review of cardiac catheterization and heart biopsies:  Previous OIG reviews uncovered inappropriate payments to hospitals for right heart catheterizations when they were separately paid during a simultaneous heart biopsy procedure.  In 2014 the OIG will further explore this issue to determine use of proper billing procedures.
  • Payments for patients diagnosed with kwashiorkor:  This OIG project focuses on hospital Medicare payments made for claims that include the diagnosis of Kwashiorkor, and specifically focuses on whether the medical record adequately supports the diagnosis.  At issue is the fact that a diagnosis of Kwashiorkor may substantially elevate the hospital’s reimbursement from Medicare.  Like other projects in the 2014 OIG Work Plan, this one stems from findings during earlier work.
  • Bone marrow or stem cell transplants:  The OIG plans on reviewing payments made to hospitals for bone marrow or stem cell transplants to determine whether Medicare payments were paid in accordance with Federal rules and regulations.  Prior reviews by the OIG have suggested that this isn’t always the case.  Bone marrow or peripheral blood stem cell transplantation is a process that includes several steps.  When this is covered, the necessary diagnosis and all steps must be included.
  • Indirect medical education payments:  This OIG project focuses on hospitals’ indirect medical education (IME) payments.  Prior reviews have shown that hospitals have received excess reimbursement for these costs.  This largely has to do with teaching hospitals, and with residents in approved graduate medical education programs.  Here, they receive additional payments for each Medicare discharge to reflect the higher indirect patient care costs of teaching hospitals relative to those of non-teaching hospitals.

Hospitals – Quality of Care and Safety

  • Oversight of pharmaceutical compounding:  This is an early investigation by the OIG.  They are looking into Medicare’s oversight of pharmaceutical compounding in Medicare-participating acute care hospitals.  Medicare oversees the safety of pharmaceuticals compounded at Medicare participating hospitals through the accreditation and certification process.
  • Hurricane Sandy – Case study of hospitals’ emergency preparedness and response:  Of particular interest is this review in the 2014 OIG Work Plan where hospital emergency preparedness is under scrutiny.  Here, the OIG will assess emergency preparedness of hospitals in selected counties affected by Hurricane Sandy, including the hospitals’ participation in the Public Health Emergency Preparedness Cooperative Agreements program funded through the Centers for Disease Control and Prevention and the Hospital Preparedness Program funded through the Office of the Assistant Secretary for Preparedness and Response.  CMS conditions of participation require that hospitals develop and maintain a an environment that ensures the safety and well-being of patients and have adequate medical and nursing staff during disasters.  Sandy has given a real-life measuring-stick on the effectiveness of these programs.
  • Oversight of hospital privileging:  In this new project, the OIG will study how hospitals assess medical staff candidates prior to granting initial privileges.  This will include verification of credentials and review of the National Practitioner Databank.  This review stems from the requirement that a hospital’s governing body must ensure that  members of the medical staff, including physicians and other licensed independent practitioners, are accountable for the quality of care provided to patients.

The 2014 OIG Work Plan is a welcome document

The Office of the Inspector General purposely releases this work plan each year in part to be transparent as to where its concerns lie.  It’s also a resource for healthcare providers to able to understand and be reminded of the rules of participation.  Ultimately, this annual document shouldn’t be so much feared as  welcomed.  It’s every provider’s opportunity to better understand their role, what’s expected, and it even acts a little bit like a crystal ball showing some of what’s to come.

Compliance with the many laws that govern healthcare needs to be at the forefront of every provider’s thinking.  Failure to do so may quickly result in becoming an unwanted statistic.  So let’s take advantage of the tools that the OIG provides us.


When you need proven expertise and performance

Thomas M. Lee, Partner

Mr. Thomas M. Lee has over 35 years of experience in the business of healthcare with special emphasis in operations management, financial analysis, financial forecasting, construction projects, and new program development.