The federal government's latest efforts to identify and correct fraud, waste, and abuse within federally funded healthcare programs are outlined in the 2014 work plan issued by the Office of Inspector General.
What went wrong with the health insurance exchange rollout and HealthCare.gov, admission criteria under the so-called "two-midnight rule," and whether taxpayers should bear the brunt of unreasonable healthcare executive compensation, are among 60 new targets of investigation announced by the Office of Inspector General for the U.S. Department of Health and Human Services.
The OIG's 2014 work plan was issued Friday, nearly four months behind schedule. The annual list of investigations, inspections, and audits includes more than 140 other projects listed in previous years' work plans that are ongoing or planned.
All are part of the government's effort to correct fraud, waste, and abuse within federally funded healthcare programs. The scope of work covers Medicare, Medicaid, the Children's Health Insurance Program, the Centers for Disease Control and Prevention and the U.S. Food and Drug Administration.
Richard Kusserow, who held the office of Inspector General for 11 years and is the founder and CEO of the consulting firm Strategic Management, says that a key area of interest for the OIG this year is the $4.8 billion in contracts overseen by the Centers for Medicare & Medicaid Services, including those companies who were contracted for the exchange rollout.
"There's been a lot of questions about contract administration at CMS," Kusserow said in an interview. "What this means is that maybe what they're [the OIG] going to look at is how well they're managing the process of hospital appeals specific to Recovery Audit Contractors [RAC] refusing claims. I think there's going to be a huge war on this issue."
The work plan specifies that "CMS relies extensively on contractors to help it carry out its basic mission, including administration, management, and oversight of its health programs…[but] Previous Government Accountability Office reports highlighted the vulnerabilities and weaknesses within the contracting environment at CMS.
Kusserow says that between the lines of the document, the issue revolves around the enormous amounts of money that the RACs deny on hospital claims, two-thirds of which are reversed when they get to the appeal level in front of the an administrative law judge.
Now, because of the backlog of claims on appeal, CMS has suspended assignment to ALJ hearings for at least 24 months, holding hospitals' claims funds in captivity. "The question is," he said, "what is the OIG doing about the problem? The appeals process is clogged, and what is (CMS) doing to streamline the process, so you don't have so many unmeritorious (RAC) contractor seizures" of hospital reimbursements?"
Questions About Contractors
Specific to the exchange rollout, 11 of the 60 new OIG projects involve the federal marketplaces—projects that were requested by HHS Secretary Kathleen Sebelius in a Dec. 10 letter to Inspector General Daniel Levinson.
She asked for reviews of the acquisition process for contracts to launch healthcare.gov, how contractors were selected, contract administration, "and the overall project management," and "whether contract specifications were met, and whether performance was adequately monitored.
In addition, the OIG is looking at controls to determine the accuracy of eligibility for enrollment and subsidy payments, selection of contractors, contract types, "and the rationale for these selections." There is a separate new project to determine "whether performance-based contracting was used to determine payments to contractors; whether contractors were paid appropriately."
In FY 2013, the work plan says, the OIG's work recovered $5.8 billion in receivables, including findings in amounts paid to states for their share of the Medicaid programs. The OIG also says that it "identified $19.4 billion in savings" because of prior legislative, regulatory or administrative actions identified by its recommendations.
For the 2014 projects of specific interest to hospital leaders, 12 new projects top the OIG's wish list for 2014. They include:
The 2-Midnight Rule
New admission criteria specifying which patients should be assigned to "observation" status versus inpatient stay, which pays a much higher reimbursement. "Previous OIG work found overpayments for short inpatient stays, inconsistent billing practices among hospitals, and financial incentives for billing Medicare inappropriately," the work plan says.
Under the new criteria, physicians may admit patients expected to need at least two nights of hospital care; beneficiaries' whose care is expected to require a shorter stay are treated as outpatients on observation status. The investigation will detail variations in hospital billing practices during the 2014 fiscal year.
Unreasonable Employee Compensation
OIG says it will review hospital salary data to "determine the potential impact on the Medicare Trust Fund if the amount of employee compensation that could be submitted to Medicare for reimbursement on future cost reports had limits."
The report adds that employee compensation should represent "reasonable remuneration for managerial, administrative, professional and other services relate to the operation of the facility and furnished in connection with patient care." Currently there are no limits on what hospitals can include.
Hospital Billings for Clinic Care
OIG will examine the impact on payments to hospitals that are increasingly buying free-standing clinics and physician practices, which enables hospitals to bill at higher rates.
Hospitals Billing for "New" Patients
The OIG says that its "preliminary work identified overpayments that occurred because hospitals used new patient codes when billing for services to established patients." It will investigate hospital-based clinics that inappropriately bill Medicare higher rates for "new" beneficiary visits when those patients had been seen within the prior three years.
Inpatient Compounding Pharmacies
OIG will dig into how well state agencies and accreditation agencies perform in their oversight of hospital compounding pharmacies.
Staff Physician Performance
OIG intends to determine whether hospitals participating in Medicare and their governing bodies have a system to periodically appraise members of their medical staff, as they're required to do, including verification of credentials and review of the National Practitioner Databank. "Robust hospital privileging programs contribute to patient safety," the work plan states.
Hurricane Sandy Preparedness
OIG will seek to determine whether hospitals in selected counties hit by Hurricane Sandy met a required level of preparedness and response. The OIG work plan specifically asks about the hospitals' "participation in disaster programs funded by the CDC to meet conditions of participation required for Medicare reimbursement.
Appropriate Transplant Billing
OIG will seek to identify hospitals that have incorrectly billed separately parts of the process necessary for bone marrow or stem cell transplants, such as harvesting, transplant, chemotherapy and radiotherapy prior to transplant, when those steps are included in the payment, and only for specific diagnoses.
Appropriate Cardiac Services Billing
OIG will investigate whether hospitals inappropriately billed separately for right heart catheterizations and heart biopsies during the same operative session, procedures that are included in the payment for heart biopsies.
Defective Medical Devices
OIG will seek to determine whether Medicare has paid for costs associated with defective medical devices. "CMS has previously expressed concerns about the impact of the cost of replacement devices, including ancillary cost, on Medicare payments for inpatient and outpatient services."
Correct Medical Education Billing
OIG will investigate whether teaching hospitals correctly calculated amounts requested to cover indirect medical education, which use the hospital's ratio of resident full-time equivalents to available beds.
Kwashiorkor
The practice in which hospitals bill Medicare for care to patients with Kwashiorkor, a rare condition usually seen only in areas hit by famine, is not supported by documentation and will be investigated in 2014. "Prior OIG reviews have identified inappropriate payments to hospitals for claims with a Kwashiorkor diagnosis," the work plan states.