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The OIG is responsible for deterring fraud and abuse by identifying systemic weaknesses and vulnerabilities that can be mitigated through corporate compliance programs. The OIG also pursues criminal convictions and recovers damages and penalties through civil and administrative proceedings from individuals and entities that commit fraud or abuse. Each year, the OIG publishes a Work Plan to identify and prioritize specific projects for future implementation. The OIG creates the Work Plan after completion of comprehensive financial and performance audits that identify systemic weaknesses that give rise to fraud, waste and abuse. The OIG Work Plan for Fiscal Year 2009 ("Work Plan") identifies areas that the OIG will study, audit and/or investigate in fiscal year 2009, and provides valuable guidance for identifying high risk compliance areas that apply to specified types of health care organizations. Health care organizations can mitigate their risk of false claims act or other fraud and abuse liability by assessing their operations in the context of current government priorities and identifying and correcting deficiencies in legal compliance. The following summarizes the most significant new OIG projects for hospitals, skilled nursing facilities, health plans, and health care professionals that will be implemented in 2009.

Hospitals

Significant new hospital compliance issues that the OIG will review in 2009 include the following:

• Provider-Based Status for Inpatient and Outpatient Facilities. The OIG will review cost reports of hospitals claiming provider-based status for inpatient and outpatient facilities to determine if payments were appropriate. The OIG noted that provider-based status can allow hospitals to receive higher reimbursements and allows freestanding facilities to receive enhanced disproportionate share hospital (DSH) payments, upper payment limits (UPL) payments or graduate medical education payments, which they would not be entitled to in the absence of claiming provider-based status.
• Hospital Ownership of Physician Practices. The OIG will review the appropriateness of Medicare reimbursement to hospital owned physician practices that are designated as provider-based. The OIG will investigate several related issues, e.g., whether these hospitals have met applicable federal requirements for the provider-based designation, the impact on Medicare of reimbursement under the hospital outpatient prospective payment system (HOPPS) to such provider-based practices, and the extent to which hospital-owned physician practices that do not have provider-based designation have been improperly reimbursed under the HOPPS.
• Inpatient Hospital Payments for New Technologies The OIG will review payments made to hospitals for "new" services and technologies. "New" medical services and technologies are defined by regulation, and a hospital may receive additional payment if the new service or technology is demonstrated to be otherwise inadequately paid under the diagnosis-related group (DRG) system. The OIG will determine whether hospitals have submitted claims in accordance with these criteria and were reimbursed appropriately for costs associated with the new services and technologies.
• HIPAA Security of Portable Devices Containing Personal Health Information. The OIG will review the security controls hospitals have implemented to prevent the loss of protected health information stored on portable devices and media, such as laptops, jump drives, backup tapes and equipment considered for disposal. The OIG will assess and test hospitals' policies and procedures for protecting, accessing, storing and transporting electronic health information
• Additional Part A Medicare Capital Payments for Extraordinary Circumstances. Hospitals may request additional Medicare capital payments for unexpected expenses over $5 million resulting from extraordinary circumstances such as a flood, fire or earthquake. The OIG will assess whether capital payments to hospitals for extraordinary circumstances satisfied federal requirements.
• Payments for Diagnostic X-Rays in Hospital Emergency Departments. The OIG will sample Part B claims and medical records for diagnostic x-rays performed in hospital emergency departments to determine whether payments were proper.
• Serious Medical Errors (Never Events). The OIG will review the incidences of and payments for serious medical errors, known as "never events," in the Medicare population. Recent law requires OIG to conduct a study of never events, examining types of events and payments by any party; the extent to which the Medicare program paid, denied payment, or recouped payment for services furnished in connection with such events; and the extent to which beneficiaries paid for such services. The OIG also is required to review CMS's administrative processes regarding detecting and paying for never events. The OIG will conduct a series of reviews to address the requirements of this mandate. More specifically, it will review key issues, policies, and practices regarding never events in hospitals.
• Reliability of Hospital-Reported Quality Measure Data. The OIG will review hospitals' controls related to quality of care data that they submit to CMS. Hospitals are required to report quality measures for a set of 10 indicators. Hospitals that fail to report these measures to CMS receive a two-percent payment reduction. The OIG will determine whether hospitals have implemented sufficient controls to ensure that their quality measurement data are valid.

Skilled Nursing Facilities

The Work Plan contains several new projects designed to identify Medicare overpayments, discover Skilled Nursing Facilities' ("SNF") providers' claims for services that were not medically necessary, and uncover other Medicare fraud and abuse. These new SNF projects include:

• Skilled Nursing Facility (SNF) Consolidated Billing. The OIG will review Medicare Part B claims submitted by suppliers for items, supplies, or services provided to beneficiaries during Part A Medicare-covered SNF stays. Pursuant to the current law, the supplier must bill and receive payment from SNF, rather than from Medicare, for these items or services. Prior audits have identified significant improper claims submission and reimbursement in this area, and the OIG is continuing work to identify additional overpayments. The OIG also will determine whether edits in CMS's main claims-processing system, the Common Working File (CWF), are effective in detecting and preventing improper payments.
• Accuracy of Coding for Medicare SNF Resource Utilization Groups' Claims. The OIG will review a national sample of Medicare claims submitted by SNFs to determine the extent to which Resource Utilization Groups (RUGs) included on SNF claims for Medicare reimbursement are accurate and supported by the residents' medical records. Medicare pays for Part A-covered SNF stays based upon a PPS that includes a case-mix adjustment based upon RUGs. A 2006 OIG report found that 22 percent of claims were upcoded, representing $542 million in potential overpayments for FY 2002. The OIG' will also will identify methods to improve the accuracy of payments to SNFs.
• Part B Services in Nursing Homes, Mental Health Needs and Psychotherapy Services. The OIG will review Medicare Part B payments for psychotherapy services provided to nursing home residents during non-covered Medicare Part A SNF stays. Pursuant to regulations, certified nursing homes are required to provide the necessary care and services to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident. A previous OIG review found that approximately 31 percent of outpatient claims for Part B mental health services allowed by Medicare did not meet coverage guidelines, resulting in $185 million in inappropriate payments. The OIG will determine the medical necessity of services, appropriateness of coding, and adequacy of nursing home documentation.
• Calculation of Medicare Benefit Days. The OIG will review whether SNFs submit no-pay bills as required. No-pay bills are submitted to Medicare without a request for reimbursement to track beneficiaries' benefit periods. Medicare allows up to 100 days of SNF services per spell of illness. A spell of illness begins on the first day on which SNF services are provided and ends after those services have not been utilized for 60 days. The Medicare Claims Processing Manual requires that a SNF submit a bill for a beneficiary that has started a spell of illness under the SNF Part A benefit for every month of the related stay even though no benefits may be payable. A SNF provider also must submit no-pay bills for a beneficiary who has previously received Medicare-covered skilled care and subsequently dropped to a noncovered level of service but continues to reside in a Medicare-certified area of a facility. The OIG will review whether failure to submit no-pay bills contributes to inappropriate calculations of SNF eligibility periods. The OIG also will examine CMS's oversight mechanisms in place to ensure that no-pay bills are submitted by SNFs.
• Oversight of Nursing Home Minimum Data Set Data (MDS). The OIG will review CMS's oversight of MDS data submitted by nursing homes certified to participate in Medicare or Medicaid. The OIG will review CMS's processes for ensuring that nursing homes submit accurate and complete MDS data.
• Nursing Home Residents Aged 65 or Older Who Received Antipsychotic Drugs. The OIG will review the extent to which nursing home residents aged 65 or older received selected antipsychotic drugs in the absence of conditions approved by the Food and Drug Administration (FDA). Applicable law requires SNFs to respect certain rights of patients, including the right to be free from chemical restraints administered for discipline or convenience. The OIG will examine Medicare Part D and Part B program reimbursements for selected antipsychotic drugs received by elderly nursing home residents and the extent to which these drugs were prescribed and paid for in accordance with Federal regulations.

Health Plans

Significant new Health Plan issues that the OIG will review in 2009 include the following:

• Medicare Part C Payment and Reimbursement. The OIG will review the appropriateness of several types of payments and reimbursements under Medicare Part C. The OIG will assess the appropriateness of Medicare Part C reimbursement for beneficiaries whom the plans have classified as institutionalized, in ESRD, or Medicaid eligible because CMS must adjust the payment to Medicare Advantage Plans for patients falling into one of these categories.
• Critical Access Hospital Payment and Reimbursement. The OIG will review the appropriateness of Medicare reimbursements paid to critical access hospitals by Medicare Advantage Plans.
• Risk Adjustment. The OIG will examine CMS' process for validating risk adjustment scores used to calculate capitated payment rates to determine if there are any discrepancies in the payments.
• Drug Utilization Costs. The OIG will review and compare drug utilization costs of special needs plan beneficiaries with other Medicare Advantage prescription drug plan beneficiaries.
• Encounter Data. The OIG will review the accuracy of Part A encounter data on Medicare beneficiaries because incorrect data could impact future Medicare reimbursement.

Physicians and Other Health Professionals

Physician billing to Medicare for diagnostic x-rays, MRI's and "incident to" services have previously generated OIG scrutiny, and the Work Plan indicates that the OIG intends to continue its focus on high utilization of services. Significant new health care professional issues that the OIG will review in 2009 include the following:

• Long-Distance Physician Claims Requiring a Face-to-Face Visit. The OIG will evaluate the appropriateness of Medicare claims for long-distance evaluation and management services and factors that contribute to the submission of such claims
• Patterns Related to High Utilization of Ultrasound Services. The OIG will examine billing patterns for ultrasound services paid under the Medicare fee schedule in areas with high utilization.
• Medicare Payments for Chiropractic Services. The OIG will evaluate chiropractor claims with the acute treatment modifier for compliance with Medicare reimbursement requirements. In particular, the OIG will assess payments for claims identified as maintenance therapy.
• Physician Reassignment of Benefits. The OIG will review a national sample of claims to determine the extent to which physicians reassign benefits and are aware of their reassignments, after previous investigations uncovered fraudulent reassignment schemes.
• Medicare Payments for Unlisted Procedure Codes. The OIG will review the use of unlisted procedure codes and the accuracy of Medicare payments for the services.
• Medicare Practice Expenses Incurred by Selected Physician Specialties. The OIG will review selected physician specialties to determine whether the Medicare payments to such physicians are comparable to the actual expenses of the physicians.
• Outpatient Physical Therapy Services Provided by Independent Therapists. The OIG will review the services of independent physical therapists with a high utilization rate to assess compliance with Medicare reimbursement requirements.
• Medicare Payments for Colonoscopy Services. The OIG will review Medicare payments for colonoscopy services to determine compliance with Medicare reimbursement requirements.
• Physicians' Medicare Services Performed by Non-physicians. The OIG will review "incident to" services to determine whether the qualifications of the non-physician staff who perform "incident to" services are consistent with professionally recognized standards of care.

Compliance Activities Health Care Organizations Should Undertake

Health care organizations should ensure that newly identified OIG projects contained in the fiscal year 2009 Work Plan receive priority in establishing future compliance efforts. In order to demonstrate that your compliance program is "effective" and is being updated to address new regulatory issues, we recommend that health care organizations take the following actions:

1. Compliance Committee. Convene a compliance committee meeting to discuss the OIG's 2009 Work Plan, with particular emphasis on risk areas that impact your health care organization. Document these efforts by keeping written minutes of such meeting.
2. Compliance Program Amendments. Carefully review your compliance program to consider whether amendments to the compliance program should be made. New risk areas identified in the Work Plan should be added to risk or audit areas set forth in the compliance program. All such compliance program amendments should be documented.
3. Develop a Compliance Risk Assessment. One of the key components of an effective compliance program is that Hospitals should conduct a comprehensive risk assessment that identifies and prioritizes the various compliance and business risks that the health care organization may experience in its daily operations and should serve as the basis for the written policies and procedures that the health care organization should develop. The risk assessment should: (1) identify the health care organization's key compliance risks; (2) evaluation compliance program control activities and the level of risk mitigation; (3) Rank risk areas and risk concern level; and (4) incorporate risk assessment results in the compliance program work plan.
4. Develop a Compliance Work Plan. Upon completing a compliance risk assessment, the next step is to create a compliance work plan detailing various compliance monitoring and auditing activities for the upcoming year. The objective of the Work Plan is to plan for the provision of compliance, monitoring and audit services to those areas of greatest health care organization risk and management concern. The planning process should be broad based taking into consideration existing and emerging strategic, financial, operational, compliance and overall risks associated with the health care organization's operations. There are a significant number of resources readily available to assist you in preparing a Work Plan. Resources to consider in preparing your work plan include: OIG 2009 Work Plan; State and Federal Laws, licensing, accreditation, and certification requirements; OIG advisory opinions; OIG audit services and investigation reports; Local Medical Review Policies; Local Coverage Decisions; Medicare bulletins and CMS updates; and Peer Review Organization activities. Elements of a compliance program Work Plan should include audits, investigations, consulting services, training and education, and compliance services. The matrix provided below may be helpful in defining those compliance activities most applicable to your health care organization and help to inform management of your key risk areas.
5. Auditing and Monitoring. Initiate internal and/or external monitoring and audits of the areas of the OIG Work Plan that impact your medical group to evaluate your compliance in those areas. "Monitoring" is a process involving ongoing checking and measuring to ensure quality control. Monitoring involves daily, weekly, or other periodic checks to verify that essential functions are being adequately performed and that processes are working effectively. The results of the monitoring process may indicate the need for a more detailed audit. "Auditing" is a systematic and structured approach to analyzing a compliance process. It is a formal review that usually includes planning, identifying risk areas, assessing internal controls, sampling of data, testing of processes, validating information, and formally communicating recommendations and corrective action measures to both management and the board of directors. Document these efforts by preparing a written summary of the methodology and results of such audits, and any corrective actions taken as a result.
6. Educate Personnel. Educate management, professionals and staff with respect to new risk areas and the need to develop mechanisms to reduce the risk of noncompliance. New policies and procedures should be developed to address new risk areas identified by the OIG Work Plan, and the new policies and procedures should coordinated with training and educational programs. Document all efforts in connection with any educational program or seminar offered regarding compliance issues.

Conclusion

Health care organizations should regularly review and update the implementation and execution of their compliance program to ensure its effectiveness. An effective compliance program demonstrates a good faith effort to comply with applicable statues, regulations, and other Federal health care program requirements, and may significantly reduce the risk of unlawful conduct and corresponding sanctions. Our firm has assisted numerous health care organizations with the development, implementation and operation of corporate compliance plans. If you require our assistance or have any questions please contact Michael Dowell at mdowell@tocounsel.com or the lawyer in the firm who generally handles your health care legal matters.