OIG Annual Work Plan for 2016 Series: Spotlight on Medicare and Medicaid Areas of Fraud Part One of Two

Tuesday, November 17, 2015
By Michelle Bedoya and George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law.

The United States Department of Health and Human Services (HHS) Office of Inspector General (OIG) released its 2016 Annual Work Plan (Work Plan) on November 2, 2015, with an effective date of October 1, 2015. The Work Plan describes more than 40 new investigations and strategic inquiries concerning pharmacy fraud and increased drug prices, among other topics. The Work Plan also summarizes ongoing areas of regulatory review and indicates areas of focus for the OIG in the upcoming year. Focus areas are selected based on a number of factors such as:

(1)    Previously identified issues;

(2)    Mandatory OIG review requirements; and

(3)    Requests from Congress, HHS management, or the Office of Management and Budget.

Accordingly, the OIG sets priorities for the sequence and proportion of resources to be allocated. In this two part blog, we will spotlight key focus areas within the Work Plan. When analyzing the Work Plan, it is important to keep in mind that the purpose of each focus is to primarily reduce waste, fraud and abuse. A notable portion of the Work Plan spotlights Medicare and Medicaid key focus areas.

Medicare Focus Area.

1.    Hospitals.

The OIG revised its focus on Medicare oversight of provider-based status and will seek to determine the extent to which the Centers for Medicare and Medicaid Services has methods to oversee provider-based billing. The extent to which provider-based facilities meet regulatory requirements will be reviewed as well. The OIG will also review Medicare payments for replaced medical devices since prior OIG reviews have determined that Medicare has made improper payments for replaced medical devices. Additionally, the OIG will review Medicare payments to acute care hospitals to determine whether certain outpatient claims billed to Medicare Part B for services provided during inpatient stays were allowable. Furthermore, the OIG has newly identified the need to determine the extent to which CMS validated hospital inpatient quality reporting data.

2.    Nursing Homes and Hospices.

Prior OIG reviews have found that Medicare payments for therapy greatly exceeded skilled nursing facilities (SNF) cost for therapy. As a result, the OIG will review compliance with various aspects of the SNF prospective payment system, including the documentation requirement in support of the claims paid by Medicare. Moreover, the OIG revised its focus on hospice general inpatient care and the Work Plan specifies how the OIG will review and assess the appropriateness of hospices’ general inpatient care claims.

3.    Medical Equipment and Supplies.

To identify potentially wasteful spending, the OIG will determine the reasonableness of Medicare fee schedule amounts for orthotic braces. The OIG will also review Medicare Part B payments for orthotic braces to determine whether durable medical equipment, prosthetics, orthotics and supplies were medically necessary. Due to the Centers for Medicare and Medicaid Services concerns, the OIG will review billing trends for ventilators, respiratory assist devices and continuous positive airway pressure devices, as well as examine factors associated with the increase in ventilator claims.

4.    Other Providers: Ambulatory Surgical Centers, Physicians Services, Anesthesia Services and Histocompatibility Laboratories.

The OIG will review the following areas:

a.    Medicare’s quality oversight of Ambulatory Surgical Centers;

b.    Select Medicare services that were referred/ordered by physicians and non-physician practitioners to determine whether the payments were made  appropriately;

c.    Claims for anesthesia services to determine whether the beneficiary had a related Medicare service and whether the services were reasonable and necessary;

d.    Physicians that provide evaluation/management home visits; and

e.    Histocompatibility laboratories supplier compliance with payment requirements.

5.    Prescription Drugs Part B & Part D.

The Work Plan has revised the OIG's focus in determining the financial impact of 340B-covered entities. This includes the oversight action that the Centers for Medicare and Medicaid Services take to ensure that payments for Part B drugs meet the appropriate coverage criteria. With regard to Medicare Part D sponsors, the OIG will:

a.    Verify whether sponsors comply with Medicare requirements for reporting direct and indirect remunerations;

b.    Review the degree to which plan drug formularies include drugs frequently used by dual-eligible members; and

c.    Review price increases for brand-name drugs under Part D compared to inflation.

6.    Part A and B Program Management: Accountable Care Organizations & Billing and Payments.

The Work Plan calls for a new focus and analysis of the Accountable Care Organizations (ACO) that participate in the Medicare Shared Savings Program. Moreover, the OIG will focus on reviewing the procedures established by the Centers for Medicare and Medicaid Services to prevent and recoup payments for incarcerated beneficiaries and unlawfully present beneficiaries in the United States. In addition, the OIG will focus on reviewing aspects of the Centers for Medicare and Medicaid Services’s early management of the implementation of the 10th version of the International Classification of Diseases codes in Medicare Parts A and B.

7.    Medicare Part C: Medicare Advantage.

Prior audits have revealed vulnerabilities in the accuracy of reported encounter data with regards to Medicare Advantage plans. As a result, the OIG will assess the extent to which the Centers for Medicare and Medicaid Services’s Integrated Data Repository contains timely, valid and complete encounter data. Also, the Work Plan places a new found focus on Medicare Advantage organization practices in Puerto Rico.

Medicaid Focus Area.

1.    Medicaid Prescription Drug Reviews.

The OIG revised its focus on states’ actions based on Medicaid drug utilization reviews. It will be reviewing the enforcement and education actions that states have taken on the basis of information generated by their drug utilization review programs related to inappropriate dispensing and potential abuse of prescription drugs.

However, the OIG will newly focus on:

a.    Specialty drug pricing and reimbursement in Medicaid by determining how state Medicaid agencies define specialty drugs;

b.    How much states paid for those specialty drugs;

c.    How states have determined payment methodologies for specialty drugs; and

d.    The differences in reimbursement amounts for these drugs among the states.

2.    Additional Medicaid Services, Equipment and Supplies.

The Work Plan indicates how the OIG will determine the degree to which selected states made inaccurate eligibility determinations using the Express Lane Option for Medicaid and the Children’s Health Insurance Program. It will also determine whether state survey agencies verified correction plans for deficiencies identified during nursing home recertification surveys.

3.    State Program Integrity Activities and Compliance with Federal Requirements.

State and the Centers for Medicare and Medicaid Services oversight of provider ownership information will be reviewed. The Work Plan indicates that the OIG will review whether states are conducting enhanced screenings that assess the risk for fraud. Moreover, the OIG will review payments made to providers with allegations of fraud deemed credible by states.

4.    Medicaid Managed Care State and Manufacturer Compliance with Medicaid Requirements.

The OIG will review states and managed care plans with contract provisions that require rebates from managed care plans if a minimum medical loss ratio is not met. This ensures that the federal share of payment retrievals that states receive through profit-limiting methodologies is refunded to the federal government. States’ reimbursements made to managed long-term-care plans will be looked at to decide whether those reimbursements conformed to certain federal and state requirements.
For a complete outline of all ongoing focus areas, read the 2016 OIG Work Plan here

Still Want to Know More?

The 2016 Work Plan is full of insider information on important topics for health care providers, professionals and facilities to understand. Check back regularly for part two of this blog series. The series will continue to highlight key area focus topics including the Affordable Care Act and Medicare/Medicaid reforms, and how these issues will affect you.

Consult with a Health Law Attorney Experienced in Medicare and Medicaid Issues Now.

The attorneys of The Health Law Firm represent health care providers in Medicare audits, ZPIC audits and RAC audits throughout Florida and across the U.S. They also represent physicians, medical groups, nursing homes, home health agencies, pharmacies, hospitals and other healthcare providers and institutions in Medicare and Medicaid investigations, audits, recovery actions and termination from the Medicare or Medicaid Program.

For more information please visit our website at www.TheHealthLawFirm.com or call (407) 331-6620.


"Work Plan Fiscal Year 2016."  U.S. Department of Health and Human Services: Office of Inspector General, 2015.

About the Author:
Michelle Bedoya is a long-time consultant to home health agencies and is currently a student at Barry University School of Law. George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida area.  www.TheHealthLawFirm.com. The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

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Response to: OIG Annual Work Plan for 2016 Series: Spotlight on Medicare and Medicaid Areas of Fraud Part One of Two
Wednesday, November 18, 2015
barry hart dubner says:

Well-written and much needed information. Thank you.

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