EDITOR’S NOTE: Denise Nash, MD, CCS, CIM, is the newest member of the RACmonitor editorial board. Dr. Nash serves as the revenue cycle director for Quorum Health Resources, LLC.

Here we go again, just when you thought it was safe. On Oct. 2, 2012, the Office of Inspector General (OIG) released the Work Plan for fiscal year 2013, which describes activities the OIG plans to initiate or continue with respect to HHS programs from October 1, 2012, through September 30, 2013.

Overall, the plan continues to focus on the changes introduced by the Affordable Care Act (ACA). The 2013 Work Plan contains a notable increase in projects related to hospitals. Of the 50 new projects under Medicare Parts A and B, 11 are directed at hospitals, three at nursing homes, two at hospices, seven at DMEPOS, eight at other providers and suppliers, eight at prescription drugs, six at Parts A and B contractors, and five under other Parts A and B management and system issues. This first article will deal with the issues affecting hospitals.

The OIG will continue to monitor hospitals in the areas of:

  • Same-Day Readmission
  • Acute-Care Inpatient Transfers to Inpatient Hospice Care
  • Admissions with Conditions Coded to Present on Admission (POA)
  • IP and OP payments to Acute Care Hospitals
  • Inpatient Outlier Payments
  • Medicare’s Reconciliation of Outlier Payments
  • Duplicate GME Payments
  • Occupational-Mix Data Use to Calculate Inpatient Hospital Wage Indexes
  • IP and OP Hospital Claims for the Replacement of Medical Devices
  • OP Dental Claims
  • OP OBS During OP visits
  • CAH, Variation in Size, Services, and Distance from Other Hospitals
  • IP Rehab, Transmission of Patient Assessment Instruments
  • IP Rehab, Appropriateness of Admissions and Level of Therapy

Along with the items above, the OIG has added many new focus areas for hospitals, and greater scrutiny on hospital billing via hospital payments for readmitted patients and patients discharged to other facilities. Included in the new areas of focus are:

Inpatient Billing for Medicare Beneficiaries

The OIG will assess changes in IP billing for 2008-12. The assessment will also cover changes in IP billing among different hospital types and hospital insurance with Medicare compliance with IP billing. Medicare paid hospitals $100 billion for IP stays in 2010 under the MS-DRG, which is comprised of 747 Medicare severity-adjusted diagnosis-related groups.

Diagnosis-Related Group (DRG) Window

The OIG will launch a new analysis of the Diagnosis-Related Group Window. Claims data will be analyzed to determine how much CMS could save if it bundles outpatient services delivered up to 14 days prior to an inpatient hospital admission into the diagnosis-related group (DRG) payment.

Non-Hospital Owned Physician Practices Using Provider-Based Status

The OIG will determine the impact and extent to which practices using the provider-based status met CMS billing requirements. Provider-based status allows the subordinate facility to bill as the main provider, which allows for additional Medicare payment but may also increase the beneficiaries’ coinsurance.

Discharges vs. Transfers

The OIG will review Medicare payments made to hospitals for beneficiary discharges that should have been coded as transfers. These claims will be reviewed for appropriateness of payment and whether they were processed correctly. A hospital that discharges a patient is paid the full DRG, whereas a hospital that transfers a beneficiary to another facility is paid a graduated per diem, not to exceed the full DRG payment that would have been paid for the discharge.

Swing Beds for IP/CAH

The OIG will review Medicare payments made to hospitals for beneficiary discharges that were coded as discharges to a swing bed in another hospital. Swing beds are inpatient beds that can be interchangeably used for acute care or skilled nursing services. Medicare does not pay the reduced graduated per diem rate if the patient was discharged to a swing bed in another hospital. If appropriate, the OIG will recommend that CMS evaluate its policy related to payments for hospitals discharges to swing beds in other hospitals. For CAHs, reimbursement will be compared for swing-bed services at CAHs to same level of service obtained at Skilled Nursing Facilities (SNF) to determine if Medicare could achieve cost savings through a more cost-effective payment methodology. Currently, CAHs are reimbursed 101 percent of reasonable cost, whereas SNFs are reimbursed under a PPS through case-mix, adjusted per diem.

Cancelled Surgeries

The OIG will determine the impact of cancelled surgeries followed by a rescheduled surgical procedure in a PPS facility on subsequent readmission. Currently, the facility receives two payments, one for the cancelled procedure and another for the subsequent rescheduled procedure, unless the patient is readmitted the same day.


Mechanical Vent

The OIG will review Medicare payments for mechanical vent to determine whether the DRG assignment and payment were appropriate. The determinant factor will be whether the patient received fewer than 96 hours of mechanical vent. For certain DRG payments to qualify for Medicare coverage, a patient must receive 96 hours or more of mechanical vent.

QIO’s Work with Hospitals

The OIG will determine the extent conducted by QIOs in working with facilities in conducting quality improvement projects or in providing technical assistance. The current cost to Medicare for each three-year SOW is $1.1 billion.

ASC Acquisition

The OIG will determine the extent and effect on Medicare beneficiaries of hospital acquisitions of ASCs and conversion to OP departments. Since Medicare reimburses OP surgical services performed in hospital OP departments at a higher rate than ASCs, the OIG will determine the effect of these types of acquisitions on Medicare payments and beneficiary cost-sharing.

Interrupted Stays at Long-term Hospitals

The OIG will determine the extent to which Medicare made improper payments for interrupted stays in long-term care hospitals (LTCHs) in 2011. An interrupted stay occurs when a patient is discharged from an LTCH for treatment and services not available at an LTCH and is readmitted after a specific number of days. Interrupted stays cause an adjustment in Medicare payments. The OIG will also identify readmission patterns and determine the extent to which LTCHs readmit patients directly following the interrupted stay periods.

Although this article’s primary focus is on hospitals, all affected should peruse the OIG Work Plan for their respective lines of business, as it can help with those areas of compliance that the OIG believes are important.

About the Author

Denise Nash, MD, is the revenue cycle director for Quorum Health Resources, LLC. Dr. Nash has more than 20 years experience in the healthcare industry. She has worked for CMS in hospital auditing and has expertise in negotiation and implementation of risk contracting for managed care plans.  Denise has also worked with individuals as well as physician groups on utilization and PQRS management to improve financial performance for the risk-based contracts and Value Based Purchasing programs.  She has past experience with episode of care data and patient management in the ACO environment.  She has also worked with both hospitals and physician practices on the legal and financial aspects of adding new services to the respective facilities. Denise is a consultant on coding/compliance audits at physician practices, hospitals and has worked for insurance plans conducting second level appeals. Her past experience also included consulting for the Office of the Inspector General of New Hampshire in its Fraud and Abuse Division. Currently she is employed in the ICD-10 division of healthcare consulting in Revenue Cycle for Quorum Health Resources.

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