OIG 2004 Work Plan Hospital Focus

1. OIG 2004 Work PlanHospital Focus http://www.oig.hhs.gov/publications/workplan.html

2. Topics Covered • What is the Work Plan? • What to do if contacted by OIG as part of an Audit or Study • Will not address every Hospital OIG Work Plan item, but will address those we feel are most significant to compliance professionals • Adequate time for Q&A at end

3. OIG 2004 Work Plan • What Does It Mean? • Not necessarily a “Fraud” Roadmap • A “Plan” for Where OIG will invest its resources in coming year (may change). • A Valuable Tool for Compliance Professionals

4. What Is the Work Plan? • OIG duties and responsibilities • Concerns of the Department of Health and Human Services • “various project areas that [OIG] perceives as critical to [its] mission” • Roadmap for providers and compliance professionals • Divided into distinct sections (e.g. CMS)

5. Interaction with OIG on Work Plan Item • OIG sends auditors and analysts into the field. • May request records and seek interviews • Will typically provide chance to comment on preliminary findings • Can have attorney present during questioning (judgment call)

6. Medicaid GME • Numerous states provide hospitals reimbursement for medical education costs through a state plan amendment or CMS approved waiver • Initial OIG evaluations have indicated that Medicaid and Medicare payments have reimbursed hospitals in excess of overall medical education program costs • OIG plans to conduct evaluations across 15 states to determine appropriateness of reimbursement for GME/IME • Hospitals should internally assess reimbursement from all payers for IME/GME. • Recognize that IME costs are incurred by providers by having excessive ancillary costs associated with tests ordered by residents

7. GME – Dental & Podiatry • Relevant Issues in Final 2004 IP PPS Rule • GME / Dental and Podiatry Residents • Exempt from resident caps for GME • BBA of 1997 exempted Dental and Podiatry residents from resident cap calculations • Hospitals took on Dental and Podiatry residency programs and claimed residents for GME reimbursement • CMS sites Prohibition Against Redistribution of Costs • Once community assumed educational costs, these costs could not be incurred / reported by Provider as allowable costs • CMS is preventing Providers from claiming residents in non-provider settings if Provider did not historically incur the costs • January 1, 1999 is effective date for FIs to determine whether Provider or other entity has been incurring the costs of training

8. GME – Dental & Podiatry • Relevant Issues in Final 2004 IP PPS Rule • GME / Dental and Podiatry Residents (cont.) • CMS Directive • If FI identifies redistribution of costs, FI will disallow portion of GME and IME payments related to those residents • Redistribution of Costs not to apply to a “new” program • Redistribution of Costs for IME applies only to non-provider settings • CMS to apply policy as of October 1, 2003 • After October 1, 2003, rule applies to all residents with exception of those residents that began training prior to October 1, 2003

9. Inpatient Capital Payments • $6 Billion paid annually to hospitals for Medicare Capital reimbursement • Acute care hospitals are currently reimbursed 100% based off of a national federal rate for capital costs (no longer actual cost factored into reimbursement) • OIG to evaluate the process that CMS has established for updating capital reimbursement amounts • Likely that hospital site-visits would occur to complete audits • Verify if hospitals are using capital reimbursement for intended purposes (Capital expenditures vs. operating subsidy) • Replenishment of plant • Addition of new equipment

10. IP and OP Charging Practices • OIG to evaluate impact, if any, of provider charges on Medicare reimbursement • Medicare regulations have been revamped to preclude providers from maximizing reimbursement (on outliers) as a result of new regulations • OP APC payments can still be impacted by charging practices and high increases in charge practices • Commerce Committee has launched an investigation to evaluate impact of charge practices on self-insured patient population • OIG has proposed new regulations to evaluate charge practices for consideration of provider exclusion from governmental programs

11. IP and OP Charging Practices • The Committee on Energy and Commerce Investigation • 20 health systems nationally are participating in special investigation by Commerce Committee • Investigation centers around potential billing inequalities for the uninsured • Many Hospitals still in the process of collecting the requested information

12. IP and OP Charging Practices • OIG Proposed Rule: Claims with Excessive Charges • Published in September 15, 2003 Federal Register • Proposed Rule amends OIG exclusion regulations addressing excessive claims by defining/clarifying: • “Usual Charges” • “Substantially in excess” and • The “good cause” exception • “Usual Charges” include amounts billed to: • Cash paying patients • Indemnity insured patients with no contractual arrangements with Provider • Any fee-for-service rates it contractually agrees to accept including discounted rates with Managed Care plans • Discounted contract rates are a Providers “charge” to those patients

13. IP and OP Charging Practices • OIG Proposed Rule: Claims w/ Excessive Charges (cont.) • “Usual Charges” should not include: • Charges for services provided to uninsured patients free or substantially reduced • Capitated payments • Rates based on hybrid fee-for service • Fees set by Medicare, Other Federal and State health care programs • “Substantially in Excess” • Charges or costs that are more than 120% of the Providers usual charges or costs • If more than 120%, exclusion is not mandatory • It is at the OIG’s discretion

14. Consecutive Inpatient Stay • Analyzing claims to identify consecutive stays that may be attempts to circumvent PPS – “questionable patterns of inpatient and long-term care.”

15. Organ Acquisition Costs • Accurate allocation of costs to pre-transplant cost centers • Costs of physician services (must maintain adequate documentation) • Periodic/annual time studies or time sheets covering all hours? • Administrative costs (salaries) • Allocation of space costs • Employee benefits • Allocation of costs from other departments (e.g., lab) • Audit of Medicare Costs for Organ Acquisitions at Tampa General Hospital, OIG Audit Report A-04-02-02017 (April 17, 2003) • Sharp Memorial Healthcare Corporate Integrity Agreement (February 2003)

16. Medical Necessity in Inpatient Psychiatric Facilities • Holdover study • Psych – 58% error rate in acute care hospital’s outpatient psych services • 42% error rate in psych hospital outpatient services • Also looking at inpatient psych

17. Medical Necessity in Inpatient Rehab Facilities • Holdover study • $4 billion in Medicare payments in 2000 • QIOs (f/k/a/PROs) ceased its med. Necessity reviews of PPS exempt hospitals and units in 1995 • OIG concerned that no one was watching the store • 75% Rule nexus and recent FI LMRPs on IRF Medical Necessity

18. DRG Payment Limits • Assessment of Medicare contractors ability to limit payments to hospitals for patient who are discharged with a qualifying DRG and subsequently admitted to a post acute care settings • Qualifying DRGs up from 10 to 29 in 2003. • Prior reviews by OIG found significant overpayments

19. Update on DRG Coding • Review for inaccurate DRG coding—“inaccurate coding may lead to Medicare overpayment” • OIG has now identified 20 DRG pairs

20. Coronary Artery Stents (new) • Medical Necessity • Consecutive procedures • Increased Medicare spending on drug-eluting stents (by Oct. ’03, 69% of coronary artery stents would be drug eluting). • $4,859 higher payment than for bare metal stents.

21. Diagnostic Testing in the ED • Medicare spends $85M on standard imaging (x-rays) and $70M on advanced imaging (MRIs, CT) • What will standard be for medical necessity? • Over-utilization? • Failure to document contemporaneous interpretation? • OIG Draft Report: “Medicare’s Reimbursement for Interpretations of Hospital Emergency Room X-rays” (OEI-02-89-01490) (May 11, 1993)

22. Outpatient PPS • OIG to review several impacts from implementing OP PPS system on August 2000 • Numerous providers will go through focused reviews for the following: • Appropriateness of outlier payments • Billing multiple procedures during one encounter • Transitional pass through payments • Overall OP claims assessment (30 claims – very comprehensive) • Refer to several OAS reports on OP evaluations (10/23/03 and 7/31/03) • Providers need to evaluate current charge practices and documentation

23. Outpatient cardiac rehabilitation services • At request of CMS, will review cardiac rehabilitation services provided by outpatient departments • “incident-to” a physician’s professional service, nonphysician services must be furnished under physician’s “direct supervision” • The audit reports all point to no direct supervision in finding overpayments

24. Outpatient cardiac rehabilitation services • “Direct supervision” - physician must be in the exercise program area and immediately available and accessible for a medical emergency at all times during exercise • Even OIG has recently conceded that “incident to” rules are confusing

25. Grant Fund • Office of Investigations devoting increased resources (e.g., recent Mayo Clinic subpoena) • Direct and indirect HHS grants (e.g., NIH) • Greater interaction with NIH • Proposal to issue Compliance Program Guidance re: Grant Recipients

26. Howard Young, Esq.Former Deputy Chief of Civil Recovery and Senior Counsel of the OIG.Currently PartnerSonnenschein, Nath & Rosenthal, LLP, Washington DC Email hyoung@sonnenschein.com • John Dugan, CPA • Partner PricewaterhouseCoopers Philadelphia, PA • Email john.k.dugan@us.pwc.com Steven Ortquist, CHCVP, Ethics and Compliance & Chief Compliance Officer Banner Health Phoenix, AZ Email Steven.Ortquist@bannerhealth.com