1. Schaum, Kathleen D. MS

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On December 10, 2014, the Office of Inspector General (OIG) released its Semiannual Report to Congress (, which describes findings and recommendations from recently completed OIG reviews, many of which focus on existing laws and regulations. America's taxpayers are expected to see $4.9 billion in improperly spent federal healthcare dollars returned to the Government, thanks to the oversight and investigations conducted in fiscal year (FY) 2014 by the OIG of the Department of Health and Human Services (HHS). Although the report reviews the OIG activities for the last half of the FY 2014 (April 1, 2014 to September 30, 2014), it also summarizes the OIG's full year of achievements. In the report, the Inspector General Daniel R. Levinson said, "It is a sacred trust we hold with the 120 million Americans who depend on HHS programs to live healthy, productive lives. The mission of this office is to protect the fiscal integrity of all HHS programs from those who would abuse and, in too many cases, even steal from them."


This author was surprised at the volume of "offenders" cited in the semiannual report. The OIG


* excluded 4017 individuals and entities from participation in federal healthcare programs


* reported 971 criminal actions against individuals or entities that engaged in crimes against some of the 100 HHS programs overseen by OIG


* reported 533 civil and administrative cases (false claims and unjust-enrichment lawsuits), which were either OIG initiated or provider self-disclosures



One of the most common types of fraud perpetrated against Medicare, Medicaid, and other federal healthcare programs involved filing false claims for reimbursement. False claims may be pursued under federal and state criminal statutes and, when appropriate, under the False Claims Act. Depending on the types of fraud or other violations involved, OIG investigations may culminate in criminal or civil court judgments and decisions, administrative sanctions and decisions, and/or negotiated settlement agreements. Investigative outcomes take many forms, including incarceration, restitution, fines, penalties, forfeitures, assessments, and exclusion of individuals or entities from participation in all federal healthcare programs. Frequently used exclusion and penalty authorities are described in Appendix D of the OIG Semiannual Report and can be found on their website at


This author was sad to read about several violations that accounted for the provider's repayment to the government because they are issues that we have discussed before in Payment Strategies and in wound care reimbursement seminars throughout the United States.


* Improper Payments for Evaluation and Management Services Cost Medicare Billions in 2010



In 2010, Medicare inappropriately paid $6.7 billion for claims for evaluation and management (E/M) services that were incorrectly coded and/or that lacked documentation. This represents 21% of Medicare payments for E/M services that year. Evaluation and management services are 50% more likely to be paid in error than other Part B services. Most improper E/M payments result from errors in coding and from insufficient documentation.


* Limited Compliance with Medicare's Home Health Face-to-Face Documentation Requirements



The OIG found that for 32% of home health claims that required face-to-face encounters, the documentation did not meet Medicare requirements, and physicians inconsistently completed the narrative portion of the face-to-face documentation. This resulted in $2 billion in payments that should not have been made.


The semiannual report also discussed the work of the Medicare Fraud Strike Force teams, which began in 2007 in an effort to combine the resources of federal, state, and local law enforcement entities to prevent and combat healthcare fraud, waste, and abuse. These Strike Force teams are partnerships between OIG and HHS, the Department of Justice, the US Attorneys' Offices, the Federal Bureau of Investigation, and state and local law enforcement with a common goal: to successfully analyze healthcare fraud data and investigative intelligence to quickly identify fraud and bring prosecutions. Strike Force teams currently operate in 9 areas: Miami, Florida; Los Angeles, California; Detroit, Michigan; Houston, Texas; Brooklyn, New York; southern Louisiana; Tampa, Florida; Chicago, Illinois; and Dallas, Texas. From April 1, 2014, to September 30, 2014, the Strike Force efforts resulted in the filing of charges against 134 individuals or entities, 125 criminal actions, and $147 million in investigative receivables. Several of the fraudulent behaviors should be particularly interesting to wound care professionals:


* Demand for physical therapy, electrical stimulation treatment, and other medical services was artificially increased by providing Medicare beneficiaries with free goods and services, for example, massages, facials, lunches, gift cards, and recreational classes. False claims were then submitted to Medicare for medical services; for example, office visits, physical therapy, lesion destruction, and electrical stimulation treatment, which were medically unnecessary, were not provided, and otherwise did not qualify for reimbursement. Once the beneficiaries arrived at the clinics, they were required to give their Medicare numbers to staff and to see a physician, regardless of medical need, in order to receive the free nonmedical inducements.


* False claims were billed to Medicare for home healthcare services (including nursing care and physical, speech, and occupational therapy) provided to patients who were not homebound and to those who lacked a need for skilled nursing and/or skilled therapy services. False claims were also billed to Medicare for services provided to patients without regard to medical necessity and were overbilled by up-coding patients' diagnoses.



After reading the OIG's 2014 semiannual report, this author decided to read the OIG's 2015 Work Plan (, which was effective on October 1, 2014. This annual OIG Work Plan is published at the start of each FY and provides citations to laws and regulations that are the subject of OIG audits, evaluations, and certain legal and investigative initiatives that are ongoing. This author wanted to ascertain if the 2015 OIG Work Plan was similar to the OIG's 2014 semiannual report.


The 2015 OIG Work Plan identified reducing waste in Medicare Parts A and B and ensuring quality, including in nursing home, hospice care, and home- and community-based care, as the top management challenges facing the department. In 2015, the OIG will focus its efforts on the following:


* Improving quality of care and access: The OIG will examine care settings where they have identified gaps in program safeguards intended to ensure medical necessity, patient safety, and quality of care. They will also continue their focus on access to care, including beneficiary access to durable medical equipment, prosthetics, orthotics, and supplies in the context of new programs involving competitive bidding.


* Reducing improper payments: The OIG will expand examination of inefficient payment policies or practices, including comparison among government programs to identify instances when Medicare paid significantly different amounts for the same or similar services or when less efficient payment methodologies were used. Planning is also ongoing to address Medicare costs incurred because of deficiencies in services or defective medical devices, as well as noncompliance or other vulnerabilities in care settings with high payment error rates.


* Fostering economical payment policies: The OIG will expand their work to address Medicare program changes designed to improve efficiency and quality of care and to promote program integrity and transparency. They will consider work examining the transition from volume-based to value-based payments and the soundness and effectiveness of the payment structures, care coordination, and administration of these new payment models. Work that is expected to begin in 2015 and beyond includes examinations of data and metrics to document and measure quality and performance.



Wound care professionals should pay particular attention to several items on the 2015 OIG Work Plan. Following are the ones that "stand out" for this author:


* New Inpatient Admission Criteria



The OIG will determine the impact of new inpatient admission criteria on hospital billing, Medicare payments, and beneficiary copayments. This review will also determine how billing varied among hospitals in FY 2014. Previous OIG work identified millions of dollars in overpayments to hospitals for short inpatient stays that should have been billed as outpatient stays. Beginning in FY 2014, new criteria stated that physicians should admit for inpatient care those beneficiaries who are expected to need at least 2 nights of hospital care (known as the "2 midnight policy"). Beneficiaries whose care is expected to last fewer than 2 nights should be treated as outpatients. The criteria represent a substantial change in the way hospitals bill for inpatient and outpatient stays.


* Medicare Oversight of Provider-Based Status



The OIG will determine the extent to which provider-based facilities meet the Centers for Medicare & Medicaid Services (CMS) criteria. Provider-based status allows facilities owned and operated by hospitals to bill as hospital outpatient departments. Provider-based status can result in higher Medicare payments for services furnished at provider-based facilities and may increase beneficiaries' coinsurance liabilities. In 2011, the Medicare Payment Advisory Commission expressed concerns about the financial incentives presented by provider-based status and stated that Medicare should seek to pay similar amounts for similar services.


* Comparison of Provider-Based and Freestanding Clinics



The OIG will review and compare Medicare payments for physician office visits in provider-based clinics and freestanding clinics to determine the difference in payments made to the clinics for similar procedures and assess the potential impact on the Medicare program of hospitals' claiming provider-based status for such facilities. Provider-based facilities often receive higher payments for some services than do freestanding clinics.


* Outpatient Evaluation and Management Services Billed at the New-Patient Rate



The OIG will review Medicare outpatient payments made to hospitals for E/M services for clinic visits billed at the new-patient rate to determine whether they were appropriate and will recommend recovery of overpayments. Preliminary work identified overpayments that occurred because hospitals used new-patient codes when billing for services to established patients. The rate at which Medicare pays for E/M services requires hospitals to identify patients as either new or established, depending on previous encounters with the hospital. According to federal regulations, the meaning of "new" and "established" pertains to whether the patient has been seen as a registered inpatient or outpatient of the hospital within the past 3 years per 73 Fed. Reg. 68679, November 18, 2008.


* Medicare Part A Billing by Skilled Nursing Facilities



The OIG will describe changes in skilled nursing facility (SNF) billing practices from FYs 2011 to 2013. Prior OIG work found that SNFs increasingly billed for the highest level of therapy, even though beneficiary characteristics remained largely unchanged. OIG also found that SNFs billed 25% of all 2009 claims in error; this erroneous billing resulted in $1.5 billion in inappropriate Medicare payments. The CMS has made substantial changes to how SNFs bill for services for Medicare Part A stays.


* Questionable Billing Patterns for Part B Services During Nursing Home Stays



The OIG will identify questionable billing patterns associated with nursing homes and Medicare professionals for Part B services provided to nursing home residents during stays not paid under Part A (eg, stays during which benefits are exhausted or the 3-day prior-inpatient-stay requirement is not met). A series of studies will examine several broad categories of services, such as foot care. Congress directed OIG to monitor Part B billing for abuse during non-Part A stays to ensure that no excessive services are provided per Medicare, Medicaid, and State Children's Health Insurance Program Benefits Improvement and Protection Act of 2000, [S]313.


* Physicians-Place-of-Service Coding Errors



The OIG will review physicians' coding on Medicare Part B claims for services performed in ambulatory surgery centers (ASCs) and hospital outpatient departments to determine whether they properly coded the places of service. Prior OIG reviews determined that physicians did not always correctly code facility places of service on Part B claims submitted to and paid by Medicare contractors. Federal regulations for different levels of payments to physicians depend on where services are performed (42 CFR [S]414.32). Medicare pays a physician a higher amount when a service is performed in a nonfacility setting, such as a physician's office, than it does when the service is performed in a hospital outpatient department or, with certain exceptions, in an ASC.


* Physical Therapists-High Use of Outpatient Physical Therapy Services



The OIG will review outpatient physical therapy services provided by independent therapists to determine whether they were in compliance with Medicare reimbursement regulations. Prior OIG work found that claims for therapy services provided by independent physical therapists were not reasonable or were not properly documented or that the therapy services were not medically necessary. The OIG will focus on independent therapists who have a high utilization rate for outpatient physical therapy services. Medicare will not pay for items or services that are not "reasonable and necessary."


* National Correct Coding Initiative Edits and CMS Oversight of Medicaid Claims



The OIG will review selected states' implementation of National Correct Coding Initiative (NCCI) edits of Medicaid claims and describe CMS's oversight of NCCI edits. The NCCI consists of coding policies and automatic computer edits. The NCCI's original purpose was to promote correct coding of healthcare services provided to Medicare beneficiaries and to prevent payment for improperly coded services. Federal law required states to incorporate methodologies compatible with NCCI for Medicaid claims filed on or after October 1, 2010 (Social Security Act, [S]1903(r), as amended by the ACA, [S]6507). States were permitted to deactivate some or all NCCI edits because of conflicts with state laws, regulations, administrative rules, payment policies, and/or the states' levels of operational readiness (State Medicaid Director Letter #10-017). As of April 1, 2011, lack of operational readiness was no longer a permissible basis for deactivation of the edits. (State Medicaid Director Letter #11-003). After April 1, 2011, the only basis for deactivation is conflicts with state laws, regulations, administrative rules, and/or payments policies.



Wound care professionals should carefully inspect and audit their coding and billing practices in light of (1) the OIG's 2014 Semiannual Report to Congress and (2) the 2015 OIG Work Plan. You can read the details of both documents by following the Internet links provided earlier in this article. Conducting those self-audits and taking steps to correct issues are far better than the possible alternatives, for example:


* exclusion from participating in Medicare, Medicaid, and other federal healthcare programs


* civil monetary penalties for submitting or causing to be submitted a claim for items or services that the person knows or should know is false or fraudulent


* criminal penalties for the following:


[white circle] knowingly and willfully soliciting, receiving, offering, or paying remuneration (in cash or in kind) to induce, or


[white circle] in return for (1) referring an individual to a person or an entity for the furnishing, or arranging for the furnishing, of any item or service payable under the federal healthcare programs or (2) purchasing, leasing, or ordering, or arranging for or recommending the purchasing, leasing, or ordering, of any good, facility, service, or item payable under the federal healthcare programs.



If wound care professionals identify problem areas during an audit, they should always contact their compliance officer. Together, they should decide if they should self-disclose to the OIG. Since 1998, the OIG has made available comprehensive guidelines describing the protocol for providers to voluntarily submit to OIG self-disclosures of fraud, waste, or abuse. The provider self-disclosure protocol gives providers an opportunity to minimize the potential costs and disruption that a full-scale OIG audit or investigation might entail if fraud were uncovered. The self-disclosure also allows the provider to negotiate a fair monetary settlement and potentially avoid being excluded from participation in federal healthcare programs.


The self-disclosure protocol guides providers and suppliers through the process of structuring a disclosure to OIG about matters that constitute potential violations of federal laws. After making an initial disclosure, the provider or supplier is expected to thoroughly investigate the nature and cause of the matters uncovered and make a reliable assessment of their economic impact. The OIG evaluates the reported results of each internal investigation to determine the appropriate course of action. The self-disclosure guidelines are available on the OIG website at