Control Hospital Risk Using OIG’s 2013 Work Plan

Let government reviews help you identify and correct potential compliance risks at your hospital.

By Jillian Harrington, MHA, CPC, CPC-P, CPC-I, CCS-P

Each October, the Office of Inspector General (OIG) reports on compliance issues it plans to monitor most closely in the new year. This information provides a road map your organization can use to develop a compliance audit plan for the year ahead. In reviewing the OIG’s areas of concern for hospitals, you might catch potential noncompliance in your workplace, allowing you to take corrective action to reduce risk of Medicare and Medicaid fraud.

Look Out for First-time Reviews

Several items in the 2013 Work Plan, aimed specifically at the hospital industry, are appearing for the first time. Consider each of the following items carefully.

Inpatient Billing for Medicare Beneficiaries

In 2008, the Medicare Inpatient Prospective Payment System (IPPS) transitioned from the traditional Centers for Medicare & Medicaid Services-Diagnosis Related Group (CMS-DRG) system to Medicare Severity-Diagnosis Related Groups (MS-DRGs). This classification system change has meant updates in billing for hospitals, as well.

In this review, the OIG explains the changes in billing since 2008, and how billing in 2012, in particular, varied among different providers. They also plan to examine compliance with inpatient billing standards among hospitals. Compliance with billing standards is crucial to assigning appropriate MS-DRGs. Take this opportunity to examine billing compliance function to verify it is active and functioning well.

As always, inpatient coding is an area of risk in a hospital, so be sure not to forget this area when developing your coding audit plans for the year.

DRG Window

The Medicare program currently bundles all outpatient services delivered three days prior to an inpatient hospital admission. The Medicare program does not pay separately for these preadmission services when they are delivered in a setting owned or operated by the admitting hospital. This policy is commonly known as the “DRG window,” and prior OIG work identified improper payments in the DRG window.

This study was developed to analyze claims data to determine how much CMS could save if it bundled outpatient services delivered up to 14 days prior to an inpatient hospital admission into the MS-DRG payment. To evaluate these DRG window payments, however, CMS will examine all services provided in that time frame. This will uncover potential issues with the three-day window, as well, which is an area that has been problematic for facilities in the past.

This review provides a great opportunity for hospitals to consider the affects of potential expansion of the DRG window before it occurs. For example:

  • Is your facility including all diagnostic and clinically related non-diagnostic services provided within the three-day window?
  • Have wholly owned and operated physician practices been considered in any previous reviews of these types of claims?

Organizations should look closely at these claims and be sure that this item is included in their audit plan for the year.

Non-hospital-owned Physician Practices Using Provider-based Status

This is a two-part review by the OIG, based on concerns from the Medicare Payment Advisory Commission.

In one portion of the review, the OIG will examine the impact of non-hospital-owned physician practices billing Medicare as provider-based physician practices. The Medicare program makes additional payment to facilities for services provided in the provider-based clinic setting. Unfortunately, the beneficiary also loses out in these situations, as he or she pays a higher co-payment.

In the other portion of this review, the OIG will examine which practices that bill Medicare using provider-based status meet billing requirements. Hospitals should examine their provider-based clinics to determine if they are billing properly. If your facility has physician practices that do not meet the criteria for provider-based clinic billing, it’s critical these services are not billed as provider-based.

Compliance with Medicare’s Transfer Policy

Transfers have been a consistent issue in hospital billing and reimbursement for many years. This OIG Work Plan looks at transfers overall, but also reviews the effectiveness of the claims processing edits used by the Medicare administrative contractors (MACs) to identify claims subject to the transfer policies in place in the Medicare program.

Under Medicare IPPS guidelines, a hospital that is discharging a beneficiary receives MS-DRG payment in full. A hospital that is transferring a patient to another acute care facility is paid a graduated per diem rate. The rate will not exceed the full MS-DRG payment that would have been made if the patient was discharged from the original without being transferred. There are often issues where patients are improperly noted as being “discharged” instead of “transferred” from the original facility, and the entire MS-DRG payment is made for both facilities. The OIG is on the lookout for this sort of thing.

This item should always be included in a hospital billing compliance audit plan; this is a constant risk area for most hospitals.

Payments for Discharges to Swing Beds in Other Hospitals

Swing beds are inpatient beds in hospitals that can be used for skilled nursing services or acute care services. This review concerns instances when an acute care facility discharges patients from the acute care setting to a swing bed.

A move from one clinical setting to another to receive additional care typically is considered a transfer. Currently, however, Medicare does not pay a reduced, graduated per diem rate if the patient was discharged to a swing bed in another hospital. This review will allow the OIG and CMS to examine swing bed policy to determine if a change in reimbursement policies should be made.

Payments for Canceled Surgical Procedures

From an analysis of data, the OIG has determined large occurrences of initial IPPS payment for a canceled surgical procedure, followed by a second IPPS payment for the rescheduled surgical procedure. For the initial IPPS payment, few, if any, inpatient services such as laboratory or diagnostic tests were provided by the hospitals because the surgical procedure was canceled.

Medicare makes two payments to hospitals, generating two bills, unless the patient is readmitted to the hospital on the same day, in which case a single payment is made. Right now, it is not inappropriate for two bills to be made, as the OIG states in their Work Plan. It’s clear, however, they are determining how much money is spent on inpatient short stays for canceled surgical procedures without significant services being provided. This could result in policy changes in the future for this type of service.

This review item provides an opportunity for providers to check that documentation for these types of services is strong and concise. Have clinical documentation improvement staff members work with providers to clearly document reasons for surgical cancellations, as well as all services provided for patients. Be sure coding clearly reflects all work provided for patients during their stay.

Payments for Mechanical Ventilation

When a ventilator or respirator is used to take over active breathing for a patient for 96 or more hours in the inpatient setting, certain MS-DRG payments can be changed, creating a significant increase in the payment for that particular MS-DRG.

For example, MS-DRG 871 Septicemia without mechanical ventilation, 96+ hours with MCC has a relative weight of 1.8803. MS-DRG 870 Septicemia with mechanical ventilation, 96+ hours has a relative weight of 5.8399. This significant difference in relative weight will obviously result in a higher payment to the facility for mechanical ventilation services.

Review any clinical documentation you have for mechanical ventilation in your facility:

  • Are there areas for improving time recording?
  • Are the minimum standards being met for the MS-DRG grouping 96-hour rule?

Use the Work Plan to Your Advantage

Most of these new items in the OIG Work Plan are reviews of policies, procedures, and areas for future improvement within the Medicare program. Facilities have a great opportunity to review these areas and improve compliance internally.

Take the time to review the existing items in the Work Plan, such as same-day readmissions, outlier payments, observation payments, and many of the other items continuously monitored by the OIG. These are still active reviews, and your organization may be called upon to provide information in any of these areas.

The entire 2013 Work Plan can be downloaded. For a peek into the areas of risk for physician related-items read “Get a Jump on 2013 Government Reviews” on pages 48-49 of January’s Cutting Edge.


Jillian Harrington, MHA, CPC, CPC-P, CPC-I, CCS-P, serves as a clinical technical editor for OptumInsight, and has nearly 20 years of experience in the health care industry. She is a former chief compliance officer and chief privacy official. She teaches CPT® coding as an approved AAPC instructor, and is a former member of AAPC’s ICD-10 curriculum development team. She holds a bachelor’s degree in health care administration from State University of New York – Empire State College and a master’s degree in health systems administration from the Rochester Institute of Technology.


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