OIG activities can guide your hospital compliance work plan.

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

Each October, the Office of Inspector General (OIG) reveals to us in their annual Work Plan what they will be working on with respect to Department of Health and Human Services (DHHS) programs and operations in the upcoming year. This plan can give you an idea of what the federal government’s areas of concern are in the public health care sector. You can then use this information to create or update your own compliance work plan.

Last month, we looked at the 2010 OIG Work Plan in regards to physician practices. This month, we’ll look at the items relating to hospitals, and consider how providers can use this information to prepare for the upcoming year.

New Work Plan Items for Hospitals

Hospital Payments for Nonphysician Outpatient Services Under the Inpatient Prospective Payment System (IPPS)—In the hospital setting, all outpatient diagnostic services and admission-related nondiagnostic services provided within three days prior to an inpatient admission date are not paid separately, but payment is considered as included in the Medicare Severity Diagnosis-related Group (MS-DRG) payment provided to the hospital for the inpatient admission. This is commonly known as the three-day window, or somewhat inappropriately, the 72-hour rule. Prior OIG work had shown significant issues in these areas in the past, when it was previously included in the plan. They’ve included it again this year, specifically looking at payments made for these services within that three-day time period.

To prepare yourself for this review, look at your current controls, to be sure you have appropriate edits in place to prevent billing for these services to the program outside of MS-DRG payment. If you do not have automatic controls in place to protect your facility, does your current compliance program monitor this issue? If not, now is definitely a great time to look at the program and include these in reviews for the upcoming year.

Hospital Admissions with Conditions Coded Present-on-Admission—The rules and regulations regarding hospital acquired conditions (HACs), serious adverse events, and present-on-admission (POA) indicators have not been in place for very long. It is, however, an area of significant concern to the OIG, as it’s an area with potential error, fraud, and abuse issues. The OIG will look at claims to determine the number of inpatient admissions for which certain diagnoses are indicated as POA and specifically which diagnoses were most frequently coded as POA. Under the new rules, a facility receives a lower payment for services if certain conditions were acquired in the hospital. This provides a facility incentive to show that a condition was not acquired in the hospital setting, but was present upon the patient’s admission to the facility. OIG also plans to look at transfer activity between facilities, especially those transferring a large number of patients with conditions present upon admission and those receiving transfers of patients with conditions present upon admission.

This is a new area to be concerned with in your compliance programs. Hopefully, you are already auditing and monitoring with regard to these types of indicators. If not, it’s important to review your POA and HAC coding, as with any new process, there is the potential for errors. It is also a good idea to review your transfer rates, to find if there are any concerning or alarming statistics that might be red flags to the OIG.

Hospital Readmissions—If you discharge a patient from an inpatient admission, and then readmit the patient on the same calendar day for the evaluation or management (E/M) of that same condition he or she was initially treated for in your facility, combine the initial and subsequent inpatient stays into a single claim submission for a single MS-DRG payment. The Medicare program has built edits into their systems to prevent payment of these services, but there are ways to override these edits in the event a patient is discharged and readmitted on the same day for a different medical rationale. The OIG plans to review claims for patients discharged and readmitted to the same acute care facility on the same day, to see if these edits were overridden properly, or if claims were paid inappropriately.

If you do not currently have a process in place in your billing system to force review of each of these types of claims, it’s a good idea to discuss this with your billing director to determine if some kind of automatic edit can be put into place. If you do have an automatic edit, you may wish to do some auditing of the claims submitted when this edit is overridden to determine whether or not the override was appropriate.

Adverse Events—There are five items specifically directed at the new Adverse Event policies under the Medicare program. These reviews are:

  • Hospitals: National Incidence Among Medicare Beneficiaries
  • Hospitals: Methods To Identify Events
  • Hospitals: Early Implementation of Medicare’s Policy for Hospital-Acquired Conditions
  • Hospitals: Responses by Medicare Oversight Entities
  • Public Disclosure of Adverse Event Information

These reviews are all directed at determining if hospitals are appropriately identifying and reporting adverse events, and whether or not the current list of Medicare adverse events is appropriate. It is also an indicator of whether their list should be expanded further to match the list published by the National Quality Forum.

As a facility, review your adverse event reporting process, as it is most likely to be a new, more expanded process than in the past. Prior to these requirements, dealing with adverse events was the problem of the medical director and the risk management/quality assurance divisions. Under these new Medicare guidelines, adverse events span to a much wider group within the facility, including not only the medical director and risk/quality divisions, but also the compliance department, finance, billing, and operations. Be sure there is working communication between each of these areas, and tweak those new policies and procedures as necessary to make them work well in this new realm. Consider examining your state Medicaid regulations regarding the same topic. Each state is implementing its own plan to correlate with these regulations, and some have significantly different lists of adverse events than the Medicare program. Check the requirements in your state, and make sure you’re in compliance with each set of necessary requirements

Note Other Items in the Hospital Work Plan

There are many other important items in the Work Plan this year that involve hospitals. Some are new and some have been in the plan for a while. They include:

  • Part A Hospital Capital Payments
  • Provider-Based Status for Inpatient and Outpatient Facilities
  • Part A Inpatient Prospective Payment System Wage Indices
  • Payments to Organ Procurement Organizations
  • Inpatient Rehabilitation Facility Submission of Patient Assessment Instruments
  • Critical Access Hospitals
  • Medicare Disproportionate Share Payments
  • Duplicate Graduate Medical Education Payments
  • Interrupted Stays at Impatient Psychiatric Facilities Payments
  • Provider Bad Debts
  • Medicare Secondary Payer

There are also reviews in other sections of the work plan that may be pertinent to your facility, such as the Medicaid program sections, the Recovery Act Work Plan, or the Public Health program sections. Check out the entire Work Plan to know where you stand with the items they’ll be reviewing this year. The 2010 OIG Work Plan is available for free online at http://oig.hhs.gov/publications/docs/workplan/2010/Work_Plan_FY_2010.pdf.


Jillian Harrington, MHA, CPC, CPC-I, CCS-P, is president/CEO of ComplyCode, a health care compliance consulting and education firm in Upstate New York. She holds a Masters in Health Administration from the Rochester Institute of Technology (RIT), and is a former member of the AAPC National Advisory Board (NAB).



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