OIG Work Plan for FY 2017

By Rob Mendoza, CHC, and Kenneth Zeko, J.D.
| 2/21/2017

support-img-lp-oig-workplan-hc-2 The fiscal year (FY) 2017 U.S. Department of Health and Human Services Office of Inspector General (OIG) work plan lists 91 projects applicable to healthcare providers, 26 of which are new for 2017. Much of the FY 2017 work plan is a continuation of prior-year projects and four new projects announced during the midyear update in June 2016. The continuing areas of focus from the FY 2016 work plan include hospitals’ use of outpatient and inpatient stays under Medicare’s two-midnight rule, medical device credits for replaced medical devices, inpatient rehabilitation facility payment system requirements, and Medicare incentive payments for adopting electronic health records. More information on continued areas of focus can be found by examining the complete FY 2017 “OIG Work Plan.”

The midyear update included projects focused on the following:

  • Intensity-modulated radiation therapy
  • Program for national background checks for long-term care employees
  • Skilled nursing facility prospective payment system requirements
  • Potentially avoidable hospitalizations of Medicare- and Medicaid-eligible nursing facility residents

Management should take these actions:

  • Review the OIG work plan focus areas.
  • Assess to what extent the organization’s culture and compliance programs are conducive to and capable of mitigating risks identified in the work plan.

New Projects

These projects are new to the FY 2017 OIG work plan:

New Project Focus Description Significance
Case review of inpatient rehabilitation hospital patients not suited for intensive therapy  Inpatient rehabilitation hospitals The OIG will conduct a study to assess a sample of rehabilitation hospital admissions to determine whether the patients participated in and benefited from intensive therapy. For patients who were not suitable candidates, the OIG will identify reasons they were not able to participate and benefit from therapy. Inpatient rehabilitation hospitals provide intensive rehabilitation therapy to patients recovering from illness, injury, or surgery. This intensive therapy requires endurance that some patients receiving post-acute care do not have, potentially causing those patients to be better suited for an alternative setting such as a skilled nursing facility.
Inpatient psychiatric facility outlier payments Inpatient psychiatric facilities The OIG will determine whether inpatient psychiatric facilities nationwide complied with Medicare documentation, coverage, and coding requirements for stays that resulted in outlier payments. Inpatient psychiatric facilities provide active psychiatric treatment to meet the urgent needs of those experiencing an acute mental health crisis, which may involve mental illnesses or alcohol- or drug-related problems. The OIG reports that from FY 2014 to FY 2015, the number of claims with outlier payments increased by 28 percent, and total Medicare payments for stays that resulted in outlier payments increased by 19 percent.
Incorrect medical assistance days claimed by hospitals Disproportionate share hospitals (DSHs) The OIG will focus on reviewing whether Medicare administrative contractors properly settled Medicare cost reports for Medicare DSHs with respect to Medicaid patient days. Because Medicare DSH payments are the result of calculations to which a number of sometimes complex factors and variables contribute, they are at risk of overpayment.
Hyperbaric oxygen therapy services – provider reimbursement in compliance with federal regulations Hospitals The OIG will determine whether Medicare payments for hyperbaric oxygen therapy outpatient services were made in accordance with Medicare requirements. This will include a review of whether beneficiaries received treatment for noncovered conditions, the medical documentation supporting the services, and whether beneficiaries received more treatments than were medically necessary. Providers should verify they have processes in place that comply with Centers for Medicare & Medicaid Services (CMS) Pub. 100-03, “Medicare National Coverage Determinations Manual,” Ch. 1, § 20.29(A). Beneficiaries must meet one of 15 covered conditions for providers to receive hyperbaric oxygen therapy reimbursement.
Nursing home complaint investigation data brief Nursing facilities The OIG will review whether state agencies investigate complaints categorized as immediate jeopardy and actual harm within required time frames (two and 10 days, respectively). All nursing home complaints categorized as immediate jeopardy and actual harm must be investigated within a two- and 10-day time frame, respectively. A 2006 OIG report found that state agencies did not investigate some of the most serious complaints within these required time frames.
Skilled nursing facilities – unreported incidents of potential abuse and neglect Skilled nursing facilities The OIG will assess the incidence of abuse and neglect of Medicare beneficiaries receiving treatment in skilled nursing facilities and determine whether incidents of abuse and neglect were properly reported and investigated in accordance with federal and state law. Facilities that are found to have failed to appropriately report potential abuse and neglect incidents could be subject to sanctions.
Skilled nursing facility reimbursement Skilled nursing facilities The OIG will review documentation related to reports on the minimum data set to determine if the documentation meets the requirement for each particular resource utilization group. Previous OIG reviews have indicated that skilled nursing facilities are frequently billing for higher levels of therapy than were provided or were reasonable or necessary.
Skilled nursing facility adverse event screening tool Skilled nursing facilities The OIG will release a tool that describes the purpose, use, and benefit of the skilled nursing facility adverse event trigger tool and the guidance document released by the Institute for Healthcare Improvement. OIG developed the skilled nursing facility adverse event trigger tool as part of its study, “Adverse Events in Skilled Nursing Facilities: National Incidence Among Medicare Beneficiaries” (OEI-06-11-00370), released in February 2014. The goal of this product is to disseminate practical information about the tool for use by those involved with the skilled nursing industry.
Review of hospices’ compliance with Medicare requirements Hospice providers The OIG will review hospice medical records and billing documentation to determine whether Medicare payments for hospice services were made in accordance with Medicare requirements. Hospice providers should review their processes to ensure they are documenting and billing for their services in accordance with Medicare requirements (Code of Federal Regulations Title 42 (42 CFR), Part 418, Subpart G).
Hospice home care – frequency of nurse on-site visits to assess quality of care and services Hospice providers Medicare requires that a registered nurse make an on-site visit to each patient’s home at least once every 14 days to assess the quality of care and services provided by the hospice aide and to ensure that services ordered by the interdisciplinary group meet the patient’s needs. The OIG will determine whether registered nurses made required on-site visits to the homes of Medicare beneficiaries who were in hospice care. Hospice providers should review their processes to ensure they are complying with this Medicare requirement (42 CFR § 418.76(h)(1)(i)).
Comparison of home health agency (HHA) survey documents to Medicare claims data Home health agencies The OIG will assess whether HHAs are providing inaccurate patient information to state agencies for recertification surveys to avoid scrutiny of potentially unqualified or fraudulent providers. HHAs supply patient information (e.g., rosters and schedules) to state agencies during the recertification survey process, but state agencies do not have access to Medicare claims data to verify this information. Therefore, fraudulent HHAs might intentionally omit certain patients from information supplied to state agencies to avoid scrutiny.
Positive airway pressure (PAP) device supplies – supplier compliance with documentation requirements for frequency and medical necessity Durable medical equipment (DME) suppliers The OIG will review claims for frequently replaced PAP or respiratory assist device therapy supplies to determine whether medical necessity, frequency of replacement, and other Medicare documentation requirements are being met. Prior OIG work found that suppliers automatically shipped PAP device supplies when no physician orders for refills were in effect. For supplies and accessories used periodically, orders or certificates of medical necessity must specify the type of supplies needed and the frequency with which they must be replaced, used, or consumed (CMS Pub. 100-08, “Medicare Program Integrity Manual,” Ch. 5, §§ 5.2.3 and 5.9). Beneficiaries or their caregivers must specifically request refills of repetitive services and/or supplies before suppliers dispense them (CMS Pub. 100-04, “Medicare Claims Processing Manual,” Ch. 20, § 200).
Part B services during non-Part A nursing home stays – durable medical equipment DME suppliers The OIG will seek to determine the extent of inappropriate Medicare Part B payments for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) provided during non-Part A stays in skilled nursing facilities and whether CMS has a system in place to identify inappropriate payments and recoup payments from suppliers. If a beneficiary continues to reside in a skilled nursing facility after 100 days, Medicare Part B may provide coverage for certain therapy and supplies (non-Part A stay). A prior OIG report found that Medicare Part B allowed inappropriate payments of $30 million in 2006 for DMEPOS provided during non-Part A stays in skilled nursing facilities.
Power mobility device equipment – portfolio report on Medicare Part B payments DME suppliers The OIG will compile results of prior OIG audits, evaluations, and investigations of power mobility devices paid by Medicare to identify trends in payment, compliance, and fraud vulnerabilities and will make recommendations to improve detected vulnerabilities. Previous OIG work identified inappropriate payments for power mobility devices that were medically unnecessary, were not documented in accordance with Medicare requirements, were cheaper to rent instead of purchase, or were fraudulent.
Data brief on financial interests reported under the open payments program Manufacturers, group purchasing organizations, physicians, and teaching hospitals The OIG will review 2015 data from the open payments website to determine how much Medicare paid for drugs and DMEPOS ordered by physicians who had financial relationships with manufacturers and group purchasing organizations. The Physician Payments Sunshine Act (from the Affordable Care Act (ACA) § 6002) requires that manufacturers disclose to CMS payments made to physicians and teaching hospitals. Manufacturers and group purchasing organizations also must report ownership and investment interests held by physicians.
Medicare payments for chronic care management (CCM) Hospitals and physician practices The OIG intends to review whether payments for CCM were made in accordance with Medicare requirements. CCM cannot be billed during the same service period as transitional care management, home healthcare supervision/hospice care, or certain end-stage renal disease services. Beginning Jan. 1, 2015, Medicare paid separately for CCM under the Medicare physician fee schedule and under the American Medical Association current procedural terminology.
Medicare payments for transitional care management (TCM) TCM service providers The OIG intends to review whether payments for TCM were made in accordance with Medicare requirements. Beginning Jan. 1, 2013, Medicare covered TCM services and paid for them under the Medicare physician fee schedule. Medicare-covered services, including chronic care management, end-stage renal disease, and prolonged services without direct patient contact, cannot be billed during the same service period as TCM.
Medicare payments for clinical diagnostic laboratory tests – mandatory review Laboratories The OIG will analyze Medicare payments for clinical diagnostic laboratory tests performed in 2016 and monitor CMS’ implementation of the new Medicare payment system for these tests. Section 216 of the Protecting Access to Medicare Act of 2014 requires CMS to replace its current system of determining payment rates for Medicare Part B clinical diagnostic laboratory tests with a new market-based system that will use rates paid to laboratories by private payers.
Potential savings from inflation-based rebates in Medicare Part B Part B drugs The OIG will examine the amount that could be collected from pharmaceutical manufacturers if inflation-indexed rebates were required under Medicare Part B. Each year, statutorily mandated rebates enable Medicaid to recoup a substantial portion of the billions spent by the program on prescription drugs. In contrast, Medicare Part B also spends billions annually on prescription drugs; however, no similar rebate authority exists for Part B to reduce the costs of drugs to the program.
Drug waste of single-use-vial drugs Part B drugs The OIG will determine drug waste for the 20 single-use-vial drugs with the highest amount paid by Medicare and provide specific examples of where a different size vial could significantly reduce waste. The CMS Pub. 100-04, “Claims Processing Manual,” Ch. 17, § 40, provides guidance on the use of the “JW” modifier for discarded Part B drugs and biologicals to track the amount of reimbursed waste in single-use vials, effective Jan. 1, 2017.
Extent of denied care in Medicare Advantage (MA) and CMS oversight Medicare Advantage The OIG will examine national trends and oversight by CMS of denied care within MA and will determine the extent to which services were denied, appealed, and overturned in MA from 2013 to 2015. The OIG also will compare rates of denials, appeals, and overturns across MA plans and evaluate CMS’ efforts to monitor and prevent inappropriate denials of care in MA. Capitated payment systems, such as those used by CMS to pay MA plans, are based on a payment per person rather than a payment per service provided and may create financial incentives for plans to underserve beneficiaries.
Medicare Part C payments for service dates after an individual’s date of death Medicare Advantage The OIG will determine whether prospective payments made after a beneficiary’s date of death were in accordance with Medicare requirements. CMS pays MA organizations for Part C benefits prospectively. A prior OIG review of deceased beneficiaries (OEI-04-12-00130) determined that Medicare improperly made $23 million in payments in 2011, of which $20 million was directly related to Medicare Part C payments that were made that year after beneficiaries’ deaths. Federal regulations require that MA organizations disenroll a beneficiary from the MA plan on the death of the individual, which is effective the first day of the calendar month following the month of death.
Questionable billing for compounded topical drugs in Part D Pharmacies The OIG will review billing for topical compounded drugs under Medicare Part D and will identify pharmacies and associated prescribers with questionable Part D billing for these drugs. Part D spending for compounded topical drugs grew by more than 3,400 percent between 2006 and 2015, reaching $224 million. This growth in spending, combined with an increase in the number of OIG investigative cases involving compounded drugs, suggests the emergence of a fraud risk.
Medicare payments for services after an individual’s date of death Medicare providers The OIG will review CMS policies and procedures that ensure that payments are not made for Medicare services ostensibly rendered to deceased individuals. Section 502 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) requires CMS to establish policies and implement claim edits to ensure that payments are not made for Medicare services ostensibly rendered to deceased individuals. Prior reviews have identified such payments.
Healthcare-acquired conditions – Medicaid managed care organizations (MCOs) Medicaid managed care organizations The OIG will determine whether Medicaid MCOs have continued to make payments to providers for inpatient hospital services related to treating certain provider-preventable conditions. The ACA Sec. 2702 and implementing regulations at 42 CFR § 447.26 prohibit federal payments for provider-preventable conditions. Because the OIG found problems with states making fee-for-service payments associated with provider-preventable conditions in prior reviews, the OIG is expanding its review to managed care arrangements.
Food and Drug Administration (FDA) – hospital’s reliance on drug compounding facilities All hospitals The OIG will determine the extent to which hospitals obtain compounded sterile preparations from compounders, including outsourcing facilities that have registered with the FDA. Large-scale facilities that compound without a patient-specific prescription are regulated under Section 503B of the Food, Drug, and Cosmetic Act and are referred to as outsourcing facilities.


Total Projects

The following summarizes the total projects by OIG focus area:

OIG Focus Area New Projects for 2017 Total Projects Percentage of Projects That Are New
Hospitals 4 23 17%
Nursing homes 4 7 57%
Hospices 2 2 100%
Home health 1 2 50%
Medical equipment and supplies 2 6 33%
Other providers and suppliers 5 22 23%
Prescription drugs 2 3 67%
Medicare Advantage (Part C) 2 3 67%
Medicare Part D 1 3 33%
Other management issues    1 4 25%
Appendix B Recovery Act reviews 0 2 0%
Medicaid prescription drugs 0 2 0%
Medicaid home health 0 1 0%
Other Medicaid services, supplies, and equipment 0 6 0%
Medicaid information system controls and security 0 1 0%
Medicaid managed care 1 3 33%
Food and Drug Administration 1 1 100%
Totals 26 91 29%




Contact us

Rob Mendoza
Ken Zeko
Ken Zeko
Managing Director