Barnes & Thornburg LLP: OIG Work Plan 2014: Takeaways for Hospitals

By Gayland Hethcoat

With the release of its work plan for fiscal year 2014 on Jan. 31, 2013, the U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) has provided insight on the agency’s current enforcement priorities in Medicare, Medicaid, and other HHS programs.

For hospitals, the work plan identifies several new areas of focused review for fraud, waste, abuse, and noncompliance with HHS program requirements. Areas of greater scrutiny include:

1. New inpatient admission criteria: A final rule issued by the Centers for Medicare and Medicaid Services (CMS) in late 2013 (and since partially delayed for almost a year amid ongoing criticism from the hospital community) instructs physicians to admit Medicare beneficiaries for inpatient hospital stays if they expect the beneficiaries to need inpatient care over the course of at least two midnights. OIG will determine the impact of new inpatient admission criteria under the “two-midnight” rule on hospital billing, Medicare payments, and beneficiary payments.

2. Salaries in hospital cost reports: Hospitals may include employee compensation in their operating costs reported to and reimbursed by Medicare if such compensation is “reasonable remuneration” for managerial, administrative, professional, and other services related to facility operations and furnished in connection with patient care. There are no limits on the salary amounts that hospitals may report, but OIG will consider the effect such limits might have on the Medicare Trust Fund.

3. Pharmaceutical compounding: In light of a recent meningitis outbreak resulting from contaminated injections of compounded drugs and the passage of legislation intended to strengthen the Food and Drug Administration’s oversight of pharmaceutical compounding, the OIG will summarize Medicare’s oversight of pharmaceutical compounding in Medicare-participating acute-care hospitals. The agency will also distill state regulators’ and hospital accreditors’ assessments of pharmaceutical compounding in hospitals.

4. Hurricane Sandy case study on emergency preparedness: As a condition of participation in Medicare, hospitals must ensure patient care during disasters. Using hospitals’ experience during Hurricane Sandy as a case study, the OIG will assess in selected counties hospitals’ preparation and response to that natural disaster, in addition to their participation in HHS emergency planning programs.

5. Hospital privileging: Another condition of participation in Medicare requires hospitals to have an organized medical staff, which periodically appraises its members and the quality of care they render. OIG will determine how hospitals review new medical staff candidates, including verification of privileges and consideration of information from the National Practitioner Data Bank.

In addition to these and other new focus areas, OIG will continue its efforts in areas that it noted in its previous work plan. These areas include inpatient and outpatient billing requirements, duplicate graduate medical education payments, and hospitals’ participation in quality improvement organizations.

Hospitals should consider how their compliance objectives for this year align with those in the OIG’s work plan.

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