End-stage renal disease care cited in OIG’s Work Plan

The Office of the Inspector General (OIG) recently released its Work Plan for the fiscal year 2013, giving risk managers a heads-up about what topics will be of most interest to regulators over the next year. Some are perennial favorites, such as fraud and abuse, but there are many new areas of focus for 2013.

The Work Plan should be useful for risk managers in directing their resources for the coming year, says James B. Riley Jr., JD, a partner with the law firm of McGuireWoods in Chicago.

“The OIG uses the Work Plan in different ways, both to assess the effectiveness of enforcement in some particular areas and also to gather information on some topics that they can provide to Congress,” Riley says. “The usefulness for risk managers is that the 240 items identified in the Work Plan, like same-day admissions, tell us that the OIG is gathering information to see whether or not it’s a problem they should look into.”

Riley suggests that risk managers take a close look at the Work Plan and use it to identify areas in which the government is focusing on what could be inappropriate activities, and then to assess your own hospital’s vulnerabilities in those areas.

One of the biggest new areas of interest is end-stage renal disease (ESRD). The Work Plan outlines these three areas in which it will scrutinize ESRD:

1. Medicare oversight of dialysis facilities. The OIG will assess Medicare’s oversight of facilities that provide outpatient maintenance dialysis services to Medicare beneficiaries with ESRD. Particularly, the OIG will focus on the oversight function’s performance and the complaint processes of dialysis facilities.

2. Bundled prospective payment system (PPS) for renal dialysis services. The OIG will review Medicare pricing and utilization related to renal dialysis services under the new bundled ESRD PPS, which began in 2011. The ESRD PPS has replaced the basic case-mix adjustment composite payment system and the methodologies for reimbursement of separately billable outpatient ESRD services.

3. Payments for ESRD drugs under the bundled rate system. The OIG will compare facilities’ acquisition cost for certain drugs to inflation-adjusted cost estimates and determine how costs for the drugs have changed since the last OIG review. The Centers for Medicare and Medicaid Services (CMS) has based the bundled price updates of ESRD care on wage and price proxy data from the Bureau of Labor Statistics, but previous OIG reviews found the bureau did not accurately measure the changes in facilities’ acquisition costs for ESRD drugs.

In addition, hospital risk managers can expect more OIG attention in these areas:

  • DRG window. The OIG will determine how much CMS could save if it bundled outpatient services performed up to 14 days (instead of three days) prior to an inpatient admission into the DRG payment.
  • Readmissions. The OIG will review Medicare claims to identify trends in same-day readmissions.
  • Non-hospital owned practices using provider-based status. The OIG will determine the impact of non-hospital-owned physician practices billing Medicare as provider-based. The OIG also will review whether practices billing Medicare as provider-based satisfied Medicare billing requirements.
  • Medicare’s transfer policy. The OIG will review payments to hospitals for discharges that should have been coded as transfers and whether such claims were appropriately processed and paid.
  • Discharges to swing beds in other hospitals. The OIG will review Medicare payments made to hospitals for discharges that were coded as discharges to a swing bed in another hospital.
  • Canceled surgical procedures. The OIG will determine the costs to Medicare associated with inpatient claims for canceled surgical procedures. The OIG notes that in a preliminary analysis, it identified significant occurrences of hospitals receiving two payments for cancelled surgical procedures [i.e. an initial inpatient PPS (IPPS) payment followed by a second IPPS payment for the rescheduled procedure].
  • Mechanical ventilation. The OIG will review Medicare payments for mechanical ventilation to determine the appropriateness of the diagnosis-related group (DRG) assignments and the payments. The OIG will specifically review whether patients received fewer than 96 hours of mechanical ventilation.
  • Graduate medical education payments. The OIG will review data to identify whether providers have claimed duplicate or excessive graduate medical education payments.
  • Acquisition of ambulatory surgery centers (ASCs). The OIG will identify the extent to which hospitals acquire ASCs and the effect of such acquisitions on Medicare payments and beneficiary cost-sharing.
  • Long-term-care hospitals and interrupted stays. The OIG will assess the extent to which Medicare made improper payments for interrupted stays in long-term-care facilities, identify readmission patterns, and determine the extent to which they readmit patients directly following the interrupted stay period.
  • Claims submitted by error-prone providers. The OIG will determine the validity of claims submitted by error-prone providers, project the results to the provider’s population of claims, and recommend to CMS that it request refunds of projected overpayments.
  • Use of commercial mailboxes. The OIG will review the extent to which the practice locations of Medicare Part B providers and suppliers matched commercial mailbox addresses in 2011.
  • High cumulative Part B payments. The OIG will assess controls that identify high cumulative Part B payments to physicians and suppliers and whether controls are in place to identify such payments.
  • Anesthesia services. The OIG will review Part B claims for personally performed anesthesia services to determine whether the claims satisfied Medicare requirements. The OIG will also review whether payments for services reported with the “AA” modifier satisfied Medicare requirements.
  • “Incident-to” services performed by non-physicians. The OIG will review billing for incident-to services to identify whether payments for such services had a higher error rate than other services. The review stems from prior OIG findings regarding unqualified non-physicians performing such services.

The full 2013 Work Plan can be found online at http://tinyurl.com/2013workplan.


  • James B. Riley Jr., JD. Partner, McguireWoods, Chicago. Telephone: (312) 750.8665. Email: jriley@mcguirewoods.com.