The United States Department of Health and Human Services, Office of Inspector General (“OIG”), has published its Fiscal Year 2013 Work Plan. The Work Plan details the OIG’s compliance and enforcement goals for the coming year.
This Client Alert, the second in a two-part series, highlights data gathering and analysis activities that may shape future policies.
- Hospitals – Diagnosis-Related Group Window. This is a new initiative by CMS to review outpatient services provided up to 14 days prior to an inpatient hospital admission to determine if bundling those outpatient services might yield savings to the Medicare program. Currently, bundling occurs for all outpatient services delivered three days prior to an inpatient hospital admission. CMS realizes that expanding the bundling window could reduce costs to the program. Based on the results of the study, the OIG may recommend that CMS expand the bundling window. Such a policy, if implemented, would have a direct impact on hospital revenue. Hospitals should determine the scope of this potential impact, monitor CMS activity in this area, and plan accordingly to manage the impact of any revenue decrease.
- Hospitals – Same-Day Readmission. In 2004 CMS implemented a program that rejects subsequent claims on behalf of beneficiaries who are readmitted to the same hospitals on the same day. This program limits hospitals to one DRG payment for the combined original and subsequent stays. Hospitals have been able to override this program under certain circumstances. CMS is now evaluating the program’s effectiveness in relation to implementing certain provisions of the Affordable Care Act. Accordingly, facilities that decide to override the program should take care to split the original and subsequent stay claims, and ensure that they have met the specific criteria for doing so.
- Hospitals – Acute Care Inpatient Transfers to Inpatient Hospice Care. The OIG plans to analyze hospital discharges of beneficiaries to hospice facilities after a short hospital stay. Currently, hospitals are paid the full PPS rate when they discharge beneficiaries for hospice care. A lower rate is paid when a discharge is made to a skilled nursing facility. Based on its analysis, the OIG may recommend that CMS stop making full DRG payments for transfers to hospice care facilities. In order to be prepared, hospitals should quantify the potential revenue impact resulting from such a change in policy and, if material, begin planning their response should the change be implemented.
- Hospitals – Payments for Discharge to Swing Beds in Other Hospitals. Continuing with the discharge theme, CMS is evaluating coded discharges to a swing bed in another hospital. When a hospital discharges a beneficiary, the hospital is paid the full DRG amount. When a hospital transfers a beneficiary to another hospital, it is paid a per diem and not the full DRG. When a hospital discharges a patient to a swing bed in another hospital, however, it is still paid the full DRG amount with no reductions. The OIG has announced that it will evaluate swing-bed discharges and potentially recommend to CMS that hospital discharges to swing beds in other hospitals be treated like other transfers to hospitals, resulting in payment of a per diem rate instead of the full DRG amount. Hospitals should evaluate the potential impact of no longer receiving the full DRG payment when they transfer patients to swing beds in other hospitals.
- Hospitals – Payment for Canceled Surgical Procedures. Under this initiative, the OIG will determine the costs incurred by the Medicare system for inpatient hospital claims for canceled surgical procedures. The OIG’s preliminary analysis of such claims has revealed significant occurrences of an initial PPS payment to hospitals for a canceled surgical procedure followed by a second higher payment to the same hospital for the rescheduled surgical procedure. Under the current system, Medicare is making two payments to hospitals unless the patient is readmitted to the hospital on the same day. The OIG plans to continue with its analysis of the impact of these dual payments on the Medicare system. Following that analysis, it may recommend that CMS stop dual payments for canceled surgical procedures followed by the actual surgical procedure. Facilities should evaluate the potential impact of this policy change and develop needed initial strategy and business planning.
- Hospitals – Acquisitions of Ambulatory Surgical Centers: Impact on Medicare Spending. Hospitals are reimbursed at a higher rate for surgical procedures performed in outpatient departments than for those performed in ambulatory surgical centers. The OIG plans to determine the amount of increased costs to the system when hospitals acquire an ambulatory surgical center and convert it to a hospital outpatient department. CMS has not announced what it intends to do with the results of its analysis, but it may affect the future ability of hospitals to convert an ambulatory surgical center to an outpatient surgical center. Facilities planning to acquire an ambulatory surgical center and convert it to an outpatient surgical center should be aware of this analysis and consider any impact on the business case for the acquisition.
- Critical Access Hospitals – Variations in Size, Services, and Distance from Other Hospitals. The OIG is continuing its in-depth examination of critical access hospitals and the numbers and types of patients they treat to determine if they continue to meet the CAH criteria. Those criteria include, but are not limited to: rural area site, provision of 24-hour emergency care, limit of 25 inpatient beds, average annual stay length of 96 hours or less, and located either more than a 35-mile drive from the nearest hospital (more than a 15-mile drive in areas with mountainous terrain or only secondary roads) or certified as a critical access prior to January 1, 2006, based on state designation as a “necessary provider” of health care services to residents in the area. A hospital currently operating as a critical access hospital should perform a self-evaluation to determine if it still meets the critical access hospital designation criteria. Failure to continually meet the criteria could mean conversion from a critical access hospital to a PPS hospital, with the resulting dramatic impact on reimbursement.
- Physician-Owned Distributors – High Utilization of Orthopedic Implant Devices Used in Spinal Fusion Procedures. The OIG is concerned with utilization of physician-owned distributors that provide spinal implants purchased by hospitals. Congress has expressed a concern that this could create a conflict of interest and a safety concern for patients. While the OIG has not provided a clear statement indicating whether it will recommend changes in this area, providers and facilities currently engaged in or considering engaging in relationships with Physician-Owned Distributors should monitor the activity of the OIG and CMS closely to determine the continued viability of such relationships.
The experienced health care attorneys of Spencer Fane Britt & Browne LLP are available to assist health care organizations in identifying and addressing risk areas highlighted by the Work Plan.