HHS Office of Inspector General Issues Work Plan for FY 2014

The U.S. Department of Health and Human Services Office of Inspector General (OIG) issued their Work Plan for fiscal year 2014 on Friday, January 31. The Work Plan outlines new and ongoing reviews and activities of HHS programs and operations the OIG plans to pursue during the current fiscal year.

Below are some of the highlights of the Work Plan. Click here to view the full report.

Analysis of salaries included in hospital cost reports (Expected Issue Date FY 2015)

Issue: Currently, Medicare does not provide any specific limits on the salary amounts that can be reported on the hospital cost report.

Plan: The OIG intends to review cost reports and determine the potential impact on the Medicare Trust Fund if employee compensation on future cost reports had limits.

Risk: If compensation is deemed excessive your Medicare reimbursement may be at risk of being reduced.

Action: Identify your facility's highest compensated employees and assess whether it would be deemed excessive.

Comparison of provider-based and free-standing clinics (New Project in FY14)

Issue: Currently, provider-based facilities often receive higher payments for some services than do freestanding clinics. For example, 2013 Medicare reimbursement for the basic physician office visit (CPT 99213):

• In a freestanding clinic: $69.99
• In a PBC: $49.27 (pro fee) + $72.12 (estimated cost per visit) = $121.39

Plan: The OIG will evaluate the difference in payments for similar procedures and assess the potential impact on the Medicare program of hospitals claiming provider-based status for such facilities.

Risk: Clinics that fail to attest their provider-based clinic status may face increased risk in decreased Medicare reimbursement.

Action: Review the requirements to become a provider-based clinic and ensure they are in compliance with all criteria. Click here to review the requirements for provider-based clinics.

Rural health clinics - compliance with location requirements (Expected Issue Date FY 2014)

Issue: The Balanced Budget Act of 1997 (BBA) authorized CMS to remove from the RHC program clinics that do not meet location requirements. However, CMS has yet to promulgate the final regulations. As a result, RHCs that no longer meet eligibility requirements continue to receive enhanced Medicare reimbursement.

Plan: The OIG will determine the extent to which Rural Health Clinics (RHCs) do not meet basic location requirements and the extent to which Medicare reimbursements to such clinics are occurring.

Risk:If an existing RHC does not meet the new location requirements they may be at risk of losing RHC status and will be reimbursed by Medicare as a freestanding clinic.

Action: RHC's should evaluate whether or not they meet the new location requirements and estimate the possible impact on reimbursement of losing the RHC designation. Click here to review the new location requirements for RHCs.

Critical access hospitals (CAHs)-Payment policy for swing-bed services

Issue: The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) allowed CAHs to receive Medicare reimbursement equal to 101 percent of reasonable cost and have up to 25 inpatient beds that could be used for acute care or swing-bed services, with CMS approval. (Social Security Act, § 1814(l).). Unlike CAHs, traditional SNFs are reimbursed under a PPS through case-mix, adjusted per-diem prospective payment rates for all SNFs.

Plan: The OIG will compare reimbursement for swing-bed services at CAHs to the same level of care obtained at traditional skilled nursing facilities (SNF) to determine whether Medicare could achieve cost savings through a more cost effective payment methodology. 

Risk: The OIG could recommend a change in reimbursement for swing-bed services from the current cost based methodology to the SNF PPS methodology.

Action: CAHs should evaluate the reimbursement impact of conversion back to a SNF PPS reimbursement methodology for swing-bed services.

Critical access hospitals (CAHs)-Beneficiary costs for outpatient services

Issue: Beneficiaries who receive outpatient services at CAHs pay coinsurance amounts that are computed on the basis of CAHs' submitted charges, rather than the costs of the services.

Plan: The OIG will determine the costs to Medicare beneficiaries for outpatient services received at CAHs.

Opportunity: The OIG could recommend capping CAH beneficiary coinsurance amounts to that of PPS hospitals in order to promote access and equity.

Action: CAHs should determine the financial impact the current methodology of calculating coinsurance has on the CAH beneficiary.

These are just a few highlights of the Work Plan. While the Work Plan does not constitute a change in current regulation, we urge you to take these into consideration when assessing your risk and planning for the future of your facility. If you have questions, please contact Ralph Llewellyn or your Eide Bailly representative.