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Office of Inspector General plans to crack down on fraud and cut costs

November 6, 2015
by Nicole Stempak, Associate Editor
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Office of Inspector General announces Medicare initiatives for 2016.

The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) outlined its plans for fiscal year 2016:  focus on delivery system reform and examine the effectiveness of alternate payment models, coordinated care programs and value-based purchasing.

The Work Plan for fiscal year 2016 summarizes new and ongoing OIG audits, evaluations, legal and investigative initiatives. The OIG provides independent and objective oversight to improve the economy, efficiency and effectiveness of programs operated by the HHS.

The OIG serves more than 100 programs administered by HHS. The majority of the office’s funding is directed at overseeing Centers for Medicare & Medicaid Services (CMS) programs, 76 percent of the office’s budget in 2014.

The full report can be read at Here are notable revisions and changes for the upcoming year:

Medicare Part A and Part B


Nursing Homes

New: Skilled nursing facility prospective payment system requirements

What it means: The OIG will review complaints with the skilled nursing facility (SNF) prospective payment system, including the documentation required for Medicare claims, to ensure SNF care is reasonable and necessary. Documentation includes (1) a physician order at the time of admission for the resident’s immediate care (2) a comprehensive assessment, and (3) a comprehensive plan of care prepared by an interdisciplinary team that includes the attending physician, a registered nurse and other appropriate staff.

Reason: Prior OIG reviews found Medicare paid more than the facility’s cost for therapy. The OIG also found SNFs increasingly billed for the highest level of therapy even though key beneficiary characteristics remained largely the same.


Revised: Hospice general inpatient care

What it means: The OIG will review the appropriateness of claims and statements for Medicare hospice beneficiaries who receive general inpatient care. The office will also review hospice medical records to address concerns that this level of hospice care is being billed when that level of service is not medically necessary.

Reason: Hospice care is palliative rather than curative. When a beneficiary elects hospice care, the hospice agency assumes the responsibility for medical care related to the beneficiary’s terminal illness and related conditions.

Medical Equipment and Supplies

Equipment and Supplies – Policies and Practices

New: Orthotic braces – reasonableness of Medicare payments compared to amounts paid by other payers.

What it means: The OIG will compare Medicare payments for orthotic braces to amounts paid by non-Medicare payers, such as private insurance companies.

Reason: To identify potentially wasteful spending.

New: Osteogenesis stimulators – lump-sum purchase versus rental

What it means: The OIG will see if there’s a potential savings if osteogensis stimulators are rented over a 13-month period rather than purchased in a lump-sum.

Reason: Osteogensis stimulators are categorized as “inexpensive and other routinely purchased items.” Benficiaries have the option of either purchasing or rending the stimulators.

Equipment and Suppliers – Billing and Payments

New: Orthotic braces—supplier compliance with payment requirements

What it means: The OIG will review Medicare Part B payments for orthotic braces to determine whether durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) suppliers’ claims were medically necessary and met Medicare requirements.

Reason: Prior review showed some DMEPOS suppliers were billing for services that weren’t properly documented or were medically unnecessary, e.g., beneficiaries received multiple braces or the referring physician did not see beneficiaries.

New: Increased billing for ventilators

What it means: The Centers for Medicare & Medicaid Services (CMS) National Coverage Determination manual stipulates ventilators are covered for the treatment of severe conditions associated with “Neuromuscular diseases, thoracic restrictive diseases and chronic respiratory failure consequent to chronic obstructive pulmonary disease.” Ventilators would not be considered reasonable and necessary to treat any of the conditions described in the LCDs for either CPAPs or RADs.

Reason: Suppliers may be inappropriately billing for ventilators for beneficiaries with non-life-threatening conditions, which would not meet the medical necessity criteria for ventilators and might instead be more appropriately billed to codes for RADs or CPAPs.

Prescription drugs – policies and practices

Revised: Part B Payments for drugs purchased under the 340B Program

What it means: The OIG will calculate the cost of 340B-covered entities, the Medicare program and Medicaid beneficiaries of three different shared savings arrangements that would enable Medicare and its beneficiaries to share in the cost savings resulting from 340B discounts—and how much ASP-based payments exceed 340B prices.