HHS Office of Inspector General Issues 2015 Work Plan (Part 1)

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) recently released its 2015 Work Plan. The OIG’s Work Plan outlines the reviews and activities the OIG plans to pursue during the 2015 fiscal year. Thus, the Work Plan gives health care providers an overview of the OIG’s enforcement priorities for the coming year.

The highlights from the OIG’s 2015 Work Plan are summarized in two separate posts.  This first post focuses on hospitals, nursing homes, hospice, and home health providers.

Hospitals: The OIG’s 2015 Work Plan places a major emphasis on hospitals, focusing its review of hospital activities in 22 areas. For the first time, the OIG will focus on adverse events in post-acute care for Medicare beneficiaries. The OIG will estimate the national incidence of adverse and temporary harm events for Medicare beneficiaries who receive care in long-term care hospitals, identify factors contributing to these events, determine the extent that the events were preventable, and estimate the costs to Medicare. According to the OIG, long-term care hospitals are the third most common type of post-acute care facility and account for almost 11 percent of Medicare costs for post-acute care.

The OIG also is focusing on the following hospital-related policies and practices, billing and payment, and quality of care and safety areas.

  • The OIG will study the impact of 2014 inpatient admission criteria known as the “two midnight policy.” The criteria require physicians to admit for inpatient care only those beneficiaries who are expected to need at least two nights of hospital care. If the beneficiary’s care is expected to last less than two nights, the beneficiary should be treated as an outpatient.  The OIG plans to study the impact of the new inpatient admission criteria on hospital billing, Medicare payments, and beneficiary co-payments, as well as determine how billing varied among hospitals.
  • The OIG will compare the Medicare payments for physician office visits in provider-based clinics and freestanding clinics to determine the difference in payments for similar procedures.
  • The OIG will determine the extent to which provider-based facilities meet the criteria of the Centers for Medicare and Medicaid Services (CMS). The OIG noted the financial incentives to bill as provider-based facilities because provider-based status allows facilities owned and operated to bill as hospital outpatient departments.
  • The OIG will examine other policies and practices that include:  reconciliation of outlier payments; costs associated with defective medical devices; salaries included in Medicare cost reports; and the payment policies for swing-bed services.
  • The OIG will examine various billing and payment issues, including inpatient claims for mechanical ventilation, selected inpatient and outpatient billing requirements, duplicate graduate medical education payments, indirect medical education payments, outpatient dental claims, and outpatient evaluation and management services billed at the new patient rate.
  • The OIG will examine other quality of care and safety issues in hospitals including hospital privileging, adverse events in inpatient rehabilitation facilities, and participation in projects with quality improvement organizations.

Nursing Homes: The OIG will review several areas relating to nursing homes, including Medicare Part A billing by skilled nursing facilities. The OIG stated that skilled nursing facilities increasingly bill for the highest level of therapy even though beneficiary characteristics did not change and that in 2009 skilled nursing homes billed one-quarter of all claims in error. In addition, the OIG will review questionable billing patterns for Part B services during nursing home stays. Congress directed the OIG to monitor Part B billing for abuse during non-Part A stays to ensure that excessive services are not provided. Of note, the OIG will also review the extent that Medicare beneficiaries in nursing homes are hospitalized for manageable and preventable conditions.

Hospices:The OIG will continue its focus on hospice care, specifically two areas in 2015: hospices in assisted living facilities and the use of hospice general inpatient care. As part of its review of the extent that hospice plans serve Medicare beneficiaries who reside in assisted living facilities, the OIG will determine the length of stay, levels of care received, and common terminal illnesses. The OIG’s work is intended to provide HHS with information as part of the Affordable Care Act (ACA) requirement that CMS reform the hospice payment system, collect data relating to hospice payment revisions, and develop quality measures for hospice. The OIG will assess the appropriateness of a hospice program’s general inpatient care claims, including a review of hospice medical records to address concerns that the inpatient level of hospice care is misused.

Home Health Services:The OIG will review compliance with the home health prospective payment system, notably the documentation required in support of Medicare claims. In addition, the OIG will examine the extent to which home health agencies employed individuals with criminal convictions.

CMS Plans to Expand Five-Star Rating System Beyond Nursing Homes

HC BLOG_five starsDr. Patrick Conway, a deputy administrator at the Centers for Medicare and Medicaid Services (CMS) announced on CMS’s blog in June that the agency plans to add a star rating system later in 2014 and early in 2015 for several other health care providers.  According to Conway, CMS plans to add a star rating system to the Hospital Compare, Dialysis Facility Compare, and Home Health Compare websites.  The Nursing Home Compare website already uses star ratings, and the Physician Compare website just started to include star ratings for certain physician group practices.

CMS launched the five-star system for nursing homes in December 2008.  The overall five-star rating for each nursing home is based upon the star ratings for three separate categories: 1) health inspections; 2) quality measures; and 3) staffing.  To determine a nursing home’s overall rating, CMS begins with the facility’s health inspection rating and then adds or subtracts “stars” depending on the facility’s staffing rating and its quality measures rating.  Thus, a facility’s overall rating is an aggregate of its scores in these three areas.

Although CMS intended that consumers use the five-star rating system to help them choose nursing homes, the system has been used beyond its intended purpose.  For example, in tort cases against a facility, attorneys for nursing home residents and/or family members frequently attempt to introduce into evidence the nursing home’s five-star rating.  It is possible that the same situation will occur with the five-star rating system CMS intends to launch for hospitals, dialysis facilities, and home health companies.  However, CMS never intended that the five-star nursing home rating system should serve as a standard of care.  In fact, CMS states that the quality measures (one of the components of the five-star rating) on Nursing Home Compare “[a]ren’t benchmarks, thresholds, guidelines, or standards of care, and aren’t appropriate for use in a lawsuit.”

Eleventh Circuit Affirms Conviction Against Nursing Home Owner Brought Under Worthless-Services Theory

In United States v. Houser, No. 12-14302, June 24, 2014, the 11th U.S. Circuit Court of Appeals affirmed the conviction of a nursing home operator for conspiring with his wife to defraud the Medicare and Medicaid programs by billing for criminally worthless services, as well as for payroll tax fraud and failure to pay personal tax returns.

The trial court’s order of conviction states that the government proved beyond a reasonable doubt that three nursing facilities operated by the defendant submitted or caused to be submitted false or fraudulent claims to the Medicare and Medicaid programs for worthless services because the services were not provided, were deficient, inadequate, substandard, did not promote the maintenance or enhancement of the residents’ quality of health, and were of a quality that failed to meet professionally recognized standards of health care. The 11th Circuit adopted the trial court’s description of the nursing homes’ conditions as “barbaric” and “uncivilized.” According to the Department of Justice, this was the first conviction following a trial in federal court for submitting claims for worthless services.

On appeal, the 11th Circuit rejected the defendant’s argument that attaching the worthless-services concept used in civil actions on to the federal health care fraud statute makes the statute unconstitutionally vague because it is not possible to determine at what point health care services have crossed the line from bad to criminally worthless. While the appeals court did not endorse or adopt the worthless-services theory, it upheld the conviction because certain required services were not provided to residents at all.

This decision is noteworthy because it shows that the government will go to great lengths to prosecute quality of care cases, including developing new ways to prosecute health care fraud. This trend will likely continue, especially in light of the Department of Health & Human Services (HHS) Office of Inspector General (OIG) 2013 report identifying problems with the quality of care in nursing homes. OIG, “Skilled Nursing Facilities Often Fail to Meet Care Planning and Discharge Planning Requirements,” Feb. 2013.

CMS’ Interpretive Guidance for Nursing Homes on Reprocessed Single-Use Devices and Egg Preparation

The Centers for Medicare and Medicaid Services (CMS) recently issued interpretive guidance in two areas of interest for nursing homes: use of reprocessed single-use devices and preparation of eggs in nursing homes.  Nursing homes should become familiar with these guidance documents to avoid survey deficiencies.

CMS revised its guidance regarding use of single-use devices: S&C Memorandum No. 14-25-NH, “Advance Copy — Single Use Device Reprocessing under Tag 441, Revisions to Interpretative Guidance in Appendix PP, State Operation Manual (SOM) on Infection Control,” issued May 9, 2014.  CMS made this revision to be consistent with current Food and Drug Administration (FDA) regulation that allows the reprocessing and marketing of single-use devices under specific conditions.  Nursing homes may purchase reprocessed single-use devices when these devices are reprocessed by an entity or a third-party reprocessor that is registered with the FDA.  CMS states that the nursing home must have documentation from the third-party reprocessor indicating that it has been cleared by the FDA to reprocess the specific device in question.

CMS also has revised its interpretative guidance and procedures relating to egg preparation in nursing homes: S&C Memorandum No. 14-34-NH, “Advance Copy of Revised F371; Interpretive Guidance and Procedures for Sanitary HC BLOG_eggsConditions, Preparation of Eggs in Nursing Homes,” issued May 20, 2014.  Nursing homes should use pasteurized shell eggs or liquid pasteurized eggs to eliminate the risk of residents contracting Salmonella Enteritidis.  Using pasteurized eggs allows nursing homes to meet resident preferences for soft-cooked, undercooked, or sunny-side up eggs.  CMS has stated that nursing homes should not prepare or serve soft-cooked, undercooked, or sunny-side up eggs from unpasteurized eggs.  Unpasteurized eggs must be cooked until the yolk and the white are completely firm.  For all other forms of egg preparation, including hot holding of eggs and eggs used as an ingredient before baking (such as in cakes or meat loaf), the nursing home must use pasteurized eggs or cook the food item to an internal temperature of 160 degrees.

Nursing homes should also take note of guidance issued to surveyors relating to egg preparation.  Signed health release agreements between the resident (or the resident’s representative) and the facility acknowledging that the resident has accepted the risk of eating undercooked unpasteurized eggs are not permitted.  Thus, if the nursing home prepares or serves unpasteurized or undercooked eggs — eggs that do not have a completely firm yolk and white — CMS has instructed surveyors to consider citing deficiencies at F371.

Image courtesy of Flickr by Brenda Gottsabend

The OIG’s Anti-Kickback Concerns on Contracts Between Senior Communities and Placement Agencies

The Office of Inspector General (OIG) of the Department of Health & Human Services (HHS) has issued an advisory opinion about whether senior communities that paid a placement agency for referring new residents violated the federal anti-kickback statute. OIG Advisory Opinion No. 14-01. Although the OIG did not impose sanctions, the opinion highlights the risks inherent in these types of arrangements.

A nonprofit organization that owns subsidiaries involved in senior housing and geriatric care, including senior residential communities and skilled nursing facilities, requested an advisory opinion about the relationship between two residential communities and a placement agency.  The placement agency contracted with the two communities to promote their available housing and place new residents with them.  Under the agreement the placement agency receives a fee for every new resident it places at one of the communities.  The fee is based on a percentage of a new resident’s initial charges and does not include any charges billed to federal health care programs.  In addition, the contracts prohibited the placement agency from referring new residents who rely on state or federal health care money and do not allow the communities to accept any referrals of residents who receive state or federal health care money.

The communities did not provide services reimbursed by Medicare, no residents who were referred received services provided under a Medicaid waiver program, and none of the residents received therapy from skilled nursing facility staff.  Although none of the residents who were referred by the placement agency received federally payable services at the time of the referral, it was possible that the residents could receive federally payable services by an affiliated entity in the future.

Although the OIG found that there was remuneration that implicated the anti-kickback statute, it concluded that the facts and circumstances of the arrangement adequately reduced the risk that the payment provided under the contract could be an improper payment for referrals or the generation of federal health care program business.  The placement fee does not include any charges to the federal health care programs.  In addition, the contract prohibits the placement agency from referring and the communities from accepting any residents who rely on state or federal health care programs.  The placement agency does not refer residents for services and housing that are paid by federal health care programs, nor does it limit a resident’s choice of provider.  Finally, the parent company certified that its affiliated entities do not track referrals or common residents or providers.

The OIG’s opinion highlights the risks of referral-based payment arrangements.  By paying the placement fee, the communities paid remuneration that implicates the anti-kickback statute because the residents may later receive care reimbursed by federal health care programs.  Percentage compensation arrangements are problematic under the anti-kickback statute because they relate to the volume and value of the business between the parties.  However, due to the unique circumstances of this matter — including that the entities certified they did not track referrals to determine which residents eventually received Medicare and Medicaid services — the OIG found that the remuneration was not likely to be an improper payment to generate federal health care program business.

Of note, the OIG’s advisory opinion did not extend to a community that at one time had residents who had access to federally payable on-site therapy services provided by staff from a skilled nursing facility.  Health care providers that enter volume- and value-based contracts should proceed with caution: The OIG’s advisory opinion is tied to a specific and narrow set of facts

OIG Issues Priority Recommendations Highlighting Focus Areas

The U.S. Department of Health and Human Services’ Office of Inspector General (OIG) recently released the OIG Compendium of Priority Recommendations.  The OIG derives its 25 priority recommendations from more specific recommendations that the OIG has made in audit and evaluation reports but has not yet implemented.  The recommendations cover 25 broad areas and provide insight into the OIG’s focus areas.  According to the OIG, the “recommendations represent opportunities to achieve cost-savings, improve program management, and ensure quality of care and safety of beneficiaries. …”  Health care providers should review the OIG recommendations to assist in focusing compliance efforts.

The OIG’s recommendations fall into seven broad categories:HC BLOG_hospice

1.         Medicare Policies and Payments;

2.         Medicare Quality of Care and Safety Issues;

3.         Medicaid Program Policies and Payments;

4.         Medicaid Quality of Care and Safety Issues;

5.         Oversight of Food Safety;

6.         HHS Grants and Contracts; and

7.         HHS Financial Stewardship.

Below is a summary of selected recommendations that affect senior providers, hospice, and home health.

Hospice care in nursing homes – The OIG expresses concern that Medicare’s hospice payment methodology may lead some hospices to inappropriately seek out beneficiaries in nursing homes.  As the OIG notes, Medicare pays hospices an all-inclusive daily rate regardless of the number of services furnished.  The OIG identified hundreds of hospices that had more than two-thirds of their beneficiaries residing in nursing facilities in 2009.

The OIG recommends monitoring hospices that depend heavily on nursing facility residents.  In addition, the OIG recommends modification of the payment system for hospice care in nursing facilities, including statutory authority if necessary.

Home health services: billing practices – The OIG expressed concern about home health agencies’ billing practices, noting that one review found one in four home health agencies exceeded a threshold that indicated unusually high billing for at least one of six measures of questionable billing.

As a result of this finding, the OIG’s recommendations include increasing monitoring of billing of home health services and taking action regarding inappropriate payments and questionable billing.

Skilled nursing facilities: billing practices – According to the OIG, skilled nursing facilities have a number of billing problems.  The OIG states that these problems include submitting inaccurate, medically unnecessary, and fraudulent claims, concluding that in 2009 skilled nursing facilities billed one-quarter of their claims in error.

The OIG has several recommendations to remedy skilled nursing facilities’ billing problems, such as increasing and expanding review of claims, monitoring compliance with new therapy assessments, and strengthening monitoring of skilled nursing facilities that disproportionately bill for higher paying resource utilization groups.

Nursing homes: patient harm, questionable resident hospitalizations, and inappropriate drug use – The OIG found a number of problems with nursing homes.  According to the OIG’s findings, about 33 percent of Medicare beneficiaries experienced adverse or temporary harm events during their stay.  Fifty-nine percent of these events were clearly or likely preventable, and the OIG found that these events resulted from substandard treatment, inadequate resident monitoring, and failure or delay of necessary care.  The OIG also found that nursing homes had questionable hospitalizations and safeguards against unnecessary antipsychotic drug use.

The OIG made several specific recommendations to combat the nursing home problems that it identified.  The recommendations include instructing nursing home surveyors to review facility practices for identifying and reducing adverse events, instructing surveyors to review nursing home hospitalization rates, and having the Centers for Medicare and Medicaid Services assess whether survey and certification processes offer adequate safeguards against unnecessary antipsychotic drug use in nursing homes.

Other recommendations – Health care providers should review the OIG’s entire list of priority recommendations to determine which recommendations apply to them.  The recommendations provide a useful starting point for targeted compliance activities.