OIG Mid-Year Update to FY2016 Work Plan

June 16, 2016

On June 8, 2016, the U.S. Department of Health & Human Services Office of Inspector General (“OIG”) released its Mid-Year Update to the Fiscal Year (“FY”) 2016 Work Plan (“Mid-Year Update”). This is the second consecutive year that the OIG has published a semi-annual report. This year’s Mid-Year Update outlines the OIG’s completed, ongoing, new and revised program integrity initiatives, highlighting changes made since publication of its Annual FY 2016 Work Plan summarized here: FY 2016 Annual Work Plan. Providers should use the Mid-Year Update to assess their ongoing compliance risks and prioritize resources to address outstanding risk areas targeted by the OIG.


The Mid-Year Update confirms that provider based departments will continue to be scrutinized by the OIG and that the payment differential for provider based facilities remains in jeopardy. The OIG plans to determine how many provider based facilities exist, select a number of providers to evaluate their provider based facilities’ compliance with the provider-based status requirements (42 CFR 413.65), review CMS’ oversight of provider based billing, and examine the provider based attestation process and its challenges. In addition, the OIG continues to review and compare the differences between payment for services provided in provider based clinics versus freestanding clinics. Hospitals with provider based facilities should be prepared to defend their provider based status, if scrutinized, and anticipate that there will be more changes coming in the way of reimbursement for services provided in provider based facilities.

As discussed in the FY 2016 Annual Work Plan, the OIG continues to look at the consequences of CMS’ policy changes on outpatient and inpatient stays under the two-midnight rule. Specifically, the OIG plans to examine how hospitals’ use of outpatient and inpatient stays has changed, by comparing claims for hospital stays in the year prior to the effective date of the two-midnight rule (October 1, 2013) to stays in the year following the effective date of that rule.

The Mid-Year Update also identifies several new priorities for hospitals. The OIG states that it will determine the extent of potential Medicare savings if hospital outpatient stays were ineligible for an outlier payment, noting that the OIG has already concluded that hospital charges, unrelated to actual costs, lead to excessive inpatient outlier payments. Results of this review are expected to be released in the FY 2017 Work Plan, and could lead to the elimination of outlier payments for outpatient hospital services. Another new initiative is the OIG’s review of Medicare outpatient payments for intensity-modulated radiation therapy (“IMRT”) to determine whether the services were appropriately billed. This review will likely focus on whether certain services were appropriate to be billed during the IMRT plan development phase.

Nursing Homes
The OIG has stated, in the Mid-Year Update, that it will determine whether nursing homes are complying with the skilled nursing facility (SNF) prospective payment system requirement of a 3-day qualifying inpatient hospital stay within 30 days of an SNF admission (“3-day Rule”). Based on previous studies, the OIG believes most beneficiaries do not comply with the 3-day Rule. The OIG may be looking at whether the 3-day qualifying stay should again be eliminated based on recent experience with providers participating in Pioneer ACOs and bundled payments who received a waiver of the 3-day Rule.

The OIG has also revealed that increased attention will be given to reviewing whether nursing homes are adequately preventing conditions typically associated with increased hospitalizations, such as urinary tract infections. In addition, the OIG plans to review the procedures instituted by States for long term care facilities to conduct background checks on prospective employees and providers who have direct access to patients, evaluating the costs and any unintended consequences of these programs.

In the Mid-Year Update, the OIG has indicated a commitment to continue ongoing reviews related to hospice care. In particular, the OIG has stated that it will review hospice medical records to determine whether hospice care is being billed for services that are not medically necessary.

Home Health Services
The OIG plans to take a closer look at indicators associated with home health fraud, given that the Medicare benefits related to home health services tend to be a “high-risk” area for fraud, waste, and abuse. Based on prior OIG reviews that indicated one in four home health agencies had questionable billing, the OIG will devote closer attention to whether home health claims were paid in accordance with Medicare requirements.

Accountable Care Organizations (ACOs)
The OIG has also revealed that it will review the CMS Medicare Shared Savings Program (MSSP) to determine whether CMS properly assigned beneficiaries to ACOs in the MSSP. Specifically, the OIG will be examining whether there was any duplication of payments for the same beneficiaries by other shared savings programs. Providers that participate in an ACO will be interested in the studies to be conducted by the OIG, which will describe the common characteristics of ACOs that achieved savings and were able to meet mandated measures. The OIG will also identify the strategies and approaches used by ACOs to achieve high-quality care and cost savings and the extent to which coordination through electronic health record exchanges can help providers participating in an ACO accomplish care coordination.


As noted in the FY 2016 Work Plan, and previous work plans, the OIG remains concerned with improper payments stemming from noncompliance with the Medicare billing requirements across all provider and supplier types. Based on the priorities specified in the Mid-Year Update, the OIG is interested in combatting waste, fraud, and abuse, while also ensuring that providers deliver high-quality care. Providers would be well-advised to examine the OIG’s specified priorities outlined in the Mid-Year Update and analyze their documentation and billing practices to minimize potential reimbursement risk.

If you have any questions about the OIG’s Mid-Year Update to the FY 2016 Work Plan, or are interested in discussing approaches to respond to the areas of enforcement and oversight highlighted by the OIG, please contact a member of Hancock Daniel’s Compliance Team.

The information contained in this advisory is for general educational purposes only. It is presented with the understanding that neither the author nor Hancock, Daniel & Johnson, P.C., PC, is offering any legal or other professional services. Since the law in many areas is complex and can change rapidly, this information may not apply to a given factual situation and can become outdated. Individuals desiring legal advice should consult legal counsel for up-to-date and fact-specific advice. Under no circumstances will the author or Hancock, Daniel & Johnson, P.C., PC be liable for any direct, indirect, or consequential damages resulting from the use of this material.

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