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Hall, Render, Killian, Heath & Lyman is a full service health law firm with offices in Indiana, Kentucky, Michigan and Wisconsin. Since the firm was founded by William S. Hall in 1967, Hall Render has focused its practice primarily in the area of health law and is now recognized as one of the nation's preeminent health law firms serving clients in multiple states. For more information about the firm please visit us at



Office Locations:

Indiana Offices
One American Square
Suite 2000
Indianapolis, IN 46282
(317) 633-4884

Contact: Gregg M. Wallander


8402 Harcourt Road
Suite 820

Indianapolis, IN 46260
(317) 871-6222
Contact: James R. Willey


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614 West Main Street
Suite 4000
Louisville, KY 40202
(502) 568-1890
Contact: Rene R. Savarise


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Columbia Center
, Suite 315
201 West Big Beaver Road
Troy, MI 48084
(248) 740-7505
Contact: Kimberly J. Commins-Tzoumakas

2369 Woodlake Drive, Suite 280
Okemos, MI 48864
(517) 703-0921
Contact: Brian F. Bauer


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111 East Kilbourn Avenue
Suite 1300
Milwaukee, WI 53202
(414) 721-0442
Contact: Lawrence K. Coon



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October 2, 2009

Summary of the OIG 2010 Work Plan

Executive Summary

On October 1, 2009, the Office of Inspector General ("OIG") published its proposed Work Plan for Fiscal Year ("FY") 2010 ("Plan") which describes new and ongoing audit and enforcement priorities of the OIG.  The Plan is helpful to providers in shaping their own compliance programs and identifying compliance risk areas in which providers should focus their ongoing efforts over the next 12 months relating to compliance program activities, audits, and policy development.

Although there is significant overlap between the FY 2010 Plan and the OIG's previous Work Plan activities, there are several new areas of inquiry, many of which focus on the quality of care provided to program beneficiaries.  In particular, new hospital focus areas include: conditions present on admission, hospital readmissions, adverse events, payments for nonphysician outpatient services under the Inpatient Prospective Payment System, inpatient rehabilitation facility submission of patient assessment instruments, duplicate graduate medical education payments, and observation services during outpatient visits.  New focus areas for other types of providers/suppliers include, but are not limited to, home health agency outlier payments, quality of care in skilled nursing facilities and payments for services ordered or referred by excluded providers.

A summary of the OIG's FY 2010 hospital audit areas and other activities is provided below.

New Medicare Hospital Audit Activities

New hospital risk areas that the OIG will focus on during FY 2010 include the following:

v      Hospital Admissions with Conditions Coded Present-On-Admission ("POA")  Section 1886(d)(4)(D) of the Social Security Act requires acute care hospitals to report on their Medicare claims when diagnoses are present when patients are admitted to hospitals.  For certain diagnoses specified by CMS, hospitals receive lower payment amounts if the specified diagnoses are acquired in the hospital.  The OIG will review claims to determine the number of inpatient hospital admissions for which certain diagnoses are coded as being POA and the conditions that are most frequently coded as POA.  The OIG will also determine which types of facilities are most frequently transferring patients with a POA diagnosis specified by CMS to hospitals and whether specific providers transferred a high number of patients to hospitals with POA diagnoses.  

v      Hospital Readmissions  According to CMS guidance found in the Medicare Claims Processing Manual, if a same-day readmission occurs for symptoms related to or for evaluation or management of the prior stay’s medical condition, the hospital is entitled to only one DRG payment and should combine the original and subsequent stays into a single claim.  While CMS implemented a coding edit in 2004 to reject subsequent claims when beneficiaries are readmitted to the same hospital on the same day, the OIG will now test the effectiveness of this edit.  Quality Improvement Organizations are also required to review cases in which a beneficiary is readmitted to a hospital less than 31 days after being discharged from the hospital.  The OIG will review the extent of over-site of these readmission cases.

v      Adverse Events  An "adverse event" is any event that causes harm to a patient as a result of medical care.  Adverse events include, but are not limited to, "never events" which are events that should never occur in a health care setting.  The OIG is expanding its review beyond never events and will review the following: 

§         The national incidence of adverse events among Medicare beneficiaries in inpatient hospital settings;

§         The methods for identifying adverse events (including medical record reviews, administrative data analysis and interviews with beneficiaries);

§         CMS’ administrative processes for identifying hospital-acquired conditions and denying higher Medicare reimbursement for related care;

§         Responses of State survey and certification agencies, State licensure boards, and Medicare accreditors to adverse events in hospitals; and

§         Policies and practices related to the public disclosure of adverse event information.

v      Payments for Nonphysician Outpatient Services Under the Inpatient Prospective Payment System ("IPPS")  IPPS payments to hospitals for inpatient stays are payment in full for hospitals’ operating costs, and hospitals generally receive no additional payment for nonphysician services.  The OIG will review the appropriateness of payments for nonphysician outpatient services that were provided to beneficiaries shortly before or during Medicare Part A covered stays at acute care hospitals. 

v      Inpatient Rehabilitation Facilities ("IRFs") – Submission of Patient Assessment Instruments  The IRF Prospective Payment System provides that if patient assessments are not encoded and transmitted within defined time limits, payments are to be reduced.  The OIG will review Medicare payments for IRF stays in which patient assessments were transmitted to the Centers for Medicare and Medicaid Services ("CMS") late to determine whether payments were correctly made.  The OIG will also review IRF claims to determine whether patient assessments were submitted in accordance with Medicare regulations.

v      Duplicate Graduate Medical Education ("GME") Payments  Medicare pays teaching hospitals for both direct graduate medical education ("DGME") and indirect medical education ("IME") costs.  Federal regulations specify that when calculating DGME and IME costs, no intern or resident may be counted by the Medicare program as more than one full-time equivalent employee.  The OIG will review provider data to determine whether duplicate GME payments have been claimed.  If duplicate payments were claimed, the OIG will determine which payment was appropriate.  The OIG will also assess the effectiveness of CMS’ Intern and Resident Information System in preventing providers from receiving payments for duplicate GME costs. 

v      Observation Services During Outpatient Visits  The OIG will review Medicare payments for observation services provided during outpatient visits, and will assess whether and to what extent hospitals’ use of observation services affects the care Medicare beneficiaries receive and their ability to pay out-of-pocket expenses for health care services. 

Continuing Medicare Hospital Audit Activities

In FY 2010, the OIG will also continue to examine several compliance risk areas that have been the focus of previous years' work, including the following:

v      Part A Hospital Capital Payments

v      Provider-Based Status for Inpatient and Outpatient Facilities

v      Part A Inpatient Prospective Payment System Wage Indexes

v      Payments to Organ Procurement Organizations

v      Critical Access Hospitals

v      Medicare Disproportionate Share Payments

v      Interrupted Stays at Inpatient Psychiatric Facilities Payments

v      Provider Bad Debts

v      Medicare Secondary Payer

v      Reliability of Hospital-Reported Quality Measure Data

v      Payment for Diagnostic X Rays in Hospital Emergency Departments

v      Over-site of Hospitals’ Compliance with EMTALA

v      Coding and Documentation Changes under the MS-DRG System

Other New Provider/Supplier Audit Areas

The Plan identifies the OIG’s enforcement priorities not only for hospitals, but also for other types of providers/suppliers, including home health agencies, skilled nursing facilities, medical equipment suppliers, physicians, and other health professionals.  Some of the new focus areas that the OIG identified for these providers/suppliers during FY 2010 include the following:

v      Home Health Agency ("HHA") – Outlier Payments  Pursuant to Section 1895(b)(5) of the Social Security Act, CMS may provide outlier payments for episodes of care that incur unusually high costs.  Outlier payments have increased significantly in the past years.  The OIG will review CMS’ methodology for calculating outlier payments to determine whether the methodology reimburses HHAs as intended for high cost episodes.

v      Skilled Nursing Facility ("SNF") – Quality of Care  Sections 1819(b)(3) and 1919(b)(3) of the Social Security Act require SNFs to use the standardized Resident Assessment Instrument ("RAI") to assess each SNF residents’ strengths and needs.  Prior OIG reports revealed that many residents’ needs, as identified through the RAI, were not reflected in the residents’ care plans and that residents did not receive all services identified in their care plans.  The OIG will determine the extent to which SNFs: (1) developed plans of care based on assessments of beneficiaries; (2) provided services in accordance with the residents’ plans of care; and (3) planned for beneficiaries’ discharges.

v      Payments for Services Ordered or Referred by Excluded Providers  No payment may be made for any items or services furnished, ordered or prescribed by an individual or entity excluded from the Medicare/Medicaid programs.  The OIG will review the nature and extent of Medicare Payments for services ordered or referred by excluded providers.  The OIG will also examine CMS’ oversight mechanisms to identify and prevent improper payments for services based on orders or referrals by excluded providers.    


The Plan is useful in providing a window into many of the OIG’s enforcement priorities for FY 2010.  Providers should use it to consider how to effectively focus their compliance program activities over the next twelve months. 

A complete copy of the Plan may be accessed on the OIG's website, at

If you would like additional information, please contact your regular Hall Render attorney or Scott W. Taebel or Leia M. Chicoine via email at and or by telephone at (414) 721-0442 at the Milwaukee, Wisconsin office of Hall, Render, Killian, Heath & Lyman, PC.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.

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