A Medical Device Daily

The Office of Inspector General (OIG) at the Department of Health and Human Services is charged with, among other things, rooting out fraud and abuse of the Medicare dollar, and it recently published its workplan for 2008, saying that it intends to add a few items to its to-do list.

The new items include a series of fairly garden-variety transactions as well as a suspect breed of physician payments.

According to an advisory published by the law firm of Alston & Bird (Atlanta), OIG will “pursue a number of audits and evaluations focusing on Medicare payments to physicians, including instances where the services are provided in institutions with which the physician has a financial relationship.”

This series of audits will include “a look at Medicare Part B payments for diagnostic imaging services provided in hospital emergency departments and a review of financial arrangements where magnetic resonance imaging services are provided and paid for under the Medicare Physician Fee Schedule.”

Alston & Bird said that OIG will look at the extent to which Medicare physicians “reassign their benefits to other entities,” a move spurred by investigations revealing “fraudulent schemes in which physicians obtain identifying information for legitimate physicians and request reassignment [of the patient] on their behalf.”

Physician-owned specialty hospitals will also go under the OIG microscope, as will independent diagnostic testing facilities, which will be examined for “billing patterns in relation to provider and beneficiary profiles.” Another area of interest is “unusually high utilization rates for ultrasound and chiropractic services.” Medicare Part D will also face scrutiny.

According to Alston & Bird, OIG will assess whether CMS has “established adequate controls over the Medicare Part D payment reconciliation process,” and will examine the use of Part D reimbursement for patients in skilled nursing facilities. Prices for drugs dispensed under Medicare Part B will also be reviewed for pricing appropriateness by comparing average sales price to widely-available market prices.

Clinical labs and ambulatory surgical centers can also count on continued review by OIG.

CMS seeking recovery of $4 billion

It’s not often that government can take back what it spent in a previous fiscal cycle, but according to the Centers for Medicare & Medicaid Services, it is prepared to do precisely that.

CMS reported that it expects to recoup as much as $4 billion from providers of Part D services after completing its payment reconciliation for calendar year 2006.

According to an Oct. 5 statement, the agency sees generic drug use as only part of the source of returns.

“The fact that 2006 marked the first time that plans were bidding on the new Part D program and the fact that there are higher levels of generic drug utilization ...than anticipated” led to the lower cost outcomes, CMS said. The announcement states that plans submitted their bids for 2006 the previous year, and at the time, “there was limited information available with respect to the costs.”

By law, CMS will pay a portion of any cost overruns falling within 2.5% of the bid amount, but CMS can recoup an unspecified portion of any savings from plans that spend between their bids and 2.5% below their bids. CMS said that “these risk corridors ...reflect the intent not only to mitigate plan risk through additional reinsurance, but also to assure that during the initial years, taxpayers would share more fully in any unanticipated savings.”

CMS also indicates that “the 2007 bid submissions were significantly lower than those submitted in 2006” and that the agency “anticipates that amounts collected from or paid to plans in future years ...will be significantly lower than the reconciliation for the 2006 plan year.” The agency states that premiums for 2008 are expected to be 40% lower than originally expected and that aggregate premiums paid by beneficiaries may be 30% lower for the first decade than originally forecast.

CMS, AHIMA to rework codes

CMS also last week reported that it has contracted with the American Health Information Management Association (AHIMA; Chicago) to conduct a study of the effect of changing out ICD-9 diagnostic codes for a more recent edition, ICD-10. The announcement states that the study will establish “ICD-10’s ability to support more accurate payment for new procedures, efficient claims processing, and improved disease management.”

Acting CMS administrator Kerry Weems said in the statement that while the agency is still mulling over the timing of the change, “our proactive approach should send a signal to hospitals and others stakeholders who use the ICD-9 coding to begin making their own transition plans.”

ICD-9, which came into being almost 30 years ago, contains about 17,000 codes whereas ICD-10 “is a more robust, descriptive code set of approximately 210,000 diagnosis and procedure codes, allowing more room for growth to reflect new diagnoses, procedures, and technology,” CMS says. The statement also points out that “currently, all G-7 countries, except the United States, have adopted the ICD-10 coding system.”