The U.S. Department of Health and Human Services’ Office of the Inspector General (OIG) has published its work plan for the 2016 fiscal year.
In 2016, the OIG will continue to examine all aspects of HHS endeavor, including Medicare, Medicaid, hospital services, public health activities, and more. In the coming year it will continue a number of hospital-focused projects while also focusing more on health care delivery, health care reform, alternative payment methodologies, and value-based purchasing initiatives.
Among the OIG’s planned Medicare projects in 2016 – some of them continued from the past and some of them new, quoted directly from the work plan – are:

• Hospitals’ use of outpatient and inpatient stays under Medicare’s two-midnight rule. We will determine how hospitals’ use of outpatient and inpatient stays changed under Medicare’s two-midnight rule, as well as how Medicare and beneficiary payments for these stays changed, by comparing claims for hospital stays in the year prior to the effective date of the two-midnight rule to stays in the year following the effective date of that rule. We will also determine the extent to which the use of outpatient and inpatient stays varied among hospitals.
• Analysis of salaries included in hospital cost reports. We will review data from Medicare cost reports and hospitals to identify salary amounts included in operating costs reported to and reimbursed by Medicare. Employee compensation may be included in allowable provider costs only to the extent that it represents reasonable remuneration for managerial, administrative, professional, and other services related to the operation of the facility and furnished in connection with patient care.
• Medicare oversight of provider-based status. We will determine the number of provider-based facilities that hospitals own and the extent to which CMS has methods to oversee provider-based billing. We will also determine the extent to which provider-based facilities meet requirements described in 42 CFR Sec. 413.65 and CMS Transmittal A-03-030, and whether there were any challenges associated with the provider-based attestation review process. Provider-based status allows facilities owned and operated by hospitals to bill as hospital outpatient departments. Provider-based status can result in higher Medicare payments for services furnished at provider-based facilities and may increase beneficiaries’ coinsurance liabilities. The Medicare Payment Advisory Commission (MedPAC) has expressed concerns about the financial incentives presented by provider-based status and stated that Medicare should seek to pay similar amounts for similar services.
• Comparison of provider-based and freestanding clinics. We will review and compare Medicare payments for physician office visits in provider-based clinics and freestanding clinics to determine the difference in payments made to the clinics for similar procedures and assess the potential impact on Medicare of hospitals’ claiming provider-based status for such facilities. Provider-based facilities often receive higher payments for some services than do freestanding clinics.
• Review of hospital wage data used to calculate Medicare payments. We will review hospital controls over the reporting of wage data used to calculate wage indexes for Medicare payments. Prior OIG wage index work identified hundreds of millions of dollars in incorrectly reported wage data and resulted in policy changes by CMS with regard to how hospitals reported deferred compensation costs.
• Inpatient rehabilitation facilities—adverse events in postacute care for Medicare beneficiaries. We will estimate the national incidence of adverse and temporary harm events for Medicare beneficiaries receiving postacute care in inpatient rehabilitation facilities (IRFs). We will also identify factors contributing to these events, determine the extent to which the events were preventable, and estimate the associated costs to Medicare.
• CMS validation of hospital-submitted quality reporting data. We will determine the extent to which CMS validated hospital inpatient quality reporting data.
• Ambulatory surgical centers—payment system. We will review the appropriateness of Medicare’s methodology for setting ambulatory surgical center (ASC) payment rates under the revised payment system. We will also determine whether a payment disparity exists between the ASC and hospital outpatient department payment rates for similar surgical procedures provided in both settings.
• Use of electronic health records to support care coordination through ACOs. We will review the extent to which providers participating in ACOs in the Medicare Shared Savings Program use electronic health records (EHRs) to exchange health information to achieve their care coordination goals. We will also assess providers’ use of EHRs to identify best practices and possible challenges to the exchange and use of health data, such as degree of interoperability, financial barriers, or information blocking.
• Accountable Care Organizations: Strategies and Promising Practices. We will review ACOs that participate in the Medicare Shared Savings Program (established by section 3022 of the Affordable Care Act). We will describe their performance on the quality measures and cost savings over the first three years of the program and describe the characteristics of those ACOs that performed well on measures and achieved savings. In addition, we will identify ACOs’ strategies for and challenges to achieving quality and cost savings.

Among the Medicaid projects the OIG will undertake, again presented in language taken directly from its work plan, are:

• Transportation services—compliance with Federal and State requirements. We will determine the appropriateness of Medicaid payments by States to providers for transportation services.
• Health-care-acquired conditions—prohibition on Federal reimbursements. We will determine whether selected States made Medicaid payments for hospital care associated with health-care-acquired conditions and provider-preventable conditions and quantify the amount of Medicaid payments for such conditions.
• State use of provider taxes to generate Federal funding. We will review State health-care-related taxes imposed on various Medicaid providers to determine whether the taxes comply with applicable Federal requirements. Our work will focus on the mechanism States use to raise revenue through provider taxes and determine the amount of Federal funding generated.
• State compliance with Federal Certified Public Expenditures regulations. We will determine whether States are complying with Federal regulations for claiming Certified Public Expenditures (CPEs), which are normally generated by local governments as part of their contribution to the coverage of Medicaid services.
• Reviews of State Medicaid Fraud Control Units. We will continue to conduct in-depth onsite reviews of the management, operations, and performance of a sample of MFCUs. We will identify effective practices and areas for improvement in MFCU management and operations.
• Medicaid managed care reimbursement. We will review States’ managed care plan reimbursements to determine whether MCOs are appropriately and correctly reimbursed for services provided.
• Medicaid managed care entities’ identification of fraud and abuse. We will determine whether Medicaid MCOs identified and addressed incidents of potential fraud and abuse. We will also describe how States oversee MCOs’ efforts to identify and address fraud and abuse.
• HRSA—duplicate discounts for 340B-purchased drugs. We will assess the risk of duplicate discounts for 340B-purchased drugs paid through Medicaid MCOs and describe States’ efforts to prevent them.

To learn more about the OIG’s plans in 2016, go here to see the document Work Plan Fiscal Year 2016.