OIG’s 2016 Work Plan Expands Focus on Delivery System Reform

Board members overseeing risk management and compliance can now view the chief healthcare regulatory agency’s 2016 Work Plan, a blueprint of projected investigations over the coming year.

 

The Department of Health and Human Services Office of Inspector General (OIG) issued its work plan in early November and noted that it “will expand its focus on delivery system reform and the effectiveness of alternative payment models, coordinated care programs and value-based purchasing.” (Work Plan Fiscal Year 2016, Office of the Inspector General, Department of Health and Human Services, November 2, 2015)

 

Some of the key areas of focus in the plan include:

 

  • Reviewing Medicare payments to acute care hospitals to determine whether certain outpatient claims billed to Part B for services provided during inpatient stays were allowable. OIG said prior work identified this area as at risk for noncompliance with Medicare billing requirements.
  • Reviewing how hospitals’ use of outpatient and inpatient stays changed under Medicare’s Two-Midnight Rule.
  • Comparing Medicare payments for physician office visits in provider-based clinics and freestanding clinics to determine the difference in payments made to clinics for similar procedures, as part of a project to assess the potential impact of claiming provider-based status for such facilities.
  • Reviewing accountable care organizations that participate in the Medicare Shared Savings Program to gauge their performance so far on quality measures and cost savings over the first three years of the program.
  • Determining the extent to which CMS validated hospital inpatient quality reporting data used for the hospital value-based purchasing program and the hospital-acquired condition reduction program.

 

The Work Plan also has a greater focus on existing “projects” that OIG expects to complete in 2016. These projects focused on cost reporting, medical education payments and outlier payments:

 

  • Reviewing Medicare outlier payments to hospitals to determine whether CMS performed necessary reconciliations in a timely manner.
  • Analyzing salary data from Medicare cost reports and hospitals to identify salary amounts included in operating costs reported to and reimbursed by Medicare.
  • Reviewing hospitals’ reporting of wage data used to calculate wage indexes for Medicare payments.
  • Determining whether hospitals received duplicate or excessive graduate medical education payments.

 

In addition to the above, other areas of investigation include ICD-10 implementation, drug reimbursement and Affordable Care Act-related work.

 

To read the 2016 OIG Work Plan, click here.

 

 

(Additional sources: OIG Issues 2016 Work Plan, AHLA Weekly, November 13, 2015 and “What Does OIG’s 2016 Work Plan Mean for Hospitals?” AHLA Practice Groups Email Alert, November 13, 2016)

 

 

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Inpatient and Outpatient Activity Declines in 2014

Both policy makers and providers expected a movement of patients from inpatient to outpatient settings due to payment redesign and other cost-cutting initiatives in the years since the Affordable Care Act was signed into law. However, both inpatient and outpatient utilization fell among pre-Medicare-age enrollees in employer-sponsored plans in 2014, according to a new report from the Health Care Cost Institute. (2014 Health Care and Cost Utilization Report, Health Care Cost Institute [HCCI], October 2015)

 

Inpatient admissions as well as some areas of outpatient services have been declining for the last three years. However, in 2014, nearly every outpatient service declined. “This trend of declining services really seems to be solidifying now.” (“No Patient Switch from Inpatient to Outpatient Settings in 2014: Report,” HFMA Weekly, November 6, 2015)

 

Utilization figures for pre-Medicare-age enrollees in employer-sponsored plans in 2014 include:

 

  • Acute inpatient admissions declined 2.7 percent in 2014, the latest decline in a five-year slide from 59 per 1,000 adults in 2010 to 53 per 1,000 adults in 2014.
  • Among all age and gender groups, only girls 0 to 18 had a slight increase in inpatient admissions during that four-year span.
  • Outpatient visits declined by 0.9 percent from 324 per 1,000 in 2012 to 317 in 2014.
  • The drop in outpatient visits was almost entirely driven by a decrease in outpatient surgical visits.
  • The only increase in outpatient visits was to emergency departments.
  • Among inpatient utilization, medical admissions declined from 22 per 1,000 individuals in 2010 to 19 in 2014.
  • Surgical admissions declined from 18 admissions per 1,000 individuals to 13.
  • Labor and delivery, mental health, and substance use admissions were steady. The only increase was 2.7 percent in newborn admissions.
  • Among outpatient visits, the 2014 decline also was influenced by a small decrease in the number of observation visits.

 

Declining service use has an important impact on overall healthcare spending, according to the author of the HCCI report.

 

Even though per capita healthcare spending increased 3.4 percent among those with employer-sponsored insurance in 2014, those spending increases were driven by prices that rose enough to compensate for the decline in utilization. (“No Patient Switch from Inpatient to Outpatient Settings in 2014: Report,” HFMA Weekly, November 6, 2015)

 

Hospitals and their boards have made strategic decisions over the last four to five years to maintain revenues affected by value-based purchasing and other initiatives by moving volume from inpatient to outpatient settings. But the report shows both inpatient and outpatient utilization continuing to trend downward. This is particularly troubling because patients with employer-sponsored plans are among the highest paying for hospitals. (“No Patient Switch from Inpatient to Outpatient Settings in 2014: Report,” HFMA Weekly, November 6, 2015)

 

To read the full report from HCCI, please click here.

 

 

 

iProtean subscribers, the advanced Finance course, Integrating Population Health Management into Your Strategic and Financial Plans, Part One, is now in your library. Marian Jennings, Mark Grube and Nathan Kaufman discuss physicians and population health management, the infrastructure required, return on investment for population health initiatives, risks for smaller organizations and evaluating capital allocation priorities.

 

 

For a complete list of iProtean courses, click here.

 

 

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Budget Would Cut Medicare Rates to Hospital-Acquired Practices

The most noteworthy of the healthcare provisions in the budget approved by Congress last week would bar acquired physician practices from billing Medicare at hospital outpatient rates.

 

Congress worked with the White House to pass a two-year bipartisan budget agreement last week; several issues must be resolved before it is signed into law, but experts say it has a good chance of passing.

 

About $80 billion of the $112 billion budget increase would be funded through healthcare savings/spending cuts. The healthcare spending cuts include an extension of the 2 percent Medicare sequester for another year and a provision to discontinue Medicare hospital outpatient prospective payment system (OPPS) rates for practices acquired by hospitals in the future. After 2016, such practices would be eligible only for payments through the ambulatory surgery center payment system or the Medicare physician fee schedule. (“Budget to Slash Medicare Rates for Acquired Practices,” HFMA Weekly, October 30, 2015)

 

The provision would not affect existing hospital-acquired practices.

 

Critics had taken issue with the wave of hospital acquisition of physician practices, contending that hospitals wanted to increase their population health and integrated care capacity. They also noted that hospitals wanted to drive increased referral business from surrounding primary care practices “to pad their bottom lines through increased prices at the practices.” (“Budget to Slash Medicare Rates for Acquired Practices,” HFMA Weekly, October 30, 2015)

Note: see last week’s blog/newsletter, “Hospital-Physician Integration Increases Outpatient Prices.”

 

Hospital experts countered that claim by noting that practice acquisitions are needed to provide the type of integrated care required to meet emerging quality-based payment models established by public and private payers.

 

An American Hospital Association (AHA) spokesperson said in a written statement that reducing payment rates to acquired practices is an “untested idea” that “may endanger patient access to care, especially among patients who are sicker, the poor, minorities and seniors who often receive care in hospital outpatient departments.”

 

Medicare payments already fall short of covering the cost of care. Hospitals’ Medicare margins were -12.4 percent for outpatient services in 2013, according to the Medicare Payment Advisory Commission (MedPAC).

 

It is unclear whether the proposed change could affect pending or future hospital acquisitions of practices. The financial impact on hospitals also is not clear; some finance experts said they don’t expect a major change because the budget proposal doesn’t affect payments from commercial insurers. However, insurers could choose to align their rates with those of Medicare. The AHA spokesperson noted that the rate reduction hurts a hospital’s ability to acquire practices over time because they will make less and won’t cover their losses from the extra fixed costs that come from acquiring a practice.

 

 

 

 

iProtean subscribers, the advanced Finance course, Integrating Population Health Management into Your Strategic and Financial Plans, Part One, is now in your library. Marian Jennings, Mark Grube and Nathan Kaufman discuss physicians and population health management, the infrastructure required, return on investment for population health initiatives, risks for smaller organizations and evaluating capital allocation priorities.

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.