Anesthesia Services are in the OIG’s Annual Work Plan Again
The Office of the Inspector General (OIG) in the Department of Health and Human Services released its Work Plan for 2014 on January 31, several months later than usual in part, at least, because of the sequestration and government shutdown engineered by our dysfunctional Congress last fall.
The Work Plan explains the OIG’s priorities and provides a brief description of the activities it will initiate and continue during each fiscal year. The document identifies the year in which the OIG expects to issue one or more reports as a result of the review, and indicates whether the work was in progress at the start of the fiscal year or will be a new project during the year. As reports are issued, they are posted to OIG's website.
Perhaps the best news in the 2014 Work Plan is the lack of any new anesthesia issues, although review of the use of the personal-performance modifier (AA) is continuing from 2013, and a report is due out this year:
Anesthesia services—Payments for personally performed services.
Billing and Payments. We will review Medicare Part B claims for personally performed anesthesia services to determine whether they were supported in accordance with Medicare requirements. We will also determine whether Medicare payments for anesthesiologist services reported on a claim with the “AA” service code modifier met Medicare requirements. Context—Physicians report the appropriate anesthesia modifier code to denote whether the service was personally performed or medically directed. (CMS, Medicare Claims Processing Manual, Pub. No. 100-04, ch.12, § 50) Reporting an incorrect modifier on the claim as if services were personally performed when they were not will result in Medicare’s paying a higher amount. The service code “AA” modifier is used for anesthesia services personally performed by an anesthesiologist, whereas the QK modifier limits payment to 50 percent of the Medicare-allowed amount for personally performed services claimed with the AA modifier. Payments to any service provider are precluded unless the provider has furnished the information necessary to determine the amounts due.
The OIG’s ongoing interest in the correct use of the AA modifier means that physician anesthesiologists who work in care teams with nurse anesthetists and anesthesiologist assistants should ensure that the documentation for any personally-performed (AA) claims shows that the physicians were present with the patient throughout the case. If they left the patient in the care of a nurse anesthetist or anesthesiologist assistant for any period of time, as is the norm for the care team mode, the anesthesiologists’ services should be reported using the QK modifier.
Anesthesiologists and other physicians will be very interested in one of the new Work Plan issues in particular: whether hospital executive compensation is “reasonaqble,” a condition for its being included in allowable hospital operating costs reimbursed by Medicare Part A. The OIG has identified for review:
Analysis of salaries included in hospital cost reports (new)
Policies and Practices. We will review data from Medicare cost reports and hospitals to identify salary amounts included in operating costs reported to and reimbursed by Medicare. We will determine the potential impact on the Medicare Trust Fund if the amount of employee compensation that could be submitted to Medicare for reimbursement on future cost reports had limits. Context—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. (CMS’s Provider Reimbursement Manual, Part 1, Pub. No. 15-1, Ch. 9 § 902.2.) Medicare does not provide any specific limits on the salary amounts that can be reported on the hospital cost report.
While to date there have been no limits on the allowable amount, the OIG plans to review data from Medicare cost reports and hospitals to identify salary amounts included in operating costs reimbursed by Medicare, and to determine the potential financial effect if the allowable amount of employee compensation is capped. One commentator recently observed that “Executive compensation is a perennial target for analysis: a widely cited 2009 analysis by the Internal Revenue Service found that not-for-profit hospital CEOs earned an average of almost $500,000 in 2006.” (Carlson J. Seeking Medicare savings, OIG considers caps on hospital compensation. Modern Healthcare, February 11, 2014.) Carlson also noted, however, that market competition makes it difficult to demonstrate that hospital executive compensation might be “unreasonable:” “Because most hospitals are not-for-profit, their executive salaries are set using well-defined comparative processes that take into account what other providers are paying, shielding them from IRS rules that could limit what tax-exempt providers can pay.”
Other physician-specific issues in the 2014 Work Plan include:
- diagnostic radiology (medical necessity of high-cost procedures),
- physical therapy (high utilization rates),
- electro diagnostic testing (“questionable billing”),
- lab services (appropriateness of increased volume of services ordered),
- evaluation and management (E/M) services (cloning, e.g., copying and pasting of records),
- assignment rules (excessive balance-billing of patients), and
- place of service errors (office settings receive higher rates than outpatient facilities and surgery centers).
The above list of Work Plan issues demonstrates the pre-eminence of “fighting fraud, waste and abuse”—the first of the four major goals in the OIG’s 2014-2018 Strategic Plan. In FY 2012 alone, the OIG’s efforts resulted in estimated savings and expected recoveries of misspent funds totaling approximately $15.4 billion. For FY 2013, the OIG reported expected recoveries of over $5.8 billion and also identified about $19.4 billion in savings estimated on the basis of prior-period legislative, regulatory, or administrative actions that were supported by OIG recommendations.
Preventing, detecting and deterring fraud and waste, and recovering overpayments are not the OIG’s only responsibilities, though. It is also responsible for fostering quality and safety of care, as evidenced by such Work Plan issues as oversight of hospital privileging, a new target this year.
In 2014, the OIG will also conduct several reviews of Affordable Care Act (ACA) implementation. According to the Work Plan, OIG’s reviews “will focus on ensuring that taxpayer funds are spent for their intended purposes and that Marketplaces operate efficiently and effectively.” The OIG has prioritized four key areas for FY 2014: payment accuracy; eligibility systems; contracts—planning, acquisition, contracting, management, and performance; and security of data and consumer information.
For most—all, we hope—of our readers, the OIG is very much a background presence protecting their taxpayer dollars and not an agency with which you will have direct dealings. We will continue to keep you abreast of important educational resources such as the annual Work Plan.