2016 OIG Work Plan (Part 2): Hospital Focus

The OIG’s annual Work Plan is an important asset for optimizing your organization’s compliance and auditing efforts because it allows you to identify possible compliance risks. In reviewing the 2016 OIG Work Plan, there are a total of 25 projects for audit under the OIG audit umbrella: three new projects, one revised, and all of the ongoing projects that remain.

In my last blog post, Part 1 of the OIG Work Plan Update Series, I addressed the revised item. In this blog post, Part 2, I will address the new items from the 2016 OIG Work Plan.

Hospital-Related Policies and Payments: New Item

The new item that I’ll be addressing here regards Medicare payments for replaced medical devices. The OIG Work Plan for FY 2016 has listed the item as:

OIG will determine whether Medicare payments for replaced medical devices were made in accordance with Medicare requirements. Medical devices are implanted during an inpatient or an outpatient procedure.  Such devices may require replacement because of defects, recalls, mechanical complication, etc.  Federal regulations require reductions in Medicare payments for the replacement of implanted devices. (42 CFR §§ 412.89 and 419.45).  Prior OIG reviews have determined that MACs have made improper payments to hospitals for inpatient and outpatient claims for replaced medical devices.  

In 42 CFR § 412.89, we find that if an implanted device determines the DRG, then the payment may be reduced if: 

  • A device is replaced without cost to the hospital.
  • The provider received full credit for the cost of a device.
  • The provider receives a credit equal to 50% or more of the cost of the device.

"Our organization was created to protect the integrity of HHS programs and operations and the well-being of beneficiaries by detecting and preventing fraud, waste, and abuse; identifying opportunities to improve program economy, efficiency, and effectiveness; and holding accountable those who do not meet program requirements or who violate Federal healthcare laws."

- The OIG Work Plan FY 2016

Payment adjustment for certain replaced devices:

  • CMS lists the DRGs that qualify in the annual final rule for the hospital IPPS.
  • For a device provided to the hospital without cost, the cost of the device is subtracted from the DRG payment.

For more information on this new item, please watch our on-demand webinar on the 2016 OIG Work Plan for Hospitals by clicking the button below:

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Questions or Comments?