2016 OIG Work Plan (Part 3): New Item

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 Part 1 of this four part series I addressed the revised item, in Part 2 I covered new items, and in this post, Part 3, I will continue to cover new items from the 2016 OIG Work Plan.

Hospital-Related Policies and Payments: New Item

The new item we’ll be tackling in this post relates to Medicare payments to acute care hospitals, outpatient claims during inpatient stays. We’ll also tackle how items, supplies, and services given to patients are covered. In the 2016 Work Plan the OIG has posted the item as:

  • OIG will review Medicare payments to acute care hospitals to determine whether certain outpatient claims billed to Medicare Part B for services provided during inpatient stays were allowable and in accordance with the inpatient prospective payment system.
  • Certain items, supplies, and services furnished to inpatients are covered under Part A and should not be billed separately to Part B. Prior OIG audits, investigations, and inspections have identified this area as at risk for noncompliance with Medicare billing requirements.

The issue related to what is commonly called the “3-Day Rule” has often lead to some confusion.  For example, it has commonly been referred to in a myriad of ways such as the:

  • 72-hour rule
  • DRG rule
  • 1-day rule
  • Inpatient roll-up rule

When a beneficiary receives outpatient hospital services during the 3 days immediately preceding the hospital admission, the outpatient services are treated as inpatient services if the beneficiary has Part A coverage. Decisions whether to include or exclude from the inpatient claim are based on criteria for diagnostic or non-diagnostic services.

This concept does not apply when Medicare Part A cannot reimburse a Part A claim as in the following situations:

  • The beneficiary does not have Part A benefits
  • The beneficiary has exhausted their Part A benefits
  • The inpatient stay is not covered
  • The inpatient stay does not occur


Some providers are excluded from these regulatory requirements and payment reimbursement schema such as:

  • Ambulance services
  • Maintenance Renal Dialysis Services
  • Part A Services furnished in a: 
    • Skilled Nursing Facility (SNF)
    • Home Health Agency (HHA)
    • Hospice
    • Critical Access Hospitals (CAHs)

The way that CMS tries to prevent billing errors for these services is through the Common Working File (CWF). The CWF will reject outpatient diagnostic bills that occur on the day of or one day before admission.  Also the CWF rejects line item date of service (LIDOS) which fall on the day of admission or any of the 3 days immediately prior to an admission for Inpatient Prospective Payment System (IPPS) hospitals.

For more information on this new item in Hospital Related Policies And Payments, watch our on-demand webinar, "2016 OIG Work Plan for Hospitals" by clicking the button below:

Watch the Webinar On-Demand >> 

Questions or Comments?