Compliance UPDATES

Fiscal Year 2017 HHS OIG Work Plan

The Department of Health and Human Services Office of Inspector General (OIG) released its 2017 Work Plan, which describes OIG audits evaluations, and certain legal and investigative initiatives that are new or ongoing in FY 2017. According to the work plan, in FY 2017 and beyond, OIG will focus on Medicare payments for Clinical Diagnostic Laboratory Tests, Transitional Care Management and Chronic Care Management. Additionally, OIG focuses its oversight efforts on “identifying and offering recommendations to reduce improper payments, prevent and deter fraud, and foster economical policies.”

Fiscal Year 2017 HHS OIG Work Plan

HHS OIG Fiscal Year Work Plan, Mid-year Update 2016 - 06/23/16

The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) Work Plan Mid-Year Update for fiscal year (FY) 2016 summarizes new and ongoing reviews and activities that OIG plans to pursue with respect to HHS programs and operations during the current fiscal year and beyond.

The work plan:

  • REVISED Medicare Oversight of Provider Based Status – OIG will determine the number of provider-based facilities that hospitals own and review CMS oversight of provider-based billing. Will also determine the extent to which selected provider-based facilities meet requirements. Expected to be issued in FY 2016
  • Comparison of Provider-Based and Freestanding Clinics - OIG 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. Expected to be issued in FY 2016
  • Review of Hospital Wage Data Used to Calculate Medicare Payments - OIG will review hospital controls over the reporting of wage data used to calculate wage indexes for Medicare payments. Expected to be issued in FY 2016
  • REVISED Medical Loss Ratio - OIG will review selected States and MCOs that do not use contract provisions that require a minimum percentage of total costs to be expended for Medicaid medical services (medical loss ratio). Expected to be issued in FY 2016
  • NEW Delivery System Reform Accountable Care Organizations: Beneficiary Assignment and Shared Savings Payments - Will review the CMS MSSP to determine whether beneficiary assignment to ACOs and shared savings payments for assigned beneficiaries complied with Federal requirements. Expected to be issued in FY 2017


A proposed merger of health insurance provider Aetna with Humana hit a significant stumbling block when a Missouri court posted a decision saying that putting the companies together would lessen competition in the state.

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Members of the House Ways and Means Committee unanimously agreed to cut hospital Medicare payments across the board to pay for allowing hospitals building on-campus outpatient departments to continue receiving higher rates than nonhospital clinics.

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Starting in December 2016, employees making less than $47,476 per year in BASE SALARY, will likely need to be classified as non-exempt (i.e. hourly). The specific duties may change this, but the final rules have not been released.

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A medical billing company in Charlotte, NC has been indicted for allegedly falsely increasing the number of services for which it billed. The providers (mental health treatment facilities) submitted a list of beneficiaries, the services received, and the number of services to be billed. The billing company then submitted claims to Medicaid that indicated a greatly increased number of services compared to the number submitted by the providers.

The providers have already pleaded guilty to federal charges related to the false claims.

Lesson learned: Reconcile your billing records to the payors’ EOBs to identify any variances early.


The HHS Office of Inspector General (OIG) released their 2016 Work Plan recently. Here are a few of the investigations they plan on undertaking in 2016:

  • Costs associated with replacement of defective medical devices.
  • Provider-based status. The OIG will evaluate the number of provider-based facilities that hospitals own and how they comply with federal requirements for billing. (Think “facility fee”.)
  • Comparison of the cost differences at hospital-based and freestanding clinics.
  • Update of ESRD payment bundles and dialysis utilization.

The OIG re-iterates that “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.”

On October 16th the Department of Justice released a notice regarding a $237M False Claims act judgement against a hospital system in South Carolina. (United States ex rel. Drakeford v. Tuomey Healthcare System, Inc., Case No. 3:05-cv-02858 (MBS) (D.S.C.)). The Department of Justice settled for $72.4M. (Plus, the two hospital system will be sold to another multi-hospital system.)

The hospital was accused by the government of “fearing that it could lose lucrative outpatient procedure referrals to a new freestanding surgery center, entered into contracts with 19 specialist physicians that required the physicians to refer their outpatient procedures to Tuomey and, in exchange, paid them compensation that far exceeded fair market value…” even though one of the hospital’s attorneys warned against these contracts.

The case was brought as a whistleblower suit filed by an orthopedic surgeon who was offered (but did not accept) one of these illegal contracts. He will receive $18.1M under the settlement.

What we find interesting is that the government used the Stark Law to underpin the false claims accusation, rather than using the anti-kickback statute.

Cancer Care Group, P.C., an Oncology Group in Indiana, has agreed to pay $750,000 in fines related to violations of HIPAA. A laptop computer and non-encrypted storage device was stolen from a Cancer Care Group employee's care.

The U.S. Department of Health and Human Services (HHS), Office for Civil Rights (OCR) determined that the breach could have been prevented had Cancer Care Group conducted a system-wide risk analysis and implemented policies related to removing devices containing PHI from their facilities. To read more about this case, click here.

For information about implementing HIPAA safeguards in your practice, click here.

For a guide to IT privacy and security from the HHS Office of the National Coordinator of Health Information Technology, click here.

Oncological treatments have been at the center of several recently announced settlements with the OIG and the Department of Justice.  In two OIG settlements, radiation oncologists in southern Alabama agreed to settlements totaling $12,119,822.85.

These Civil Monetary Penalties were the result of submitting claims for radiation oncology services without the direct supervision of a radiation oncologist or similarly qualified person, or without the timely review by a radiation oncologist. For More Information »

The Department of Justice case saw a California oncologist pay $736,000 to settle a False Claims Act allegation because he billed government payors for chemotherapy drugs purchased from an unlicensed foreign distributor. For More Information »

Physicians beware, that gift basket might be a kickback

Nurses' Registry & Home Health in Lexington, Ky., sent gift baskets and event tickets to physicians who referred patients to the facility, and those gifts are now the center of a pending Stark Law, Anti-Kickback Statute and False Claims Act lawsuit.  Continue reading »

Recently, the Office of Inspector General of the US Department of Health and Human Services (OIG) released “Practical Guidance for Health Care Governing Boards on Compliance Oversight.”  This document is aimed at Boards of Directors for all health care entities, public or private. 

The guidance addresses: “(1) roles of, and relationships between, the organization’s audit, compliance, and legal departments; (2) mechanism and process for issue-reporting within an organization; (3) approach to identifying regulatory risk; and (4) methods of encouraging enterprise-wide accountability for achievement of compliance goals and objectives.”

Key Take-aways

  1. Boards must act in good faith, including making probing inquiries.
  2. There is an abundance of data that Boards can use to define their roles in the Compliance Program.
  3. The Compliance Program must be appropriate to the size and complexity of the entity.
  4. There must be a formal plan for keeping the Board abreast of changes in the regulatory environment.
  5. Committee Charters (i.e. audit, compliance, finance, etc) must include functional boundaries and expected collaborations.
  6. The Board should set and enforce expectations for receiving particular types of compliance-related information from various members of management.
  7. Regulatory risk areas common to most health care organizations include: “…referral relationships and arrangements, billing problems…, privacy breaches, and quality-related events.” “The Board should ensure that management and the Board have strong processes for identifying risk areas.”
  8. Risk assessment plans should be monitored, audited and updated regularly.
  9. Compliance programs should encourage self-reporting by the organization.

On June 9, 2015 the OIG released a Fraud Alert regarding Physician Compensation Arrangements. In it they warn that “compensation arrangements such as medical directorships must ensure that those arrangements reflect fair market value for bona fide services the physicians actually provide.”  Even if the services are legitimate and the compensation rate is fair market value, if even one of the motivations for the arrangement is to influence referrals of Federal health program business, the arrangement can violate the anti-kickback statute.

The OIG recently settled claims against 12 physicians for a variety of alleged violations including:

  1. Payments took into account the number of referrals made by the physician;
  2. Payments were not at fair market value;
  3. The physician did not actually provide the services, or;
  4. The entity to which the physician made referrals paid all or part of the salary of the physician’s office staff.

Regulatory Updates

  1. In a 5 to 4 decision on Tuesday, March 31, the US Supreme Court ruled against the providers in Armstrong v. Exceptional Child Care Inc. (the Idaho case that HFNI has been following.) The decision means that private health care providers cannot sue state Medicaid agencies over low reimbursement rates.
  2. On March 25, 2015, the HHS Office of Inspector General (OIG) posted OIG Advisory Opinion No. 15-04. In AO 15-04, the OIG considered a clinical lab’s proposal to waive all patient fees for patients in practices who come to that clinical lab instead of the clinical lab as directed by the patients’ insurance plans. The OIG stated that the “Proposed Arrangement could potentially generate prohibited remuneration under the anti-kickback statute and that the Office of Inspector General (“OIG”) could potentially impose administrative sanctions on the clinical lab.”