The Health and Human Service Office of the Inspector General (OIG) exists to detect and remedy fraud, waste and abuse in the healthcare industry. Last year, Medicaid Fraud Control Units recovered $1.4 billion from healthcare industry members for alleged fraud and abuse. The majority of the OIG’s resources go towards the oversight of Medicare and Medicaid — programs that represent a significant part of the federal budget and that serve some of the country's most vulnerable citizens.
The OIG regularly oversees audits of healthcare providers. This includes audits of hospitals, practice groups, individual practitioners, pharmacies, home health agencies and other healthcare industry members and providers. These audits are typically conducted to determine whether a healthcare provider was overpaid by The Centers for Medicare & Medicaid Services (CMS) or if they committed Medicare fraud.
The OIG’s oversight extends to other arenas as well. The OIG may pursue punitive measures for actions such as failing to evaluate and stabilize an emergency patient, abuse/neglect in nursing homes, HIPAA violations, Anti-Kickback and Stark law violations and medical identity theft. The OIG can also “exclude” individuals from participating in the Medicare program for having had a criminal conviction or discipline to their medical license, among other things. Providers can also render themselves and their practices ineligible to receive Medicare reimbursement if they hire individuals who have been excluded by the OIG. The prohibition for hiring excluded individuals includes medical assistants, receptionists, nurses, etc. or healthcare providers.
What will subject a healthcare provider to an audit?
Many healthcare audits are random. However, the OIG may also look for “red flags” to conduct an audit, such as providers that seek high-dollar reimbursement amounts for a small number of patients; data analysis of medical records that reveal billing errors or unusual trends; or whistleblower reports. Providers who are statistical outliers from their peers are at higher risk of an audit.
What steps can healthcare providers take to prevent an audit?
The OIG has set forth guidelines to help healthcare providers comply with relevant federal law. The most recent comprehensive guide was published in November 2023. This guide is generally applicable to all healthcare providers.
Some of the relevant takeaways from this guide include:
- Healthcare providers must monitor their business activities for potential violations of the Federal Anti-Kickback Statute and Physician Self-Referral (aka Stark) laws. Key steps that providers can take include avoiding improper inducements to either provide or receive referrals and making sure all healthcare transactions are billed at fair market value.
- Develop a policy to comply with the recently enacted Information Blocking Act. This law requires healthcare providers to refrain from engaging in a practice that is likely to interfere with, prevent or materially discourage the access, exchange or use of electronic health information. Penalties for violating this act may include Civil Monetary Penalties (CMPs) of up to $1 million per violation.
- Regularly review the OIG’s exclusion list to ensure that potential healthcare employees are not on the list. The OIG has the legal authority to impose CMPs on individual and entity employers that arrange or contract (by employment or otherwise) with an individual or entity whom the employer knows or should know is excluded from participation in a federal health care program.
- Develop and implement a policy to ensure that all record-keeping and billing practices are compliant with current CMS standards, including compliance with Local Coverage Determinations (LCDs).
- Assess your practice’s risk level for potential Health Insurance Portability and Accountability Act (HIPAA) violations.
The OIG anticipates publishing additional specific guidelines for hospitals, Medicare advantage providers and clinical laboratories in 2025.
Healthcare providers can also sign up to receive notices of OIG exclusion updates here.
In November 2024, CMS finalized the 2025 Medicare Physician Fee Schedule, bringing a 2.83% across-the-board cut to physician reimbursement. The reduction immediately triggered concerns throughout the medical community, with many healthcare organizations pushing for Congressional intervention. Although there was optimism that Congress would act in late 2024 to avert or soften the cut, those efforts ultimately failed.
Healthcare providers should therefore continue to be cautious about their submissions for reimbursement from Medicare and Medicaid programs. CMS and Congress have made their intentions to cut costs clear, yet healthcare providers can prepare for a potential audit or CMS action by proactively implementing the above guidelines from the OIG.
Parsons’ healthcare attorneys are highly qualified to assist clients in a wide range of healthcare issues, including OIG investigations, HIPPA compliance, Anti-Kickback and PSL laws and CMS audits. Let us know how we can assist you.
