Volume 4, Issue 8 April 2009

The Office of Inspector General

The Office of Inspector General (OIG) is administered by the Secretary of Health and Human Services (HHS). There are six offices within HHS OIG:

  • The Immediate Office of the Inspector General (IOIG),
  • The Office of Audit Services (OAS),
  • The Office of Evaluation and Inspections (OEI),
  • The Office of Investigations (OI),
  • The Office of Council to the Inspector General (OCIG), and
  • The Office of Management and Policy (OMP).

The following is the OIG’s published mission:

Our mission, as mandated by the Inspector General Act of 1978, 5 U.S.C. App., is to conduct and supervise audits and investigations relating to the programs and operations of HHS; provide leadership and coordination and recommend policies for activities designed to promote economy, efficiency, and effectiveness in the administration of, and to prevent and detect fraud and abuse in, such programs and operations; and provide a means for keeping the Secretary of HHS and Congress informed about problems and deficiencies relating to the administration of such programs and operations and the necessity for and progress of corrective action.

The OIG reports both to the HHS Secretary and to Congress.  The OIG's essential tasks are conducted through a nationwide network of audits, investigations, and inspections performed by the following OIG components:

  1. The OI is responsible for conducting and coordinating criminal, civil and administrative investigations related to fraud, waste and abuse in more than 300 HHS programs including Medicare and Medicaid. The OI coordinates their fraud and abuse efforts with the Department of Justice (DOJ) and other law enforcement authorities across the country. These investigations may lead to criminal convictions, administrative sanctions and or Civil Monetary Penalties (CMPs).

  2. The OAS provides auditing services for HHS, by conducting audits with its own audit resources and overseeing audit work done by others. These audits examine the performance of HHS programs its grantees and contractors in carrying out their respective responsibilities. The goal of these audits is to help reduce waste, abuse, and mismanagement and promote economy and efficiency.

  3. The OEI conducts national evaluations to provide HHS, Congress, and the public with timely, useful, and reliable information on significant issues. These evaluations focus on preventing fraud, waste, or abuse and promoting economy, efficiency, and effectiveness of departmental programs. OEI reports also present practical recommendations for improving program operations.

  4. The OCIG provides general legal services to OIG, rendering advice and opinions on HHS programs and operations and providing all legal support for OIG's internal operations. OCIG represents OIG in all civil and administrative fraud and abuse cases involving HHS programs, including the False Claims Act, program exclusion, and CMP cases. In connection with these cases, OCIG also negotiates and monitors corporate integrity agreements. OCIG renders advisory opinions, issues compliance program guidance, publishes fraud alerts, and provides other guidance to the health care industry concerning the anti-kickback statute and other OIG enforcement authorities



Exclusions Program


The OIG’s Exclusions Program was implemented to protect Medicare and Medicaid beneficiaries and to prevent certain individuals and businesses from participating in federally funded healthcare programs.  Providers and other individuals may be excluded from the Medicare and Medicaid programs for a variety of reasons including convictions for program-related fraud and patient abuse, licensing board actions and default on Health Education Assistance Loans.

Congress first mandated the exclusion of physicians and other practitioners convicted of program-related crimes from participation in Medicare and Medicaid in 1977, in the Medicare-Medicaid Anti-Fraud and Abuse Amendments, Public Law 95-142, this has since been codified in section 1128 of the Act.

In 1981 the Civil Monetary Penalties Law (CMPL), Public Law 97-35, authorized the Department and the OIG to impose Civil Monetary Penalties (CMPs), assessments and program exclusions against individuals and entities who submit false or fraudulent, or otherwise improper claims for Medicare or Medicaid payment.

The Medicare and Medicaid Patient and Program Protection Act of 1987, Public Law 100-93, the Health Insurance Portability and Accountability Act (HIPAA) of 1996, and the Balanced Budget Act (BBA) of 1997 further expanded and revised the OIG's Exclusion Program and sanction authority. The BBA authorized CMPs to be imposed against providers that employ or enter into contracts with excluded individuals for the provision of services or items to Federal program beneficiaries

Through this provision providers and entities that hire or contract with excluded individuals or entities to provide items or services to Federal program beneficiaries may be subject to a civil monetary penalty (CMP) of up to $10,000 for each service or item furnished by the excluded entity and an additional penalty of up to three times the amount claimed as well as possible exclusion themselves.

The OIG lists the following effects of exclusion:

  • No payment will be made by any Federal health care program for any items or services furnished, ordered, or prescribed by an excluded individual or entity. Federal health care programs include Medicare, Medicaid, and all other plans and programs that provide health benefits funded directly or indirectly by the United States (other than the Federal Employees Health Benefits Plan). For exclusions implemented prior to August 4, 1997, the exclusion covers the following Federal health care programs: Medicare (Title XVIII), Medicaid (Title XIX), Maternal and Child Health Services Block Grant (Title V), Block Grants to States for Social Services (Title XX) and State Children's Health Insurance (Title XXI) programs.

  • No program payment will be made for anything that an excluded person furnishes, orders, or prescribes. This payment prohibition applies to the excluded person, anyone who employs or contracts with the excluded person, any hospital or other provider where the excluded person provides services, and anyone else. The exclusion applies regardless of who submits the claims and applies to all administrative and management services furnished by the excluded person.

  • There is a limited exception to exclusions for the provision of certain emergency items or services not provided in a hospital emergency room.
    See regulations at 42 CFR 1001.1901(c)

Prior to hiring an individual or contracting with an agency verify that they have not been excluded from Federal programs by searching the online OIG List of Excluded Individuals.

The OIG Workplan


The OlG publishes a yearly Work Plan identifying various projects to be addressed during the fiscal year by the Office of Audit Services, Office of Evaluation and Inspections, Office of Investigations, and Office of Counsel to the Inspector General. The OIG Work Plan includes projects planned in the Centers for Medicare & Medicaid Services (CMS) as well as other departments.

A review of the Work Plan will tell you what the OIG is focusing on and will help to identify vulnerabilities and risks in your practice. The OIG description of the target areas provides information on the potential problem as seen by the OIG, and the scope and timeline of their investigation.

The 2009 OIG Work Plan includes the following Medicare and Medicaid areas deemed “most worthy of attention” in 2009:

Hospital Ownership of Physician Practices

We will review the appropriateness of Medicare reimbursement to hospital-owned physician practices that have the provider-based designation. In October 2005, CMS revised Federal regulations at 42 CFR § 413.65 to delineate requirements for hospitals to obtain provider-based designation for purchased physician practices. These requirements address such issues as the physical location of the entity, the patient population served, and the types of controls and governance exhibited by the hospital over the physician practice. Under the Hospital Outpatient Prospective Payment System (OPPS), hospitals may receive Medicare reimbursement for outpatient services in provider-based practices at amounts greater than CMS’s Medicare Physician Fee Schedule (MPFS). We will determine whether hospitals have met the Federal requirements to obtain the provider-based designation and assess the impact of the increased cost to Medicare as a result of reimbursement under the OPPS for physician services in provider-based practices. We will also determine the extent to which hospital-owned physician practices without provider-based designation improperly received reimbursement under the OPPS.

(OEI; 00-00-00000; expected issue date: FY 2009; new start)

Medicare Secondary Payer

We will review Medicare payments for beneficiaries who have other insurance. Pursuant to the Social Security Act, § 1862(b), Medicare payments for such beneficiaries are required to be secondary to certain types of insurance coverage. We will assess the effectiveness of current procedures in preventing inappropriate Medicare payments for beneficiaries with other insurance coverage. For example, we will evaluate procedures for identifying and resolving credit balance situations, which occur when payments from Medicare and other insurers exceed the providers’ charges or the allowed amount.

(OAS; W-00-08-35317; various reviews; expected issue date: FY 2010; work in progress)

Physician Billing for Medicare Hospice Beneficiaries

We will review the extent of Part B billing for physician services provided to Medicare hospice beneficiaries. The regulations at 42 CFR § 418.304 list the physician services that are already covered by Medicare under the hospice benefit. The regulation provides that, for physicians employed by or in an arrangement with the hospice, payments for certain services are reimbursed to the hospice as part of the hospice payment, while other services are paid to the hospice under the Part B MPFS. Physicians may receive reimbursement for hospice services under Medicare Part A or Part B. This study is a follow-up to recent OIG studies on hospice care. We will determine the frequency of and total expenditures for physician services under Part A and Part B for hospice beneficiaries. We will identify whether physicians double-billed hospice services to Part A and Part B.

(OEI; 00-00-00000; expected issue date: FY 2009; new start)

Place of Service Errors

We will review physician coding of place of service on Medicare Part B claims for services performed in ambulatory surgical centers (ASC) and hospital outpatient departments. Federal regulations at 42 CFR § 414.22(b) (5) (i) (B) provide for different levels of payments to physicians depending on where the services are performed. Medicare pays a physician a higher amount when a service is performed in a nonfacility setting, such as a physician’s office, than it does when the service is performed in a hospital outpatient department or, with certain exceptions, in an ASC. We will determine whether physicians properly coded the places of service on claims for services provided in ASCs and hospital outpatient departments.

(OAS; W-00-08-35113; various reviews; expected issue date: FY 2009; work in progress)

Medicare Practice Expenses Incurred by Selected Physician Specialties

We will review the actual expenses of selected physician specialties. Physician services include medical and surgical procedures, office visits, and medical consultations. Physicians are paid for services pursuant to the MPFS, which covers the major categories of costs including the physician professional cost component, malpractice costs, and practice expense. The Social Security Act, § 1848(c)(1)(B), defines “practice expense” as the portion of the resources used in furnishing the service that reflects the general categories of expenses, such as office rent, wages of personnel, and equipment. We will determine whether Medicare payments for physician services performed by selected specialties are comparable to the actual expenses incurred by the physicians in providing services and operating their practices.

(OAS; W-00-09-35219; various reviews; expected issue date: FY 2009; new start)

Physicians’ Medicare Services Performed by Nonphysicians

We will review services physicians bill to Medicare but do not perform personally. Such services, called “incident to,” are typically performed by nonphysician staff members in physicians’ offices. The Social Security Act, § 18610(s) (2) (A), provides for Medicare coverage of services and supplies performed “incident to” the professional services of a physician. However, these services may be vulnerable to overutilization or put beneficiaries at risk of receiving services that do not meet professionally recognized standards of care. We will examine the qualifications of nonphysician staff that perform “incident to” services and assess whether these qualifications are consistent with professionally recognized standards of care.

(OEI; 09-06-00430; expected issue date: FY 2009; work in progress)

Medicare Payments for Unlisted Procedure Codes

We will review the accuracy of Medicare payments for services billed using unlisted procedure codes. Unlisted procedure medical codes are miscellaneous codes used by service providers only when there are no specific Healthcare Common Procedure Coding System (HCPCS) codes that accurately identify the medical service furnished. The Social Security Act, § 1848(a) (1), establishes the MPFS, which provides a payment amount for almost all HCPCS codes, as the basis for Medicare reimbursement for physician services. However, unlisted procedure codes are not paid under the fee schedule. The Medicare contractors that process such claims suspend them for individual review and manual pricing. We will examine provider usage of procedure codes for services not listed in the HCPCS.

(OEI; 00-00-00000; expected issue date: FY 2010; new start)

Medicare Billings With Modifier GY

We will review the appropriateness of providers’ use of modifier GY on claims for services that are not covered by Medicare. CMS’s “Medicare Carriers Manual,” Pub. No. 14-3, pt. 3, § 4508.1, states that modifier GY is to be used for coding services that are statutorily excluded or do not meet the definition of a covered service. Beneficiaries are liable, either personally or through other insurance, for all charges associated with the provision of these services. Pursuant to CMS’s “Medicare Claims Processing Manual,” Pub. No. 100-04, ch. 1, § 60.1.1, providers are not required to provide beneficiaries with advance notice of charges for services that are excluded from Medicare by statute. As a result, beneficiaries may unknowingly acquire large medical bills that they are responsible for paying. In FY 2006, Medicare received over 53 million claims with a modifier GY and denied claims totaling over $400 million. We will examine patterns and trends for physicians’ and suppliers’ use of modifier GY.
(OEI; 00-00-00000; expected issue date: FY 2009; new start)

Medicare Payment for Chemotherapy Drug Administration Services
We will review Medicare payments for chemotherapy drug administration services pursuant to the Social Security Act, § 1832, that occur without corresponding chemotherapy administration drug claims. MedPAC found that Medicare payments for chemotherapy drug administration services increased 217 percent between 2003 and 2004, while payments for chemotherapy drugs increased only 4 percent. We will examine whether billing for chemotherapy administration codes are proper, based on documentation associated with the claims data.

(OEI; 09-08-00190; expected issue date: FY 2009; work in progress)

Laboratory Test Unbundling

Laboratory Test Unbundling by Clinical Laboratories

We will review the extent to which clinical laboratories have inappropriately unbundled laboratory profile or panel tests to maximize Medicare payments. Pursuant to the “Medicare Claims Processing Manual,” Pub. No. 100-04, ch. 16, § 90, to ensure the accuracy of payments, Medicare contractors must group together individual laboratory tests that clinical laboratories can perform at the same time on the same equipment and then consider the price of related profile tests. Payment for individual tests must not exceed the lower of the profile price or the total price of all the individual tests. We will determine whether clinical laboratories have unbundled profile or panel tests by submitting claims for multiple dates of service or by drawing specimens on sequential days. We will also determine the extent to which the Medicare carriers have controls in place to detect and prevent inappropriate payments for laboratory tests.

(OAS; W-00-09-35222; various reviews; expected issue date: FY 2010; new start)

Monitoring Medicare Part B Drug Prices: Comparing Average Sales Prices to Widely Available Market Prices

We will periodically review WAMPs for selected prescription drugs covered by Part B and compare them to ASPs for those drugs. In 2005, Medicare began paying for most Part B drugs using a new methodology based on the ASP. The Social Security Act, § 1847A(d), enacted by section 303(c)(1) of the MMA, mandates that OIG compare ASPs to WAMPs (if any) for Part B drugs and notify the Secretary, at such times as the Secretary may specify, if the ASP for a selected drug exceeds the WAMP by a threshold of 5 percent. We will compare ASPs to WAMPs and identify drug prices that exceed the threshold.

(OEI; 00-00-00000; various studies; expected issue date: FY 2009; new start)

Monitoring Medicare Part B Drug Prices: Comparing Average Sales Prices to Average Manufacturer Prices

We will periodically review Medicare Part B drug prices by comparing ASPs to AMPs. In 2005, Medicare began paying for most Part B drugs using a new methodology based on the ASP. The Social Security Act, § 1847A(d), enacted by section 303(c)(1) of the MMA, mandates that OIG compare ASPs to AMPs for Part B drugs and notify the Secretary, at such times as the Secretary may specify, if the ASP for a selected drug exceeds the AMP by a threshold of 5 percent. We will compare ASPs to AMPs for Part B drugs and identify drug prices that exceed the threshold.

(OEI; 03-08-00530; 03-08-00450; various studies; expected issue date: FY 2009; work in progress)

Variation of Laboratory Pricing

We will review the extent of variation in laboratory test payment rates among Medicare contractors. The Social Security Act, § 1833(h), requires the Secretary to establish a payment fee schedule for clinical diagnostic laboratory tests. In 2007, Medicare payments for laboratory services exceeded $6 billion. Prior OIG work found that Medicare had paid significantly higher prices than other payers for certain laboratory tests. We will analyze claims data to determine pricing variances among Medicare contractors for the most commonly performed tests.

(OEI; 05-08-00400; expected issue date: FY 2009; work in progress)

Providers Billing More Time Than Is Feasible in a Day

We will review services provided by physicians to determine whether claims are submitted for more time than is feasible in a day. Prior partnership audits in one State identified significant improper claims submission and service upcoding by physicians. We will analyze provider claims to identify providers with potential billing problems.

(OAS; W-00-09-31137; various reviews; expected issue date: FY 2009; new start)

Medicare/Medicaid Credit Balances

We will review providers, including independent laboratories and hospitals, to determine whether there are Medicare/Medicaid overpayments in patient accounts with credit balances. For Medicare, the Social Security Act, § 1862(b), and 42 CFR pt. 411 require participating providers to furnish information about payments made to them and to refund any monies incorrectly paid. For Medicaid, the Social Security Act, § 1902(a)(25), regulations at 42 CFR pt. 433, subpart D, and various State laws require that Medicaid be the payer of last resort and that providers identify and refund overpayments received. Prior OIG work has identified Medicare/Medicaid overpayments in patients’ accounts with credit balances.

(OAS; W-00-08-31311; various reviews; expected issue date: FY 2009; work in progress)

States’ Accountability Over Medicaid Drug Rebate Programs

We will conduct follow-up reviews to determine whether States have established adequate accountability and internal controls over their Medicaid drug rebate programs. Federal regulations at 45 CFR § 433.32 require that financial management systems provide for effective control over and accountability for all funds, property, and other assets. During our follow-up reviews, we will review State Medicaid agencies’ collection of brand-name drug manufacturer rebates for physician-administered drugs since the passage of the DRA. Pursuant to section 6002 of the DRA, States are required to collect data necessary to enable them to collect rebates on physician-administered drugs. Previous OIG work found that the majority of States were not collecting Medicaid rebates for physician-administered drugs and that most States had weaknesses in accountability and internal controls over their drug rebate programs. We will determine whether States have established adequate internal controls over their Medicaid drug rebate programs. We will also determine whether State Medicaid agencies followed Federal regulations when collecting brand-name drug manufacturer rebates for physician-administered drugs.
(OAS; W-00-07-31205; W-00-08-31205; various reviews; expected issue date: FY 2009; work in progress)


The OIG continues to focus on the investigation of fraud committed against the Medicare and Medicaid programs. The OIG performs investigations in conjunction with other law enforcement agencies, such as the Federal Bureau of Investigation (FBI), the United States Postal Inspection Service, the Internal Revenue Service (IRS), and State Medicaid Fraud Control Units (MFCU).

OIG actively investigates individuals, facilities, or entities that bill or are alleged to have billed Medicare and/or Medicaid for services not rendered, claims that manipulate payment codes in an effort to inflate reimbursement amounts, and false claims submitted to obtain program funds. The OIG also investigates business arrangements for violations of the Federal health care anti-kickback statute and the statutory limitation on self-referrals by physicians.


Published by Rise Marie Cleland. Sponsored by Genentech and hsi

Risk Reduction


Check the OIG List of Excluded Individuals  prior to hiring an individual or contracting with an individual or entity. Remember, the Exclusion Program is not limited to physicians. Nurses, pharmacists, lab personnel, administrators, billing staff and other practice staff are subject to exclusion from federal healthcare programs. 

If you have not done so already, begin developing a voluntary compliance program. The American Medical Association recommends that practices adopt a compliance audit and monitoring program based on the seven components outlined in “Compliance Program Guidance for Individual and Small Group Physician Practices,” published by the OIG on September 25, 2000.

The seven components of the Compliance Program Guidance are:

  • Conducting internal monitoring and auditing through the performance of periodic audits;
  • Implementing practice standards through the development of written standards and procedures;
  • Designating a compliance officer or contact to monitor compliance efforts and enforce practice standards;
  • Conducting appropriate training and education on practice standards and procedures;
  • Responding appropriately to detected violations through the investigation of allegations and developing a corrective action program;
  • Developing open lines of communication with the practice’s employees; and
  • Enforcing disciplinary standards through well-publicized guidelines.

The OIG developed this Guidance to assist physician practices in developing their own voluntary compliance program and to prevent the submission of erroneous claims or unlawful conduct involving the Federal health care programs.

The OIG states that the development and implementation of a voluntary compliance program will show that your practice is making additional good faith efforts to submit claims appropriately. Furthermore, it sends an important message to your employees that while the practice recognizes that mistakes will occur, employees have an affirmative, ethical duty to come forward and report erroneous or fraudulent conduct, so that it may be corrected.

The OIG is cognizant of the resource limitations that may face a small physician group and they emphasize that practices are not required to fully implement all seven components. Instead, they suggest that practices focus first on those components which are most likely to provide an identifiable benefit based on the practice’s specific history with billing and compliance issues. 

The OIG has identified the following four high risk areas for physicians:

  • Coding and billing;
  • Reasonable and necessary services;
  • Documentation; and improper inducements,
  • Kickbacks and self-referrals.

The OIG recommends that practices perform a self-audit at least once a year to determine whether:

  • Bills are accurately coded and accurately reflect the services provided (as documented in the medical records);
  • Documentation is being completed correctly;
  • Services or items provided are reasonable and necessary; and
  • Any incentives for unnecessary services exist.

Finally, even if you do not currently have a compliance program, perform a self-audit focusing on the four high risk areas listed above. Review the current year’s OIG Work Plan to identify areas of vulnerability and risk that the OIG will be focusing on and include these items in your self-audit.



Fraud Alerts
The OIG develops and issues Fraud Alerts for both internal and external dissemination. Special Fraud Alerts are developed for extensive distribution directly to the health care provider community. Most Special Fraud Alerts identify national trends in health care fraud and serve to provide general guidance to the health care industry on violations of Federal law.

Special Advisory Bulletins
Section 1128D (b) (5) (A) (v) of the Social Security Act and 42 CFR 1008.47 require that advisory opinions made by the OIG are available to the general public. The OIG publishes these advisory on their website. Through the advisory opinion process the OIG provides advice on the application of the anti-kickback statute and other OIG sanction statutes in specific factual situations. While these advisory opinions are binding and may legally be relied upon only by the requestor, third parties are not bound nor may they legally rely on these advisory opinions as they are written to address the specific facts supplied by the requestor.

Office of Audit Services Reports
Pursuant to the Freedom of Information Act, 5 U.S.C. 552, OIG reports are generally made available to the public and can be found on the OIG website. The Office of Audit Services (OAS) Reports address particular issues audited by the OAS and include the background, objective, summary finding and recommendations of the OAS. While these reports are specific to the entity and issue audited they can also provide an understanding of the OIGs stance on certain issues.

Semiannual Reports
The Inspector General Act of 1978 (Public Law 95-452), as amended, requires that the Inspector General report semiannually to the head of the Department and the Congress on the activities of the office. Through these reports the OIG informs the Secretary and the Congress of their significant findings and recommendations.

Open Letters
The OIG periodically publishes Open Letter to Health Care Providers to refine and/or clarify issues or to announce new initiatives. These Open Letters are used to disseminate information impacting providers.

E-Mail List
Health care providers and their staff can sing up to receive email messages about new OIG Evaluation and Audit Reports, monthly additions and reinstatements to the OIG Exclusions database, new and expiring Corporate Integrity Agreements, Federal Register notices and other special OIG postings. Sign up here.


Risë Marie Cleland

Oplinc, Inc.
113 W. 7th Street
Suite 205
Vancouver, WA 98660
360.695.1608 office
360.695.6937 fax




Comments and suggestions for future issues are welcome, please forward correspondence to Risë Marie Cleland by email at: Rise@Oplinc.com




Volume 4 Issue 7
Volume 4 Issue 6
Volume 4 Issue 5
Volume 4 Issue 4
Volume 4 Issue 3
Volume 4 Issue 2
Volume 4 Issue 1
Volume 3 Issue 8
Volume 3 Issue 7
Volume 3 Issue 6
Volume 3 Issue 5
Volume 3 Issue 4
Volume 3 Issue 3
Volume 3 Issue 2
Volume 3 Issue 1
Volume 2 Issue 7
Volume 2 Issue 6
Resource Guide Issue 5
Volume 2 Issue 4
Volume 2 Issue 3
Volume 2 Issue 2
Volume 2 Issue 1




Risë Marie Cleland is the founder and President of Oplinc, Inc., a national organization of oncology professionals. Through Oplinc, Inc. Ms. Cleland publishes the weekly Oplinc Fast Facts focusing on the timely dissemination of information pertaining to billing, reimbursement and practice management in the oncology office and Oplinc’s Best Practices Review, which provides a more in-depth look at the issues and challenges facing oncology practices. Ms. Cleland also works as a consultant and advisor for physician practices, pharmaceutical companies and distributors.




Please note that this newsletter is presented for informational purposes only. It is not intended to provide coding, billing or legal advice. Regulations and policies concerning Medicare reimbursement are a rapidly changing area of the law. While we have made every effort to be current as of the issue date, the information may not be as current or comprehensive when you review it. Please consult with your legal counsel for any specific reimbursement information. For Medicare regulations visit: www.cms.hhs.gov.




CPT® is a Trademark of the American Medical Association Current Procedural Terminology (CPT) is copyright 2009 American Medical Association. All Rights Reserved. No fee schedules, basic units, relative values, or related listings are included in CPT. The AMA assumes no liability for the data contained herein.




Copyright ©2009 Oplinc, Inc.
Oplinc, Inc., grants permission to distribute this newsletter without prior permission provided that it is forwarded unedited and in its entirety.

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