Original story posted on: November 2, 2012

OIG: One Per-diem Payment Arrangement Low Risk for Fraud, Abuse



A per-diem payment that one hospital makes to have specialty physicians on call poses a low risk for fraud and abuse, the HHS Office of Inspector General (OIG) stated in an advisory opinion issued Oct. 23.

OIG notes the advisory opinion applies only to the provider who submitted the information, though providers often rely on such opinions when making similar arrangements.

Here are the details in the advisory opinion: The provider is a tax-exempt, charitable, not-for-profit hospital with a 24-hour emergency department. The department uses an independent group of emergency medicine physicians to staff the department but has specialists on call. The hospital pays a per-diem fee for those specialists to provide unrestricted call coverage for the department, the OIG’s opinion stated.

The hospital bases payments based on the number of days per month the specialty would likely be called, the number of patients the specialists would see per day and the likely number of patients requiring inpatient care and post-discharge care in the specialists’ office. The figure is divided by 365 to get a daily amount that’s given to the specialists when they are on call regardless of whether they are contacted by the emergency department to treat a patient, the opinion stated.

The hospital used an independent consultant to confirm that the per diems are fair market value and don’t take into account the value or volume of referrals, the opinion stated.

OIG said the arrangement is low risk for fraud and abuse because the per-diem payments are fair market value; payments are determined and allocated annually in advance; specialists provide actual and necessary services for which they are not otherwise compensated; the arrangement is offered to all specialists on its staff required by hospital bylaws to take unrestricted call; and the hospital absorbs costs.

“As structured, the arrangement appears to contain safeguards sufficient to reduce the risk that the remuneration is intended to generate referrals of federal health care program business,” OIG stated.

To read the full advisory opinion, visit https://oig.hhs.gov/fraud/docs/advisoryopinions/2012/AdvOpn12-15.pdf.

RAC Issues

If WPS pays your claims as the national fiscal intermediary and you aren’t located in Missouri, Kansas, Iowa or Nebraska, your recovery auditor (RAC) now will be HealthDataInsights. Affected providers will be notified by the RAC by mail. Any additional documentation requests in which demand letters had not been generated have been canceled and closed. For more information, check the recent updates section on CMS’ RAC website at http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Recovery-Audit-Program/Recent_Updates.html.

RACs in Regions A, B and D posted issues this week for durable medical equipment suppliers, home health agencies and outpatient hospitals. See the charts below for more details.

Durable medical equipment (DME)

Name of issue

Date approved

Regions/states where it is active

Description of issue

Document sources

DME home blood glucose testing supplies


RAC Region B

For Glucose monitors, the quantity of test strips (A4253), and lancets (A4259) that are covered depends on the usual medical needs of the diabetic patient.

NGS LCD L27231; NGS articles A47154, A48935; CMS Pub. 100-04 chapter 20; CMS Pub. 100-02 chapter 15; OIG report A-09-08-00043


Home health

Name of issue

Date posted

Regions/states where it is active

Description of issue

Document sources

Skilled nurse length of stay


RAC Region A

Home health late episodes (third and later) receive increased payment, therefore payment incentives exist for extended home health care. Medicare covers skilled nursing services when they are reasonable and necessary. Extended nursing care for observation and assessment may not be covered. Claims for nursing services into the third episode and after will be reviewed to determine whether all Medicare coverage criteria is met.

42CFR 409.42 and 409.44; CMS Pub. 100-02 chapter 7; Medicare Payment Advisory Commission Report to Congress March 2011, chapter 8; Cahaba GBA Medicare Newsline articles Sept. 1, 2010, and Dec. 1, 2010; CMS definition and use of HIPPS codes

No skilled service


RAC Region A

To qualify for the home health benefit, a patient must need a skilled service. When a skilled service is needed, dependent services such as home health aide may also be covered. Dependent services are not covered for a patient who no longer needs a skilled service.

Social Security Act 1814(2)(c); 42CFR 409.42 and 409.45; CMS Pub. 100-02 chapter 7

Outpatient hospital

Name of issue

Date approved

Regions/states where it is active

Description of issue

Document sources

Unbundling of critical care


California, Hawaii, Nevada, WPS jurisdiction states

Any services that NCCI and CPT indicate are included in the reporting of critical care E/M CPT code 99291, including those services that would otherwise be reported by and paid to hospitals using any of the CPT codes specified by CPT, should not be billed separately by the hospital. Effective Jan. 1, 2011, the NCCI edits for the hospital OPPS that disallow the reporting of critical care services with ancillary services will be deleted retroactive to Jan. 1, 2011.

CMS Pub. 100-04 chapter 4

About the Author

Karen Long is the editor of Physician Solutions for DecisionHealth and oversees products that relate to fraud and abuse and HIPAA compliance for physician offices and home health agencies, and accreditation compliance for hospitals. In her almost four years at DecisionHealth, Karen also has been the compliance editor and a reporter for Home Health Line, nation's leading independent authority on home healthcare business, regulation and reimbursement.

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Karen Long

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