OIG's Increased Scrutiny on Heart Stents and ICDs: What It Means For Your Hospital

In the past two years, the federal government has greatly increased its efforts to combat Medicare and Medicaid false claims and fraud by healthcare providers. In May of 2009 Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius announced the creation of a new interagency effort, the Health Care Fraud Prevention and Enforcement Action Team, to combat fraud. In addition, the new Patient Protection and Affordable Care Act, which became law in March, boosts funding for fraud investigation and enforcement by $300 million over the next 10 years and provides additional tools and oversight to investigators.

"From the regulatory agency viewpoint, we're seeing unprecedented efforts by agencies to coordinate their activities," says Bo Martin, PhD, CFE, CAMS, a statistician with Navigant Consulting.  "HHS' Office of Inspector General, the Department of Justice and state agencies are working together in a very coordinated fashion, which is very impressive compared to their previously siloed approaches."

ICDs increasingly a focus of investigations
One area of possible fraud that has come under recent scrutiny by the OIG and other regulators is the implantation of heart stents, ICDs (implantable cardioverter-defibrillators) and pacemakers. A recent case that has made headlines across the country is an investigation into the stent implantation rates of cardiologists at St. Joseph Medical Center in Towson, Md. Analysis of patient records found that cardiologists at the hospital performed stent procedures at rates well above the state average (roughly 30 percent of patients undergoing catheterization receive a stent) and, in some cases, more than double the average rate. The hospital argued that it sees more complicated cases as a regional referral center and therefore, above average stent rates are to be expected. Although neither the hospital nor the physicians have yet to be charged with wrongdoing, the case is reflective of a move by government regulators to make the examination of ICD and stent rates an increasingly significant area of investigative focus.

"Cardiology and the implantation of ICDs is a very lucrative area for hospitals," says Phil Hurd, MHA, CPC, CCP, a director in the healthcare practice at Navigant Consulting. "It appears [the regulators] believe that some of these procedures were not medically necessary, and regulators have really begun to focus on these procedures."

In recent months, several hospitals across the country have reported receiving investigative demands for various documents related to these procedures, including patient charts and claims data, from the OIG. While it remains unclear just how many hospitals have received the request, Tenet Healthcare Corp., which operates 49 acute-care hospitals in 11 states, recently disclosed that one of its facilities received a request from the DOJ for documentation on ICD implantations going back to 2002. Tenet said in its disclosure that it expects similar requests at more of its facilities in the coming months.

During these investigations, regulators examine whether or not the hospital has documentation supporting the medical necessity of the claims. Medicare's National and Local Coverage Determinations outline the specific instances when ICDs and other implants, such as stents, can be billed to the program. For example, any ICD implanted in patients and billed to Medicare must include specific documentation showing the patient meets the determinations for coverage, including copies of relevant tests and diagnostics. "Hospitals are at risk if they do not have a complete history documenting the patients' medical condition," says Mr. Hurd. "Some tests are performed in the physician office or a free standing diagnostic center, which makes it even more challenging for hospitals." Thus, hospitals lacking adequate documentation could face false claims and fraud charges, even if the claims were unintentionally false.

Will your hospital be targeted?

It seems clear that the OIG has increased its scrutiny of ICD and stent procedures, and hospitals with unusually high levels of these procedures, which can be identified with data mining of Medicare claims data, are likely to be targets of investigation. "A hospital with high rates of implantations may not necessarily be non-compliant. Regional referral centers and cardiac centers of excellence will likely have higher rates due to higher acuity cases," says Kristofer Swanson, CPA, CFE, CFF, CAMS, managing director in the Dispute Resolution, Forensic Accounting & Regulatory Compliance practice at Navigant Consulting. "However, high rates could prompt an investigation, the results of which could be good or bad for the hospital."

Mr. Swanson recommends that hospitals take a proactive approach in determining their level of risk. "Once a government investigation starts, the pressure on the institution increases dramatically," he says. "It's much better to lean forward thoughtfully now and determine if the hospital appears to be an outlier, and if it does, have the opportunity to gather supporting documentation and conduct analysis, without the increased strain of a concurrent investigation."

What hospitals should do now

1. Determine if your hospital has high rates of implantation compared to peers. Hospitals should begin by having a clear understanding whether or not they are likely to be targeted with an investigation, which means examining whether or not the hospital's rate of implantation is higher than state and/or regional averages. These analyses, which typically use MEDPAR data, are often performed by an outside firm and serve only as "red flags" for a possible investigation, not an indicator of actual fraud as implantation rates may vary by hospital for a variety reasons, including those discussed in the above section.  


"Hospitals can assess if they are likely to show up on the government's radar screen by examining how the hospital compares to an aggregate of other facilities in the state," says Mr. Martin. "Regulators and RACs (Recovery Audit Contractors) are mining this data as we speak, so hospitals should do so as well to understand whether or not they are likely to trigger interest from regulators."

2. Examine a sample of claims on a provider-by-provider basis for compliance.
In addition to examining aggregate implantation rates, hospitals should examine a sampling of individual claims to ensure they are compliant. "A hospital, when examined by total claims, might not show up on the radar, but certain physicians could be putting the hospital at risk," says Mr. Hurd. "Hospitals need to examine claims for provider variability and possible fraudulent activity on a doctor-by-doctor basis."

Mr. Swanson recommends hospitals bring in coding and compliance experts to examine several hundred implant claims from all physicians performing those procedures. During this process, the examiners review all files for necessary documentation to establish medical need.

3. Locate any missing documentation and/or seek legal guidance. If hospitals determine patient files are missing documentation, which essentially renders the claims false, they should immediately begin to gather that documentation by working with the physician, his or her office and any relevant outpatient facilities. This step affords hospitals the opportunity to ensure each patient has a complete medical record and is more cost-effective than waiting until regulators come knocking, says Mr. Swanson. At this point, hospitals may also choose to seek legal guidance, especially if documentation cannot be located to support the claim. In this type of situation, a hospital may decide to voluntarily self-report to regulators.

4. Improve upon any processes that put the hospital at risk. Hospitals can also use a self-analysis as an opportunity to implement process improvements that address any issues that appear to put the hospital at risk. "Hospitals not only need guidelines that ensure compliance, but they also need to make sure they are adhered to," says Mr. Hurd. For example, hospitals can set "roadblocks" to ensure procedures do not occur unless the patient's record contains all necessary documentation and the patient is qualified for the procedure, according to Medicare's determinations.

"You can gain valuable insight from an arm's length analysis that will improve your program and your patients' care going forward," says Mr. Swanson.

Learn more about Navigant Consulting (pdf).


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