OIG Mid-Year Work Plan Update Adds PAMA-Focused Lab Item

The U.S. Department of Health and Human Services Office of Inspector General released its mid-year update to the Annual Work Plan, adding and revising items relevant to lab enforcement efforts. The OIG released the 2016 Work Plan late last year (see National Intelligence Report, 11/12/16, p. 1).

First, not surprisingly, a new item in this update focuses on the much anticipated implementation of the Protecting Access to Medicare Act of 2014 (PAMA). The OIG says it will consider CMS’ “ongoing activities and progress toward implementing” the new market-based payment system under PAMA for clinical diagnostic laboratory tests. PAMA also requires the OIG to analyze “the implementation and effect of the new payment system.” It predicts a report to be issued this fiscal year. CMS’ final rule implementing PAMA was submitted for OMB review and its release is widely expected to be imminent. G2 Intelligence and ACLA are co-presenting a webinar addressing the final rule, on June 28.

Revised items in the update include a review of histocompatibility laboratories (which was a new item in the initial 2016 Work Plan)—with the resulting report now expected in 2017 fiscal year rather than 2016 fiscal year as originally reported in the 2016 Work Plan. The OIG is concerned about accuracy of costs reported by histocompatibility labs—which reported $131 million in reimbursable costs on recent cost reports. The OIG explains such costs must be reasonable, necessary and proper and detail provided regarding such costs must sufficiently justify payments made.

Recurring items include review of independent clinical lab billing requirements and the OIG’s annual mandatory review of the top 25 lab tests (per Medicare expenditures). The update notes the OIG’s concern with independent clinical lab billing, which was also included in the 2015 Work Plan as well. The OIG is looking for labs that “routinely submit improper claims” and will seek repayments of overpayments. The OIG notes that prior “audits, investigations and inspections have identified independent clinical laboratory areas at risk for noncompliance with Medicare billing requirements.”

The review of the top 25 test ties in to the OIG’s oversight of PAMA. The OIG first performed this review last year and in September 2015 issued its baseline analysis of the top 25 lab tests according to review of 2014 data. That report indicated that $7 billion was paid to 63,000 labs under Medicare Part B in 2014 for 451 million lab tests performed for 27 million Medicare beneficiaries. Medicare paid $4.2 billion in payments for the top 25 lab tests.

The OIG update also notes it may have new and expanded reviews of U.S. Food and Drug Administration oversight, including the agency’s oversight of blood establishments and laboratory-developed diagnostic tests. It also added new items focused on FDA review of networked medical devices for cybersecurity risks and controls over networked medical devices in hospitals.

The OIG’s Fiscal Year 2016 Work Plan Mid-Year Update is available on the OIG Website under Reports and Publications.

Takeaway: Labs continue to be a significant focus with several lab payment items highlighted in the latest update to the OIG’s Work Plan.