Preparing for New OIG Targets and IRF Documentation Requirements

Jan 25, 2018 | Archive

A&C JAN 2018

We wish all of our readers a Happy New Year. This month we are focusing on two audit topics and a reminder of the Medicare 2018 beneficiary deductibles and coinsurance amounts that are in effect as of January 1, 2018.

OIG now targets Herceptin billing errors. We previously reported that the Office of Inspector General of the Department of Health and Human Services periodically provides the industry with updates to its work plan. The latest pronouncement from the OIG pertains to the addition of specialty drug coverage and reimbursement by Medicare.

Specifically, the OIG is targeting Herceptin, and audits will intensify in 2018. Herceptin is covered by both Medicare and Medicaid for use in the treatment of breast cancer. The OIG is focusing on the amount of the drug that is dispensed and the use of the modifier JW to indicate utilization of multiuse vials. Medicare only reimburses for the amount of a drug that is administered to the patient. Adding complexity to the issue is the fact that the drug is supplied in vials of 440 milligrams and can be used on multiple patients.

We urge both hospital and physician providers to carefully review their billing guidelines on specialty drugs especially when the packaging exceeds the dosage per patient. We recommend that compliance officers review this issue with the oncology unit as well as the billing department to ensure that there is coordination between the two departments to prevent mistakes that can lead to audit issues down the road. This is easy to detect and providers can avoid this issue by properly coordinating with all concerned departments. It also might be helpful to do a small internal audit of claims processed to determine if they meet Medicare requirements.

Inpatient Rehabilitation Facility (IRF) Medical Review Changes announced by the Centers for Medicare and Medicaid Services.

CMS published MLN Matters article number SE 1736, dated 12/11/2017. The complete article is available here.

As background, the Medicare IRF benefit provides intensive rehabilitation therapy in an intensive inpatient hospital environment, including free-standing inpatient rehabilitation hospitals as well as inpatient rehabilitation units of acute care hospitals. Specifically, the IRF benefit is for a Medicare patient who—due to the complexity of nursing, medical management, and rehabilitation needs—requires and can reasonably expected to benefit from an inpatient stay and an interdisciplinary team approach to rehab care.

In order for IRF services to be covered under the Medicare IRF benefit, submitted documentation must sufficiently demonstrate that a patient’s admission to an IRF was reasonable and necessary according to Medicare guidelines. Auditors, especially the Recovery Auditor Contractors, have previously reviewed IRF admissions and denied previously paid claims since the medical documentation did not meet the Medicare requirements. In the MLN article, CMS clearly outlines what documentation is required to satisfy Medicare requirements. This is good news for providers, as we believe that CMS has finally codified the IRF documentation requirements and, while they are extensive, they are needed to ensure payment is not taken back on audit. To ensure compliance, providers should review their electronic medical record systems to certify the EMR contains all of the CMS documentation requirements. Documentation can be problematic, and this is a great opportunity for compliance officers to engage with the IRF staff to determine if they are fully aware of the Medicare documentation requirements. We also urge our readers to share this information with the IRF clinical staff so there can be sufficient in-service training on documentation requirements.


Each year, CMS releases the Medicare Parts A and B deductibles and coinsurances for the New Year. The 2018 amounts are listed below, with a comparison to 2017 amounts:

PART A 2018 2017
  • Inpatient hospital deductible
$1,340.00 $1,316.00
  • Daily coinsurance for 61st – 90th day
$335.00 $329.00
  • Daily coinsurance for lifetime reserve days
$670.00 $658.00
  • Skilled Nursing Home coinsurance
$167.50 $164.50


The annual deductible for Medicare Part B services, including outpatient and physician services, remains at $183.00.

We recommend hospital providers evaluate Medicare patients that do not have other third-party insurance at the time of admission for Medicaid eligibility. A patient that remains hospitalized for more than 150 days without secondary insurance will be responsible for $51,590.00. Medicaid will cover the entire amount, as well as medically necessary days, after Medicare coverage is exhausted.