The Office of Inspector General (OIG) has initiated a new audit initiative to determine whether Medicare is making erroneous payments to hospitals in a number of specifically identified areas. This new OIG initiative is expansive in its scope. Not only is it reviewing the inpatient and outpatient claims that were paid, but it is also engaging in a detailed review of the hospital systems
that produced the claims.

Based upon prior audits and investigations, the OIG has identifi ed certain areas for which it believes hospitals are at risk for not complying with Medicare billing requirements
and, as a result, have been paid erroneously. To remedy this, the OIG has begun a new t ype of audit to determine whether hospitals are being paid improperly in these risk areas. The OIG is focusing on Medicare payments made from 2008 through 2010, for both inpatient and outpatient services, in the identifi ed risk areas.

These audits are unique in a number of ways. First, they require the target hospitals to conduct a significant self-audit prior to the OIG beginning its audit. Second, the audits are not limited to claims review; they include a review of the hospitals' internal controls applicable to the areas under audit. Lastly, they require the hospitals to establish new systems to prevent the erroneous payments going forward.

To date, it appears that only a few hospitals in a small number of key states have been chosen for these audits. But, regardless of the small number of these audits to date, hospitals should take note due to the identifi ed risk areas and the emphasis on internal controls. Even if the OIG does not target your hospital, the recovery audit contractors (RACs) are watching. Many of these risk areas are straightforward and made for RAC audits or other increased enforcement efforts.

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