The Office of Inspector General issues a yearly Work Plan to identify those areas on which it will focus its investigative, enforcement and compliance activities. Among the 2011 Plan's aims are scrutiny of outpatient facility Medicare payments and a review of ambulatory surgical center payment methods. Here's a review so that you can examine your reporting practices and take corrective action where needed.

• "Provider-based" status. The OIG wants to be sure that facilities claiming "provider-based status" truly deserve the designation — and the benefits it bestows, including:
• hospitals can share overhead costs between the hospital and the provider-based facility; and
• some services may be covered when rendered in a provider-based facility, but not when provided in a freestanding facility or other setting.

The OIG will review cost reports of hospitals claiming provider-based status for outpatient (and inpatient) facilities. Federal regulation (42 C.F.R. ?413.65(a)(2)) defines a provider-based facility as "created by, or acquired by, a main provider for the purpose of furnishing healthcare services of a different type from those of the main provider under the name, ownership, and administrative and financial control of the main provider."

The Work Plan notes that Medicare may permit hospitals that own and operate multiple provider-based facilities or departments in different sites to operate as a single entity, so long as specific requirements are met. Hospitals that receive this "provider-based status" may receive higher reimbursement when they include the costs of a provider-based entity on their cost reports. Freestanding facilities may also benefit from enhanced disproportionate share hospital (DSH) payments, upper payment limit (UPL) payments or graduate medical education payments for which they'd not normally be eligible.

• Correct site-of-service coding. The OIG will determine whether physicians properly coded the places of service on claims for services provided in ASCs and hospital outpatient departments. Investigators will review physician coding of place of service on Medicare Part B claims. As you know, Medicare pays a physician a higher amount when a service is performed in a non-facility setting, such as a physician's office, than it does when the service is performed in a hospital outpatient department or, with certain exceptions, in an ASC.

The OIG has been targeting place-of-service errors for years — seemingly with good reason. In a 2005 report ("Review of Place of Service Coding for Physician Services - TrailBlazer Health Enterprises, LLC for the Period January 1, 2001 through December 31, 2002"), the OIG found that of 76 claims reported as performed in a physician's office or other non-facility place of service, 44 actually were performed in outpatient hospital settings; one was performed in an emergency room (facility setting); and 30 were performed in an ASC setting.

• ASC payments. As required by law, the OIG promises a review of the methodology for setting ASC payment rates under the revised ASC payment system. The Work Plan is short on details, stating only, "We will examine changes to the revised ASC payment system and the rate-setting methodology used to calculate ASC payment rates." What this means for future ASC payment rates is yet to be determined.