Ensuring medical necessity for services or supplies isn’t just about getting paid. It’s a safeguard against unnecessary or duplicative services that increase the risk of patient harm or medical errors. That’s reason enough for this to be an important topic for compliance leaders. 

This is the first article in a series on medical necessity — an area that many compliance programs struggle with. In this piece, we explain the medical necessity compliance risk in general, while subsequent articles highlight specific examples of enforcement actions experienced by medical providers such as hospitals and health systems. 

Impact of Denial Rates and Medical Necessity on Payer Costs  

Data suggests that medical necessity is becoming a primary way for payers to manage costs, making it even more worthy of leadership attention. The “State of Claims 2025” Report found that 54% of providers agree claim denials are increasing faster than they can appeal. 

A data accuracy gap also contributes to the problem. Roughly 41% of healthcare organizations report at least 1 in 10 claims is denied, often due to “bad data” at intake or lack of clinical justification. 

All of this creates further justification for the need to better understand medical necessity from a compliance standpoint. 

Role of Clinician Review in Determining Medical Necessity 

Medical necessity isn’t an easy compliance risk to tackle, especially when OIG recommendations bump up against front-line reality. Sometimes, clinicians view medical necessity as their bailiwick.   

Of course, their expertise is the basis for medical decision making. Generally speaking, clinicians are making their decisions based on what they believe is medically necessary. They are the clinically trained professionals and should know when something is medically necessary or not, right?  

However, from a compliance standpoint, medical necessity often really means “covered” by a third-party payor. If something is considered “not medically necessary,” it may actually mean it does not meet payor coverage requirements. 

OIG on Clinical Review of Medical Necessity in Claims Audits 

In their General Compliance Program Guidance document (GCPG), the Department of Health and Human Services (HHS) Office of Inspector General (OIG) emphasized the importance of ensuring claims submitted to government payors are medically necessary. 

Specifically, they note:  

“Medicare requires, as a condition of payment, that items and services be medically reasonable and necessary. Therefore, entities should ensure that any claims reviews and audits include a review of the medical necessity of the item or service by an appropriately credentialed clinician. Entities that do not include clinical review of medical necessity in their claims audits may fail to identify important compliance concerns relating to medical necessity.” 

Considerations for Compliance Risks in NCD and LCD 

Other entities have also emphasized medical necessity as coverage criteria. For example, Medicare publishes National Coverage Determinations (NCDs) and Local Coverage Determinations (LCDs). These are, in essence, coverage criteria for a specific service.  

Though generally accepted medical guidelines or medical practice may suggest a certain treatment plan is appropriate, the LCD might not cover the service for a particular condition or diagnosis or might not allow the service at a particular cadence or frequency. 

Example: Meeting LCDs for Pain Injection Procedures 

LCDs addressing pain injection procedures are a good example of this. A Medicare LCD might state that before Medicare considers a spinal injection “medically necessary” (think “covered”), the patient needs to have failed four months of conservative therapy (e.g., lifestyle changes, physical therapy, etc.)   

Or the LCD might state a total of four injections in a twelve-month period is the maximum number of injections they will allow. Additionally, an LCD might require that a patient has a certain condition (represented by an ICD-10 or diagnosis code i.e., diagnosis code) before considering a service covered.   

There is potential compliance risk in all these areas if coverage criteria are not met and documented in the medical record or if codes are reported to ensure coverage, but the medical record does not support the diagnosis code reported. 

Overlap with Patient Safety 

Medical necessity can also overlap with patient safety issues. If a physician exaggerates the severity of a condition to make it look like the services should be covered, a patient could undergo a procedure that was not appropriate or medically necessary to perform in the first place.  

This raises patient safety issues for subjecting a patient to certain risks when the service does not appropriately meet clinical standards or indications for performance. 

How Medical Necessity Compliance Is Enforced 

The government utilizes various tools for enforcing medical necessity compliance.  These include the False Claims Act (FCA), typically used by the U.S. Department of Justice (DOJ), and the Civil Monetary Penalties Law (CMPL) utilized by the OIG. 

The DOJ can investigate allegations of medically unnecessary services when credible information is brought to its attention by whistleblowers (qui tam relators). A qui tam relator is a private individual or entity who files a lawsuit on behalf of the government under the FCA against companies or individuals committing fraud. Or the DOJ can investigate on their own, typically because of data analytics they proactively perform. 

How OIG Pursues Financial Penalties and Program Exclusion 

The OIG is authorized to pursue monetary penalties and exclusion through a variety of civil authorities, most notably the CMPL. Under the CMPL, OIG can seek assessments in lieu of damages, Civil Monetary Penalties (CMP), and exclusion from participation in federal health care programs.   

According to the OIG, one example of conduct that could lead to CMP liability is presenting a claim for a pattern of medical or other items or services that a person knows or should know are not medically necessary. 

Medical Necessity Risk Tied to Clinical Services 

There isn’t a one-size-fits-all risk profile when it comes to medical necessity. Each organization’s risk is going to be tied to the clinical services it offers or orders. Organizations and their compliance programs should undertake risk assessments tailored to their particular situation.  

Via the GCPG document, the OIG recommends that when conducting risk assessments, organizations should “ensure that medical necessity, patient safety, and other quality compliance issues are included in the risk universe.” 

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Coming Articles: Details of Recent Enforcement Actions 

In subsequent articles in this series, we’ll take a closer look at the details of recent enforcement actions involving allegations that submitted claims lacked medical necessity. This information will help compliance leaders stay on top of situations and reduce risks in their own organizations.  

About the Author 

CJ Wolf, MD, M.Ed. is a healthcare compliance professional with over 27 years of experience in healthcare economics, revenue cycle, coding, billing, and healthcare compliance. He has worked for Intermountain Healthcare, the University of Texas MD Anderson Cancer Center, the University of Texas System, an international medical device company and a healthcare compliance software start up. Currently, Dr. Wolf teaches and provides private healthcare compliance and coding consulting services as well as training.   

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The post Medical Necessity: A Guide for Healthcare Compliance Leaders  first appeared on YouCompli.

In this blog, learn how to go on offense following a regulatory compliance audit or inspection, so you’re well-prepared for the next one. Using sports training analogies, the authors present a better way to handle ongoing inspections and audits in healthcare systems.  

If you play us in basketball, we’re going to run the fast-break transition offense at you, and we will tell you right now; you don’t want to play us two on two. We know our biggest strength – namely that conditioning kills. Savage speed plus unlimited endurance equals an unstoppable force.  

The fast-break transition offense we use is inspired by the 1990 UNLV Running Rebels basketball team. This high-tempo strategy aims to score before the defense can get set. It involves pushing the ball down the court immediately after gaining possession and creating scoring opportunities through numerical advantages and defensive mismatches.  

You can apply the same strategies when managing audits and inspections.  

What Drives Healthcare Audits and Inspections? 

Audits and inspections are regular occurrences in healthcare systems. A number of factors influence how often and what kind. 

• Internal vs. External: Healthcare organizations conduct their own internal audits monthly, quarterly or annually. 
• Regulatory Bodies: Government agencies conduct their own audits, with the number depending on things like budget and staff. 
• Risk and Regulation: Frequency may increase if issues are discovered or when major changes are made to regulations. 
• Organization Size: Larger organizations often have more complex auditing needs, potentially driving more frequent audits. 
• Staff Turnover: High turnover can trigger more frequent audits to ensure consistency. 

What’s Your Playbook for Regulatory Inspections and Audits? 

Most healthcare systems have good reason to believe that a regulatory inspection, sponsor audit or other scrutiny could appear at any time, announced or unannounced. It’s accepted that the standard technique for managing these visits is ongoing vigilance.  

At her presentation on “How to Be Your Own Internal Monitor: A Guide to Monitoring Your Own Studies” at the ACRP 2025 conference, Ann-Marie Jacobson, CCRP, Senior Research Affairs Specialist at Tufts University School of Dental Medicine, said “Because of the unknowns about inspections and audits of in-progress or completed clinical trials, it is important to make sure that all study materials are always kept accurate, current, and explanative of the study activities to date.”

“You always need to be asking yourself, if the Food and Drug Administration (FDA), sponsor, or IRB came in right now and selected a current or recently closed study for examination, would everything be ready?”  

She explained that at her institution, study coordinators “regularly conduct audits of regulatory binders, subject folders, case report forms (CRFs), payment logs, and enrollment/screening logs. These are coordinators who are separate from the clinical team, to ensure that fresh perspectives are always present.” 

We don’t disagree with her, but we wouldn’t call that a fresh approach. Rather, we think that ongoing vigilance should be the standard in healthcare compliance, like a basketball team needs the fundamentals of solid shooting, dribbling and passing.  

Changing Audit Landscape Requires a New Game Plan 

The current healthcare audit landscape is shifting and shifting quickly. Back in late 2024 and even earlier this year, federal and state auditors would arrive and investigate one complaint at a time. They’d come in specifically for one reason or to investigate a particular incident, talk with a couple of staff members, and then summarize their findings and leave.  

Now, we’re hearing differently. Just this week at one of our collegial facilities, an investigator came in to investigate about 10 complaints in various areas, from documentation, to patient care and the like.  

To diligently investigate complaints of this type and volume, the auditor or inspector is probably going to be there on-site for a week or more. They will gobble up valuable conference room space, staff time and basically throw your whole operation into a tizzy due to the heightened emotional state.  

What’s your game plan for audit readiness now? 

Fast Break Offense for Compliance Audit Readiness 

How do you combat this? Well, if you use the key principles of a fast break offense, you will be prepared and conditioned. We’ve adapted these three techniques to the compliance game, to make champions of your team. 

1 – Push the Pace 

In basketball, coaches encourage players to maintain a fast pace and recognize when to initiate the first trigger. In an audit, this means anticipating what the auditor is going to ask and getting ahead of it before they bring it up.  

Pre-audit prep meetings and ongoing reviews of your events make this work, but you can’t just do a pre-audit meeting when an inspection is scheduled. You need to regularly schedule pre-audit meetings, so you’re always prepared.  

I know most organizations don’t do this. But we do. Which is why we have covered things so thoroughly that we can go quickly and get the auditor what they need and then move on to the next question.  

2 – Strength in Numbers 

In sports, we recognize numerical advantages, such as 2-on-1’s, 3-on-2’s or 4-on-3’s and then capitalize on these circumstances through drive-and-kick sequences. Drive the ball to the basket and when the defense collapses on the person with the ball, you kick the ball out to an open teammate to hit a jump shot.  

Within audits, scoring means answering auditors’ questions with the best players you have. You create a numerical advantage by bringing in multiple people to meet with the auditor at the same time and kicking facts around like you would move the ball to score.  

3 – Continuously Practice Good Habits Across the Team 

Lastly, you need elite conditioning habits in sports and in compliance. To run the fast break effectively, you can’t get tired. Imagine unleashing an endless barrage of offense and staying so diligent to this effort that teams know it’s coming and still can’t stop it.  

The team with the most dialed-in offense is usually the most capable, but you need to have players who can react “lag-free” or win their first three steps to capitalize on numerical advantage. The only way to get good at this is to continually work on it.  

Quality and compliance preach continuous improvement, but how often do you do make the effort? How often do you stay late at work, just because? How often do you run more meetings or make everything tighter?  

Chances are zero times, but I will tell you right now that we do. So, if you get into an audit with me, by Day 4, I am still working with a full gas tank, but the auditor isn’t because they went home and “Netflixed“ while I slept. Get your whole team committed to elite habits, and you are unstoppable.  

Prepare Your Compliance Program for the Win 

By reinforcing these principles and working on conditioning and decision making, teams can create more scoring opportunities. And just as a prepared team can force the defense into difficult situations, a well-prepared compliance team can “force” the auditor into zero-findings and more quality inspections.  

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Create Compliance Scoring Opportunities 

If you’re interested in more ideas for building a strong compliance program, read these resources next. A strong compliance culture is the foundation of a strong program. 

10 Tips for Building a Compliance Culture in Healthcare 

Earning recognition as a value creator and establishing a healthy culture can be challenging. Yet as these 10 tips show, you can successfully shape culture to help the larger organization better manage and control risk. 

Healthcare Compliance Culture Means Doing the Right Thing at All Levels 

A culture of compliance isn’t just a platitude. It really does exist. Those organizations with a strong culture of compliance and an effective compliance program are the ones with engaged clinical and operational leaders. 

A Culture of Compliance Through Proactive Decision-making 

A culture of compliance is critical to effective regulatory change management. Find three steps to help your leaders make decisions more proactively.   

Andrea has taught first grade in Willoughby, Ohio for 27 years in the same classroom that she attended school as a child. She earned a Bachelor of Science in elementary education with a minor in language arts from John Carroll University and a Master’s Degree in the Art of Teaching and Education from Marygrove College. 

John builds and fixes quality departments, while currently thriving as the Administrator & Director of Quality, Risk Management and Compliance at River Vista, a behavioral hospital in Columbus, Ohio.

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The Q-Kids – John R Nocero and Andrea L Bordonaro – are experts at everything quality, regulatory, education training and compliance and love sharing their knowledge on YouCompli.

Follow them on LinkedIn – for more quality content or send them a message – they’d love to hear from you.

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27 Ungated Resources for Compliance Leaders and Teams 

Compliance professionals sometimes feel undervalued in comparison to other functions in their organization. They think leaders and colleagues don’t really understand what they do.  

These resources will help. Packed with ideas, tips and recommendations, these pieces were written by professionals with many years of compliance experience. 

You can quickly skim for articles that relate to your needs and interests. Bookmark this page as a reference for future questions or projects.

Visit Now

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The post With Compliance Audits, The Best Defense is a Good Offense  first appeared on YouCompli.

It’s the nature of our mission to stay on top of what’s happening in the world of healthcare compliance. And right now, that focus couldn’t be more important.  

These are unusual times, and Compliance is feeling the impact. The Medicare Fiscal Year 2026 Final Rules were expected to be late but came through on time. However, hospitals must still rush to analyze and respond with action plans in short order. CMS transmittals are also likely impacted by the government shutdown (more on that later). 

That leaves many hospital compliance teams unprepared and under-resourced to cope with fast-coming changes. The price of noncompliance, even under extenuating circumstances, is reimbursement risk. 

Two Areas Needing Compliance Attention: Final Rules and Transmittals 

• Final Rules – Legally binding federal regulations that establish new policies in particular areas of healthcare. 
• CMS Transmittals – Internal instructions for updating CMS operational manuals to reflect new or changed policies. 

Two Important CMS Timelines: Fiscal Year and Calendar Year 

The CMS guidance for healthcare comes with its own deadlines attached, and every year there are two important and separate timelines for fiscal year and calendar year Final Rules.  

In healthcare, fiscal year guidance typically has an October 1 effective date, and that Final Rule usually drops in August. This year, YouCompli analysts got through the fiscal year Final Rules incredibly quickly, because CMS cut a lot of the material in the preamble, and that allowed more efficient review and analysis. 

Effective Date of Calendar Year Final Rule Coming Up Fast 

As every seasoned compliance professional knows all too well, CMS puts out a handful of big, omnibus rules for different areas of health care on an annual basis. This time of the year brings us the final rules affecting outpatient costs and billing. These areas usually get addressed during the calendar year, and these calendar year communications started dropping this year on November 5. That gives an effective date of January 1 of the next year.  

It’s important to get these annual changes synthesized and implemented in a health care organization because they cover the entire year. Even when Rules drop at the usual time (and not during a government shutdown), the short time frame to the established effective date still puts pressure on providers to analyze and develop a compliance action plan. That’s where having a partner like YouCompli already breaking down these rules and translating them into actionable business requirements is essential.  

Transmittals Could Be Delayed and Affect Claims Processing 

On top of concerns about Final Rules delays, CMS transmittals ceased to come out on September 30. Transmittals are typically issued on a running basis as they come up. In a given month, you can have anywhere from 15 to 150 transmittals come out.  

A CMS transmittal is not the same as a Final Rule. They are two distinct types of guidance documents from the CMS. Transmittals are official documents to communicate new or changed policies, procedures, claims and other operational guidance to Medicare administrative contractors (MAC), regional offices, and healthcare providers. The communications update specific CMS program manuals, instructions, and other documentation to ensure consistent implementation of Medicare rules.  

MACs Also Risk Claims Backlog with Transmittal Delays 

Another job of a transmittal is to direct the MACs on what to do in processing claims. These third-party contractors are hired by CMS to administer claims, and they can get backlogged on their instructions and claims processing when transmittals run late.  

Any claims processing delays impact providers, so it’s important to keep an eye on when these transmittal communications come out, especially if it drags out for weeks. If MACs struggle with claims processing because they can’t keep up with the updates, providers lose money. 

Whether it be through time-related loss, because then they have to reissue claims with fixes and things of that nature, delays directly impact revenues. That’s not good at a time when health systems are already under the gun. 

Solution: Proactive Compliance to Know, Act and Verify 

If you’re a YouCompli customer, you wouldn’t have to scramble to prepare for last-minute changes, because we would handle it.  

If communications are ever delayed, creating a time crunch, let us act as your analysist team, grabbing communications as soon as they come out, and breaking it down for you. We capture the necessary data and deliver it, along with easily understandable business requirements.  

You’ll know what you need to do to comply, so when the next Final Rule or transmittal hits your inbox, you’re ready to run with updating procedures, training and other requirements.  

We suggest getting on board with us now, so when that time comes, you’re not struggling with these risks and delays.  

About the Author 

Nate Ward, J.D. is the Manager of Compliance and Content Development at YouCompli Software. He comes from a deep background in healthcare compliance and the legal field. Nate leads a team of experts who read regulations, analyze how they apply, and recommend action plans for healthcare compliance.   

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27 Ungated Resources for Compliance Leaders and Teams 

Compliance professionals sometimes feel undervalued in comparison to other functions in their organization. They think leaders and colleagues don’t really understand what they do.  

These resources will help. Packed with ideas, tips and recommendations, these pieces were written by professionals with many years of compliance experience. 

You can quickly skim for articles that relate to your needs and interests. Bookmark this page as a reference for future questions or projects.

Visit Now

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The post How to Prepare for New CMS Final Rules and Transmittals  first appeared on YouCompli.

Many compliance professionals rely on HHS OIG focus areas as they perform risk assessments and plan subsequent auditing and monitoring activities. In November 2024, the OIG added an item to their Work Plan describing their intention to review Medicare Part B payments for skin substitutes.  

More recently, in September of 2025, the OIG published a data snapshot report that concluded Medicare Part B payment trends for skin substitutes raise major concerns about fraud, waste and abuse.  

This blog explores the implications for compliance and what health systems need to be aware of.  

How Skin Substitutes Are Covered Currently 

Skin substitutes aid in wound healing and redevelopment of skin. Medicare covers skin substitutes that are reasonable and necessary for the treatment of an enrollee’s condition. Local coverage determinations state that Medicare Part B generally covers skin substitutes for treatment of diabetic foot ulcers and venous leg ulcers that have failed to respond to at least four weeks of standard wound care.  

However, no national or local coverage requirements apply for other wound types (e.g., pressure ulcers or trauma wounds), and coverage of skin substitutes for these wounds is determined on a case-by-case basis.  

How Medicare Pays for Skin Substitutes 

Medicare Part B pays for skin substitutes based on the number of service units billed at prices ranging from approximately $100 to more than $1,000 per square centimeter.  

For payment purposes, CMS treats skin substitutes like approved prescription biologics, and skin substitutes are reimbursed in non-institutional Part B settings at 106% of the average sales price (ASP).  ASP Refers to the average price of a drug sold to providers, and it’s used for calculating reimbursement rates.  

From calendar years 2020 through 2023, Medicare Part B payments for skin substitutes increased substantially. In two years, Part B spending on skin substitutes increased 640%, going from $389 million (Q3 2022) to $2.88 billion (Q3 2024). 

What Drives Increases in Skin Substitute Pricing and Utilization? 

The rapid growth in expenditure is driven by both higher prices and increased utilization, and the OIG found concerning trends in both areas. 

Higher Prices Driven by ASP and Incentives 

Some of the factors potentially increasing prices include the ASP and incentives for providers. Manufacturers of skin substitutes can quickly bring new skin substitutes to market compared to typical products paid using ASP.  

By statute, ASP is defined as a manufacturer’s sales of a drug to all purchasers in the United States in a calendar quarter (net of most discounts) divided by the total number of units of the drug sold by the manufacturer in that same quarter. 

Calculating Payments for Billing Codes 

Manufacturers are required to report the ASPs and total sales volume for each of their Part B drugs to CMS within 30 days of the end of every quarter. CMS then uses this data to calculate a payment amount for the billing code representing the drug.  

Because different versions (i.e., dosage amounts, package sizes) of a drug may be included within the same billing code, CMS calculates an overall volume-weighted ASP for the code using the manufacturer-reported sales data. By statute, Part B payment is set at 106% of the volume-weighted ASP.  

In cases in which CMS is unable to calculate a volume-weighted ASP for a code (e.g., a new code for which ASPs have yet to be reported), Medicare Part B contractors typically use Wholesale Acquisition Costs, aka WACs (i.e., list prices) or payment invoices to determine a payment amount.  

Providers Seek More Favorable Payments Based on Spread 

Allowing for the time it takes for manufacturer price reporting and the subsequent CMS validation and calculations, there is a two-quarter lag in the ASP-payment process (e.g., first-quarter 2024 ASPs were used as the basis for third-quarter 2024 payment amounts). 

Part B providers can retain the “spread” between their acquisition cost for a drug and the Medicare payment amount. Previous OIG work found that higher spreads may correlate with increased utilization for certain drugs.  

Under the current payment system, Medicare often pays providers for skin substitutes at amounts much higher than providers’ purchase prices, and providers keep the “spread.” This creates incentives to bill for more and more units of skin substitutes and to choose products with the greatest spreads – the same types of billing trends highlighted in the OIG’s report. 

Increased Utilization Has Average Part B Payment Up 153% 

Utilization of skin substitutes has also increased steadily, with more enrollees having skin substitute claims and a higher number of units being billed per enrollee. OIG found that between the first quarter of 2023 and the third quarter of 2024: 

• Number of unique Part B enrollees with skin substitute claim increased by 53%. 
• Total number of units paid under Part B increased by 83%. 
• Average Part B payment amount for each unit of skin substitute increased by 153%. 

In less than two years, the amount paid per Part B enrollee has tripled from $40,051 to $121,501. 

28% Growth in Utilization and Payments in Home Care Settings 

The OIG also found the growth of skin substitute utilization and payments in the home care setting to be particularly notable. By the third quarter of 2024, 28% of enrollees with a paid skin substitute claim under Part B were reportedly being treated in their home. These home care enrollees accounted for more than half of Part B spending on skin substitutes that quarter. 

They also noted that utilization and expenditures for skin substitutes under Medicare Advantage (MA) are just a fraction of utilization and expenditures under original Medicare.   

For example, in the third quarter of 2024, OIG found that only 3,800 Medicare Advantage enrollees were associated with a skin substitute claim, compared to 24,000 enrollees in Part B.  

OIG concluded there were no obvious differences in the enrollee demographics of original Medicare and Medicare Advantage that would explain the massive variance in skin substitute utilization.  

Instead, they suggested variance is likely driven by MA plans’ ability to use numerous reimbursement and utilization management tools to set payment rates and coverage for products such as skin substitutes. 

Urgent Action Needed to Rein in Spending Increases and Fraud 

Based on their data snapshot report, the OIG concluded that action is urgently needed to rein in the massive increases in Medicare Part B spending for skin substitutes in non-institutional settings. They also cited numerous fraud schemes involving skin substitutes. 

Compliance professionals should make sure they are considering their organization’s use of skin substitutes and determine if there are existing risks. If so, they should monitor and audit their organization’s use of skin substitutes to ensure compliance. 

More Resources on Compliance Risk 

Know the Compliance Risk for Certain Anesthesia Services 

A good healthcare compliance program is all about reducing risk, both in patient care and in financial reimbursement. This detailed blog by compliance expert, CJ Wolf, will bring you up to date on the compliance risks associated with certain anesthesia services.   

How to Avoid Compliance Risk in Peripheral Vascular Reimbursement   

Peripheral vascular disease (PVD) reimbursement is fraught with potential compliance pitfalls. This expert-written blog addresses the pressing concern of compliance risks in PVD reimbursement. It provides insights into regulatory trends, recent investigations and best practices. 

Exclusion Screening Failure Causes Compliance Nightmare 

Even a seemingly small glitch can have major consequences for healthcare compliance. This blog shares the story of the consequences of an incident when exclusion screening software glitched. 

CJ Wolf, MD, M.Ed. is a healthcare compliance professional with over 22 years of experience in healthcare economics, revenue cycle, coding, billing, and healthcare compliance. He has worked for Intermountain Healthcare, the University of Texas MD Anderson Cancer Center, the University of Texas System, an international medical device company and a healthcare compliance software start up. Currently, Dr. Wolf teaches and provides private healthcare compliance and coding consulting services as well as training.   

Download our Latest Whitepaper

Sign-up for our Weekly Newsletter

Schedule a quick overview

Download our Latest Whitepaper

Sign-up for our Weekly Newsletter

Qualified compliance professionals do the heavy lifting for you, simplifying regulatory change management  

The post OIG Cites Fraud, Waste and Abuse Concerns with Skin Substitutes  first appeared on YouCompli.

A good healthcare compliance program is all about reducing risk, both in patient care and in financial reimbursement. This detailed blog by compliance expert, CJ Wolf, will bring you up to date on the compliance risks associated with certain anesthesia services.   

The OIG just published audit results and report (July 31, 2025) outlining the issues in this area. This article is a summary of that report, along with what it might mean for compliance professionals.  

The implications can be huge. For example, OIG concluded that Medicare paid $45.7 million for anesthesia services provided during the SPM procedure sessions that were at risk for noncompliance with Medicare requirements.  

What to Know About Anesthesia, Compliance and the Latest OIG Audit 

The U.S. Department of Health and Human Services Office of Inspector General (OIG) recently released a nationwide audit report highlighting potential improper payments for anesthesia services provided during select spinal injection procedures  

It is only under rare circumstances that Medicare Part B covers the cost of anesthesia during certain spinal pain management (SPM) procedures. In fact, a prior OIG audit found that 27% of billed anesthesia services during SPM procedures did not have supporting medical documentation that would justify the use of anesthesia.  Given these circumstances, the OIG decided to perform the more recent nationwide audit and publish its findings. 

Goal of OIG Audit Regarding Medicare Part B Payments 

The OIG’s goal in the audit was to identify Medicare Part B payments to physicians for anesthesia administered during selected SPM procedures that were at risk for noncompliance with Medicare requirements. 

The specific SPM procedures included in the audit were: 

• Facet-joint injections 
• Facet-joint denervation (aka radiofrequency ablation) 
• Epidural steroid injections 
• Sacroiliac joint injections 

Medicare Coverage Only in Rare Circumstances 

As mentioned, it is only in rare circumstances that Medicare covers the cost of certain anesthesia services provided during SPM procedures. The types of anesthesia services that could potentially be covered under these rare circumstances include: 

• Moderate sedation: Administration of a drug-induced depression of consciousness during which a patient responds purposefully to verbal commands, either alone or accompanied by light tactile stimulation. No interventions are required to maintain the enrollee’s airway, and spontaneous ventilation is adequate. 

• General anesthesia: Administration of a drug-induced loss of consciousness during which a patient is not arousable, even by painful stimulation. The ability to independently maintain breathing is often impaired. The patient often requires assistance in maintaining an open airway that allows for adequate airflow and proper oxygenation of the lungs. Positive pressure ventilation may be required because of depressed spontaneous ventilation or drug-induced depression of neuromuscular function. 

• Monitored anesthesia care: This is a specific anesthesia service for a diagnostic or therapeutic procedure. Indications for monitored anesthesia care include the need for deeper levels of analgesia (i.e., the inability to feel pain) and sedation than can be provided by moderate sedation. Monitored anesthesia care falls between moderate sedation and general anesthesia. 

MAC LCDs Published for Select SPM Procedures 

Medicare Part B claims are adjudicated and paid by Medicare Administrative Contractors (MAC).  MACs are charged with ensuring proper payment of claims.  They are to safeguard Medicare funds against improper medical coding and billing, fraud and abuse. One way they do this is by publishing local coverage determinations (LCDs) which outline when certain services are, or are not, covered. 

The MAC LCDs for the selected SPM procedures explain that the use of moderate sedation, general anesthesia, and monitored anesthesia care is usually unnecessary or rarely indicated for these procedures. However, individual consideration may be given in rare cases when documentation clearly established the need for such anesthesia. 

Audit to Confirm Compliance with Limited Coverage Rules 

The OIG wanted to confirm compliance with these limited coverage rules for anesthesia services billed along with the SPM procedures. To do so, they identified an audit period consisting of claims for SPM procedure dates of service between May 2, 2021, and August 31, 2023, during which Medicare paid for 3.9 million sessions of SPM procedures.   

For this audit period, physicians billed for anesthesia services nearly 18% of the time. The MACs paid $46.2 million for the anesthesia services or 99.5% of the time that anesthesia was billed during the same SPM procedure session. 

Then, the OIG identified and selected a nonstatistical sample of 28 sessions where both anesthesia and the selected SPM procedures were billed. To verify compliance, the OIG obtained the supporting medical documentation for these sessions and had an independent medical reviewer determine whether the anesthesia was medically necessary and met the rare circumstances when Medicare would cover the anesthesia service.  

Medical Records Fail to Document Necessity 

For 20 of the 28 sampled sessions, the medical reviewer determined the supporting medical records did not document a rare circumstance in which administering anesthesia was reasonable or necessary for the specific SPM procedure.   

One such example included a session where a physician administered moderate sedation to a patient during an epidural steroid injection session. The medical records provided by the physician stated that this type of anesthesia was administered because of the patient’s anxiety, which is not a medically necessary indication meeting coverage criteria according to the LCD. The medical records also did not have evidence of failed oral sedation, which could have necessitated moderate sedation. 

The OIG stated they could not provide an overall estimate of improper payments for the entire audit period because the sample they used was a nonstatistical sample. However, they concluded that Medicare paid $45.7 million for anesthesia services provided during the SPM procedure sessions that were at risk for noncompliance with Medicare requirements. 

OIG Recommendations Include Provider Education 

One of the more significant recommendations the OIG made for CMS and the MACs is to  

• Educate providers on the coverage criteria 
• Review claims for improper billing of anesthesia services 

For providers, this means your MAC may begin auditing such claims. 

Compliance Tip for Anesthesia Billing 

Compliance professionals should assess how often their organizations bill anesthesia services at the same time as the SPM procedures and review the medical records to determine if the sessions meet the rare circumstances found in the LCD requirements for coverage of both services. 

More Resources about Compliance Risks 

Continue learning about the complexities of Medicare reimbursement and compliance in these other piece by CJ Wolf. 

Compliance Risks Associated with Outlier Payments 

In some circumstances, payers like Medicare, for example, will reimburse additional amounts beyond the prospective payment rate. These additional payments are called “outlier payments.” Outlier payments provide additional reimbursement for cases of exceptionally costly treatments.   

How to Avoid Compliance Risk in Peripheral Vascular Reimbursement   

Peripheral vascular disease (PVD) reimbursement is fraught with potential compliance pitfalls. This expert-written blog addresses the pressing concern of compliance risks in PVD reimbursement. It provides insights into regulatory trends, recent investigations and best practices. It provides insights into regulatory trends, recent investigations and best practices. 

CJ Wolf, MD, M.Ed. is a healthcare compliance professional with over 22 years of experience in healthcare economics, revenue cycle, coding, billing, and healthcare compliance. He has worked for Intermountain Healthcare, the University of Texas MD Anderson Cancer Center, the University of Texas System, an international medical device company and a healthcare compliance software start up. Currently, Dr. Wolf teaches and provides private healthcare compliance and coding consulting services as well as training.   

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The post Know the Compliance Risk for Certain Anesthesia Services  first appeared on YouCompli.

In this blog, experts offer the real scoop on audit readiness in healthcare. Learn the unfiltered truth about compliance audits and what audit etiquette means. Get essential tips on preparing for audits, the role of healthcare compliance auditors, and what to do (and what not do) during an audit.  

What Does Audit Readiness Mean? 

Let’s say a regulator shows up at your door tomorrow. What’s the first thing your team scrambles to find? Is it evidence of task completion? Maybe a list of applicable regs? Updated policies? How about proof of communication to stakeholders? We saw a post this week asking for a current audit preparedness playbook because so many organizations think they’re ready, until they aren’t. 

Raw Truth about Compliance Audits 

Here’s the raw, unfiltered truth; no organization is ever ready for an external auditor or inspector. Ever. If you were, no one would panic when the FDA shows up at the door unannounced, or the state shows up in your lobby. “The state showed up the other day, and I knew why they were coming so I wasn’t unprepared.”  

The truth is you do your best, and you also expect the worst because they’re an auditor or inspector. Duh. It’s what they do.  

It’s like when you hear a funny rattle in your car. You take it to the mechanic. You know he’s gonna find SOMETHING. That’s his job. If you didn’t hear the rattle, you wouldn’t have taken it to him. You’re just hoping it is a minor repair rather than a total overhaul. Same with your audit, your auditor, and the rattle in your compliance practices. 

What to Know About the Healthcare Compliance Auditor 

Auditing is a formal, independent way to investigate regulatory compliance of a system or process within an organization. In accordance with regulations or industry best practices, an auditor assesses the adherence, adequacy and absence of certain processes.  

What a Healthcare Compliance Auditor Does 

• Identifies errors, omissions and irregularities.  
• Investigates the intent of possible wrongdoings. 
• Provides information regarding auditing procedures.  
• Submits reports to investigating authorities. 

Okay, A Compliance Audit Is Scheduled – What to Do? 

Once you know an audit is coming, use these five steps to prepare your organization. 

1. Make sure you can have as many of your team members available for the audit as possible, in case the auditor wants to schedule interviews with them.  
2. Provide a few date options for the auditor to choose from. A regulatory body like CAP, CLIA or FDA does not have to give warning of an audit and can arrive unannounced, but most audits are not unannounced. You have time to prep. Use it.  
3. Ask for an audit agenda as soon as you can. Review it.  
4. Alert the team that an audit will occur. This allows time to prepare any project-specific documents that may not be complete.  
5. About a week out from the audit, do a facility walkthrough to make sure there is nothing out of place. Do it two days out and then the day before. Yes, this much. You have people in your office. They move things.  

Once you have these steps under control, preparation becomes a case of do’s and don’ts. In other words, audit etiquette. 

What Is Audit Etiquette? Best Practices for Compliance Behavior 

Audit etiquette covers all the best practices required to facilitate smooth external audits. These vary slightly based on the health system’s existing compliance processes and experience facilitating them.  

In most cases though, following these techniques for what to do and what to avoid will drive positive, less stressful outcomes.  

What to Do in a Compliance Audit 

• Do listen to an auditor’s question and think before responding.  
• Do answer only the question that is asked. Stop talking.  
• Do ask for clarification if you don’t understand the question.  
• Do answer only those questions relative to your job.  
• Do be honest and pleasant. 
• Do treat the auditor with respect and courtesy at all times.  
• Do dress in business casual attire. 
• Do prepare to talk to the auditor and anticipate questions. 
• Do have quality obtain copies of taped conversations. 
• Do provide well-ordered, clear documents. 
• Do understand your policies and procedures. 
• Do keep computers locked when away. 
• Do close security-controlled doors. 
• Do keep paperwork organized and out of sight when possible. 
• Do escort the auditor at all times while on the premises. 

What Not to Do in a Compliance Audit 

Don’t guess. Say you don’t know or that you need to consult an SOP or defer to someone who is more suitable to answer the question. If you want to consult an SOP, describe the procedure in general terms with the auditor and then walk them through the details. Just saying “I have to consult my SOP” gives the impression that you aren’t trained. 

Here are other things NOT to do in an audit:  

• Don’t try to answer for someone else. 
• Don’t answer for another department or specialty. 
• Don’t offer additional information. Again, stop talking.  
• Don’t elaborate – answer only what is asked. 
• Don’t use hedge words (examples: I think, usually, normally). 
• Don’t guess when asked a question. 
• Don’t sign anything without legal approval.  
• Don’t argue with the auditor or inspection. Clarify anything the auditor misunderstood.  
• Don’t be rude or disrespectful to the auditor. 
• Don’t huddle. 
• Don’t panic. 
• Don’t lie. 

Practice Compliance Audit Etiquette with Confidence 

Regulatory bodies will give a report prior to leaving the audit. Ensure you engage with the necessary teams to give sufficient responses and have a plan for any noted observations. The observations and responses in a report will generally be the first items looked at in the next audit. Make sure you stay on top of these action plans and complete the items you have committed to. 

Also remember that auditors may be experts or novices based on the type and scope of the audit being performed. Do not assume you are the smartest person in the room when communicating with an auditor. Understand that the inherent authority of the auditor is dictated by the interested party they are advising. Their ability to influence a decision (that may have a significant impact on your organization) is the foundation of a desired outcome for you. That’s one reason why we recommend practicing good audit etiquette. 

More Resources about Compliance and Audit Readiness 

• Three Strategies to Align Compliance with Revenue Cycle 
• Audit Expectations and Challenges 
• Healthcare Audit? Stay Ready. Don’t Get Ready. 
• How to Use TPE Plans for Compliance Auditing and Monitoring 

John R. Nocero, Ph.D., and Andrea L. Bordonaro, MAT, blog on LinkedIn as “The Q-Kids,” discussing everything related to clinical research education, inspiration, and professional connection. 

Andrea has taught first grade in Willoughby, Ohio for 27 years in the same classroom that she attended school as a child. She earned a Bachelor of Science in elementary education with a minor in language arts from John Carroll University and a Master’s Degree in the Art of Teaching and Education from Marygrove College. 

John builds and fixes quality departments, while currently thriving as the Administrator & Director of Quality, Risk Management and Compliance at River Vista, a behavioral hospital in Columbus, Ohio.

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The Q-Kids – John R Nocero and Andrea L Bordonaro – are experts at everything quality, regulatory, education training and compliance and love sharing their knowledge on YouCompli.

Follow them on LinkedIn – for more quality content or send them a message – they’d love to hear from you.

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The post Audit Readiness? How about Audit Etiquette?  first appeared on YouCompli.

A conflict of interest (COI) in healthcare occurs when a person or organization involved in medical decision-making, such as a doctor, researcher or healthcare administrator, has a secondary interest (financial, professional or personal) that could compromise or influence their objectivity and clinical judgment.  

This secondary interest has the potential to affect decisions about diagnosis, treatment, or research in a way that’s not aligned with the best interests of the patient or public health.  

Key Components of a Conflict of Interest 

Key elements of a conflict of interest include: 

• Financial ties, such as relationships with pharmaceutical companies or medical device manufacturers 
• Personal or professional relationships that can bias medical decision making 
• Institutional interests that influence financial or strategic decisions 

Why COI Must Be Addressed 

The identification and mitigation of COI in healthcare is critically important because they directly affect the quality of patient care, the integrity of medical research, and the overall trust in healthcare systems.  

Here’s why it’s essential to avoid conflicts of interest: 

1. Protect Patient Health and Safety 

When a healthcare provider has financial or personal incentives that conflict with the patient’s best interests, it could lead to recommendations for unnecessary treatments or suboptimal care. This can directly harm patients, either through unnecessary side effects, prolonged treatments, or missed opportunities for better outcomes.   

Patients trust healthcare providers to make decisions based on their health needs, not on external incentives. If a physician is influenced by financial or personal gain, it undermines this trust and can result in patient harm. 

2. Ensure Clinical Objectivity and Best Practices with Evidence-Based Decisions 

In healthcare, clinical decisions should be grounded in the best available scientific evidence. COI can distort clinical judgment, leading to decisions based on profit motives or personal interests, rather than sound evidence or best practices. 

When decisions are made objectively, based on the best evidence and clinical standards, it ensures optimal outcomes for patients and trust in the system. 

3. Reducing Healthcare Costs by Avoiding Unnecessary Procedures 

COI can lead to overutilization of tests, procedures and treatments that are not medically necessary, inflating healthcare costs for individuals and insurance systems. Unnecessary treatments contribute to the rising cost of healthcare and can create financial burdens on patients, insurers and the healthcare system as a whole.  

Mitigating COI can lower costs by ensuring that treatments are based on necessity and effectiveness, not financial incentives. 

4. Preventing Fraud and Abuse in Healthcare Through Ethical Integrity 

COI can open the door to fraudulent practices, such as billing for unnecessary services, overprescribing medications, or manipulating patient data for personal gain.  

Addressing COIs protects the integrity of the healthcare system, ensuring that resources are used appropriately and that the system is not exploited for financial gain. 

Impact of Conflicts of Interest on Healthcare Systems 

Role of Compliance Officer in COI Management 

The compliance officer helps ensure transparency, ethical decision-making, and accountability, thereby protecting patients and maintaining system integrity. The compliance officer’s role in mitigating COI risk involves: 

Monitoring: Ensuring healthcare professionals and organizations disclose any potential COI, particularly financial or personal interests, that could influence decisions. 

Policy Enforcement: Implementing and enforcing clear COI policies and procedures, including guidelines for recusal or divestment when conflicts arise. 

Education and Training: Providing ongoing education to staff about identifying and managing COI to maintain ethical standards.  

Auditing and Reporting: Regularly auditing practices for compliance with COI regulations and reporting any violations to ensure corrective actions. 

An Unfortunate Example of a Deliberate COI 

In 2015, Dr. Farid Fata was sentenced to 45 years in a federal prison by U.S. District Judge Paul Borman. Dr. Fata, who had built an empire of upscale cancer clinics, intentionally misdiagnosed patients and illegally billed Medicare for the treatment.  

He grossly over-treated, under-treated, and misdiagnosed hundreds of patients by telling them they had cancer when they did not. He administered too much or improper treatment to others who did have cancer and continued to give chemotherapy to terminal patients who no longer needed it.  

Over $34M in Billings from Fraudulent Treatments 

About 550 patients have been identified as victims, with 34.7 million in billings to patients and insurance companies, and 17.6 million paid for work Dr. Fata admitted was unnecessary. Prosecutors say Dr. Fata was notorious for treating all his patients personally and keeping other medical professionals away.

The U.S. Attorney’s office said Dr. Fata, “is the most egregious fraudster in the history of the country, measured not only by the millions of dollars he stole but by the harm he inflicted on his victims.”   

This case is one of the most extreme, but it highlights a powerful conflict of interest where financial incentives result in harmful over-treatment of patients. Financial pressure or incentives, whether directly or indirectly tied to volume of procedures, can lead some physicians to recommend unnecessary treatments. These actions exploit the trust of patients, who rely on the expertise of their doctors for decisions that can affect their health, safety, and financial well-being.¹

Conflicts Embedded in Medical Guidelines and Standards 

A unique and mind-blowing aspect of COI in healthcare that few people realize is how deeply conflicts can be embedded in medical guidelines and “evidence-based” standards themselves, shaping the very definition of disease and thresholds for treatment in ways that drive profit more than health. 

When a physician prescribes a statin or a glucose-lowering drug, it feels like a purely clinical decision. But that decision is based on guidelines often crafted by panels with financial ties to drug manufacturers. Even physicians who believe they’re making objective decisions may be following protocols shaped behind the scenes by corporate influence. 

Medical guidelines—the foundation of diagnosis and treatment—are often written by experts who have financial ties to pharmaceutical or device companies whose products benefit from more liberal definitions of disease.   

The assumption is that practitioners and patients need guidance for medical decision making. But in many cases, it’s the interests of pharmaceutical and medical device companies subtly shaping the physician’s practice by influencing how diseases are defined. It seems like medicine is in control, but often, industry tailors the rules of the game through guideline panels, research funding and educational influence. 

Workforce Awareness Needed to Reduce COI 

Members of a healthcare organization’s workforce need to understand what constitutes a Conflict of Interest. COI occur when personal, financial, or professional interests interfere with objective decision-making that affects patient care, research, or organizational integrity.  

The workforce also needs to be aware of disclosure requirements, because they must disclose any potential COI to the compliance officer or management, especially financial relationships with outside entities. Workforce members have an ethical responsibility to prioritize patient welfare, transparency and integrity over external interests in all decisions. 

How Employees Should Respond to COI Suspicions 

If an employee suspects a COI might be an issue, they should promptly report suspicions to the compliance officer, management or through confidential reporting channels. If they are uncertain, the workforce member can seek advice on whether a situation constitutes a COI and how to proceed. This ensures accountability and maintains ethical standards in the organization. 

A solid conflict of interest mitigation process is crucial for a healthcare organization because it ensures patient safety, maintains ethical decision-making, prevents financial exploitation, and preserves public trust. Without it, the integrity of care is compromised, risks to patient health increase, and the organization’s reputation and legal standing are jeopardized. 

1. https://www.justice.gov/archives/opa/pr/detroit-area-doctor-sentenced-45-years-prison-providing-medically-unnecessary-chemotherapy  ︎

Susan is a healthcare compliance leader with over four decades working in a variety of administrative and managerial capacities, including strategic planning, regulatory oversight, revenue cycle risk mitigation, denial and appeal management, privacy and information security, healthcare advocacy, clinical department leadership, provider practice administration, risk management, and quality outcomes.  Currently, Susan provides compliance and privacy consulting services to a variety of healthcare organizations, including program implementation, policy and procedure development, compliance and privacy training, and regulatory oversight administration.  

Susan is a Certified Internal Auditor (CIA), Certified Healthcare Compliance (CHC), Certified Professional Coder (CPC) and holds a Certification in Risk Management (CRMA).  

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Peripheral vascular disease (PVD) reimbursement is fraught with potential compliance pitfalls. With increased scrutiny and worrisome statistics about improper payments, healthcare providers must identify and mitigate any PVD compliance risks that could jeopardize their operations.  

This expert-written blog addresses the pressing concern of compliance risks in PVD reimbursement. It provides insights into regulatory trends, recent investigations and best practices.  

Equip yourself with the knowledge to navigate this complex environment and safeguard your organization’s reputation and financial sustainability. Learn effective strategies to mitigate compliance risks in peripheral vascular reimbursement by focusing on medical necessity and adherence to guidelines. 

What’s your compliance risk when it comes to reimbursement for specific medical procedures like peripheral vascular interventions (PVD)? 

Hospitals, health systems and medical practices providing peripheral vascular procedures should be aware of recent scrutiny of these services by government enforcement agencies. 

What Therapies Target Peripheral Vascular Disease? 

Peripheral vascular disease can result in the narrowing or blockage of arteries in the periphery, such as the lower extremities. There are many different therapies to address PVD, including the typical first-line treatment of lifestyle changes and medications.  Lifestyle changes include quitting smoking, eating a healthy diet low in saturated fats, regular exercise and weight management. Some PVD medications include the statin class of drugs, antiplatelet agents, ACE inhibitors and others.   

If lifestyle changes and medications don’t work, and certain clinical criteria are met, patients can undergo peripheral vascular procedures. These are minimally invasive procedures intended to improve blood flow through the arteries. Angioplasties, atherectomies and placement of stents are types of peripheral vascular procedures. 

OIG Looks at Compliance Risk in PVD Reimbursement  

Enforcement agencies are concerned with the increasing volume of these procedures. The problem relates to suspicions that some clinicians perform these procedures when they’re not medically necessary. 

The HHS OIG has added two different projects to their work plan related to peripheral vascular procedures. The first is “Utilization of Peripheral Vascular Procedures and CMS’s Related Program Integrity Efforts.” They report that in one calendar year, Medicare paid more than $600 million for atherectomies and angioplasties in peripheral arteries with and without a stent.   

Editor’s Note: The Work Plan is a guide to OIG priorities around oversight and compliance. By reviewing the Work Plan, health systems can identify potential compliance risks and proactively take action to mitigate them. 

Fraud Concerns Over Vascular Reimbursement Volume 

The OIG also states that both CMS and whistleblower fraud investigations have identified these surgeries as vulnerable to improper payments. This particular project is designed to determine trends in Medicare fee-for-service for surgeries in peripheral arteries over several years and identify paid claims that exhibit questionable characteristics.  

The OIG will also describe program integrity activities that CMS and its contractors have taken to combat fraud, waste and abuse specific to procedures in peripheral arteries. The report is expected to be issued in 2026. 

Understanding Medicare Compliance for Vascular Interventions 

The second work plan project is named “Medicare Payments for Lower Extremity Peripheral Vascular Procedures.” The OIG reports that peripheral vascular procedures in an office setting have increased among the Medicare population over the past decade.  

In fact, OIG says for calendar years 2022 and 2023, Medicare paid approximately $1.16 billion for lower extremity peripheral vascular procedures in office settings. Their concern is that these procedures are generally recommended only after patients have exhausted medical and exercise therapy and have lifestyle-limiting symptoms.  

The OIG plans to analyze Medicare fee-for-service for peripheral vascular procedures for questionable characteristics. They would also like to assess whether these procedures complied with CMS requirements and met applicable treatment guidelines. This report is expected to be released in 2025 under report number W-00-24-35914. 

Whistleblower Fraud Investigations Find Compliance Issues 

The OIG reported that there have been some whistleblower fraud investigations concerning these procedures. One case recently occurred in Florida where the whistleblower was a physician who claimed a vascular center and its providers were performing and billing for medically unnecessary peripheral vascular procedures.   

The government intervened in the case and alleged the providers submitted false claims to Medicare for percutaneous transluminal angioplasties that were not reasonably or medically necessary because they were performed without appropriate diagnostic imaging or clinical justification.   

The case was resolved when the medical providers agreed to pay $810,301, of which $337,625 was restitution. The defendants also agreed to pay $85,000 for the whistleblower’s reasonable expenses, including attorneys’ fees and costs. 

Report: Faster Treatment, Higher Costs with Office Procedures 

The Journal of Vascular Surgery published a report in June 2024 that concluded Medicare patients with peripheral artery disease are treated more quickly but undergo higher cost interventions in office-based laboratories compared to outpatient hospital settings. 

The authors used publicly available Medicare fee-for-service claims data spanning a five-year period that identified all patients undergoing certain peripheral procedures for certain conditions. They then evaluated the associations of patient and procedure characteristics with the site of service. 

Steps for Compliance in Peripheral Vascular Reimbursement 

So, what’s a compliance officer to do?  The first step is to determine the level of involvement the organization has in these particular procedures.  

If found to be significant, it’s probably wise to evaluate the clinical guidelines and policies in place for use of peripheral vascular procedures. Most organizations have a medical director or department chair who could guide a review to determine if procedures are medically necessary.  

Seek Out External Resources about PVD Compliance 

Alternatively, seeking external expertise is also an option. Though professional societies’ clinical practice guidelines are not the “end-all,” it might be useful to reference such guidelines as a starting point.  

These might include: 

• Society of Vascular Surgery

• American College of Cardiology/American Heart Association Joint Committe

• Society of Interventional Radiology

Best Practices for Peripheral Vascular Procedure Compliance  

Most compliance programs only perform medical coding reviews of the procedure documentation, but the OIG suggests including medical necessity audits as well. In their General Compliance Program Guidance (GCPG) document, they state, “Medicare requires, as a condition of payment, that items and services be medically reasonable and necessary.  

“Therefore, entities should ensure that any claims reviews and audits include a review of the medical necessity of the item or service by an appropriately credentialed clinician. Entities that do not include clinical review of medical necessity in their claims audits may fail to identify important compliance concerns relating to medical necessity.” 

Given this, compliance professionals shouldn’t ignore the question of medical necessity for peripheral artery procedures. Scrutiny of these services continues to be a priority for the OIG and their work plan as well as the Department of Justice, as evidenced by cases that result either from data analytics or whistleblowers. 

Confident Compliance Starts Now 

YouCompli customers are confident in their approach to compliance challenges like managing PVD reimbursement. Learn more about the unique combination of expert human analysis and digital compliance management tools. 

CJ Wolf, MD, M.Ed. is a healthcare compliance professional with over 22 years of experience in healthcare economics, revenue cycle, coding, billing, and healthcare compliance. He has worked for Intermountain Healthcare, the University of Texas MD Anderson Cancer Center, the University of Texas System, an international medical device company and a healthcare compliance software start up. Currently, Dr. Wolf teaches and provides private healthcare compliance and coding consulting services as well as training.   

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The Nurse Who Slipped Through: A Tale of Missed Screenings and Million-Dollar Consequences 

ABC Health, a mid-sized midwestern provider, was thriving. With a regional flagship hospital, six outpatient clinics, a home health division, and a solid reputation for quality care, the CEO had just signed a five-year partnership with a major insurance network.  

There didn’t seem to be any cause for worry. The compliance officer insisted they ran exclusion screenings every quarter—plenty often, the executive claimed. 

Tech Failure Leads to “Minor” Exclusion Screening Lag 

But in Q3, the exclusion screening software glitched. It missed a monthly sync. Then a second. By the third missed month, the compliance officer dismissed it as “a minor lag,” promising the HR department everything would be rerun soon. 

Unfortunately, even a seemingly small glitch can have major consequences for healthcare compliance. 

ABC Health hired a new nurse in October. Her references checked out. She had a glowing record of employment. However, as it turns out, two years ago, she was convicted of Medicaid fraud while working under a different name in the southwest. She was on the OIG Exclusion List under her maiden name. 

But no one screened her for her maiden name at any time. 

Billings Accrue for Excluded Individual Over 11 Months 

The nurse worked at ABC Health for eleven months. In that time, she administered care to over 200 Medicare patients. ABC Health billed CMS more than $1.2 million for services in which she had direct or indirect involvement. 

In August of the following year, a whistleblower complaint hit the OIG hotline. An old colleague recognized the nurse’s face on ABC Health’s website. An investigation followed swiftly. The OIG cross-checked full names and dates of birth, matched alias records, and confirmed: ABC Health had employed an excluded individual. 

A Perfect Storm of Compliance Failure 

What followed was a perfect storm: 

• CMS demanded full repayment of $1.2 million in federal reimbursements. 
• Civil monetary penalties were levied—$20,000 for each false claim filed involving the excluded nurse. 
• The DOJ initiated False Claims Act proceedings, arguing gross negligence in compliance. 
• The state Medicaid program joined the fray, adding $400,000 in additional penalties. 

As this example shows, the fines, penalties, and reputational damage from exclusion failures are significant.  

Exclusion Screening as Compliance Practice and Risk Protection 

The OIG has the authority to exclude individuals and entities from federally funded healthcare programs pursuant to the Social Security Act and maintains a list of all currently excluded individuals and entities called the List of Excluded Individuals/Entities (LEIE). Anyone who hires an individual or entity on the LEIE may be subject to civil monetary penalties (CMP).  

Exclusion screening is critically important for healthcare provider organizations because failing to do it properly can result in severe legal, financial and reputational damage.  

Here are five reasons why you should take a look at your exclusion screening practices: 

1. It’s a Legal Requirement. 

Federal law prohibits payment by Medicare, Medicaid or other federal healthcare programs for any item or service furnished by an excluded individual or entity. This includes not just direct patient care but indirect services (e.g., billing, transportation, administrative work). 

2. Non-Compliance = Massive Penalties 

If your organization hires or contracts with an excluded individual, you must repay all related federal reimbursements. Plus, you could face: 

• Civil Monetary Penalties (CMPs) — up to $20,000 per item/service 
• False Claims Act liability 
• Exclusion from federal healthcare programs, particularly Medicare and Medicaid 

3. Exclusions Are Not Always Obvious. 

Individuals can be excluded under different names, maiden names or aliases. Not all exclusions stem from obvious crimes. Some involve license issues, fraud or administrative findings. 

4. Exclusions Can Happen at Any Time. 

A person not excluded today could be excluded tomorrow. That’s why ongoing, monthly screening is so essential, not just one-time checks during hiring. 

5. It Protects Patients and Upholds Trust. 

Exclusion screening helps prevent unqualified or unethical individuals from delivering care. It’s a cornerstone of patient safety and organizational integrity. 

Regular exclusion screening isn’t just good compliance practice. It’s a regulatory safeguard that protects your organization from fraud, fines and harm to organizational credibility and business integrity. 

So, What Happened at ABC Health? 

The ABC Health board fired the compliance officer; the CEO resigned, and ABC Health declared bankruptcy within six months. The company’s name became a case study in compliance seminars across the country.  

And in a final twist, what happened to the nurse? She vanished before investigators could issue a subpoena. Her exclusion had never expired.  

Moral of the Story: In healthcare compliance, skipping or delaying exclusion screening isn’t just an oversight—it’s a significant risk with high-stake consequences. 

How to Avoid Exclusion Screening Problems 

How can problems like these be avoided? One way is better tracking and management of compliance processes using a tool like YouCompli. Know what the responsibilities are and verify when they are completed. Then confidently manage ongoing compliance processes to avoid situations like what happened to ABC Health.  

Reference Material:   

• U.S. Department of Health & Human Services. Office of Inspector General. Exclusions Program.   
• Background Information.  https://oig.hhs.gov/exclusions/background.asp  
• Exclusions FAQs.  https://oig.hhs.gov/faqs/exclusions-faq/  
• The HIPAA Journal. “What are the HHS OIG Background Check Requirements?”  https://www.hipaajournal.com/hhs-oig-background-check-requirements/  
• U.S. Department of Health & Human Services. Office of Inspector General. Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs. (May 8, 2013).  https://oig.hhs.gov/exclusions/files/sab-05092013.pdf  

Susan is a healthcare compliance leader with over four decades working in a variety of administrative and managerial capacities, including strategic planning, regulatory oversight, revenue cycle risk mitigation, denial and appeal management, privacy and information security, healthcare advocacy, clinical department leadership, provider practice administration, risk management, and quality outcomes.  Currently, Susan provides compliance and privacy consulting services to a variety of healthcare organizations, including program implementation, policy and procedure development, compliance and privacy training, and regulatory oversight administration.  

Susan is a Certified Internal Auditor (CIA), Certified Healthcare Compliance (CHC), Certified Professional Coder (CPC) and holds a Certification in Risk Management (CRMA).  

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The post Exclusion Screening Failure Causes Compliance Nightmare  first appeared on YouCompli.