Compliance shield may cut risk of fraud, abuse
". . .an important defense in the event of a government investigation of billing or other irregularities"
Program can limit legal, business, professional risksBy Robert J. Saner and Ana-Maria McKessy
As federal and state efforts to detect and punish Medicare and Medicaid fraud and abuse increase, medical practices have growing cause for concern that they may become the subject of a health care fraud and abuse investigation. Reimbursement disputes, and even simple billing mistakes-once handled by Medicare carriers as simple overpayments in a nonadversarial context-are now the bases for potential civil, and in extreme cases, even criminal prosecution. Many orthopaedic practices are increasingly involved in contract and investment relationships with other health care providers which also raise concerns about compliance with physician self-referral, antitrust and other state and federal healthcare laws.
Formal practice compliance programs, once limited to very large health care companies, are increasingly seen as an appropriate practice management response to limit legal, business and professional risks. This article provides an introduction to compliance programs, designed to assist orthopaedic practices in evaluating whether such a program is appropriate for a given practice and, if so, how to go about establishing one.
The U.S. Department of Justice (DOJ) has made health care fraud a high priority, second only to violent crime. Medicare and Medicaid fraud has become the crime of the 1990s, comparable to the savings and loan and Defense Department contracting cases of the 1980s. Congress has provided the DOJ, the Office of the Inspector General (OIG), other federal law enforcement agencies, and the states with vastly increased resources to detect and prosecute fraud and abuse.
While cases involving large organizations get the most attention, providers of all types and sizes are potentially at risk, and physician practices are no exception. Indeed, the government recently announced the settlement of a false billing investigation against a small ophthalmology practice in which the physician paid back $375,000, more than 10 times the amount of the Medicare billings at issue, and agreed to a very onerous five-year corporate integrity plan imposed by the government.
The government's favorite prosecutorial tool is the civil False Claims Act with penalties of $5,000 to $10,000 per claim, plus triple the amount of the claims. Other sanctions available are civil monetary penalties under the Social Security Act, and exclusion from federal health care programsóthe "kiss of death" for any practice with a substantial number of Medicare patients. The threat of criminal prosecution of both individuals and organizations is also increasingly real for health care providers.
Having an effective corporate compliance program can, be an important defense in the event of a government investigation of billing or other irregularities. While it does not guarantee immunity from prosecution, it evidences the practice's commitment to compliance, and the DOJ and OIG take it into account in both formal and informal ways. It can influence whether an audit leads to an investigation; whether the investigation is civil or criminal; whether the investigation leads to settlement, and on what terms, or to prosecution; whether the prosecution is civil or criminal; and if a criminal conviction results, the severity of the sentence.
No federal statute or regulation requires an orthopaedic practice to implement a compliance plan. Thus, the decision to establish one and how to design it are at the discretion of each practice. That situation changes, however, if an investigation is commenced, wrongdoing is discovered, and the practice wants to settle the matter with the government. Almost all health care settlements with the government include the imposition of a compliance program designed by the government, but of course implemented at the expense of the practice. These mandatory compliance plans involve extensive internal auditing and external reporting obligations, and effectively result in the practice operating under ongoing government supervision for five years or longer. Breach of obligations imposed by these plans can trigger automatic program exclusion. Thus, another clear advantage of adopting a compliance effort voluntarily is to reduce the risk of a less flexible program being imposed.
There is no perfect program appropriate to all practices. While the government has issued a "model" plan for clinical labs, and may issue a similar model for physicians some time in the future, these models are not off-the-shelf programs that can be readily implemented. They are more in the nature of guidance on how to design a plan, and what elements are necessary before the government will deem a compliance program to be effective. These elements are derived from the Federal Sentencing Guidelines adopted in 1991 for use by federal judges, and these guidelines more that anything else have introduced some standardization to compliance program design. To be deemed effective under the Sentencing Guidelines, a program must cover seven basic elements:
These standard features can be implemented in radically different ways depending on the size and characteristics of the practice. Nonetheless, many practices view compliance programs as yet another major cost at a time when cost control for practices is a very high priority. While a poorly designed plan may be quite costly, an efficient one which builds upon internal systems and controls already in place need not be.
Against the costs of a program, the practice must weigh the likely benefits. A primary purpose of a good program is to prevent violations of law before they happen, and if they happen, to detect and correct them before they mushroom into a serious audit or enforcement problem. By expending some resources early and voluntarily, the group may avoid much greater liabilities down the road.
The first step to designing a compliance program is the implementation of a comprehensive legal audit to identify areas which may be of significant risk to the practice group. For most practices, these areas include compliance with Medicare and Medicaid billing requirements, the anti-kickback and Stark physician self-referral laws, and state laws regulating physician practices. The audit should also include a review of contracts and investment relationships with other organizations for potential fraud and abuse violations. Audits of large practices might also include an analysis of the risk of antitrust violations.
No two orthopaedic practices will have exactly the same needs in the compliance area. Those with high-volume, office-based practices will likely wish to focus initial efforts on coding and documentation for ambulatory visit services. Specialized surgical practices on the other hand will want more education and training on the surgical billing issues unique to their practices. A practice that makes heavy use of in-office physical therapy and other physician extenders will need to focus on Medicare's "incident to" billing requirements. Those with their own in-office imaging facilities, and who supply prosthetics or durable medical equipment, may need to start with a focus on Stark law compliance, and particularly Stark's restrictions on physician compensation plans as they relate to imaging and other ancillary service revenues.
Practices that have external investment and contract relationships with hospitals, managed care companies, ambulatory surgery centers and other physician groups will need to look at issues pertaining to the Stark anti-kickback law. In fact, while most of the focus in physician compliance programs today is on billing, coding, and related documentation concerns, tomorrow, the greater risks for some practices will be these self-referral issues.
Practitioners should also develop clear written standards of conduct, setting forth the group's commitment to honesty, integrity and professionalism in all of its dealings with the federal health care programs. These standards should be communicated to all employees through training programs and the distribution of written materials explaining what is required of them. Compliance with the written standards of conduct should be a condition of continued employment.
Practices should also incorporate monitoring and auditing mechanisms, such as reviews of written documentation, on-site visits, prospective billing audits, and interviews with personnel involved in management operations. This feature is an important part of any compliance program because it ensures that the program is actively implemented and that policies are enforced. Since the implementation of certain monitoring and auditing systems may be somewhat costly, group practices with limited resources may consider simply incorporating such systems into already existing procedures.
Another essential feature is the implementation of some mechanism for open communication so that employees may report potential wrongdoing, ask questions about the group's practices or policies, and obtain information about the compliance program. This may be as simple as providing a post office box for anonymous reporting, and having an open-door policy to respond to employee questions.
Finally, it is of primary importance that a compliance program be designed to fit the size and special needs of the practice. Larger practices will likely require more extensive procedures and resources for training, monitoring, and auditing, than smaller ones can afford. Ultimately, however, a compliance program which is designed to address the unique concerns and risks facing a particular group will be more effective than an "off-the-shelf" compliance program that does not fit the group's circumstances. Thus, while an effective compliance program may require a serious commitment of time and resources, if it is properly implemented, it can substantially reduce the risk of a government enforcement action, and may eliminate or minimize substantial expenditures in the future.
This is the first in a two-part series on practice compliance programs. The second article will address many of the practical issues which arise in the development and operation of compliance programs in orthopaedic practices.
Robert Saner and Ana-Maria McKessy are attorneys with the law firm of Powers, Pyles, Sutter & Verville, P.C. Based in Washington, D.C., Powers, Pyles conducts a national health care law practice.