Compliance Program for Healthcare Providers

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Table of Contents

Abstract
Introduction
What is a compliance program?
Anti-Kickback Statute
False Claims Act
Medicare D
Qui Tam Suits
Conclusion
References

Abstract

The compliance program bridges the gap between understanding the law and figuring out what your health care employer needs to do to comply. The term “compliance program” was initially used in connection with the government.

This research essay discusses in detail about compliance programs to be followed by U.S healthcare providers

Introduction

A compliance program for the hospital can be explained as a tool to help hospitals in America in conceiving “efficient internal checks that encourage observance of applicable both federal and state law and the program mandates of private, federal and state health plans. In 2004, the ‘Office of Guidance for Hospitals’ (OIG) issued a supplementary compliance guidance program, which addressed the shortfalls of compliance issued by OIG in 1998. These guidelines offer guidelines to hospitals for setting up a compliance program. The supplementary compliance program guidelines focus on the following areas.

Provision of precise information and claims.
Anti-kickback and self-referral statues.
Payments to minimize or limit services.
Associations with the federal health care plan beneficiaries.
Security and HIPAA privacy rules.
Inferior care services.
The Emergency Medical Treatment and Labour Act.

Further, provisions regarding preventive care, liberal concessions to uninsured patients, and professional courteousness are also deliberated in the supplementary Compliance program guidelines.

The new privacy regulations demand that healthcare providers and hospitals have to comply with these regulations by appointing a Chief Compliance Officer (CCO) to supervise regulatory compliances of such hospitals.

This research essay discusses in detail compliance programs to be followed by U.S healthcare providers and the provisions of various laws that have to be observed by the healthcare providers in the U.S.A.

What is a compliance program?

According to Robert Desle Miller, the majority of health care entities are now spotlighting compliance programs to observe the compliance with the intricate governmental needs especially on criminal laws provisions so that they do not deviate from those provisions. The primary aim is to achieve the non-infringement of those criminal law provisions. The U.S government itself has advanced model compliance programs for home health agencies, hospitals, and other healthcare service providers.

It is to be observed that as a part and parcel of settlement agreements, certain hospitals had to concur to create costly compliance programs in the structure demanded by the government which is known as ‘Corporate Integrity Agreements.’ (Miller, 2006, p.682).

If a hospital peruses voluntary compliance then it means that it can escape closer scrutiny but it could lead to false claims charges.

There are various enforcement agencies both at the federal and state level and also by certain private agencies. These prosecuting agencies closely monitor the activities of health care providers and intervene to book the serious infringers. For instance, the health care providers who are billing the patients for services not provided by them are being prosecuted by these enforcement agencies.

Under Federal healthcare enforcement mechanisms, federal healthcare programs like ‘Anti-kick-back statue’, the civil money penalties law, and the False Claims Act will be the main enforcement tools to monitor, investigate and control healthcare-related frauds. (Rabecs, 2006, p.727).

Under the compliance program, there have been some contentious national programs namely DRG Three-Day Window and Operation Bad Bundle Project. For instance, at his testimony before congress, the CEO of Ohio hospital explained that in the compliance program, a hospital was given an opportunity of either

Deferring $ 25,000 for overpayments plus $25,000 penalties for overpayment of approximately $ 2 per bill and had to formulate a corporate compliance program at an outlay of $ 100,000.
Else, should prove before the court that billing errors were not fraudulent in nature but too with the jeopardy, if it was held by the court that there was a fraudulent intention, then the hospital needs to pay the three times of overpayment and $10,000 per claim or a total of over 135 million which was approximately ten times of the hospital’s yearly budget and such hospitals would be excluded from Medicaid and Medicare involvement in the future.

Thus, hospitals would be pushed to a precarious position for a compulsory settlement as they would not dare to meet the peril of bankruptcy and shutting down its shutters by deciding to contest the same in the court.

Having encountered numerous cases of overpayment, finally, wisdom has dawned on the Department Of Justice which then understood that in most cases, it was employing bad data as the source for its demands and hence it modified its compliance program. (Miller, 2006, p.684).

On the other hand, due to some malpractices in the DRG Three-Day project, Congress in 1990 amended the Medicare legislation to make it compulsory for all outpatient services offered within three days before hospital admission could not be billed separately.

Despite the fact that though hospitals have achieved a good rate of compliance, the Department of Justice implemented a Zero Tolerance rule retrospectively and demanded settlement. Hospitals fearing mammoth penalties reluctantly paid the fines for their survival.

One another issue that American hospitals encounter is the presence of various independent enforcement authorities which makes enforcement more intricate and it confuses the providers to decide with which enforcement authority the settlement has to be arrived at. One irritating issue is that information revealed to one enforcement agency may be used to prosecute or levy penalties by other enforcement agencies on service providers.

There is a vast difference between a civil and a criminal penalty as criminal penalties can only be imposed by courts whereas a civil penalty can be imposed by enforcement agencies. For imposing a criminal penalty, the government should substantiate its case beyond a reasonable doubt.

Under a compliance program, a healthcare service provider should be more careful with the following offenses for which criminal penalties have been prescribed.

Wrongful health care decisions.
Failure to observe billing requirements.
Indulging in Medicaid and Medicare abuse and fraud.
Death or significant injuries that emanate from health care decisions.
Intentional end-of-life decisions.

A healthcare provider should aware that if any Medicare bill for any service that does not cater to the required quality and records will be considered as a fraudulent bill under Medicare law and criminal proceedings will be imposed for such fraudulent billing. For instance, the total quantum of fines collected for fraud billing has been increasing tremendously. About $3.30 billion was collected as a fine for fraud billing in the year 1990. Further, from 2000 to 2002, the total fine collected was $4.3billion. The fraud fine collection was estimated at about $2billion in 2003. (Miller, 2006, p.693).

Further, according to DOJ, it has recovered about $1.5 billion in fraud resolutions and judicial decisions for the financial year closing September 30, 2005. Health Care fraud resolutions and judicial decisions constituted a major share of all fraud resolutions and judicial decisions in the past several financial years in the U.S.A. (Rabecs, 2006, p.727).

Anti-Kickback Statute

This statute provides both civil and criminal penalties for soliciting either knowingly, willfully any bribe, kickback, or rebate either overtly or covertly, directly or indirectly for referring an individual under a Federal Health Care Program.

Under Compliance program, a healthcare provider should know that any misrepresentations and reports under Medicaid / Medicare claims under anti-kickback statue would invite both fine and imprisonment and fine will be subject to a maximum fine $ 25,000 and along with an imprisonment of five years. For instance, a federal appellate court, in 1987 upheld the verdict of lower court for convicting a physician for employing inappropriate billing codes on claims.

However, so as to prevent for initiating action for commonplace business arrangements under Anti-kickback law, ‘Safe harbors ‘provision has been enacted to facilitate the healthcare industries to design their commercial agreements to accomplish all the criterion of a pertinent safe harbor which are protected from legal responsibility under the provisions anti-kickback law. To educate the healthcare providers, OIG has issued a ‘Special Fraud Alerts’ to recognize some applications that may infringe the provisions of Anti-Kickback Statute. (Rabecs, 2006, p.727).

False Claims Act

Under this Act, if anyone either knowingly causes or presents a fictitious or false claims for payment from U.S government, will be entitled to criminal penalties. Even, reckless claim can also be regarded as fraudulent claim under this Act. Due to false claim, if there is any financial loss to government, then defendant should compensate U.S government three times of those damages caused and have to pay a penalty of $ 5000 to $ 10,000 for each false claim. Thus, it penalizes healthcare institutions that file fraudulent claims with the government.Many healthcare providers have been convicted for fraudulent claims under this Act.

Under “bundled “payment, hospitals that wrongly billed for X-rays and other diagnostic tests which Medicare covers for senior citizens will be prosecuted.

Under Compliance program, it is illegal to make referrals by healthcare providers and there should not be any kickback or payments to either doctors or hospitals to encourage drug sales. A drug manufacturing company paid more than $885 million as federal fines in 2001 on the charges of paying kickbacks and bribing the hospitals and physicians to encourage drug sales. Further, doctors are prohibited from self-referrals for attaining financial interest by referring a patient to a specific medical facility. This is called as Stark law. A hospital administrator at Kansas was sentenced to federal prison for making payments to doctors that infringed the Stark rules. There were instances where physicians have been sentenced for mail fraud for bills submitted to private insurers. (Miller, 2006, p.700).

Medicare D

A new program which has been christened as ‘Medicare Part D’ was introduced in response to the “MMA (Medicare Prescription Drug, Improvement and Modernization Act of 2003). Under this plan, Medicare benefit recipients especially for outpatients will be receiving a portion of Medicare treatment and medical compensation for their drugs prescribed by physicians. Some researches have projected that the Part D agenda will involve an outlay of $721 billion during its initial years and hence due to its size, Part D program will be the centering on fraud mongers. Since Part D program has a mammoth outlay, examination into scam and misuse will be much more rigorous. (Rabecs, 2006, p.727).

A Michigan hospital was charged with wire and mail fraud in 2003 for having submitted bills for involving medically unnecessary formalities. Hospital pleaded guilty and it was positioned in federal pretrial diversion with a compliance agreement for the ensuing three years. Hospital agreed to pay $ 1million fine and full restitution to private insurers and Medicare providers.

Enforcement authorities are having wide powers to suspend payments to healthcare providers when investigations of suspected infringement and courts normally will not criticize such suspensions. Further, it has power to recoup the amount lost due to misfeasance from the future payments.

Further, the department of Health and Human Services (DHHS) has ample powers to keep out any healthcare providers who infringe anti-kickback, false claims, medical necessity, self-referral or medical quality requirements from partaking in Medicaid, Medicare and various other federal programs. In some cases, exclusion is mandatory whereas in some other cases it is lax. Where it is of permissive in nature, HHS will be offering corrective plans in lieu of exclusion. Generally, such excluded entities or persons are not allowed to deal with the existing healthcare providers. Reinstatement is possible to healthcare providers if there is a change in either management or ownership. (Miller, 2006, p.703).

Further, HHS is having power to levy huge civil penalties for infringement of Medicaid and Medicare abuses and frauds.

Qui Tam Suits

A qui tam suit can be filed by an individual under the False Claims Act with knowledge of fraud unleashed against the U.S government on behalf of federal government. Further, such whistleblower is entitled to receive a quantum not exceeding 25% of the fines levied because of such revelations. A qui tam suit can be filed only on conceived information and not on the basis of public information unless the whistle blower had the unique source of the public information. Government investigators and auditors are excluded to be whistleblowers who are under a duty to unravel the information. Under qui tam claims, an employee is having protection even before such proceedings are initiated. However, medical staff members who are not employees of a healthcare provider do not have any protection under qui tam claims proceedings.

Conclusion

The quantum of enforcement activity and investigation process involving health care frauds is liable to augment in the ensuing years due to introduction of innovative programs like Medicare Part D plan. One of the administration’s chief arms in fighting fraud, the Anti-Kickback Statute, seems to be employed by government enforcement authorities in waging war against misuse and fraud among the U.S healthcare benefit programs.

Hence, hospitals, drugstores and pharmaceutical manufacturers must initiate care to make sure that their activities are designed in a complaint style including cost-sharing obligations to comply with the recent OIG guidelines. (Rabecs, 2006, p.727).

Doctors should be more scrupulous in their documentation. A training program should be conducted at frequent intervals educating doctors to follow Medicare billing rules, the federal enforcement initiatives which eventually target group practices associated with hospitals and updating of various laws concerning healthcare industries. Further, a hospital is required to submit its annual healthcare compliance report and hence it should have a strong inbuilt compliance program to structure such annual compliance report.

References

Miller, Robert Desle. (2006). Problems in Health Care Law. Sudbury: Jones & Bartlett.
Rabecs, R. N. (2006). Health Care Fraud under the New Medicare Part D Prescription Drug Program. Journal of Criminal Law and Criminology, 96(2), 727+.
Schmidt, W. (2004). Chief Compliance Officer: Ensuring Self-Governance Responsibilities. Public Management, 86, 26+.

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