OIG Compliance Guidance For DME And Hospice Industries
 
September 1, 1999
 

Ambrose Bierce once observed that physicians are those "upon whom we set our hopes when ill and our dogs when well." Bierce may well have debated that idea today in the context of increasing government involvement with healthcare providers. This involvement extends to the definition and clarification of standards for compliance with the requirements of the Medicare and Medicaid programs.

Consistent with this trend, the Office of the Inspector General of the Department of Health and Human Services (OIG) recently issued Draft Compliance Guidance for the Durable Medical Equipment, Prosthetics, Orthotics and Supply Industry (DMEPOS) and the Hospice Industry (Hospice). The DMEPOS and Hospice programs are the most recent additions in a two-year effort by OIG to provide compliance guidance and are preceded by guidelines for clinical laboratories, hospitals, home health agencies, third-party medical billing companies, and Medicare+Choice organizations. OIG characterizes compliance guidance as voluntary, but federal policy increasingly demonstrates the practical requirement of a compliance program. Recent regulations, for example, require that Medicare+Choice organizations enact compliance plans before they are allowed to contract with the Health Care Financing Administration to provide services to Medicare beneficiaries.

Like their predecessors, the DMEPOS and Hospice compliance guidance are based on seven fundamental elements for corporate compliance, as set forth in the Federal Sentencing Guidelines. These elements call for implementing written policies, procedures and standards of conduct; designating a compliance officer and compliance committee; conducting effective training and education; developing effective lines of communication; enforcing standards through well-publicized disciplinary guidelines; conducting internal monitoring and auditing; and responding promptly to detected offenses and developing corrective action. In addition to these fundamental areas, OIG compliance guidance points out industry-specific risk areas.

The DMEPOS guidance, for example, identifies 47 specific risk areas for DMEPOS suppliers, including improper telemarketing practices; continuing to bill for rental items after they are no longer medically necessary; providing and/or billing for substantially excessive amounts of DMEPOS items or supplies; and improper conduct relevant to completing certificates of medical necessity. The Hospice guidance addresses more than 50 such risk areas, including uninformed patient consent to elect Medicare Hospice Benefit; admitting patients to hospice care who are not terminally ill; knowing denial of needed care in order to keep costs low (under-utilization); and improper relinquishment of core services and professional management responsibilities to nursing homes, volunteers, and privately paid professionals. Specific risk areas are also discussed in the seven structural areas identified above.

Once in place, an "effective" compliance plan is viewed favorably by the OIG when deciding the scope, settlement, and penalties associated with a governmental investigation. However, examples of "effective" compliance, as cited in the DMEPOS and Hospice guidance, raise questions that are not easily resolved. For example, the Hospice guidance states that the "documented practice of refunding of overpayments and self-disclosing incidents of noncompliance with federal health care program requirements can serve as evidence of a meaningful compliance effort by a hospice." Clearly, the materiality of any particular compliance incident will affect the decision whether to self-disclose. On another point, the Hospice guidance provides that "[i]n today's intensive regulatory environment, the OIG believes that a provider cannot possibly have an effective compliance program if it receives minimal or no feedback from its employees regarding compliance matters." While this observation accurately reflects the complexity of laws affecting healthcare providers, it does not acknowledge that other causes may exist for low levels of reporting, including the existence of a long-standing and well-functioning compliance program. In still another example, the OIG cautions that a provider must refund overpayments promptly or risk administrative, civil, and criminal penalties. However, the Hospice guidance also states that overpayments include instances where a hospice is "paid for care rendered to patients who are not terminally ill." Providers must thus insure that physicians understand and their patients meet the Medicare criteria for "terminal illness," or such providers are at risk for overpayment assessment and attendant penalties.

In summary, the recent DMEPOS and Hospice compliance guidance provides welcome direction, but leaves significant legal and operational questions for resolution by the provider. DMEPOS and hospice providers would be well-advised to analyze this guidance closely and to consider carefully how and to what extent it should be incorporated into their current operations.