Inspector General Issues Draft Compliance Program Guidelines For Individual And Small Group Physician Practices
August 1, 2000
The Department of Health and Human Services’ Office of Inspector General (OIG) recently issued draft compliance guidelines to assist physicians of solo and small group practices in developing voluntary procedures to prevent fraud and abuse in government health care programs, including Medicare and Medicaid. Although the OIG believes that the majority of physicians are honest and strive to provide high quality medical care, it emphasizes that every health care provider is responsible for ensuring that claims submitted to government health care programs are true and accurate. According to the OIG, the implementation of voluntary compliance programs allows physicians to better protect their practices from the potential for fraudulent or erroneous conduct and engenders confidence in our health care system. The guidelines note that physicians are not subject to criminal or civil penalties for innocent mistakes or negligence. The False Claims Act only includes offenses that are committed with actual knowledge of the falsity of the claim, reckless disregard, or deliberate ignorance of the falsity of the claim.
Similar to previous guidance offered to hospitals, clinical laboratories, nursing facilities, home health agencies, durable medical equipment suppliers and others, the draft physician guidelines are based on the following seven elements: (1) implementation of standards of conduct and written policies and procedures; (2) assignment of compliance monitoring to a compliance officer; (3) development of in-depth training and education programs; (4) performance of internal monitoring and auditing; (5) creation of accessible lines of communication to update employees on compliance issues; (6) enforcement of disciplinary standards through well-publicized disciplinary directives; and (7) investigation of allegations and prompt corrective action to detected offenses. The OIG emphasizes that while it may not be feasible for smaller practices to implement all of the recommended elements, a good faith commitment to compliance will minimize errors and help prevent penalties for improper billings.
Potential Risk Areas
The draft guidelines discuss potential risk areas affecting small physician group providers, including coding and billing, the provision of reasonable and necessary services, documentation, and kickbacks, inducements, and self-referrals. The guidelines note that, before a physician practice enters into a business arrangement that involves making referrals, it should consider employing health care attorneys to review the arrangement for potential violations of federal law. Examples of such laws include the anti-kickback statute, which provides criminal penalties for individuals and entities that knowingly offer, pay, solicit, or receive bribes or kickbacks to generate business reimbursable by federal health care programs, and the Stark Law, which prohibits physicians from making referrals to entities in which the physicians or any members of their immediate family have a financial interest if the referral is tied to the provision of designated health services, unless the financial relationship fits into an exception.
The guidelines specify that a major part of a physician practice’s compliance program should be the identification of risk areas relating to coding and billing. The OIG identifies the following billing practices as among the most frequent subjects of investigations and audits and recommends implementation of written policies to avoid them: (1) billing for services or items not rendered or provided; (2) seeking reimbursement for medical supplies, equipment and services that are not reasonable and necessary for the diagnosis or treatment of illness; (3) engaging in double billing; (4) billing for non-covered services; (5) knowingly misusing provider identification numbers; (6) billing for unbundled services; (7) failing to properly use coding modifiers; and (8) upcoding the level of service provided.
Foster Culture that Embraces Compliance
The OIG emphasizes throughout the guidelines how a physician practice, consistent with its size and resources, may foster a culture that embraces compliance. Establishing an open line of communication among members of a practice is essential to an effective compliance program. For example, small physician practices should consider instituting clear “open door” policies between the physicians and compliance personnel to address concerns about compliance issues. The OIG also recommends posting notices in common areas and/or developing a compliance bulletin board containing current compliance information. To ensure effective communication, a physician practice should also consider:
(1) requiring employees to report fraudulent or erroneous conduct; (2) implementing a user-friendly system, such as an anonymous drop box, for reporting such conduct; (3) instituting sanctions for failure to report fraudulent or erroneous conduct; (4) creating a simple procedure to process reports of fraudulent or erroneous conduct; (5) developing a process that ensures the confidentiality of the alleged perpetrators and the person reporting such conduct; and (6) ensuring that there will be no retaliation for reporting conduct that a reasonable person in good faith would have considered fraudulent or erroneous.
Investigate All Allegations
The guidelines further emphasize that a physician practice’s failure to comply with statutes and regulations applicable to government health care programs seriously undermines its status as a reliable and trustworthy provider of health care. A practice jeopardizes its legal status and reputation if it fails to take corrective action once it learns of fraudulent or erroneous conduct. Accordingly, upon receipt of reports of noncompliance, the OIG recommends compliance officers investigate the allegations and take steps to correct any problems that are discovered, including implementing a corrective action plan, returning any overpayments, and/or reporting violations to the government. The OIG also advises physician practices to seek legal advice to determine the extent of its liability and an appropriate course of action. Investigating problems and instituting appropriate corrections provide strong evidence to government prosecutors of a lack of criminal intent.
According to the OIG, “[j]ust as immunizations are given to patients to prevent them from becoming ill, physician practices should view the implementation of an effective compliance program as comparable to a form of preventive medicine to protect against fraudulent or erroneous conduct.” The draft compliance program guidance was published in the Federal Register on June 12, 2000, and is available online at www.dhhs.gov/progorg/oig/modcomp/index.htm.