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Office of Inspector General Publishes Final Compliance Program for Individual and Small Group Physician Practices

David M. Tralins, Esq.

On October 5, 2000, the Office of Inspector General of the U.S. Department of Health and Human Services published in the Federal Register the final version of a Compliance Program for Individual and Small Group Physician Practices (the "Program"). The document follows a draft released for comment in June after an extended comment period.

The OIG emphasizes the voluntary nature and flexibility of the Program. The document attempts to offer a practical approach to physicians who wish to follow sound compliance procedures with respect to rules and laws pertaining to Federal health care programs, to which the Program is specifically limited.

The OIG observes that innocent errors in billing, even negligent ones, are not subject to enforcement actions under the False Claims Act or the Civil Monetary Penalty law. The OIG claims to be mindful of the difference between erroneous claims and reckless or intentionally erroneous claims. For criminal statutes to apply, criminal intent to defraud must be proven beyond a reasonable doubt. The duty of physicians is to reasonably ensure that the claims submitted are true and accurate.

The OIG stresses that a sound starting point for a physician compliance program begins with the seven basic elements of compliance set forth under Federal sentencing guidelines. Implementation of all elements may not be feasible for all practices, but a good faith meaningful commitment is important to the smaller ones.

Policies and procedures relative to the following areas are important, whether or not a formal "compliance program" is in place.

1. Conduct of internal monitoring through periodic audits;

2. Development of written standards and procedures for the practice;

3. Designation of a compliance officer or a monitor of compliance efforts and enforcer of practice standards;

4. Conduct of appropriate training and education on practice standards;

5. Response to detected violations;

6. Development of open lines of communication to staff; and

7. Enforcement of disciplinary standards through practice guidelines,

The OIG permits the "sharing" of a compliance officer so long as that person, if he or she is "offsite," has sufficient contact with the practice to serve in that capacity. The use of a practice liaison is suggested and practices are reminded of potential kickback issues when outsourcing compliance duties.

Education and training are emphasized. In addition to "in person" training, newsletters as well as office bulletin boards can be used, but the OIG reminds that providing reading material for recipients to comprehend on their own is "seldom sufficient." The OIG recognizes that hotlines and separate email boxes may be too expensive for many practices to implement for purposes of communication. Instead, physicians may rely on a clear "open door" policy between the physicians, compliance personnel and practice employees used in conjunction with clear postings on practice bullentin boards and in notices to employees. Additionally, there must be clear communications with billing companies about areas of concern.

Each practice must decide if claims are to be reviewed retrospectively or concurrently for compliance. The OIG recommends a "baseline" audit to determine the practice’s progress in reducing or eliminating areas of vulnerability.

There must be enforcement and disciplinary procedures in place to put teeth into a compliance program. In addition, there should be prompt action to correct erroneous overpayments. Reports of fraudulent activity should be investigated immediately. Failure to detect fraudulent conduct is an indication that the compliance program is not working.

Additional risk areas include the following:

A. Lack of familiarity with local medical review policy on covered services.

B. Failure to provide or properly formulate Advanced Beneficiary Notices to convey to patients that an item or service may not be covered by Medicare so as to allow the beneficiary to make an informed decision regarding same.

C. Signing Durable Medical Equipment certifications in which information is false or with reckless disregard for the truth of the information.

D. Billing for non-covered services as if covered.

E. Failure to take call under the patient anti-dumping statute. In most cases on-call physicians must come to a hospital to examine a patient when a request is made for their services.

F. "Gainsharing" based on a percentage of cost savings is generally prohibited, but fixed fee payments at fair market value for services to reduce costs are permitted.

G. Percentage billing arrangements are permitted, but the billing service cannot directly receive Medicare payments to the physician.

H. The propriety of professional courtesy arrangements depend on the particular facts of each case, but two factors will generally be reviewed: (1) how the recipients are selected; and (2) how the professional courtesy is extended.

I. Space rental from a hospital or other provider should conform to the safe harbor regulations regarding such rentals.

In summary, the OIG, through the final Guidance, appears to encourage a "common sense" approach toward compliance in medical practices. The recognition that practices are not to be prosecuted for good faith errors is a great step forward. So is the idea that not all practices can afford to have a comprehensive, written compliance program.

Mr. Tralins chairs the Health Law Section of the MSBA. The foregoing article is for general informational purposes only and does not constitute legal advice.