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
"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
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
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
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.