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OIG Releases Final Compliance Guidance for Nursing Facilities
By Jody Ann Noon
[April 2000]

On March 13, 2000, the Office of Inspector General for the Department of Health and Human Services ("OIG") published its compliance guidance for nursing facilities. While the document does not differ substantially from the OIG's October 29, 1999, draft, the OIG responded to some comments raised by the nursing home industry and modified the guidance to articulate the OIG's role vis-á-vis HCFA's role in enforcement.

As with all its other compliance guidance reports, the OIG's guidance for nursing homes calls for the seven essential elements articulated in the Federal Criminal Sentencing Guidelines:

• Standards that address specific risk areas;
• A compliance officer and compliance committee;
• Regular education and training programs;
• Effective communication;
• Audits and monitoring;
• Appropriate hiring and discipline policies; and
• Corrective action.

However, the OIG acknowledged the financial constraints placed upon nursing facilities and recognized the valuable role operational managers can play in assuring facilities have effective compliance programs.

The OIG stated:

"We believe that every nursing facility can design a program that addresses the seven elements set out in this guidance, albeit at different levels of sophistication and complexity. In its most fundamental form, a facility's code of conduct is a basic set of standards that articulate the organization's philosophy, summarize basic legal principles, and teach employees how to respond to practices that may violate the code of conduct."

Codes of Conduct and Compliance Standards

In addition to a Code of Conduct, the OIG identified six areas that nursing facilities should evaluate when initially assessing its compliance efforts and developing its compliance standards.

1. Quality of Care

Top on the OIG's list of compliance objectives is quality of care. At the threshold, the OIG recommends that each facility begin with a statement affirming the facility's commitment to providing services that allow each resident to attain or maintain the resident's highest practicable physical, psychosocial and mental well-being. As part of this commitment, the OIG's Guidance states:

"[T]he facility should implement a system that reviews each resident's outcomes and improves on those outcomes through analysis and modification of the delivery of care. After the delivery protocols have been modified, the facility should re-analyze the residents' outcomes to assure that the modification had the desired result and has actually improved care."

The OIG's "special areas" of quality of care concerns were:

• Absence of comprehensive assessments and care plans
• Inappropriate or insufficient treatment and services to address each resident's clinical condition, including pressure ulcers, dehydrations, malnutrition, incontinence, and mental or psychosocial problems
• Failure to accommodate individual resident needs and preferences
• Failure to properly prescribe, administer and monitor prescription drugs
• Inadequate staffing levels or insufficiently trained or supervised staff
• Failure to provide appropriate therapy
• Failure to provide services to meet residents' activities of daily living
• Failure to provide an ongoing activities program
• Failure to report incidents of mistreatment, neglect or abuse

2. Residents' Rights

The OIG cites the Medicare and Medicaid Conditions of Participation for Residents' Rights and parrots them with respect to the facility's duty to provide each resident the right to a dignified existence that promotes freedom of choice, self-determination and reasonable accommodation. Among those areas of residents' rights that the compliance program should verify, the OIG listed the following risk areas:

• Discriminatory admission or improper denial of access to care
• Verbal, mental or physical abuse
• Inappropriate use of physical or chemical restraints
• Failure to ensure that residents have personal privacy and access to their personal records and that privacy of their records is protected
• Denial of a resident's right to participate in care and treatment decisions
• Failure to safeguard residents' financial affairs

3. Billing and Cost Reporting

The OIG's guidance states that nursing facilities must take all reasonable steps to ensure any information that will affect reimbursement is accurate and in compliance with federal laws. In particular, the Guidance states that a key component to ensure accurate billing information is the proper and ongoing training and evaluation of the staff responsible for coding and regular internal audits of coding policies and procedures. The OIG identified the following billing and cost reporting risks:

• Billing for items or services not rendered or provided as claimed
• Submitting claims for items or services that are medically unnecessary
• Submitting Medicare Part A claims for residents who are not eligible for Part A coverage
• Duplicate billing
• Failure to identify and refund credit balances
• Submitting claims for items and services not ordered
• Knowingly billing for inadequate or nonexistent care
• Providing misleading or inaccurate information on the MDS
• Upcoding the level of service provided
• Billing for individual items or services that are part of the facility's per diem rate
• Altering documentation or forging a physician signature on documents used to verify that services were ordered or provided
• Failure to maintain sufficient documentation to support the claimed items or services
• False cost reports

4. Employee Screening

The OIG cautions nursing facilities to exercise caution when employing either permanent or temporary staff who have access to the residents or the residents' possessions, or who have discretionary authority to make decisions that may involve compliance with the law. In doing so, the OIG recommends that the nursing facility conduct reasonable and prudent background checks by incorporating the following procedures into its compliance program:

• Investigate and verify the background of employees by checking with all applicable licensing and certification authorities
• Require all potential employees to certify on employment applications that they have not been convicted of an offense that would preclude nursing facility employment and that they have not been excluded from participation in any federal health care program
• Require temporary employment agencies to ensure that temporary staff assigned to the facility have undergone background checks that verify that they have not been convicted of an offense that preclude nursing home employment
• Check the OIG's list of excluded individuals and the GSA's list of debarred contractors

5. Vendor Relationships

While the OIG introduced this risk area as one pertaining to vendor relationships, the Guidance broadened the scope of these risks to include any violation of the Anti-kickback, Stark Physician Self-Referral and other relevant federal laws. This will include relationships with vendors, relationships with facility residents, relationships with family and relationships with other health care providers, including the facility's medical director. The OIG identified the following risks with respect to vendor, patient and provider relationships:

• Routine waivers of coinsurance or deductibles without a good faith determination of financial need
• Agreements between the facility and a hospital, home health agency or hospice that involve the referral or transfer of any resident to or by the nursing facility
• Soliciting, accepting or offering any gift or gratuity of more than a nominal value to or from residents, potential referral sources, and other individuals and entities with which the nursing facility has a business relationship
• Conditioning admission or continued stay at the facility upon a third-party guarantee of payment, or soliciting payment for service covered by Medicaid, in addition to any amount required to be paid under the State Medicaid plan
• Arrangements between a nursing facility or hospital under which the facility will only accept a Medicare beneficiary on the condition that the hospital pays the facility an amount over and above what the facility would receive through PPS
• Financial arrangements with physicians, including the medical director
• Arrangements with vendors that result in the facility receiving non-covered items at below market prices or at no charge, provided the facility orders Medicare-reimbursed products
• Soliciting or receiving items of value in exchange for providing a supplier access to residents' medical records and other information needed to bill the Medicare program
• Joint venture with entities supplying goods or services
• Swapping

6. Record Keeping and Documentation

The OIG's Guidance urges nursing facilities to develop record keeping systems that ensure complete and accurate documentation of all documents that pertain to regulatory requirements including, but not limited to, medical records. Specifically, the OIG states that nursing facilities should develop policies that provide for complete, accurate, and timely documentation of all nursing and therapy services including subcontracted services and MDS information. Among the documents identified by the OIG that fall within this guidance, the OIG listed the following items:

• All records and documentation, including billing and claims documentation,
required for participation in Federal, State, and private health care programs, including the Resident Assessment Instrument, the comprehensive care plan and all corrective actions taken in response to survey findings
• All records, documentation, and audit data that support and explain cost reports and other financial activity, including any internal or external compliance monitoring activities
• All records necessary to demonstrate the integrity of the nursing facility compliance process and to confirm the effectiveness of the program

The remaining six elements that the OIG identifies as necessary parts of an effective corporate compliance plan are more "generic," and less focused on considerations unique to long-term care.

1. Compliance Officer and Compliance Committee

The OIG recommends that every NF designate a compliance officer, which may be only a portion of his or her duties. Whoever is appointed should have direct access to the nursing facility's president or CEO, governing body, all other senior management, and the facility's lawyer. The compliance officer needs to have sufficient funding and staff to perform his or her responsibilities fully, as well as access to persons with technical expertise (e.g., billing rules).

The compliance officer's primary responsibilities should include:

• overseeing the implementation of the plan
• reporting on developments
• periodically assessing the utility of the plan
• educating employees and agents of the facility
• assuring that excluded individuals are not hired
• coordinating monitoring activities
• investigating problems and taking appropriate corrective actions

The OIG also recommends that the compliance officer participate in reviewing contracts. If the facility's resources permit, then the OIG recommends that each NF have a compliance committee that brings a variety of skills to the tasks. The committee's duties may include: understanding legal requirements; developing policies and procedures to address risk areas; encouraging employees to report problems; monitoring audits and investigations; and overseeing corrective actions. If the facility is too small to have a standing compliance committee, then the OIG recommends that the facilities create a "task force" to address problems that are identified. The members of the task force may vary depending upon the issue.

2. Education and Training

Educating the facility's personnel is a critical element of an effective compliance program. The first step is to educate the employees about the compliance program. More specific training should be targeted at those employees and contractors whose job requirements make the information relevant. The facility must also publicize the policies and procedures that it develops. The compliance officer should document any formal training undertaken by the nursing facility as part of the compliance program.

The OIG recommends that a facility consider training on the following topics:

Medicare participation requirements; documentation; prohibitions on paying or receiving remuneration to induce referrals; residents' rights; and the duty to report misconduct. Facilities with limited resources may want to create training videotapes. Participation in training programs should be a condition of employment, and taken into account in evaluating performance.

3. Communication

An NF must encourage employees to report suspected problems. That encouragement must necessarily be based upon a formal policy against retaliating against employees who respond, and mechanisms to report anonymously should also be created. The compliance officer should be viewed as someone who can answer questions about what the facility's policies and procedures are, and why things may be done a certain way. These questions may disclose areas that are appropriate for broader education or dissemination.

The OIG encourages the exchange of information in a variety of media (e.g., hotlines, suggestion boxes and newsletters). Matters that are reported should be investigated, the results of the investigation documented, and reported to the compliance committee or governing body. The facility should not make unqualified promises of anonymity, since the person's name may have to be revealed in certain instances.

4. Audits and Monitoring

An effective program should include an ongoing evaluation process. Although expensive, one method is to bring in evaluators to perform regular, periodic audits. The evaluators should have expertise in federal and State health care statutes, regulations, and program requirements, as well as private payor rules. These assessments should focus both on the nursing facility's day-to-day operations, as well as its adherence to the rules governing claims development, billing and cost reports, and relationships with third parties. The reviews also should address the nursing facility's compliance with areas that the regulators have identified as problematic. Sampling techniques that focus on measurable patient outcomes, such as resident weight maintenance and pressure ulcers, are also useful. To be effective, a compliance program should also include an annual review of whether the elements of the program have been satisfied.

Other techniques that the OIG suggests facilities consider include: testing the billing and claims reimbursement staff; mock surveys and audits; a review of complaint logs and investigative files; a legal assessment of contracts; a review of survey deficiencies; checking on employees whose performance has been problematic in the past; questionnaires; credentialing physicians and staff.

Persons conducting reviews should be qualified, experienced, objective and independent of management. They should be given sufficient access to persons and information in order to make the review meaningful. Their findings and recommendations should be put in writing.

5. Hiring and Discipline

Facilities should check to see whether an applicant has been excluded from participating in the Medicare and Medicaid programs, or debarred from contracting with the federal government, before hiring the applicant. There are web sites and periodic updates of those persons.

Persons who violate the facility's standards of conduct, policies, and procedures must be disciplined, which may range from oral warnings to suspension, termination, or financial penalties. If an employee fails to detect a violation due to negligence or reckless conduct, then discipline may be appropriate.

Managers and supervisors have a responsibility to educate employees about the facility's standards, and to discipline employees in an appropriate and consistent manner if they violate those standards. Persons at all levels, and not just lower-level employees, must be subject to the same rules.

6. Corrective Action

Allegations of misconduct must be taken seriously and investigated promptly. If problems are found, then decisive steps must be taken to correct the problem. Those steps may include drafting and implementing a corrective action plan, returning any overpayments that were received, reporting the problem to regulators, and/or referring the matter to law enforcement authorities.

If fraud is not involved, then normal repayment channels should be used to return overpayments. If fraud is suspected, then an internal investigation may be necessary.

That investigation will include interviewing persons with information and reviewing documents. It may be necessary to hire outside counsel, auditors, or health care experts to assist in the investigation.

The OIG recommends that the facility create an investigative file, which includes the following: a description of suspected violations; a description of the process that the facility followed in investigation of the matter; copies of interview notes and key documents; a log of the witnesses interviewed and the documents reviewed; and the results of the investigation. The OIG anticipates that the compliance officer will have a significant amount of authority, including the ability to remove individuals from their current jobs pending the completion of the investigation preventing the destruction of documents or other evidence.

If the facility discovers misconduct that may violate the law, the OIG recommends reporting the misconduct to the appropriate authorities within 60 days. The OIG wants to see all evidence relevant to the alleged violation of law(s) and potential cost impact. The OIG asserts that a knowing and willful failure to disclose overpayments might be characterized as an attempt to conceal the overpayment from the government, which is a crime.

Conclusion

While some critics are concerned about the OIG's newfound emphasis on quality, for more than a decade state and federal surveyors have been scrutinizing the quality of nursing facility care. Facilities with effective quality assurance and risk management programs already are one step ahead in their compliance efforts. Even though the OIG's final guidance differs little from the initial draft, the OIG claims to acknowledge the current financial strains and personnel shortages faced by nursing homes. Whether this is fact or fantasy will only become evident as nursing facilities with compliance programs undergo OIG audits and investigations. Given this uncertainty, nursing facilities will be faced with a series of challenges to determine how to implement their programs in a manner that assures the ongoing financial viability of their organizations.

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