AGENCY: Office of Inspector General (OIG), HHS.

ACTION: Notice.

SUMMARY: This Federal Register notice sets forth the recently issued Compliance Program Guidance for Individual and Small Group Physician Practices developed by the Office of Inspector General (OIG). The OIG has previously developed and published voluntary compliance program guidance focused on several other areas and aspects of the health care industry. We believe that the development and issuance of this voluntary compliance program guidance for individual and small group physician practices will serve as a positive step towards assisting providers in preventing the submission of erroneous claims or engaging in unlawful conduct involving the Federal health care programs.

FOR FURTHER INFORMATION CONTACT: Kimberly Brandt, Office of Counsel to the Inspector General, (202) 619-2078.

SUPPLEMENTARY INFORMATION:

Background

The creation of compliance program guidances is a major initiative of the OIG in its effort to engage the private health care community in preventing the submission of erroneous claims and in combating fraudulent conduct. In the past several years, the OIG has developed and issued compliance program guidances directed at a variety of segments in the health care industry. The development of these types of compliance program guidances is based on our belief that a health care provider can use internal controls to more efficiently monitor adherence to applicable statutes, regulations and program requirements.

Copies of these compliance program guidances can be found on the OIG web site at http://www.hhs.gov/oig.

Developing the Compliance Program Guidance for Individual and Small Group Physician Practices

On September 8, 1999, the OIG published a solicitation notice seeking information and recommendations for developing formal guidance for individual and small group physician practices (64 FR 48846). In response to that solicitation notice, the OIG received 83 comments from various outside sources. We carefully considered those comments, as well as previous OIG publications, such as other compliance program guidance and Special Fraud Alerts, in developing a guidance for individual and small group physician practices. In addition, we have consulted with the Health Care Financing Administration and the Department of Justice. In an effort to ensure that all parties had a reasonable opportunity to provide input into a final product, draft guidance for individual and small group physician practices was published in the Federal Register on June 12, 2000 (65 FR 36818) for further comments and recommendations.

Components of an Effective Compliance Program

This compliance program guidance for individual and small group physician practices contains seven components that provide a solid basis upon which a physician practice can create a voluntary compliance program:

Conducting internal monitoring and auditing;

Implementing compliance and practice standards;

Designating a compliance officer or contact;

Conducting appropriate training and education;

Responding appropriately to detected offenses and developing corrective action;

Developing open lines of communication; and

Enforcing disciplinary standards through well-publicized guidelines.

Similar components have been contained in previous guidances issued by the OIG. However, unlike other guidances issued by OIG, this guidance for physicians does not suggest that physician practices implement all seven components of a full scale compliance program. Instead, the guidance emphasizes a step by step approach to follow in developing and implementing a voluntary compliance program. This change is in recognition of the financial and staffing resource constraints faced by physician practices. The guidance should not be viewed as mandatory or as an all-inclusive discussion of the advisable components of a compliance program. Rather, the document is intended to present guidance to assist physician practices that voluntarily choose to develop a compliance program.

Office of Inspector General's Compliance Program Guidance for Individual and Small Group Physician Practices

I. Introduction

This compliance program guidance is intended to assist individual and small group physician practices ("physician practices")(1) in developing a voluntary compliance program that promotes adherence to statutes and regulations applicable to the Federal health care programs ("Federal health care program requirements"). The goal of voluntary compliance programs is to provide a tool to strengthen the efforts of health care providers to prevent and reduce improper conduct. These programs can also benefit physician practices(2) by helping to streamline business operations.
Many physicians have expressed an interest in better protecting their practices from the potential for erroneous or fraudulent conduct through the implementation of voluntary compliance programs. The Office of Inspector General (OIG) believes that the great majority of physicians are honest and share our goal of protecting the integrity of Medicare and other Federal health care programs. To that end, all health care providers have a duty to ensure that the claims submitted to Federal health care programs are true and accurate. The development of voluntary compliance programs and the active application of compliance principles in physician practices will go a long way toward achieving this goal.

Through this document, the OIG provides its views on the fundamental components of physician practice compliance programs, as well as the principles that a physician practice might consider when developing and implementing a voluntary compliance program. While this document presents basic procedural and structural guidance for designing a voluntary compliance program, it is not in and of itself a compliance program. Indeed, as recognized by the OIG and the health care industry, there is no "one size fits all" compliance program, especially for physician practices. Rather, it is a set of guidelines that physician practices can consider if they choose to develop and implement a compliance program.

As with the OIG's previous guidance,(3) these guidelines are not mandatory. Nor do they represent an all-inclusive document containing all components of a compliance program. Other OIG outreach efforts, as well as other Federal agency efforts to promote compliance,(4) can also be used in developing a compliance program. However, as explained later, if a physician practice adopts a voluntary and active compliance program, it may well lead to benefits for the physician practice.

A. Scope of the Voluntary Compliance Program Guidance

This guidance focuses on voluntary compliance measures related to claims submitted to the Federal health care programs. Issues related to private payor claims may also be covered by a compliance plan if the physician practice so desires.

The guidance is also limited in scope by focusing on the development of voluntary compliance programs for individual and small group physician practices. The difference between a small practice and a large practice cannot be determined by stating a particular number of physicians. Instead, our intent in narrowing the guidance to the small practices subset was to provide guidance to those physician practices whose financial or staffing resources would not allow them to implement a full scale, institutionally structured compliance program as set forth in the Third Party Medical Billing Guidance or other previously released OIG guidance. A compliance program can be an important tool for physician practices of all sizes and does not have to be costly, resource-intensive or time-intensive.

B. Benefits of a Voluntary Compliance Program

The OIG acknowledges that patient care is, and should be, the first priority of a physician practice. However, a practice's focus on patient care can be enhanced by the adoption of a voluntary compliance program. For example, the increased accuracy of documentation that may result from a compliance program will actually assist in enhancing patient care. The OIG believes that physician practices can realize numerous other benefits by implementing a compliance program. A well-designed compliance program can:

Speed and optimize proper payment of claims;

Minimize billing mistakes;

Reduce the chances that an audit will be conducted by HCFA or the OIG; and

Avoid conflicts with the self-referral and anti-kickback statutes.

The incorporation of compliance measures into a physician practice should not be at the expense of patient care, but instead should augment the ability of the physician practice to provide quality patient care.

Voluntary compliance programs also provide benefits by not only helping to prevent erroneous or fraudulent claims, but also by showing that the physician practice is making additional good faith efforts to submit claims appropriately. Physicians should view compliance programs as analogous to practicing preventive medicine for their practice. Practices that embrace the active application of compliance principles in their practice culture and put efforts towards compliance on a continued basis can help to prevent problems from occurring in the future.

A compliance program also sends an important message to a physician practice's employees that while the practice recognizes that mistakes will occur, employees have an affirmative, ethical duty to come forward and report erroneous or fraudulent conduct, so that it may be corrected.

C. Application of Voluntary Compliance Program Guidance

The applicability of these recommendations will depend on the circumstances and resources of the particular physician practice.

Each physician practice can undertake reasonable steps to implement compliance measures, depending on the size and resources of that practice. Physician practices can rely, at least in part, upon standard protocols and current practice procedures to develop an appropriate compliance program for that practice. In fact, many physician practices already have established the framework of a compliance program without referring to it as such.

D. The Difference Between "Erroneous" and "Fraudulent" Claims To Federal Health Programs

There appear to be significant misunderstandings within the physician community regarding the critical differences between what the Government views as innocent "erroneous" claims on the one hand and "fraudulent" (intentionally or recklessly false) health care claims on the other. Some physicians feel that Federal law enforcement agencies have maligned medical professionals, in part, by a perceived focus on innocent billing errors. These physicians are under the impression that innocent billing errors can subject them to civil penalties, or even jail. These impressions are mistaken.

To address these concerns, the OIG would like to emphasize the following points. First, the OIG does not disparage physicians, other medical professionals or medical enterprises. In our view, the great majority of physicians are working ethically to render high quality medical care and to submit proper claims.

Second, under the law, physicians are not subject to criminal, civil or administrative penalties for innocent errors, or even negligence. The Government's primary enforcement tool, the civil False Claims Act, covers only offenses that are committed with actual knowledge of the falsity of the claim, reckless disregard, or deliberate ignorance of the falsity of the claim.(5) The False Claims Act does not encompass mistakes, errors, or negligence. The Civil Monetary Penalties Law, an administrative remedy, similar in scope and effect to the False Claims Act, has exactly the same standard of proof.(6) The OIG is very mindful of the difference between innocent errors ("erroneous claims") on one hand, and reckless or intentional conduct ("fraudulent claims") on the other. For criminal penalties, the standard is even higher--criminal intent to defraud must be proved beyond a reasonable doubt.

Third, even ethical physicians (and their staffs) make billing mistakes and errors through inadvertence or negligence. When physicians discover that their billing errors, honest mistakes, or negligence result in erroneous claims, the physician practice should return the funds erroneously claimed, but without penalties. In other words, absent a violation of a civil, criminal or administrative law, erroneous claims result only in the return of funds claimed in error.

Fourth, innocent billing errors are a significant drain on the Federal health care programs. All parties (physicians, providers, carriers, fiscal intermediaries, Government agencies, and beneficiaries) need to work cooperatively to reduce the overall error rate.

Finally, it is reasonable for physicians (and other providers) to ask: what duty do they owe the Federal health care programs? The answer is that all health care providers have a duty to reasonably ensure that the claims submitted to Medicare and other Federal health care programs are true and accurate. The OIG continues to engage the provider community in an extensive, good faith effort to work cooperatively on voluntary compliance to minimize errors and to prevent potential penalties for improper billings before they occur. We encourage all physicians and other providers to join in this effort.