OIG Issues Hospital Compliance Guide
The OIG initially published guidance in 1998. In light of subsequent industry and regulatory changes, the OIG decided to provide additional guidance to assist hospitals in furthering their compliance efforts. Comments to the June draft may be submitted on or before July 23.
Hospital Compliance Program Effectiveness1
A compliance program that is ineffective not only wastes resources, but it may put the organization in a worse position in negotiating with the OIG. To assist hospitals in their quest to be effective, the OIG outlined factors that it considers determinative. Notably, hospitals should involve their boards of directors and senior management in the development of all aspects of the compliance program and hospital leadership should ensure that compensation structures and other policies “do not create undue pressure to pursue profit over compliance.” The culture of the organization should foster clear, open communication without fear of retribution. At least annual review and assessment of all elements of compliance plans should be undertaken and will likely include measurement of outcome indicators, such as billing and coding audits.
The compliance officer should be a member of senior management with direct access to the board of directors, senior management and legal counsel. Training and education should include “[any] other individual that functions on behalf of the hospital[.]” Scheduled and unscheduled billing audits should be conducted and response teams should be created to address all detected deficiencies. Finally, disciplinary standards should be enforced, including the annual (or more frequent) check of employees, contractors and medical staff members against applicable exclusion lists.
The OIG recommends that “Where the compliance officer, compliance committee, or a member of senior management discovers credible evidence of misconduct from any source and, after a reasonable inquiry, believes that the misconduct may violate criminal, civil or administrative law, the hospital should promptly report the existence of misconduct to the appropriate federal and state authorities within a reasonable period, but not more than 60 days, after determining that there is credible evidence of a violation.”
|III.||Particular Areas of OIG Concern|
Submission of accurate claims and information
The Guidance focuses risks that the OIG believes the hospital community does not fully appreciate, which include:
Outpatient procedure coding
Hospital Outpatient Prospective Payment System (OPPS) coding errors may lead to overpayments and subject a hospital to liability for the submission of false claims. The Guidance recommends that hospitals pay close attention to coder training and qualifications. Hospitals are urged to review their outpatient documentation practices to ensure that claims are based on complete medical records that support the level of service claimed.
Specific problems identified in the Guidance include:
Admissions and discharges
Risk areas with respect to the admission and discharge processes include:
Supplemental payment considerations
In limited situations, hospitals receive payments that otherwise would not be made under regular payment systems. Examples of specific risks that hospitals should address include:
Use of information technology
OPPS requires heightened attention to detailed and accurate record keeping. Hospital billing computer programs have the potential to omit or mischaracterize certain data, thus creating problematic claims.
|B.||“Stark” and the anti-kickback statute|
The physician self-referral law (“Stark”)
According to the Guidance, “hospitals face significant financial exposure unless their financial relationships with referring physicians fit squarely in statutory or regulatory exceptions to the statute.” That assertion is underscored by CMS’ recent Stark II, Phase II regulations that will go into effect in July 2004.
The statute prohibits hospitals from submitting—and Medicare from paying—any claim for a designated health service if the referral comes from a physician with whom the hospital has a prohibited financial relationship. This is true even if the prohibited financial relationship is the result of inadvertence or error. Particular areas that hospitals should pay attention to are:
The federal anti-kickback statute
The anti-kickback statute prohibits payments made purposely to induce or reward referrals or generation of federal health care program business. Areas of particular concern and risk are briefly noted below.
In analyzing current or future joint ventures, hospitals should examine the following factors:
According to the OIG, if a hospital is planning to participate, then—at a minimum—a hospital should consider (i) barring physicians employed by the hospital or its affiliates from referring to the joint venture; (ii) taking steps to ensure that medical staff and other affiliated physicians are not encouraged in any manner to refer to the joint venture; (iii) notifying physicians annually in writing of the preceding policy; (iv) refraining from tracking in any manner the volume of referrals attributable to particular referrals sources; (v) ensuring that no physician compensation is tied in any manner to the volume or value of referrals to, or other business generated for, the venture; (vi) disclosing all financial interests to patients; and (vii) requiring that other participants in the joint venture adopt similar steps.
Compensation arrangements with physicians
Examples of compensation arrangements include medical director agreements, personal or management services agreements, space or equipment leases, and agreements for the provision of billing, nursing, or other staff services. Many compensation arrangements are legal.
The general rule is that any remuneration between hospitals and physicians should be at fair market value for actual and necessary items furnished or services rendered based upon an arm’s-length transaction. Arrangements under which hospitals provide physicians with items or services for free or less than fair market value, relieve physicians of financial obligations they would otherwise incur, or inflate compensation paid to physicians for items or services pose significant legal risk to both the hospital and the physician.
The OIG is particularly concerned about arrangements with physicians that:
Relationships with other health care entities
Hospitals should review relationships with home health agencies, skilled nursing facilities, durable medical equipment companies, laboratories, pharmaceutical companies, and other hospital and managed care organizations using the principles identified.
Physician recruitment arrangements
When assessing the degree of risk associated with recruitment arrangements, hospitals should examine the following factors, among others:
Public policy favors open and legitimate price competition in health care. Thus, the anti-kickback statute contains an exception for discounts offered to customers if the discounts are properly disclosed and accurately reported. However, to qualify for the exception, the discount must be in the form of a reduction in the price of the good or service based on an arm’s-length transaction. Moreover, the regulation provides that the discount must be given at the time of sale or, in certain cases, set at the time of sale, even if finally determined subsequent to the time of sale (e.g., a rebate).
A hospital should not engage in “swapping” by accepting from a supplier an unreasonably low price on Part A services that the hospital pays for out of its own pocket in exchange for hospital referrals that are billable by the supplier directly to Part B (e.g., ambulance services). Suspect arrangements include below-cost arrangements or arrangements at prices lower than the prices offered by the supplier to other customers with similar volumes of business, but without federal health care program referrals.
Medical staff credentialing
Conditioning privileges on a particular number of referrals or requiring the performance of a particular number of procedures, beyond volumes necessary to ensure clinical proficiency, raises risks. However, a credentialing policy that categorically refuses privileges to physicians with significant conflicts of interest should not implicate the anti-kickback statute in most situations.
Malpractice insurance subsidies
Hospitals should review malpractice insurance subsidy arrangements including:
The Civil Monetary Penalty (CMP) prohibits a hospital from knowingly making a payment to a physician to induce her to reduce or limit items or services furnished to Medicare or Medicaid beneficiaries under the physician’s direct care. While the OIG recognizes that some gainsharing arrangements may serve legitimate purposes, they must be analyzed in light of the CMP and anti-kickback prohibitions. Therefore, the OIG recommends that gainsharing arrangements should be structured to fit within the personal services safe harbor. That recommendation is of limited value, however, because it requires that compensation be set in advance, when the "gains" are difficult to predict.
The OIG urges clear understanding by hospitals of their EMTALA obligations and implementing policies and training that accurately reflect those legal responsibilities.
The OIG asserts that is has the authority to exclude providers from participation in federal health care programs if the care provider fails to meet professionally recognized standards of health care.
Relationships with federal health care beneficiaries
Civil Monetary Penalties may be imposed on hospitals that offer remuneration to Medicare or Medicaid beneficiaries where the hospital knows or should know that the offer is likely to influence the beneficiary to order or receive items or services from a particular provider. Simply put, hospitals cannot offer valuable items or services to attract Medicare and Medicaid patients. Examples discussed in the Guidance include: gifts over nominal amounts, cost-sharing waivers (some of which may be acceptable), and free transportation over nominal value.
HIPAA privacy and security rules
The Guidance reinforces the need to comply with the law, but recognizes that some flexibility exists in tailoring a hospital's security plans and procedures in light of the particular hospital’s organization and capabilities.
Billing medicare or medicaid substantially in excess of usual charges
Emphasizing that “providers cannot routinely charge Medicare or Medicaid substantially more than they usually charge others,” the OIG reminded hospitals of its authority to exclude providers who submit claims based on costs or charges that are “substantially in excess” of their usual costs or charges unless there is “good cause.”
Implicit in the OIG's Guidance is the philosophy that "compliance is here to stay." The OIG is urging that the Compliance Officer become more integrated into senior management, have greater access to the Board and marshal more budgetary resources. While hospitals have learned that they cannot ignore the OIG's views, they cannot help but ask how they will handle yet another unfunded compliance mandate.
1 The entire text of the Guidance can be found at 69 Fed. Reg. 32012-32031 (June 8, 2003). http://oig.hhs.gov/authorities/docs/04/060804hospitaldraftsuppCPGFR.pdf
2 For a tool that can be used or modified to track relationships with physicians, see the Stark database entry form. (Note: The program requires Microsoft Access to open.)