Newsletter 1/98 vol. 2

Newsletter; January, February 1998, Vol. 2

Hospital Peer Review - Compliance Observer

Moving the Corporate Compliance Plan From Theory into Practice Getting Staff Involved by Understanding the Processes, and the Consequences

by Paula Swain, MSN, CPHQ, FNAHQ

Healthcare Management Consulting in Issues of Accreditation and Compliance, St. Petersburg, FL

When efforts to contain healthcare fraud were begun in the mid 1980's the focus was on insurance companies, patients and individual providers. As the amount of legislation to deter false claims steadily increased over the years, the emphasis has changed to include hospital providers. In educating staff it may be useful to review the history of this movement, so they will have a background to help them incorporate these concepts into their busy workdays.

Timeline and Federal Laws Used to Identify and Prosecute Fraud

1986

False Claims Act: (FCA)

$5,000. to $10,000. fine for each false claim (or statement) plus triple the amount of money the government has lost to that provider based on fraudulent billing.

Violations of the Medicare/Medicaid Act may result in preclusion from being a beneficiary of those programs and a felony conviction.

Initiation of "Whistle Blower" (qui tam) actions

Between 1986 and 1996 the total number of private actions filed under this act rose from 33 to 360

1989

Omnibus Budget Reconciliation Act (OBRA)

Known also as Stark I (initially lab testing)

Prevent physician self-referral of patients to entities where the physician has a financial interest.

Stark II effective 1995. Expanded to 10 other entities.

1992

United States Sentencing Commission "Guidelines for Organizations": (USSC)

Created the seven requirements for the Corporate Compliance Plan (CCP) which serves two purposes: deterrence and detection.

If found guilty, the government may impose a CCP that is more onerous than the voluntary, proactive compliance programs which facilities should be establishing.

1995

Operation Restore Trust:

Two year initiative (1995-1997).

Reduce Medicare fraud and abuse.

Joint project of Office of Inspector General (OIG), Department of Justice (DOJ), Health Care Financing Administration (HCFA) and Administration on Aging.

Focus on 5 states which account for 40% of Medicare/Medicaid beneficiaries (CA, FL, IL, NY, TX).

Planned to be continued, adding more states in 1997.

1996

Health Insurance Portability and Accountability Act (HIPAA)

Established a fraud and abuse control program between Department of Health and Human Services (DHHS) and US District Attorney.

Imposes criminal penalties for "knowingly and willfully" defrauding any health care benefit program.

Imposes civil penalties for improper coding and medically unnecessary services.

Whistleblowers get paid at least $100.00.

HOW TO DETER AND DETECT FRAUD

Until more formal guidance is provided, the prudent healthcare entity will tailor its compliance program to meet its unique needs, using the seven elements set forth by USSC as minimum criteria. A common thread is incorporation of the of the facility or organization's code of ethics, which highlights minimally acceptable codes of conduct.

There are two primary functions at the heart of a compliance program:

deterrence

detection of criminal conduct.

Staff need to know "deterrence from what?" Everyone along the chain - from the administrator who sets policy , to the physician who orders services, to the clerks who handle the order must know more about the process than just the task at hand. All work ends up in the form of a bill submitted for reimbursement. If payment is denied everyone who provides that service needs to know why , not just the billing manager. Deterrence begins with identification of a problem.

Most staff, including managers, do not know how the facility is reimbursed for services that they provide, or know the criteria for that reimbursement. For example, a family wants the patient, at discharge, to go to the daughterÕs home 50 miles away. The ambulance is ordered by the physician at the familyÕs request. Staff is unaware that the destination is out of the allowable mileage range. Or they are unaware of the rule for having the beneficiary sign an advance beneficiary notification (ABN) form, before the trip, thus assuming the additional transportation cost. These and many other nuances create nightmares for the billing department. The next person hearing from this family is the billing office's complaint clerk who is trying to answer the question , "Why is my mother being billed for her ambulance ride home?"

Meanwhile, unit staff have no idea that all their effort resulted in no reimbursement for the facility. In fact, their work might be detrimental, as it might place the facility in a "red flag" situation with the government for over charging.

Under generally accepted principles of agency, the actions or omissions of an agent or employee are linked to the corporate entity. * This means that if an agent (i.e., physician, physical therapist) or employee breaks the law, the employer (hospital, home care, network, etc.) may be held liable. A physician who improperly submitted 39 false Medicare claims for $550.00 was held by the court to owe the government $79,000.00. Given the application of the law, it is easy to see how the government can arrive at multimillion dollar settlements. The civil laws that were broken, might give way to a more devastating criminal component if the government chooses to prosecute intentional false claims or statements made to Medicare, Medicaid or other state health agencies. When the government successfully prosecutes those actions, they may result in a felony conviction, individual fine of $25,000, imprisonment for not more than five years, or both.

FROM THEORY TO PRACTICE

Putting the compliance plan in place should be accompanied by a an assessment of the work environment, and the role that staff play. One method of educating staff is to have them apply components of the plan that are related to the service they provide. Assessing their activities for issues where compliance could be questioned will get them started.

Examples of situations that become compliance issues that staff should be aware of :

Submitting false claims for payment by -

Compliance Issue	Examples
Billing for services not provided or documented as such Altering claims forms for higher payment.	Example: Teaching physicians not documenting or being present for services. Altering claims forms for higher payment. Example: Modifying or upcoding inpatient DRG's or outpatient facility charges to receive higher payment
Collecting duplicate payment from both Medicare/Medicaid and the beneficiary/third party payor Routine waiving of co-payments/deductibles DRG global payment window	Example: The 72-hour/three day rule
Fragmenting billing	Example: Billing components instead of global, composite or bundled rate.
Bundling of services for payment of medically unnecessary tests	Example: Panel lab tests
Modifying or including improper amounts in cost reports Altering claims history records to generate fraudulant payments Billing for non-covered services as covered services Violations of participation agreement, assignment agreement or limiting charges	Example: Beneficiaries billed for charges that exceed the reasonable charge criteria. Billing Medicare/Medicaid as the primary insuror instead of other party payers. Setting Medicare billing rates higher and at a different rate than for non-Medicare patients.
Billing for a discharge versus a transfer	Example: Discharging hospital gets full DRG rate, transferring hospital gets a graduated per-diem rate.
Soliciting, offering or receiving a kickback	Example: Paying for a patient referrals, giving bribe or rebate or supplier rebates, etc
Anti-trust provisions	Example: Physician offices or practices, acquisitions, mergers of hospitals, price setting, etc.

Examine any of the above situations and use the best measurement and assessment technique available in the facility. Follow lines of communication, document concisely and carry out the instructions contained in the corporate compliance plan for transmitting findings and making recommendations. Remember everyone is involved in determining if there are fraudulent situations in your facility.

* Reference: "Corporate Compliance: An Idea Whose Time Has Come" CONTINUING CARE RISK MANAGEMENT, ECRI, May, 1997.

Swain & Associates offers workshops detailing the Fraud and Abuse issue. For more information call 1-800-843-6449 or E-mail us at Info@SnAConsulting.com.

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