Hospital Peer Review - Compliance Observer

Putting Heads and Hearts into the Corporate Compliance Program - Understanding How to Shift Old Practices to New Ones

by Paula S. Swain, MSN, CPHQ, FNAHQ
Swain & Associates, Health care Improvement and Compliance Consultants

The billing office staff came back from a teaching session about their facility's new program - Corporate Compliance. They were overheard talking to each other about the facility offering "just another program" that the staff had to attend. They wondered if and how they would use the information. Later that day, the clerk was approached by the billing supervisor with a request from administration to waive the patient portion of the payment, the co-payment, and she was to put a note in the record to accept whatever insurance would pay. The bill was for the hospitalization of a high level officer in the company. As the clerk began to search for the account, a flash of conscience burned in her brain. Just that morning she had signed a statement that said:

As An Employee You Are Expected to:

1. Read the compliance program policy manual and sign a statement that it was read and understood.

In those policies were details about billing accuracy. Furthermore, it said false billing is very serious and the penalties are severe. Knowingly and willingly submitting false claims is a criminal offense, and even innocent errors can prompt an investigation.

2. Report to the Compliance Officer any apparent violation of the hospital's policies as stated in the manual.

3. Ask a supervisor or the Compliance Officer when they have a questions about the legality of a course of action they are about to take.  The employee was educated into an empowered way of thinking. Will she act on the new information? The supervisor who requested that she adjust the bill was wrong, the administrator who had requested the bill be adjusted was wrong and ultimately, an ethical dilemma was created.  Facilities need to prepare for a proactive compliance program from the inside out. Be prepared to support all levels of staff in dealing with the ethical dilemmas. Have a fraudulent scenario planned. Get staff to role play and practice with some agreed upon answers. Then use the knowledge gained from practicing with tough ethical questions to help the organization transition into compliance thinking and acting according to their code of conduct.

Beside the internal issues that need to have a planned approach in order to be proactive, there are also new external issues to gear up and address.  The Office of Inspector General (OIG) has identified its work plan for 1998.  These initiatives are based on studies conducted by the OIG and work integrated between federal departments over the past several years. This is part of the OIG's continued efforts to improve the programs and operations under the Department of Health and Human Services.

The work plan addresses hospitals, physicians offices, home health, hospice, nursing home care, medical equipment and supplies, laboratory services, end stage renal disease, drug reimbursement, other medical services, Medicare and Medicaid managed care, Medicaid reimbursement, Medicare contractor operations, investigations and legal counsel. Included in the list prepared by the OIG are audits, reviews and studies. A few are listed below with a brief abstract about the focus of the project.

Focus on hospitals:

Diagnosis-related group coding:  This review will determine the extent of which hospitals are incorrectly coding hospital discharges for Medicare payment. This review will develop an approach to identify facilities possibly engaged in inappropriate coding for more thorough review and proper remedial action.   Approaches may include the use of changes in case mix or commercial software currently used to detect billing irregularities.

Short-stay discharges at non-perspective payment system providers:  This review will:

1. identify the extent of "short stay" discharges from a prospective payment system (PPS) hospital and to a hospital unit that is not part of the prospective payment system;

2. assess whether such stays were warranted; and

3. determine whether Medicare reimbursement should be adjusted if the beneficiaries were subsequently readmitted to the same PPS hospital that made the original referral.

Observations stays billed to Medicare: This study will determine the financial impact on the Medicare program and its beneficiaries of miscoded hospital outpatient observations stays. The Prospective Payment Assessment Commission (ProPAC) identified this as a problem area in 1994 because many of these observation stays should have been coded as inpatient admissions to the hospital.

Revenue codes billed by hospitals: This study will determine the extent to which hospitals are inappropriately billing Medicare for non-covered items through the use of general revenue codes.

Home Health Agencies Focus Overhead costs of home health agencies: This financial analysis will determine how much of Medicare payments to home health agencies are actually benefiting the Medicare beneficiary. OIG senses that there are few incentive for agencies to control their costs and operate in a fiscally prudent manner. An analysis of a major agency disclosed that only 46 cents of every Medicare dollar paid the agency was used to provide direct medical and aide services to beneficiaries.

Nursing Home Services Focus

Financial conflicts of interest:   The OIG will examine nursing homes that have been purchased, either partially or wholly, by durable medical equipment supplier chains and/or physician groups. This review will look at claims submitted for Medicare beneficiaries in these homes and identify any aberrant billing patterns for services and supplies provided by owners with substantial financial interests.

Nursing home care after less than three days of hospitalization:  This review will determine if payments for skilled nursing facility stays meet Medicare's coverage conditions. Survey work in Illinois indicated that some nursing home stays were reimbursed by Medicare although they were not preceded by the required hospital stay.

Physician Issues

Physician perspectives on Medicare HMOs: This study will determine the experiences and perspectives of physicians who work with Medicare HMOs. Hospital ownership of physician practices: OIG will assess Medicare billing practices and utilization when hospitals own physician practices.

Vulnerabilities may include inapproopriate referrals between hospitals and physicians, either way, excessive costs and billings, and over utilization of services when hospitals bill the Medicare program through physician practices they own.

Use of surgical modifier: OIG will determine whether physicians are improperly using Modifier 25 on their Medicare Part B claims to increase reimbursements. Modifier 25 is for physicians to claim "Significant, separately identifiable evaluation and managemend services on the day of surgery" , the key words being "separately identifiable." Organizations would be well served to determine their status in regard to the applicable OIG workplan. This helps to position them in the developmental stages of their corporate compliance plan. However, do not consider only the OIG's initiatives, but they also need to consider what practices exist within the facility. Senior management will have to make a cognitive effort to identify violations that can occur in day to day practice. When the entire organization has been trained to react to vulnerable situations, test it. That way the only messsage to the clerk from the Administrative Wing will be a test scenario that senior management uses to determine the effectiveness of the compliance training.

For more information about compliance implementation or the OIG's work plan, visit the Swain & Associates website at http://www.snaconsulting.com or the OIG at http://www.dhhs.gov/progorg/oig

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