Recent activity by the U.S. Department of Justice and the U.S. Department of Health and Human Services' office of Inspector General suggests that compliance programs and qui tam litigation will continue to dominate federal government audit and investigation agendas in 1999. The OIG's 1999 Workplan and its recent publications also point to intensive focus on a variety of billing issues viewed by enforcement officials as ripe for abuse. Compliance. In the compliance arena, HHS' office of Inspector General's recent activity reveals an expansion of its 1998 model compliance plan efforts. OIG previously has published model compliance plans for hospitals, clinical labs, home health agencies, and third party billing companies. In 1999, the OIG expects to publish new model plans for nursing homes and for the hospice industry.
Practitioners in these industries should closely compare their clients' compliance plans with these new model plans as they are released. While a compliance plan alone will not resolve an enforcement dispute, the implementation of an effective compliance plan will go far in limiting the damage. Billing mistakes can happen to any organization, but the existence of an effective compliance plan can be critical in demonstrating the organization's good faith efforts to avoid erroneous coding and bills. OIG's model plans provide concrete guidance on creating such an effective plan.
Qui Tam litigation. The Justice Department recently moved to consolidate the multitude of qui tam lawsuits files against the nation's largest health care provider, Columbia/HCA. Combined with statements from both Columbia and Justice that settlement is in everyone's interest, the motion to consolidate increases the changes that this massive enforcement action will be settled in 1999. When settlement occurs, watch for details of the regulatory violations cited by the government in the settlement documents. While Columbia no doubt will seek to disclaim liability, the Justice Department and HHS likely will use the settlement as a message regarding the aggressive practices allegedly utilized by Columbia in its hospital-physician and other business arrangements. While a settlement agreement does not bind providers in the way regulatory rule-making does, providers will be hard pressed to continue practices cited by the Justice Department in the final settlement. In addition to producing a record financial settlement, the Columbia settlement may provide direct guidance on a number of regulatory questions left unanswered by recent HHS rulemaking.
Billing and Other Issues. HHS' Fiscal Year 1999 Workplan lists fifteen "projects" relating to hospitals, six related to home health care, eleven relating to nursing homes, nine relating to physicians, plus additional projects relating to medical equipment suppliers, end state renal disease, drug reimbursement, Medicare managed care, Medicaid reimbursement, and others. The Workplan is available from the OIG's website: http://www.hhs.gov/progorg/oig
One highlight: hospital-physician affiliation concerns. The fall-out from physician acquisition activity in the mid-1990s continues. Both the Internal Revenue Service and the Justice Department have now brought actions against hospital providers for excessive payments to physicians. These agencies characterize such excessive payments as kickbacks for patient referrals. We can expect continued government activity in this area, notwithstanding the fact that physician acquisitions in many markets have ground to a halt.
The OIG focuses on the physician affiliation issue in its 1999 Workplan. For example, OIG expresses concern that "provider-based status" of acquired physicians may qualify a hospital for higher reimbursement rates:
We will identify the potential vulnerabilities to Medicare arising from the proliferation of provider-based physician practices. Hospitals that meet certain criteria may receive higher reimbursement by having a "provider-based" designation for facilities housing practices they own, such as physician practices. We will review HCFA's oversight of the process for approving "provider-based" status and for monitoring hospitals that receive the additional benefit. We will also explore any benefits of provider-based facilities to Medicare and its beneficiaries.
More broadly, the Workplan expresses concern regarding the financial impact of physician acquisitions, and physician-hospital integration generally. OIG expects to "determine whether and to what extent Medicare expenditures are increased as a result of physician-hospital integration and identify other potential vulnerabilities, such as questionable patient referral practices."
How To Respond. Providers should take several proactive steps now. to the extent that a provider has not implemented a compliance plan, implementation must begin promptly -- especially in the areas of physician compensation and recruitment. As noted above, the existence of a compliance plan highlights an organization's intent to code and bill correctly. Conversely, the absence of such a plan may signal to regulators an indifference to coding and billing procedures. Such a perceived indifference often strongly influences a regulator or enforcement official in negotiating remedial measures and financial penalties.
The key ingredient to any compliance plan in any sector of the health care industry is active monitoring. Compliance manuals and telephone "hotlines", while important, are rarely effective standing alone. The best compliance plans build in active monitoring and reporting, ideally through the provider's existing management information systems. This enables provider management to stay one step ahead of enforcement officials, identifying and resolving coding or billing issues before they become widespread. This sort of compliance effort gives the provider an active enforcement role, a role that will result in much more productive, and much less costly, regulatory and enforcement interaction.
Practitioners in these industries should closely compare their clients' compliance plans with these new model plans as they are released. While a compliance plan alone will not resolve an enforcement dispute, the implementation of an effective compliance plan will go far in limiting the damage. Billing mistakes can happen to any organization, but the existence of an effective compliance plan can be critical in demonstrating the organization's good faith efforts to avoid erroneous coding and bills. OIG's model plans provide concrete guidance on creating such an effective plan.
Qui Tam litigation. The Justice Department recently moved to consolidate the multitude of qui tam lawsuits files against the nation's largest health care provider, Columbia/HCA. Combined with statements from both Columbia and Justice that settlement is in everyone's interest, the motion to consolidate increases the changes that this massive enforcement action will be settled in 1999. When settlement occurs, watch for details of the regulatory violations cited by the government in the settlement documents. While Columbia no doubt will seek to disclaim liability, the Justice Department and HHS likely will use the settlement as a message regarding the aggressive practices allegedly utilized by Columbia in its hospital-physician and other business arrangements. While a settlement agreement does not bind providers in the way regulatory rule-making does, providers will be hard pressed to continue practices cited by the Justice Department in the final settlement. In addition to producing a record financial settlement, the Columbia settlement may provide direct guidance on a number of regulatory questions left unanswered by recent HHS rulemaking.
Billing and Other Issues. HHS' Fiscal Year 1999 Workplan lists fifteen "projects" relating to hospitals, six related to home health care, eleven relating to nursing homes, nine relating to physicians, plus additional projects relating to medical equipment suppliers, end state renal disease, drug reimbursement, Medicare managed care, Medicaid reimbursement, and others. The Workplan is available from the OIG's website: http://www.hhs.gov/progorg/oig
One highlight: hospital-physician affiliation concerns. The fall-out from physician acquisition activity in the mid-1990s continues. Both the Internal Revenue Service and the Justice Department have now brought actions against hospital providers for excessive payments to physicians. These agencies characterize such excessive payments as kickbacks for patient referrals. We can expect continued government activity in this area, notwithstanding the fact that physician acquisitions in many markets have ground to a halt.
The OIG focuses on the physician affiliation issue in its 1999 Workplan. For example, OIG expresses concern that "provider-based status" of acquired physicians may qualify a hospital for higher reimbursement rates:
We will identify the potential vulnerabilities to Medicare arising from the proliferation of provider-based physician practices. Hospitals that meet certain criteria may receive higher reimbursement by having a "provider-based" designation for facilities housing practices they own, such as physician practices. We will review HCFA's oversight of the process for approving "provider-based" status and for monitoring hospitals that receive the additional benefit. We will also explore any benefits of provider-based facilities to Medicare and its beneficiaries.
More broadly, the Workplan expresses concern regarding the financial impact of physician acquisitions, and physician-hospital integration generally. OIG expects to "determine whether and to what extent Medicare expenditures are increased as a result of physician-hospital integration and identify other potential vulnerabilities, such as questionable patient referral practices."
How To Respond. Providers should take several proactive steps now. to the extent that a provider has not implemented a compliance plan, implementation must begin promptly -- especially in the areas of physician compensation and recruitment. As noted above, the existence of a compliance plan highlights an organization's intent to code and bill correctly. Conversely, the absence of such a plan may signal to regulators an indifference to coding and billing procedures. Such a perceived indifference often strongly influences a regulator or enforcement official in negotiating remedial measures and financial penalties.
The key ingredient to any compliance plan in any sector of the health care industry is active monitoring. Compliance manuals and telephone "hotlines", while important, are rarely effective standing alone. The best compliance plans build in active monitoring and reporting, ideally through the provider's existing management information systems. This enables provider management to stay one step ahead of enforcement officials, identifying and resolving coding or billing issues before they become widespread. This sort of compliance effort gives the provider an active enforcement role, a role that will result in much more productive, and much less costly, regulatory and enforcement interaction.