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Virtual Compliance Office

Physician Compliance Programs

Authored by Craig J. Zicari, Esq., Harter, Secrest & Emery, LLP

On September 25, 2000, the Department of Health and Human Services’ Office of the Inspector General (“OIG”) issued its final guidelines (the "OIG Guidance") to aid individual and small group physician practices in designing a voluntary compliance program. OIG expects that such a program will promote adherence to statutes and regulations applicable to Federal health care programs, such as Medicare and Medicaid, and will help physicians prevent and reduce improper conduct, including the fraudulent or erroneous submission of claims to Federal health care programs. A properly prepared and well-implemented compliance program can do the following: aid physicians in ensuring that the reimbursement claims they submit to the various Federal health care programs are accurate and complete; reduce the likelihood that an audit will be conducted by the government; improve the physician's position if an audit is conducted; and help avoid conflicts with both federal and state anti-kickback and self-referral laws.

The OIG Guidance emphasizes OIG's belief that most physicians are working in an ethical manner to render high quality medical care and are submitting proper claims for reimbursement. OIG notes that physicians are not subject to criminal, civil or administrative penalties for innocent errors or even negligence. For example, the Federal False Claims Act, the primary enforcement device used by the government, covers offenses which are committed with actual knowledge of the falsity of the claim, reckless disregard or deliberate ignorance of the truth or falsity of a claim.

The OIG Guidance notes that any voluntary compliance program begins with a consideration of seven basic components. They are as follows:

conducting internal monitoring and auditing through the performance of periodic audits;
implementing compliance and practice standards by developing written standards and procedures (i.e., the written compliance program);
designating a compliance officer or contact to monitor compliance efforts;
conducting training and education on practice standards and procedures;
responding appropriately to detected violations through proper investigation and disclosure to appropriate governmental entities;
developing open lines of communication (such as discussions at staff meetings and the use of bulletin boards) to keep employees updated regarding ongoing compliance activities;
and enforcing disciplinary standards through well-publicized guidelines.

The extent to which these components will be implemented will depend on the resources and the size of the physician practice.

The OIG Guidance further notes that the practice should focus on the particular risk areas which, based on the practice’s history of billing problems and other compliance issues, may benefit from effective educational, corrective or other compliance measures. For example, OIG states that a practice should review its prior claims denials as a way to begin to identify and address significant risk areas. To assist physicians in developing written standards, OIG sets forth a list of four potential risk areas which affect physician practices, and areas in which OIG has focused its investigations and audits of physician practices. They are as follows:

proper coding and billing;
ensuring that the medical services provided are both reasonable and necessary;
proper documentation; and
avoiding improper kickbacks, self-referrals and inducements.

The OIG Guidance further addresses implementation of a compliance program. It indicates, for example, that once a program has been developed, appropriate training and education must be performed in order to ensure that all employees understand the compliance program as well as the underlying statutes, regulations and guidelines.

If a physician practice discovers a potential violation, OIG recommends that a specifically tailored corrective action plan be developed to respond to the problem. The allegations must be investigated by the compliance officer and steps must be taken to correct the problem, including the return of any Federal program overpayments and voluntary self-disclosure to appropriate governmental officials and law enforcement agencies, if applicable.

In order to avoid problems from proliferating, OIG states that physician practices need to have open lines of communication, such as an “open door” policy between physicians, compliance personnel and employees of the practice. Efforts should also be made to create some anonymous procedures, such as drop boxes, so that potentially fraudulent conduct can be freely reported. Lastly, employees of a physician practice must understand the consequences of their improper actions, and there must be well-publicized guidelines detailing the procedure for the disciplining of individuals who violate the established compliance standards.

The OIG Guidance also contains a detailed appendix section which addresses issues such as: (a) additional risk areas faced by individual and small group physician practices; (b) a description of criminal, civil and administrative statutes related to health care fraud and abuse; (c) an outline of information on how to contact OIG and to report alleged instances of fraud, abuse and waste in the health care market, including self-disclosure; and (d) information on how to access information regarding the various Federal health care programs, such as internet resources.

In commenting on the issuance of the OIG Guidance, the honorable June Gibbs Brown, Inspector General, noted that "We are encouraging physician practices to adopt the active application of compliance principles in their practice rather than implement rigid, costly formal procedures. Our goal initially in this final guidance was to show physician practices that compliance can become a part of the practice culture without the practice having to expend substantial monetary or time resources."

Most physician practices have procedures in place that address some of the issues raised in the OIG Guidance. However, it is essential that these procedures become part of a comprehensive written and well-implemented compliance program.

A compliance program is more than just a "book on the shelf." It is an entire process which is developed to fit the special circumstances of a physician practice. While it needs to become part of the practice's culture, it must also reflect the practice's culture. It is also a program that should and will continually develop once it is implemented. Thus, it is not necessary when developing a compliance program to develop and implement the program "all at once." In a subsequent article, I will discuss a process and methodology that can be used to develop and implement a compliance program.

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