The federal Department of Justice, the Office of Inspector General (OIG) at the Department of Health and Human Service, state Medicaid fraud control units, and other enforcement agencies have brought multiple enforcement actions against various healthcare practices - even small practices - over the course of the past twenty years.

The institutional risks of billing noncompliance have grown since 1995 from relatively non-adversarial audits and occasional return of payments to formal investigations, prosecution under the False Claims Act, and whistleblower action.

The personal risks of billing noncompliance have changed too from money return to exclusion from government programs and loss of practice license. Administrators can be barred from working in the healthcare industry and clinicians, managers, corporate directors, even outside consultants can be jailed for healthcare fraud and abuse.

The federal government strongly encourages health compliance programs and promotes voluntary billing compliance and self-policing in a variety of ways. For instance, in the case of Medicare and the OIG, the existence of a corporate compliance program influences the approach to a violation of a federal requirement in terms of an innocent mistake or a fraudulent act. The existence of a corporate billing compliance program may determine whether the matter can be routinely handled as an overpayment by the payer or it must be investigated by the OIG, or even referred to the Department of Justice to be pursued as a civil infraction or as a criminal matter (http://oig.hhs.gov/fraud/complianceguidance.html).

Do you need a compliance management program? (Ten questions)

1. Do you currently face regulatory problems?
2. Have you been a target for billing audits or investigations in the past?
3. Are your regulatory obligations changing and/or complex?
4. Do you frequently disagree with your group members about the importance of billing compliance?
5. Do you experience poor employee morale and frequent turnover, especially among billing staff?
6. Do you have complex business/investment and referral relationships with other providers?
7. Do you routinely practice aggressive coding?
8. Do you rapidly expand into ancillary service areas?
9. Do you practice in a geographic area where other practices have been frequently audited?
10. Do you offer a very broad range of services relatively to its size?

The Seven Core Elements of a Compliance Program

Generally, compliance programs programs are not required by law. Unless a practice has been ordered to implement such a plan by a court of law or has agreed to a compliance plan as part of a settlement agreement, each group is free to decide about development of such a program and its extent.

The Federal Sentencing Guidelines are designed to ensure consistency in criminal sentencing by federal judges for federal crimes. These guidelines describe seven elements that must be included in the program for it to be counted as an effective compliance program. If a compliance program was in place, and deemed to be effective, the sentence will be less harsh. Both the existence and the efficacy of a compliance program are necessary to receive a less harsh sentencing.

The Sentencing Guidelines define an “effective program to prevent and detect violations of law” as a program that has been reasonably designed, implemented, and enforced so that it generally will be effective in preventing and detecting criminal conduct and will include at least the following seven elements:

1. Establishment of compliance rules and procedures that are reasonably capable of reducing the prospect of wrongdoing;
2. The assignment of high-level personnel to oversee the billing compliance effort;
3. The use of due care to prevent delegation of substantial discretionary authority to individuals whom the company knows or should know have a propensity to engage in illegal activities;
4. The effective communication of billing standards and billing procedures of the program to all employees by either training programs or dissemination of information;
5. Taking reasonable steps to achieve billing compliance with the standards, e.g., by using monitoring and auditing systems reasonably calculated to detect criminal conduct and the establishment and publicizing of a reporting system that employees and other agents can use to report criminal conduct without fear of retribution;
6. Consistent enforcement of billing standards through disciplinary mechanisms, including discipline of individuals responsible for the failure to detect and offense; and
7. Appropriate response to offences detected including the implementation of any modifications to the program necessary to prevent future offences of the same kind.

Coding and Billing Regulatory Risks

OIG lists the following items as specific regulatory risks most frequently subject to investigation and audit:

1. Billing for items or services not rendered as claims
2. Submitting claims for supplies and services that are not reasonable and necessary
3. Double billing
4. Billing for non-covered services
5. Failure to properly use coding modifiers
6. “Clustering” (using only a few codes on the theory that it will average out)
7. “Upcoding” (using a higher reimbursement code than the code reflecting the service rendered)
8. Inappropriate balance billing (billing Medicare beneficiaries for the difference between the total provider charges and the Medicare Part B allowable amount)
9. Routine waiver of co-payments and billing third-party insurance only
10. Discounts and professional courtesy
11. Improper billing for incident-to services
12. Improper reassignment of physician billing numbers
13. Failure to refund credit balances due to patients and payers
14. Billing for services provided by unqualified or unlicensed clinical personnel

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