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.

Institutional risks of noncompliance have grown during the last decade from audits and occasional return of payments to formal investigations, prosecution under the False Claims Act, and whistleblower action.

Personal risks of 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, and outside consultants can be jailed for healthcare fraud and abuse.

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).

An “effective program to prevent and detect violations of law” must include at least seven elements:

1. Establish compliance rules and procedures to reduce the prospect of wrongdoing;
2. Assign high-level personnel to oversee the compliance effort;
3. Prevent delegation of substantial discretionary authority to individuals that might engage in illegal activities;
4. Communicate the standards and procedures of the program to all employees;
5. Use monitoring and auditing systems to detect criminal conduct and establish and publicize a reporting system to report criminal conduct without fear of retribution; Specific items for monitoring include:
1. "Phantom Billing" (Billing for items or services not rendered.)
2. Submitting claims for supplies and services that are not reasonable and necessary
3. "Double Billing" (charging more than once for the same service, for example by billing using an individual code and again as part of an automated or bundled set of tests.)
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, e.g., billing for complex services when only simple services were performed, billing for brand-named drugs when generic drugs were provided, listing treatment as having been for a more complicated diagnosis than was actually the case.)
8. "Unbundling" (using two or more CPT billing codes instead of one inclusive code where rules and regulations require "bundling" of such claims. Submitting multiple bills, in order to obtain a higher reimbursement for tests and services that were performed within a specified time period and which should have been submitted as a single bill.)
9. Inappropriate balance billing (billing Medicare beneficiaries for the difference between the total provider charges and the Medicare Part B allowable amount)
10. Routine waiver of co-payments and billing third-party insurance only
11. Discounts and professional courtesy
12. Improper billing for incident-to services
13. Improper reassignment of physician billing numbers
14. Failure to refund credit balances due to patients and payers
15. Billing for services provided by unqualified or unlicensed clinical personnel, for instance, a drug or equipment supplier completing a Certificate of Medical Necessity (CMN) instead of the physician.
16. Billing Medicare/Medicaid for new equipment but providing the patient used equipment.
17. Billing Medicare/Medicaid for expensive equipment but providing the patient cheap equipment.
18. "Reflex testing" (Automatically running a test whenever the results of some other test fall within a certain range, even though the test was not requested by a physician.)
19. "Defective Testing" (When a test or part of a test was not performed because of technical trouble (for instance, insufficient or destroyed sample, machine malfunction) but is billed for anyway.)
20. "Code Jamming" - Laboratories inserting or "jamming" fake diagnosis codes to get Medicare/Medicaid coverage.
6. Consistently enforce the standards through disciplinary mechanisms, including discipline of individuals responsible for the failure to detect an offense; and
7. Periodically improve the program to prevent future offences of the same kind.

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