[Federal Register Volume 64, Number 209 (Friday, October 29, 1999)]
[Notices]
[Pages 58419-58435]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-28094]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Inspector General
Draft OIG Compliance Program Guidance for Nursing Facilities
AGENCY: Office of Inspector General (OIG), HHS.
ACTION: Notice and comment period.
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SUMMARY: This Federal Register notice seeks the comments of interested
parties on draft compliance guidance developed by the Office of
Inspector General (OIG) for nursing facilities. Through this notice,
the OIG is setting forth its general views on the value and fundamental
principles of nursing facilities' compliance programs, and the specific
elements that nursing facilities should consider when developing and
implementing an effective compliance program.
DATE: To assure consideration, comments must be delivered to the
[[Page 58420]]
address provided below by no later than 5 p.m. on November 29, 1999.
ADDRESSES: Please mail or deliver written comments to the following
address: Office of Inspector General, Department of Health and Human
Services, Attention: OIG-5P-CPG, Room 5246, Cohen Building, 330
Independence Avenue, SW, Washington, DC 20201.
We do not accept comments by facsimile (FAX) transmissions. In
commenting, please refer to file code OIG-5P-CPG. Comments received
timely will be available for public inspection as they are received,
generally beginning approximately 2 weeks after publication a document,
in Room 5541 of the Office of Inspector General at 330 Independence
Avenue SW., Washington, DC 20201 on Monday through Friday of each week
from 8:00 a.m. to 4:30 p.m.
FOR FURTHER INFORMATION CONTACT: Lewis Morris, Office of Counsel to the
Inspector General, (202) 619-2078.
SUPPLEMENTARY INFORMATION:
Background
The creation of compliance program guidance is a major initiative
of the OIG in its effort to engage the private health care community in
combating fraud and abuse. In the last several years, the OIG has
developed and issued compliance program guidance directed at the
following segments of the health care industry: the hospital industry;
home health agencies; clinical laboratories; third-party medical
billing companies; the durable medical equipment, prosthetics,
orthotics and supply industry; and hospices. The development of these
types of compliance program guidance is based on our belief that a
health care provider can use internal controls to more efficiently
monitor adherence to applicable statutes, regulations and program
requirements.
Copies of these compliance program guidances can be found on the
OIG website at http://www.hhs.gov/oig.
Developing Draft Compliance Program Guidance for Nursing Facilities
On December 18, 1998, the OIG published a solicitation notice
seeking information and recommendations for developing formal guidance
for nursing facilities (63 FR 70137). In response to that solicitation
notice, the OIG received 16 comments from various outside sources. In
developing this notice for formal public comment, we have considered
those comments, as well as previous OIG publications, such as other
compliance program guidances and Special Fraud Alerts. In addition, we
have also taken into account past and recent fraud investigations
conducted by the OIG's Office of Investigations and the Department of
Justice, and have consulted with the Health Care Financing
Administration.
This draft guidance for nursing facilities contains seven elements
that the OIG has determined are fundamental to an effective compliance
program:
Implementing written policies;
Designating a compliance officer and compliance committee;
Conducting effective training and education;
Developing effective lines of communication;
Conducting internal monitoring and auditing;
Enforcing standards through well-publicized disciplinary
guidelines; and
Responding promptly to detected offenses and developing
corrective action.
These elements are contained in previous guidances issued by the
OIG. As with previously issued guidances, this draft compliance program
guidance represents the OIG's suggestions on how nursing facilities can
best establish internal controls and prevent fraudulent activities. The
contents of this guidance should not be viewed as mandatory or as an
exclusive discussion of the advisable elements of a compliance program;
the document is intended to present voluntary guidance to the industry
and not represent binding standards for nursing facilities.
Public Input and Comment in Developing Final Guidance
In an effort to ensure that all parties have an opportunity to
provide input into the OIG's guidance, we are publishing this guidance
in draft form. We welcome any comments from interested parties
regarding this document. The OIG will consider all comments that are
received within the above-cited time frame, incorporate any specific
recommendations as appropriate, and prepare a final version of the
guidance thereafter for publication in the Federal Register.
Draft Compliance Program Guidance for Nursing Facilities
I. INTRODUCTION
The Office of Inspector General (OIG) of the Department of Health
and Human Services (DHHS) continues in its efforts to promote
voluntarily implemented compliance programs for the health care
industry.\1\ This compliance guidance is intended to assist nursing
facilities \2\ develop and implement internal controls and procedures
that promote adherence to applicable statutes and regulations of the
Federal health care programs \3\ and private insurance program
requirements. Compliance programs strengthen Government efforts to
prevent and reduce fraud and abuse, as well as further the mission of
all nursing facilities to provide quality care to their residents.
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\1\ Currently, the Office of Inspector General has issued
compliance program guidances for the following six industry sectors:
hospitals, clinical laboratories, home health agencies, durable
medical equipment suppliers, third-party medical billing companies
and hospices. Over the next year, the OIG plans to issue compliance
guidances for Medicare+Choice organizations offering coordinated
care plans, ambulance companies and small group physician practices.
\2\ For the purpose of this guidance, the term ``nursing
facility'' includes a skilled nursing facility (SNF) and a nursing
facility (NF) organization that meet the requirements of sections
1819 and 1919 of the Social Security Act (Act), respectively, 42
U.S.C. 1395i-3 and 42 U.S.C. 1396r. Where appropriate we distinguish
between SNFs and other facilities.
\3\ The term ``Federal health care programs,'' as defined in 42
U.S.C. 1320a-7b(f), includes any plan or program that provides
health benefits, whether directly, through insurance, or otherwise,
which is funded directly, in whole or in part, by the United States
Government (i.e., via programs such as Medicare, Federal Employees
Health Benefits Act, Federal Employees' Compensation Act, Black
Lung, or the Longshore and Harbor Worker's Compensation Act) or any
State health plan (e.g., Medicaid, or a program receiving funds from
block grants for social services or child health services). In this
document, the term ``Federal health care program requirements''
refers to the statutes, regulations and other rules governing
Medicare, Medicaid, and all other Federal health care programs.
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Through this document, the OIG provides its views on the
fundamental elements of nursing facility compliance programs, as well
as the principles that each nursing facility should consider when
developing and implementing an effective compliance program. While this
document presents basic procedural and structural guidance for
designing a compliance program, it is not in and of itself a compliance
program. Rather, it is a set of guidelines that nursing facilities
should consider when developing and implementing a compliance program.
Implementing an effective compliance program in a nursing facility
may require a significant commitment of time and resources by all parts
of the organization. However, superficial efforts or programs that are
hastily constructed and implemented without a long-term commitment to a
culture of compliance will likely be ineffective and may expose the
nursing facility to greater liability than if it had no
[[Page 58421]]
program at all.\4\ Although an effective compliance program may require
a reallocation of existing resources, the long-term benefits of
establishing a compliance program significantly outweigh the initial
costs. In short, compliance measures are an investment that advances
the goals of the nursing facility, the solvency of the Federal health
care programs, and the quality of care provided to the nursing home
resident.
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\4\ Recent case law suggests that the failure of a corporate
director to attempt in good faith to institute a compliance program
in certain situations may be a breach of a director's fiduciary
obligation. See, e.g., In re Caremark International Inc. Derivative
Litigation, 698 A.2d 959 (Ct. Chanc. Del. 1996).
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In a continuing effort to collaborate closely with health care
providers and the private sector, the OIG placed a notice in the
Federal Register soliciting comments and recommendations on what should
be included in this compliance program guidance.\5\ In addition to
considering these comments in drafting this guidance, we reviewed
previous OIG publications, including OIG Special Fraud Alerts and OIG
Medicare Advisory Bulletins, as well as reports issued by OIG's Office
of Audit Services (OAS) and Office of Evaluation and Inspections (OEI)
affecting the nursing home industry.\6\ In addition, we relied on the
experience gained from fraud investigations of nursing home operators
conducted by OIG's Office of Investigations, the Department of Justice,
and the Medicaid Fraud Control Units.
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\5\ See 63 FR 70137 (December 12, 1998) ``Notice for
Solicitation of Information and Recommendations for Developing OIG
Compliance Program Guidance for the Nursing Home Industry.''
\6\ The OIG periodically issues advisory opinions responding to
specific inquiries concerning the application of the OIG's
authorities and Special Fraud Alerts setting forth activities that
raise legal and enforcement issues. These documents, as well as
reports from OAS and OEI can be obtained on the Internet at: http://
www.hhs.gov/oig. We also recommend that nursing home providers
regularly review the Health Care Financing Administration (HCFA)
website on the Internet at: http://www.hcfa.gov, for up-to-date
regulations, manuals, and program memoranda related to the Medicare
and Medicaid programs.
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A. Benefits of a Compliance Program
The OIG believes a comprehensive compliance program provides a
mechanism that brings the public and private sectors together to reach
mutual goals of reducing fraud and abuse, improving operational
functions, improving the quality of health care services, and reducing
the cost of health care. Attaining these goals provides positive
results to the nursing facility, the Government, and individual
citizens alike. In addition to fulfilling its legal duty to ensure that
it is not submitting false or inaccurate claims to Government and
private payers, a nursing facility may gain numerous additional
benefits by voluntarily implementing a compliance program. The benefits
may include:
The formulation of effective internal controls to assure
compliance with statutes, regulations and rules;
A concrete demonstration to employees and the community at
large of the nursing facility's commitment to responsible corporate
conduct;
The ability to obtain an accurate assessment of employee
and contractor behavior;
An increased likelihood of identifying and preventing
unlawful and unethical behavior;
The ability to quickly react to employees' operational
compliance concerns and effectively target resources to address those
concerns;
Improvement of the quality, efficiency, and consistency of
providing services;
A mechanism to encourage employees to report potential
problems and allow for appropriate internal inquiry and corrective
action;
A centralized source for distributing information on
health care statutes, regulations and other program directives;\7\
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\7\ Counsel to the nursing facility should be consulted as
appropriate regarding interpretation and legal analysis of laws
related to the Federal health care programs and laws related to
fraud, abuse and other legal requirements.
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A mechanism to improve internal communications;
Procedures that allow the prompt, thorough investigation
of alleged misconduct; and
Through early detection and reporting, minimizing loss to
the Government from false claims, and thereby reducing the nursing
facility's exposure to civil damages and penalties, criminal sanctions,
and administrative remedies.\8\
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\8\ The OIG, for example, will consider the existence of an
effective compliance program that pre-dated any governmental
investigation when addressing the appropriateness of administrative
sanctions. However, the burden is on the nursing facility to
demonstrate the operational effectiveness of the compliance program.
Further, the False Claims Act, 31 U.S.C. 3729-3733, provides that a
person who has violated the Act, but who voluntarily discloses the
violation to the Government within 30 days of detection, in certain
circumstances will be subject to not less than double, as opposed to
treble, damages. See 31 U.S.C. 3729(a). In addition, criminal
sanctions may be mitigated by an effective compliance program that
was in place at the time of the criminal offense. See note 11.
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The OIG recognizes that the implementation of a compliance program
may not entirely eliminate fraud and abuse from the operations of a
nursing facility. However, a sincere effort by the nursing facility to
comply with applicable statutes and regulations as well as Government
and private payer health care program requirements, through the
establishment of a compliance program, significantly reduces the risk
of unlawful or improper conduct.
B. Application of Compliance Program Guidance
Given the diversity within the long-term care industry, there is no
single ``best'' nursing facility compliance program. The OIG recognizes
the complexities of this industry and is sensitive to the differences
among large national chains, regional multi-facility operators, and
small independent homes. However, the elements of this guidance can be
used by all nursing facilities to establish a compliance program,
regardless of size (in terms of employees and gross revenue), number of
locations, or corporate structure. Similarly, a corporation that
provides long term care as part of an integrated health care delivery
system may incorporate these elements into its structure.\9\
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\9\ For example, this would include providers that own
hospitals, skilled nursing facilities, long-term care facilities and
hospices.
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We recognize that some nursing facilities may not be able to adopt
certain elements to the same degree that others with more extensive
resources may achieve. At the end of several sections of this document,
the OIG has offered suggestions to assist these smaller nursing
facility providers in implementing the principles expressed in this
guidance. Regardless of size, structure or available resources, the OIG
recommends that every nursing facility should strive to accomplish the
objectives and principles underlying all of the compliance polices and
procedures in this guidance.
By no means should the contents of this guidance be viewed as an
exclusive or complete discussion of the advisable elements of a
compliance program. On the contrary, the OIG strongly encourages
nursing facilities to develop and implement compliance elements that
uniquely address the areas of potential problems, common concerns, or
high risk areas that apply to their own facilities. Furthermore, this
guidance may be modified and expanded as more information and knowledge
is obtained by the OIG, and as changes in the statutes, regulations and
rules of the Federal, State, and private health plans occur. New
[[Page 58422]]
compliance practices also may be incorporated into this guidance if the
OIG discovers enhancements that promote effective compliance.
II. Compliance Program Elements
A. The Seven Basic Compliance Elements
The OIG believes that every effective compliance program must begin
with a formal commitment10 by the nursing facility's
governing body to address all of the applicable elements listed below,
which are based on the seven steps of the Federal Sentencing
Guidelines.11 The OIG recognizes that full implementation of
all elements may not be immediately feasible for all nursing
facilities. However, as a first step, a good faith and meaningful
commitment on the part of nursing facility management will
substantially contribute to the program's successful implementation. As
the compliance program is effectuated, that commitment should cascade
down through management to every employee and contractor of the nursing
facility.
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\10\ A formal commitment may include a resolution by the board
of directors, owner(s), or president, where applicable. Evidence of
that commitment should include the allocation of adequate resources,
a timetable, and the identification of an individual to serve as a
compliance officer or coordinator to ensure that each of the
recommended and adopted elements is addressed. Once a commitment has
been established, a compliance officer should immediately be chosen
to oversee the implementation of the compliance program.
\11\ See United States Sentencing Commission Guidelines,
Guidelines Manual, 8 A1.2, Application Note 3(k). The Federal
Sentencing Guidelines are detailed policies and practices for the
Federal criminal justice system that prescribe the appropriate
sanctions for offenders convicted of Federal crimes.
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At a minimum, a comprehensive compliance program should include the
following seven elements:
(1) The development and distribution of written standards of
conduct, as well as written policies, procedures and protocols that
promote the nursing facility's commitment to compliance (e.g., by
including adherence to the compliance program as an element in
evaluating managers and employees) and address specific areas of
potential fraud and abuse, such as claims development and submission
processes, quality of care issues facing residents, and financial
arrangements with physicians and outside contractors that may affect
the health care provided to beneficiaries;
(2) The designation of a compliance officer and other appropriate
bodies (e.g., a corporate compliance committee), charged with the
responsibility for developing, operating and monitoring the compliance
program, and who reports directly to the owner(s), governing body and/
or CEO; 12
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\12\ The roles of the compliance officer and the corporate
compliance committee in implementing an effective compliance program
are discussed throughout this guidance. However, the OIG recognizes
that the differences in the sizes and structures of nursing
facilities may result in differences in the way in which compliance
programs function.
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(3) The development and implementation of regular, effective
education and training programs for all affected employees;
13
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\13\ Training and educational programs for nursing facilities
should be detailed, comprehensive and at the same time targeted to
address the needs of specific employees based on their
responsibilities within the facility. Existing in-service training
programs can be expanded to address general compliance issues, as
well as the risk areas identified in that part of nursing home
operations.
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(4) The creation and maintenance of an effective line of
communication between the compliance officer and all employees,
including a process, such as a hotline or other reporting system, to
receive complaints, and the adoption of procedures to protect the
anonymity of complainants and to protect whistle blowers from
retaliation;
(5) The use of audits and/or other risk evaluation techniques to
monitor compliance, identify problem areas, and assist in the reduction
of identified problems; 14
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\14\ For example, periodically spot-checking the work of coding
and billing personnel should be part of a compliance program. In
addition, procedures to regularly monitor the care provided nursing
facility residents and to ensure that deficiencies identified by
surveyors are corrected should be incorporated into the compliance
program's evaluation and monitoring functions.
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(6) The development of policies and procedures addressing the non-
employment or retention of excluded individuals or entities; and the
enforcement of appropriate disciplinary action against employees or
contractors who have violated corporate or compliance policies and
procedures, applicable statutes, regulations, or Federal, State, or
private payor health care program requirements; and
(7) The development of policies and procedures with respect to the
investigation of identified systemic problems, which include direction
regarding the prompt and proper response to detected offenses, such as
the initiation of appropriate corrective action, repayments and
preventive measures.
B. Written Policies and Procedures
Every compliance program should develop and distribute written
compliance standards, procedures and practices that guide the nursing
facility and the conduct of its employees throughout day-to-day
operations. These policies and procedures should be developed under the
direction and supervision of the compliance officer, the compliance
committee, and operational managers. At a minimum, they should be
provided to all employees who are affected by these policies, as well
as physicians, suppliers, nursing facility agents, and contractors who
may affect or be affected by the nursing facility's billing and care
functions.15 In addition to general corporate policies and
procedures, an effective compliance program should include specific
policies and procedures for the different clinical, financial, and
administrative functions of a nursing facility.
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\15\ According to the Federal Sentencing Guidelines, an
organization must have established compliance standards and
procedures to be followed by its employees and other agents in order
to receive sentencing credit for an ``effective'' compliance
program. The Federal Sentencing Guidelines define ``agent'' as ``any
individual, including a director, an officer, an employee, or an
independent contractor, authorized to act on behalf of the
organization.'' See United States Commission Guidelines, Guidelines
Manual, 8A1.2, Application Note 3(d).
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1. Code of Conduct
While a clear statement of policies and procedures is at the core
of a compliance program, the OIG recommends that nursing facilities
start the process with the development of a corporate statement of
principles that will guide the operations of the provider. One common
expression of this statement of principles is the code of
conduct.16
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\16\ The OIG strongly encourages the participation and
involvement of the nursing facility's owner(s), governing board,
CEO, as well as other personnel from various levels of the
organizational structure in the development of all aspects of the
compliance program, especially the standards of conduct. Management
and employee involvement in this process communicates a strong and
explicit commitment to all employees of the need to comply with the
organization's standards of conduct.
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The code should function in the same fashion as a constitution,
i.e., as a foundational document that details the fundamental
principles, values, and framework for action within an organization.
The code of conduct for a nursing facility should articulate the
organization's expectations of employees, as well as summarize the
basic legal principles under which the organization must operate.
Unlike the more detailed policies and procedures, the code of conduct
should be brief, easily readable and cover general principles
applicable to all employees.
The code of conduct should be distributed to, and comprehensible
by, all affected employees.17 Depending on
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the facility's work force, this may mean that the code should be
translated into other languages when necessary and written at
appropriate reading levels. Further, any employee handbook delineating
the standards of conduct should be regularly updated to reflect
developments in applicable Government and private health care program
requirements. Finally, the OIG recommends that current employees, as
well as those newly hired, should certify that they have received and
read the organization's code of conduct. These certifications should be
updated on a regular basis, possibly as part of an annual training
program, retained in the employee's personnel file and made available
for review.18
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\17\ The code also should be distributed, or at least available,
to the residents and their families, as well as the physicians and
contractors associated with the facility.
\18\ Documentation of employee training and other compliance
efforts is important in conducting internal assessments of the
compliance program, as well as during any third-party evaluation of
facility's efforts to comply with Federal health care program
requirements. See section II.F.
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The OIG believes that all nursing facilities should operate under
the guidance of a code of conduct. While the OIG recognizes that some
nursing facilities may not have the resources to establish a
comprehensive compliance program, we believe that every nursing
facility can design a program that addresses the seven elements set out
in this guidance, albeit at different levels of sophistication and
complexity. In its most fundamental form, a facility's code of conduct
is a basic set of standards that articulate the organization's
philosophy, summarizes basic legal principles, and teaches employees
how to respond to practices that may violate the code of conduct and
standards. These standards should be posted and distributed to every
employee. Further, even a small nursing facility should obtain written
attestation from its employees to confirm their understanding and
commitment to the nursing facility's code of conduct.
2. Specific Risk Areas
As part of their commitment to a compliance program, nursing
facilities should prepare a comprehensive set of written policies and
procedures that are in place to prevent fraud and abuse in facility
operations and to ensure the appropriate care of their residents. These
policies and procedures should educate and alert all affected managers
and employees of the Federal health care program requirements, the
consequences of noncompliance, and the specific procedures that nursing
facility employees should follow to report problems, to ensure
compliance, and to rectify any prior noncompliance.
The OIG recognizes that most facilities have in place policies and
procedures to prevent fraud and abuse in their institutions. These
providers may not need to develop a new, comprehensive set of policies
as part of their compliance program if existing policies encompass the
provider's operations and relevant rules. However, the nursing home
industry is subject to numerous Federal and State statutes, rules,
regulations and manual instructions.19 Because these program
requirements are frequently modified, the OIG recommends that all
nursing facilities evaluate their current compliance policies and
procedures by conducting a baseline assessment of risk areas, as well
as subsequent reevaluations.20 The OIG also recommends that
these internal compliance reviews be undertaken on a regular basis to
ensure compliance with current program requirements.
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\19\ See http://www.hcfa.gov for a set of all Medicare and
Medicaid manuals.
\20\ In addition, all providers should be aware of the
enforcement priorities of Federal and State regulators and law
enforcement agencies. OIG periodically issues Special Fraud Alerts
and Special Advisory Bulletins that identify activities believed to
raise enforcement concerns. These documents and other materials that
provide insight into the nursing home enforcement priorities of the
OIG are referenced throughout this guidance.
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To assist nursing facilities in performing this internal
assessment, the OIG has developed a list of potential risk areas
affecting nursing facility providers. These risk areas include quality
of care and residents' rights, employee screening, vendor
relationships, billing and cost reporting, and recordkeeping and
documentation. This list of risk areas is not exhaustive, nor all
encompassing. Rather, it should be viewed as a starting point for an
internal review of potential vulnerabilities within the nursing
facility.21 The objective of this assessment should be to
ensure that the employees, managers and directors are aware of these
risk areas and that steps are taken to minimize, to the extent
possible, the types of billing and quality of care problems identified.
While there are many ways to accomplish this objective, the OIG has
observed that comprehensive, clear written standards, policies and
procedures that are communicated to all appropriate employees and
contractors are the first step in an effective compliance program.
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\21\ The OIG recommends that, in addition to the list set forth
below, the provider review the OIG's Work Plan to identify
vulnerabilities and risk areas on which the OIG will focus during
the following year. In addition, it is recommended that the nursing
facility routinely review the OIG's semiannual reports, which
identify program vulnerabilities and risk areas that the OIG has
targeted during the preceding six months. All of these documents are
available on the OIG's webpage at http://www.hhs.gov/oig.
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The OIG believes that sound operating compliance policies are
essential to all nursing facilities, regardless of size and capability.
If a lack of resources to develop such policies is genuinely an issue,
the OIG recommends that those nursing facilities focus first on those
risk areas most likely to arise in their business operations. At a
minimum, resources should be directed to analyze the results of annual
surveys,22 and to verify that the facility has effectively
addressed any deficiencies cited by the surveyors. An effective and
low-cost means to accomplish this is through the use of the facility's
Quality Assessment and Assurance Committee. The committee should
consist of facility staff members, including the Director of Nursing
and the facility physician. On a periodic basis, the committee should
meet to identify compliance issues affecting the quality of care
provided to the residents and to develop and implement appropriate
corrective actions. The time commitment required for this collaborative
effort will vary according to the magnitude of the facility's quality
assessment and assurance issues.
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\22\ State and local agencies enter into agreements with DHHS
under which they survey and make recommendations regarding whether
providers meet the Medicare conditions of participation or other
requirements for SNFs and NFs (See 42 CFR 488.10).
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Creating a resource manual from publicly available information may
be a cost-effective approach for developing policies and procedures to
improve the quality of each resident's life. For example, a simple
binder that contains a facility's written policies and procedures, the
most recent survey findings and plan of correction, relevant HCFA
instructions and bulletins, and summaries of key OIG documents (e.g.,
Special Fraud Alerts, Advisory Bulletins, inspection and audit reports)
can be regularly updated and made accessible to all employees.
Particularly in the case of more technical materials, it may be
advisable to provide summaries in the handbook and make the source
documents available upon request. If individualized copies of this
handbook are not made available to all employees, then a reference copy
should be available in a readily accessible location, as well as from
the designated compliance officer.
a. Quality of Care. The OIG believes that a nursing facility's
compliance policies should start with a statement that affirms the
facility's commitment to
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providing the care necessary to attain or maintain the resident's
``highest practicable physical, mental and psychosocial well-being.''
\23\ To achieve the goal of providing quality care, nursing facilities
should continually measure their performance against comprehensive
standards, which at a minimum should include the Medicare conditions of
participation.\24\ In addition to these regulations, a facility should
develop its own standards of quality care and the mechanisms for
evaluating its performance.
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\23\ 42 CFR 483.25. See OIG report OEI-02-98-00331 ``Quality of
Care in Nursing Homes: An Overview,'' in which the OIG found that,
although the overall number of deficiencies identified through the
survey and certification process was decreasing, the number of
``quality of care'' and other serious deficiencies was increasing.
\24\ See 42 CFR part 483, which establishes requirements for
long-term care facilities. HCFA's regulations establish conditions
that must be met for a nursing facility to qualify to participate in
the Medicare and Medicaid programs. State licensure laws may impose
additional requirements for the establishment and certification of a
nursing facility.
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As noted above, current and past surveys are a good place to begin
to identify specific risk areas and regulatory vulnerabilities at the
individual facility. Any deficiencies discovered by annual State agency
or Federal validation surveys may reflect noncompliance with the
program regulations and can be the basis for enforcement actions.\25\
Those deficiencies identified by the State health agency survey
instrument should be addressed and, where appropriate, the corrective
action should be incorporated into the facility's policies and
procedures as well as reflected in its training and educational
programs. In addition to responding promptly to deficiencies identified
through the survey and certification process, nursing facilities should
take proactive measures to identify, anticipate and respond to quality
of care risk areas identified by the nursing home ombudsman or other
sources.
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\25\ See 42 CFR part 488, subparts A, B, C, E, and F. The survey
instrument is used to identify deficiencies, such as: failure to
notify residents of their rights; improper use of restraints for
discipline purposes; lack of a clean and safe environment; failure
to provide care for basic living activities, including failing to
prevent and/or treat pressure sores, urinary incontinence,
hydration; and failing to properly feed residents.
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As noted throughout this guidance, each provider must assess its
vulnerability to particular abusive practices in light of its unique
circumstances. However, the OIG, HCFA, the Department of Justice, and
State enforcement agencies have substantial experience in identifying
quality of care risk areas. Some of the special areas of concern
include:
Absence of a comprehensive, accurate assessment of each
resident's functional capacity and a comprehensive care plan that
includes measurable objectives to meet the resident's medical, mental
and psychosocial needs;\26\
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\26\ As stated above, each resident must receive the necessary
care and services to attain or maintain the highest practicable
physical, mental, and psychosocial well-being, in accordance with
the resident's assessment and plan of care (see 42 CFR 483.25). The
OIG recognizes that this standard does not always lend itself to
easy, objective evaluation. The matter is further complicated by the
right of the resident, or his or her legal representative, to decide
on a course of treatment that may be contra-in-di-cated. The Patient
Self-Determination Act (P.L. 103-413) requires health care
institutions to educate patients about advance directives and to
document their decision on life-sustaining treatments.
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Inappropriate or insufficient treatment and services to
address residents' clinical conditions, including pressure ulcers,
dehydration, malnutrition, incontinence of the bladder, and mental or
psychosocial problems; \27\
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\27\ HCFA has created a repository of best practice guidelines
for the care of residents at risk of pressure ulcers, dehydration
and malnutrition. In addition, the Food and Nutrition Board of the
National Research Council, National Academy of Sciences, has
established recommended dietary allowances.
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Failure to properly prescribe, administer and monitor drug
medication usage, including psychotropic and anti-depressant
medications; \28\
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\28\ The OIG has conducted a series of reviews that focused on
prescription drug use in nursing homes. See OIG reports OEI-06-96-
00080, OEI-06-96-0008, OEI-06-96-00082, ``Prescription Drug Use in
Nursing Homes.'' The OIG found that patients experienced adverse
reactions to various drugs as a result of inappropriate prescribing
and inadequate monitoring of medication usage. The reviews revealed
serious concerns, including residents receiving drugs for which
their medical records lacked evidence of a prescription; and the
prescription of drugs judged inappropriate for use by elderly
persons. The studies also found that medication records were often
incomplete and not readily accessible, making it difficult for a
pharmacist to identify or confirm drug regimens or problems.
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Inadequate or insufficiently trained staff to provide
medical, nursing, and related services; \29\
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\29\ For example, Federal regulations require that the medical
care of each resident should be supervised by a physician, who must
see the resident at least once every 30 days for the first 90 days
after admission and at least once every 60 days thereafter (see 42
CFR 483 40(c)). The facility also must retain the services of a
registered nurse, 42 CFR 483.30, as well as a qualified dietitian.
42 CFR 483.35. In addition to these basic Federal requirements, the
OIG strongly believes that the facility should conform to State-
mandated staffing levels where they exist and adopt its own minimum
``hours per patient'' staffing standards in any case. At the heart
of many quality of care deficiencies is a lack of adequate staff
needed to provide basic nursing services.
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Failure to provide appropriate therapy services; \30\
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\30\ See OIG report OEI-09-97-00120 ``Medical Necessity of
Physical and Occupational Therapy in Skilled Nursing Facilities,''
which found a high rate of medically unnecessary therapies in a
number of nursing facilities; such unnecessary services lead to
inappropriate care. With the introduction of the prospective payment
system, nursing facilities should ensure that financial pressures do
not create incentives to underutilize medically necessary
therapeutic services.
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Failure to provide appropriate services to assist
residents with activities of daily living (e.g., feeding, dressing,
bathing, etc.); and
Failure to report incidents of mistreatment, neglect, or
abuse to the administrator of the facility and other officials as
required by law.\31\
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\31\ In addition to providing the facility's management
important information about the state of care in the facility, the
self-reporting of resident abuse, including injuries of unknown
sources, is a condition of participation (See 42 CFR 483.13(c)(2)).
Although State surveyors conduct complaint surveys when they receive
a complaint, these surveys can only occur if the surveyors are aware
of the problem.
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As noted previously, a nursing facility that has a history of
serious deficiencies should use those survey results as a starting
point for implementing a comprehensive plan to improve its quality of
care. Effectively addressing these risk areas with written policies and
procedures, which are then implemented through effective training
programs, can most directly improve the quality of the nursing home
residents's life.
b. Residents' Rights. The Budget Reconciliation Act (OBRA) of 1987,
Public Law 100-203, established a number of requirements to protect and
promote the rights of each resident.\32\ In addition, many States have
adopted specific lists of residents' rights.\33\ The nursing facility's
policies should address the residents' right to a dignified existence
that promotes freedom of choice, self-determination, and reasonable
accommodation of individual needs. To protect the rights of each
resident, the OIG recommends that a provider address the following risk
areas as part of its compliance policies:
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\32\ See generally, 42 U.S.C. 1395i-3 and 42 CFR part 483.
\33\ In OIG report OEI-02-98-00350 ``Long Term Ombudsman
Program: Complaint Trends,'' the OIG points out that complaints
about resident care and resident rights have been increasing.
Resident care concerns included complaints about personal care, such
as a pressure and hygiene, lack of rehabilitation, the inappropriate
use of restraints, abuse and neglect, problems with admissions and
eviction, and the exercise of personal rights.
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Discriminatory admission or improper denial of access to
care; \34\
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\34\ Nursing facilities should offer care to all patients who
are eligible in accordance with Federal and State laws governing
admissions (See 42 CFR 483.12(d)). The provider also should maintain
identical policies regarding ``transfer, discharge, and provision of
services under the State plan'' for all residents, regardless of
payment source (See 42 CFR 483.12(c)). See also OIG report OEI-02-
99-00400 ``Early Effects of the Prospective Payment System on Access
to Skilled Nursing Facilities.''
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[[Page 58425]]
Verbal, mental or physical abuse, corporal punishment and
involuntary seclusion; \35\
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\35\ See California Nursing Homes: Care Problems Persist Despite
Federal and State Oversight (GAO/HEHS-98-202, July, 1998). As noted
previously, the facility must establish a process by which the
facility administrator is informed of incidents of abuse and an
investigation is conducted within 5 days of the incident (See 42 CFR
483.13(c)(4)).
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Inappropriate use of physical or chemical restraints; \36\
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\36\ See OIG Report OEI-01-91-00840 ``Minimizing Restraints in
Nursing Homes: A Guide to Action.''
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Failure to ensure that residents have access to their
personal records upon request and that the privacy and confidentiality
of those records are protected; \37\
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\37\ It is a violation of the Medicare conditions of
participation to make unauthorized disclosures from the resident's
medical records (See 42 CFR 483.10(e)). The facility should also
establish policies that respect each resident's right to privacy in
personal communications, including the right to receive mail that is
unopened and to the use of a telephone where calls can be made in
privacy.
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Denial of a resident's right to participate in his or her
care and treatment; \38\
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\38\ The right of self-determination includes the resident's
right to choose a personal physician, to be fully informed of his or
her health status, and participate in treatment decisions, including
the right to refuse treatment, unless adjudged incompetent or
incapacitated (See 42 CFR 483.10(d)).
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Failure to safeguard residents' financial affairs.\39\
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\39\ This includes preserving the resident's right to manage his
or her financial affairs or permit the facility to hold and manage
personal funds. The resident should receive a full and complete
accounting of personal funds held by the facility (See 42 CFR 483.10
(c)). If a misappropriation of a resident's property is uncovered,
the facility administrator should be notified immediately and an
investigation conducted. Finally, the provider should take measures
to ensure that personal funds have not been used to pay for items or
services paid for by Medicare or Medicaid.
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c. Billing and Cost Reporting. Abusive and fraudulent billing
practices in the Federal health care programs drain the public fisc of
the funds needed to provide program beneficiaries medically necessary
items and services. Over the last twenty years, the OIG has identified
patterns of improper and fraudulent activities that cover the spectrum
of health care services and have cost taxpayers billions of
dollars.\40\ These fraudulent billing practices, as well as abuses in
other risk areas that are described in these compliance program
guidances, have resulted in criminal, civil and administrative
enforcement actions. Because the consequences of these enforcement
actions can have a profound adverse impact on a provider, the
identification of risk areas associated with billing and cost reporting
should be a major part of a nursing facility's compliance program.
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\40\ See OIG Report A-17-99-00099 ``Improper Fiscal Year 1998
Fee-for-Service Payments'' in which the OIG estimated that improper
Medicare benefit payments made during FY 1998 totaled $12.6 billion
in processed fee-for-service payments. SNF payment errors were a
result of claims for services lacking medical necessity and
represented 7 percent of the total estimated improper payments. The
OIG could not and did not quantify what percentage of the improper
payments was the result of fraud. Significantly, it was only through
a review of medical records that the majority of these billing
errors were detected, since when the claims were submitted to the
Medicare contractor, they contained no visible errors.
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The introduction of a prospective payments system (PPS) for
Medicare SNFs and implementation of consolidated billing create
additional issues to be addressed when designing billing and cost
reporting compliance policies and procedures.\41\ In the following
discussion of billing risk areas, the OIG has attempted to identify
issues that pose concerns under the current systems of reimbursement,
the transition period to consolidated billing, as well as anticipate
potential compliance issues stemming from these program changes. As is
the case with all aspects of compliance, the nursing facility must
continually reassess its billing procedures and policies to ensure that
unanticipated problems are promptly identified and corrected. Listed
below are some of the reimbursement risk areas a nursing facility
should consider addressing as part of its written compliance policies
and procedures:
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\41\ The Balanced Budget Act of 1997 (BBA), Public Law 105-33,
established PPS for SNFs. Under PPS, all costs (routine, ancillary,
and capital) related to services furnished to beneficiaries covered
under Part A, including certain Part B services, are paid a
predetermined amount based on the medical condition and needs of the
resident, as reflected in the Resource Utilization Group (RUG) code
assigned to that resident. Other Part B services will continue to be
reimbursed separately to the providers of such services pending
implementation of a new consolidated billing system.
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Billing for items or services not rendered or provided as
claimed; \42\
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\42\ For example, the OIG has investigated suppliers of
ancillary services that improperly bill for an hour of therapy when
only a few minutes were provided. Similarly, vendors that knowingly
submit a claim for an expensive prosthetic device when the resident
only received non-covered adult diapers have been the subject of
enforcement actions. When consolidated billing is implemented,
vendors will not submit bills directly to Medicare for such
services. As the entity submitting the claim, the nursing facility
will need to have any certifications or orders necessary to provide
the service, as well as supporting documentation required, to
receive payment.
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Submitting claims for equipment, medical supplies and
services that are medically unnecessary; \43\
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\43\ Billing for medically unnecessary services, supplies and
equipment involves seeking reimbursement for a service that is not
warranted by a resident's documented medical condition. See 42
U.S.C. 1395i(a)(1)(A) (``no payment may be made under part A or part
B [of Medicare] for any expenses incurred for items or services
which * * * are not reasonable and necessary for the diagnosis or
treatment of illness or injury or to improve the functioning of the
malformed body member''). In the Special Fraud Alert ``Fraud and
Abuse in the Provision of Services in Nursing Facilities'' (June
1996), the OIG identified several types of fraudulent arrangements
through which health care providers inappropriately billed Medicare
and Medicaid for unnecessary or non-rendered items and services.
Under PPS, the provision of unnecessary services may take a
different form. As discussed below, manipulation of the Minimum Data
Set (MDS) to fit a resident into a higher RUG can result in the
provision of medically unnecessary services. In addition, a nursing
facility may not enter into arrangements with providers of ancillary
services through which the facility overutilizes services reimbursed
under Part B in return for an offset in the cost of items or
services covered under Part A.
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Submitting claims to Medicare Part A for residents who are
not eligible for Part A coverage; \44\
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\44\ Medicare Part A benefits in skilled nursing facilities are
limited to beneficiaries who require services rendered by technical
or professional personnel in a skilled nursing setting (See 42 CFR
409.30). Knowingly misrepresenting the nature or level of services
provided to a Medicare beneficiary to circumvent the program's
limitation is fraudulent.
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Duplicate billing; \45\
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\45\ Duplicate billing occurs when the nursing facility bills
for the same item or service more than once or when a vendor bills
the Federal health care program for an item or service also billed
by the facility. Although duplicate billing can occur due to simple
error, the knowing submission of duplicate claims--which is
sometimes evidenced by systematic or repeated double billing--can
create liability under criminal, civil, or administrative law. When
Medicare Part B implements consolidated billing, facilities should
modify all agreements with vendors to require that the vendor bill
the facility for those services covered under consolidated billing
requirements and not submit bills directly to Medicare for such
services.
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Failing to identify and refund credit balances; \46\
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\46\ A credit balance is an excess payment made to a health care
provider as a result of patient billing or claims processing error.
Nursing facilities should institute procedures to provide for the
timely identification, accurate reporting and repayment of credit
balances. In addition, the provider should promptly repay if a
resident is also entitled to a credit. See OIG report OEI-07-09-
00910 ``Medicare Credit Balances in Skilled Nursing Facility Patient
Accounts'' and OEI-07-09-00911 ``Medicaid Credit Balances in Skilled
Nursing Facility Patient Accounts,'' in which the OIG found that
skilled nursing facilities were not accurately or completely
adjusting and reporting credit balance amounts due to the Medicare
and Medicaid programs. Significantly, the intentional concealment of
a known overpayment may expose a provider to criminal sanctions (See
42 U.S.C. 1320a-7b(a)(3)), and civil liability under the False
Claims Act.
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[[Page 58426]]
Submitting claims for items or services not ordered;\47\
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\47\ Billing for services or items not ordered involves seeking
reimbursement for services provided but not ordered by the treating
physician or other authorized person.
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Knowingly billing for inadequate or substandard care;\48\
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\48\ See discussion on quality of care standards in nursing
facilities in section II.B.2.a above and the accompanying notes.
Knowingly billing for inadequate or substandard care may create
liability under administrative, civil and criminal law.
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Providing misleading information about a resident's
medical condition on the MDS or otherwise providing inaccurate
information used to determine the RUG assigned to the resident;
Upcoding the level of service provided; \49\
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\49\ Upcoding involves the selection of a Billing code that is
not the most appropriate descriptor of the service or condition, in
order to maximize reimbursement. Under PPS, upcoding may take the
form of ``RUG creep.'' RUG creep occurs when a provider falsely or
fraudulently completes the MDS, which results in assigning a
resident to a higher RUG category.
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Billing for individual items or services when they either
are included in the facility's per diem rate or are of the type of item
or service that must be billed as a unit and may not be unbundled;\50\
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\50\ A related risk area involves bill splitting schemes. This
billing abuse usually takes the form of manipulating the billing for
procedures to create the appearance that the services were rendered
over a period of days when all treatment occurred during one visit.
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Billing residents for items or services that are included
in the per diem rate or otherwise covered by the third-party payor;
Forging physician or beneficiary signatures on documents
used to verify that services were ordered and/or provided;\51\
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\51\ The OIG has investigated a number of cases where signatures
were forged, either to fabricate evidence that a physician ordered
equipment or services or to create a paper trail in support of items
or services that were never provided.
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Failing to maintain sufficient documentation to establish
that the services were ordered and/or performed; and
False cost reports.\52\
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\52\ Nursing homes are required to submit various reports to
Federal and State agencies in connection with facility operations
and to receive reimbursement for the care provided to program
beneficiaries. Because program payments are in part based on self-
reported operating costs, providers must implement procedures to
ensure that these reports are prepared as accurately as possible.
This should include measures to ensure that adequate documentation
exists to support information provided in the report, non-allowable
costs are appropriately identified and removed, and related party
transactions are treated consistent with program requirements (See
42 CFR part 413). If the provider intends to claim costs in non-
conformity with program rules, those items should be flagged in a
letter accompanying the cost report. Prior enforcement actions
involving nursing home cost reports have focused on nursing
facilities that claimed salary expenses for employees who do not
exist, inflated the number of residents served, included non-
reimbursable costs with nursing home-related expenses,
inappropriately shifted costs to cost centers that are below the
reimbursement cap, and shifted non-Medicare related costs to
Medicare cost centers.
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The OIG recommends that a nursing facility, through its policies
and procedures, take all reasonable steps to ensure compliance with the
Federal health care programs when submitting information that affects
reimbursement decisions. The risk areas associated with billing and
cost reporting have been among the most frequent subjects of
investigations and audits by the OIG. In addition to facing criminal
sanctions and significant monetary penalties, providers that have
failed to adequately ensure the accuracy of their claims and cost
report submissions can be excluded from program participation, or in
lieu of exclusion, be required by the OIG to execute a corporate
integrity agreement (CIA).\53\
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\53\ The CIA imposes reporting requirements, independent audits,
and other procedures on providers who have demonstrated an inability
or unwillingness to independently adopt these measures. It is
clearly in a provider's best interest to avoid the implementation of
a CIA by instituting its own prevention, detection, and disclosure
mechanisms.
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d. Employee Screening. Nursing facilities are required by Federal,
and in some cases State, law to investigate the background of certain
employees. Nursing facilities should conduct a reasonable and prudent
background investigation and reference check before hiring those
employees who have access to patients or their possessions, or who have
discretionary authority to make decisions that may involve compliance
with the law. The employment application should specifically require
the applicant to disclose any criminal conviction, as defined by 42
U.S.C. 1320a-7; or exclusion from participation in the Federal health
care programs.
This pre-employment screening is critical to ensuring the integrity
of the facility's work force and safeguarding the welfare of its
residents. Because providers of nursing care have frequent, relatively
unsupervised access to vulnerable people and their property, a nursing
facility also should seriously consider whether to employ individuals
who have been convicted of crimes of neglect, violence, theft or
dishonesty, or financial misconduct.\54\
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\54\ In OIG report A-12-97-0003 ``Safeguarding Long Term Care
Residents,'' it was noted that although no Federal requirement
exists for criminal background checks on nursing home staff, 33
States currently require that such checks occur. However, there
appears to be great diversity in the way States identify,
investigate, and report suspected abuse of nursing home residents.
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Nursing facility policies should prohibit the continued employment
of individuals who have been convicted of a criminal offense related to
health care or who are debarred, excluded, or otherwise become
ineligible for participation in Federal health care programs.\55\ In
addition, if the facility has notice that an employee or contractor is
charged with a criminal offense related to any Federal health care
program, or is proposed for exclusion during his or her employment or
contract, the facility shall take all appropriate actions to ensure
that the responsibilities of that employee or contractor do not
adversely affect the quality of care rendered to any patient or
resident, or the accuracy of any claims submitted to any Federal health
care program.\56\ If resolution of the matter results in conviction,
debarment, or exclusion, the nursing facility should terminate its
employment or other contract arrangement with the individual.
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\55\ The effect of an OIG exclusion from Federal health care
programs is that no Federal health care program payment may be made
for any items or services: (1) furnished by an excluded individual
or entity; or (2) directed or prescribed by an excluded physician
(See 42 CFR 1001.1901). An excluded individual or entity that
submits a claim for reimbursement to a Federal health care program,
or causes such a claim to be submitted, may be subject to a civil
money penalty of $10,000 for each item or service furnished during
the period that the person or entity was excluded (See 42 U.S.C.
1320a-7a(a)(1)(D)). The individual or entity may also be subject to
treble damages for the amount claimed for each item or service (See
42 U.S.C. 1320a-7a(a)). Also see OIG Special Advisory Bulletin ``The
Effect of Exclusion From Participation in Federal Health Care
Programs'' (September 1999).
\56\ Likewise, the facility should establish standards
prohibiting the execution of contracts with companies that have been
recently convicted of a criminal offense related to health care or
that are listed by a Federal agency as debarred, excluded, or
otherwise ineligible for participation in Federal health care
programs. Prospective employees or contractors that have been
officially reinstated into the Medicare and Medicaid programs by the
OIG may be considered for employment upon proof of such
reinstatement.
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In order to ensure that nursing facilities undertake background
checks of all employees to the extent required by law, the OIG
recommends that the following measures be incorporated into the
compliance program's policies and procedures:
Investigate the background of employees by checking with
all
[[Page 58427]]
applicable licensing and certification authorities to verify that
requisite licenses and certifications are in order;\57\
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\57\ Among the sources of information on prospective employees
are the State registry of nurse's aides, which provides a list of
nurse aides that have successfully completed training and competency
evaluations and the National Practitioner Data Bank. The Data Bank
is a data base that contains information about medical malpractice
payments, sanctions by boards of medical examiners or State
licensing boards, adverse clinical privilege actions, and adverse
professional society membership actions. Health care entities can
have access to this data base to seek information about their own
medical or clinical staff, as well as prospective employees or
physician contractors.
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Require all potential employees to certify that they have
not been convicted of an offense that would preclude employment in a
nursing facility and that they are not excluded from participation in
the Federal health care programs;
Check available public sources, including the OIG's List
of Excluded Individuals/Entities and the GSA's list of debarred
contractors, to verify that employees are not excluded from
participating in the Federal health care programs;\58\ and
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\58\ The OIG ``List of Excluded Individuals/Entities'' provides
information to health care providers, patients, and others regarding
individuals and entities that are excluded from participation in
Medicare and Medicaid, and other Federal health care programs. This
report, in both an on-line searchable and downloadable database, can
be located on the Internet at www.hhs.gov/oig. In addition, the
General Services Administration maintains a monthly listing of
debarred contractors, ``List of Parties Excluded From Federal
Procurement and Nonprocurement Programs,'' at www.arnet.gov/epls.
The OIG sanction information is readily available to users in
two formats on over 15,000 individuals and entities currently
excluded from program participation through action taken by the OIG.
The on-line searchable database allows users to obtain information
regarding excluded individuals and entities sorted by: (1) the legal
bases for exclusions; (2) the types of individuals and entities
excluded by the OIG; and (3) the States where excluded individuals
reside or entities do business.
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Periodically check the OIG and GSA web sites to verify the
participation/exclusion status of independent contractors and retain on
file the results of that query.\59\
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\59\ The introduction of PPS and consolidated billing for
Medicare Part B services means that vendors and their subcontractors
no longer submit bills directly to Medicare for their services.
Instead, the nursing facility will be submitting consolidated bills
for certain services provided to residents. Because of the new
responsibilities that are imposed on nursing facilities under these
reimbursement schemes, the facility may be held responsible if it
claims reimbursement for items or services provided by a contractor
that has been excluded.
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Regardless of the size or resources of the nursing facility,
employee screening is a critical component of compliance policies and
procedures. Nursing facilities, like all corporations, must act through
their employees and are held accountable for their actions. One of the
best ways to ensure that the organization will act in conformance with
the law is to hire employees and contractors who can be trusted to
embrace a culture of compliance. While the resources required to check
the OIG List of Excluded Individuals/Entities are minimal, the absence
of an accessible centralized site for criminal background checks may
result in inefficiencies and expense. While large providers may elect
to outsource the screening process, this may not be a realistic option
for smaller nursing facilities. Nevertheless, the OIG recommends that
all nursing facilities implement a policy to undertake background
checks of all employees.
e. Kickbacks, Inducements and Self-Referrals. A nursing facility
should have policies and procedures to ensure compliance with the anti-
kickback statute,\60\ the Stark physician self-referral law \61\ and
other relevant Federal and State laws by providing guidance in
situations that could lead to a violation of these laws.\62\ In
particular, arrangements with hospitals, hospices, physicians and
vendors are vulnerable to abuse. For example, in the case of hospitals,
physicians and hospital staff exert influence over the patient and can
influence the choice of a nursing facility. In addition, his or her
roles as medical director and/or attending physician, a physician
frequently can influence the utilization of ancillary services.\63\
Moreover, by contrast, a nursing facility operator can influence the
selection of which hospices will provide hospice services and which
vendors will deliver equipment and services to the facility's
residents. In addition to developing policies to address arrangements
with other health care providers and suppliers, nursing facilities also
should implement measures to avoid offering inappropriate inducements
to residents. Possible risk areas that should be addressed in the
policies and procedures include:
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\60\ The anti-kickback statute provides criminal penalties for
individuals and entities that knowingly offer, pay, solicit or
receive bribes or kickbacks or other remuneration in order to induce
business reimbursable by Federal health care programs (See 42 U.S.C.
1320a-7b(b)). Civil penalties and exclusion from participation in
the Federal health care programs may also result from a violation of
the prohibition (See 42 U.S.C. 1320a-7a(a)(5) and 1320a-7(b)(7)).
\61\ The Stark physician self-referral law, 42 U.S.C. 1395nn,
prohibits a physician from making a referral to an entity with which
the physician or any member of the physician's immediate family has
a financial relationship, if the referral is for the furnishing of
designated health services.
\62\ The OIG has issued several advisory opinions applying the
Federal statutes to arrangements that affect nursing facilities. The
opinions are available on the Internet at http://www.hhs.gov/oig.
\63\ Contracts between the facility and any entity in which the
facility's medical director has a financial interest may be subject
to the Stark law and should be reviewed and approved by legal
counsel.
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Routinely waiving coinsurance or deductible amounts
without a good faith determination that the resident is in financial
need, or absent reasonable efforts to collect the cost-sharing
amount;\64\
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\64\ In the OIG Special Fraud Alert ``Routine Waiver of Part B
Co-payments/Deductibles'' (May 1991), the OIG describes several
reasons why routine waivers of these cost-sharing amounts pose abuse
concerns. The Alert sets forth the circumstances under which it may
be appropriate to waive these amounts.
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Agreements between the facility and a hospital, home
health agency, or hospice that involve the referral or transfer of any
resident to or by the nursing home;\65\
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\65\ In the Special Fraud Alert ``Fraud and Abuse in Nursing
Home Arrangements With Hospices'' (March 1998), the OIG sets out the
vulnerabilities in nursing home arrangements with hospices. The
Alert provides several examples of questionable arrangements between
hospices and nursing homes that could inappropriately influence the
referral of patients. Examples include the offering of free goods or
goods at below fair market value to induce a nursing home to refer
patients to the hospice. Other examples demonstrating vulnerability
to fraud and abuse include: (1) a hospice paying for room and board
in excess of the amounts the nursing home would normally charge or
receive from Medicaid; (2) a hospice paying for additional services
that should be already included in the room and board payment; (3) a
hospice referring patients to the nursing home in return for the
nursing home's referral to the hospice. While the Special Fraud
Alert focused on arrangements with hospices, nursing facilities
should adopt policies that prohibit similar questionable
arrangements with all health care providers.
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Soliciting, accepting or offering any gift or gratuity of
more than nominal value to or from residents, potential referral
sources, and other individuals and entities with which the nursing
facility has a business relationship; 66
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\66\ Providers should establish clear policies governing gift-
giving, because such exchanges may be viewed as inducements to
influence business decisions. Offering or providing any gift of more
than nominal value to any beneficiary may be done with the intent to
inappropriately influence health care decisions of the beneficiary
or his or her family. Similarly, accepting gifts, hospitality, or
entertainment from a source that is in a position to benefit from
the referral of business, raises concerns that the gift may
influence the employee's independent judgment. If the provider
decides to allow employees to accept gifts or other gratuities below
a certain nominal value or in an aggregate amount below an
established amount per year, the provider should consider requiring
employees to report those gifts.
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Conditioning admission or continued stay at a facility on
a third-party guarantee of payment, or soliciting payment for services
covered by Medicaid, in addition to any amount
[[Page 58428]]
required to be paid under the State Medicaid plan; 67
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\67\ See 42 U.S.C. 1320a-7b(d)(2) which prescribes criminal
penalties for knowingly and willfully charging for services provided
to a Medicaid patient in excess of the rates established by the
State; see also 42 CFR 483.12(d).
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Arrangements between a nursing facility and a hospital
under which the facility will only accept a Medicare beneficiary on the
condition that the hospital pays the facility an amount over and above
what the facility would receive through PPS; 68
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\68\ Under PPS, the payment rates represent payment in full,
subject to applicable coinsurance. This includes payment for all
costs associated with furnishing covered SNF services to Medicare
beneficiaries. It is impermissible for a hospital to pay for SNF
services if it were to do so only for those residents who are
Medicare beneficiaries discharged from that hospital. However, it
would be permissible for a hospital to provide or pay for items or
services that are furnished to SNF residents generally, if such
payments are made without regard to the payment source for the
individual resident. In addition, a hospital and a SNF can enter
into a permissible bed reservation agreement (See HCFA Provider
Reimbursement Manual, Part I, section 2105.3).
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Financial arrangements with physicians, including the
facility's medical director; 69
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\69\ All physician contracts and agreements should be reviewed
to avoid violation of the anti-kickback, self-referral, and other
relevant Federal and State laws. The OIG has published safe harbors
that define practices not subject to the anti-kickback statute,
because such arrangements would be unlikely to result in fraud or
abuse. Failure to comply with a safe harbor provision does not make
an arrangement per se illegal. Rather, the safe harbors set forth
specific conditions that, if fully met, would assure the entities
involved of not being prosecuted or sanctioned for the arrangement
qualifying for the safe harbor. One such safe harbor applies to
personal services contracts (See 42 CFR 1001.952(d)).
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Arrangements with vendors that result in the nursing
facility receiving non-covered items (such as disposable adult diapers)
at below market prices or no charge, provided the facility orders
Medicare-reimbursed products; 70
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\70\ See OIG Special Fraud Alert ``Fraud and Abuse in the
Provision of Medical Supplies to Nursing Facilities'' (August 1995).
As well as violating the anti-kickback statute, both the supplier
and the nursing facility may be liable for false claims if the
medically unnecessary items are billed to Federal health care
programs. See also OIG Advisory Opinion No.99-2 (February 1999).
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Soliciting or receiving items of value in exchange for
providing the supplier access to residents' medical records and other
information needed to bill Medicare; 71
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\77\ In addition to raising concerns related to the anti-
kickback statute, the unauthorized disclosure of confidential
records violates the resident's rights (See 42 CFR 10(e)).
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Joint ventures with entities supplying goods or services;
72 and
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\72\ See OIG Special Fraud Alert ``Joint Venture Arrangements''
(August 1989); OIG Special Fraud Alert ``Fraud and Abuse in the
Provision of Services in Nursing Facilities'' (May 1996).
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Swapping.73
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\73\ ``Swapping'' occurs when a supplier gives a nursing
facility discounts on Medicare Part A items and services in return
for the referrals of Medicare Part B business. With swapping, there
is a risk that suppliers may offer a SNF an excessively low price
for items or services reimbursed under PPS in return for the ability
to service and bill nursing facility residents with Part B coverage.
See OIG Advisory Opinion 99-2 (March 1999).
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In order to keep current with this area of the law, a nursing
facility should obtain copies of all relevant OIG and HCFA regulations,
Special Fraud Alerts, and Advisory Opinions that address the
application of the anti-kickback and Stark self-referral laws to ensure
that the policies reflect current positions and opinions. Further,
nursing facility policies should provide that all nursing facility
contracts and arrangements with actual or potential sources of
referrals are reviewed by counsel and comply with applicable statutes
and requirements.
3. Retention of Records
Nursing facilities that implement a compliance program should
provide for the development and implementation of a records retention
system. This system should establish policies and procedures regarding
the creation, distribution, retention, and destruction of documents. In
designing a records systems, privacy concerns and regulatory
requirements should be taken into consideration. In addition to
maintaining appropriate and thorough medical records on each resident,
the OIG recommends that the system should include the following types
of documents:
All records and documentation (e.g., billing and claims
documentation) required for participation in Federal State, and private
health care programs, including the resident assessment instrument, the
comprehensive plan of care and all corrective actions taken in response
to surveys;
All records and documentation required by private payors
and other governmental institutions;
All records, documentation, and audit data that support
and explain cost reports and other financial activity, including any
internal or external compliance monitoring activities; and
All records necessary to demonstrate the integrity of the
nursing facility compliance process and to confirm the effectiveness of
the program.74
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\74\ Among the materials useful in documenting the compliance
program are employee certifications relating to training and other
compliance initiatives, copies of compliance training materials, and
hotline logs and any corresponding reports of investigation,
outcomes, and employee disciplinary actions. In addition, the
facility should keep all relevant correspondence between carriers,
fiscal intermediaries, private payor insurers, HCFA, and State
survey and certification agencies.
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While conducting its compliance activities, as well as its daily
operations, a nursing facility should document its efforts to comply
with applicable statutes, regulations, and Federal health care program
requirements. For example, where a nursing facility requests advice
from a Government agency (including a Medicare fiscal intermediary or
carrier) charged with administering a Federal health care program, the
nursing facility should document and retain a record of the request and
any written or oral response. This step is extremely important if the
nursing facility intends to rely on that response to guide it in future
decisions, actions, or claim reimbursement requests or appeals. A log
of oral inquiries between the nursing facility and third parties will
help the organization document its attempts at compliance. In addition,
these records may become relevant in a subsequent investigation to the
issue of whether the facility's reliance was ``reasonable'' and whether
it exercised due diligence in developing procedures and practices to
implement the advice.
In short, all nursing facilities, regardless of size, must retain
appropriate documentation. Further, the OIG recommends that the nursing
facility:
Secure this information in a safe place;
Maintain hard copies of all electronic or database
documentation; and
Limit access to such documentation to avoid accidental or
intentional fabrication or destruction of records.75
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\75\ In addition to prohibiting the falsification and backdating
of records, the provider should have clear guidelines, consistent
with applicable professional and legal standards, that set out the
circumstances when late entries may be made in a record.
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As the Government increases its reliance on electronic data
interchange to conduct business and gather information more quickly and
efficiently, it is important that the nursing facility develops the
capacity to ensure that all informational systems maintained by the
facility are in working order, secured, and capable of accessing
Federal and State databases.
4. Compliance as an Element of Employee Performance
Compliance programs should require that the promotion of, and
adherence to, the elements of the compliance program be a factor in
evaluating the performance of all employees.
[[Page 58429]]
Employees should be periodically trained in new compliance policies and
procedures. In addition, policies should require that managers,
especially those involved in the direct care of residents and in claims
development and submission:
Discuss with all supervised employees and relevant
contractors the compliance policies and legal requirements applicable
to their function;
Inform all supervised personnel that strict compliance
with these policies and procedures is a condition of employment; and
Disclose to all supervised personnel that the nursing
facility will take disciplinary action up to and including termination
for violation of these policies or requirements.
Managers and supervisors should be disciplined for failing to
adequately instruct their subordinates or for failing to detect
noncompliance with applicable policies and legal requirements, where
reasonable diligence would have led to the discovery of any problems or
violations and given the nursing facility the opportunity to correct
them earlier. Conversely, those supervisors who have demonstrated
leadership in the advancement of the company's code of conduct and
compliance objectives should be singled out for recognition.
The OIG believes that all nursing facilities, regardless of
resources or size, should ensure that its employees understand the
importance of compliance with program requirements and the value the
company places on its compliance program. If the small nursing facility
does not have a formal employee evaluation system, it should informally
convey to employees their compliance responsibilities whenever the
opportunity arises. Positive reenforcement is generally more effective
than sanctions in conditioning behavior and managers should be given
mechanisms to reward employees who promote compliance.
C. Designation of a Compliance Officer and a Compliance Committee
1. Compliance Officer
Every nursing home provider should designate a compliance officer
to serve as the focal point for compliance activities. This
responsibility may be the individual's sole duty or added to other
management responsibilities, depending upon the size and resources of
the nursing facility and the complexity of the task. Designating a
compliance officer with the appropriate authority is critical to the
success of the program, necessitating the appointment of a high-level
official with direct access to the nursing facility's president or CEO,
governing body, all other senior management, and legal
counsel.76 The officer should have sufficient funding and
staff to perform his or her responsibilities fully.
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\76\ The OIG believes it is not advisable for the compliance
function to be subordinate to the nursing facility's general
counsel, or comptroller or similar financial officer. Free standing
compliance functions help to ensure independent and objective legal
reviews and financial analysis of the institution's compliance
efforts and activities. By separating the compliance function from
the key management positions of general counsel or chief financial
officer (where the size and structure of the nursing facility make
this a feasible option), a system of checks and balances is
established to more effectively achieve the goals of the compliance
program.
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Coordination and communication are the key functions of the
compliance officer with regard to planning, implementing, and
monitoring the compliance program.
The compliance officer's primary responsibilities should include:
Overseeing and monitoring implementation of the compliance
program; 77
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\77\ For multi-facility organizations, the OIG encourages
coordination with each facility owned by the corporation through the
use of a headquarter's compliance officer, communicating with
parallel positions or compliance liaison in each facility or
regional office, as appropriate.
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Reporting on a regular basis to the nursing facility's
governing body, CEO, and compliance committee (if applicable) on the
progress of implementation, and assisting these components in
establishing methods to improve the nursing facility's efficiency and
quality of services, and to reduce the facility's vulnerability to
fraud, abuse, and waste;
Periodically revising the program in light of changes in
the organization's needs, and in the law and policies of Government and
private payor health plans;
Developing, coordinating, and participating in a
multifaceted educational and training program that focuses on the
elements of the compliance program, and seeking to ensure that all
relevant employees and management understand and comply with pertinent
Federal and State standards;
Ensuring that independent contractors and agents who
furnish physician, nursing, or other health care services to the
residents of the nursing facility are aware of the requirements of the
nursing facility's compliance program with respect to residents'
rights, billing, and marketing, among other things;
Coordinating personnel issues with the nursing facility's
Human Resources/Personnel office (or its equivalent) to ensure that (i)
the National Practitioner Data Bank 78 has been checked with
respect to all medical staff and independent contractors (as
appropriate) and (ii) the List of Excluded Individuals/Entities
79 has been checked with respect to all employees, medical
staff, and independent contractors; 80
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\78\ See note 60.
\79\ See note 61.
\80\ The compliance officer may also have to ensure that the
criminal backgrounds of employees have been checked depending upon
State requirements or nursing facility policy.
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Assisting the nursing facility's financial management in
coordinating internal compliance review and monitoring activities,
including annual or periodic reviews of departments;
Independently investigating and acting on matters related
to compliance, including the flexibility to design and coordinate
internal investigations (e.g., responding to reports of problems or
suspected violations) and any resulting corrective action (e.g., making
necessary improvements to nursing facility policies and practices,
taking appropriate disciplinary action, etc.) with all nursing facility
departments, subcontracted providers, and health care professionals
under the nursing facility's control;
Participating with facility's counsel in the appropriate
reporting of self-discovered violations of program requirements; and
Continuing the momentum of the compliance program after
the initial years of implementation.81
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\81\ There are many approaches the compliance officer may enlist
to maintain the vitality of the compliance program. Periodic on-site
visits of nursing facility operations, bulletins with compliance
updates and reminders, distribution of audiotapes or videotapes on
different risk areas, lectures at management and employee meetings,
and circulation of recent health care articles covering fraud and
abuse are some examples of approaches the compliance officer can
employ.
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The compliance officer must have the authority to review all
documents and other information that are relevant to compliance
activities, including, but not limited to, medical and billing records,
and documents concerning the marketing efforts of the nursing facility
and its arrangements with other health care providers, including
physicians and independent contractors. This review authority enables
the compliance officer to examine contracts and obligations (seeking
the advice of legal counsel, where appropriate) that may contain
referral and payment provisions that could violate the anti-kickback
statute or regulatory requirements.
[[Page 58430]]
A small nursing facility may not have the resources to hire or
appoint a full time compliance officer. Multi-facility providers also
may consider appointing one compliance officer at the corporate level
and creating compliance liaisons officers at each facility. In any
event, each facility should have a person in its organization (this
person may have other functional responsibilities) who can oversee the
nursing facility's compliance with applicable statutes, rules,
regulations, and policies. The structure and comprehensiveness of the
facility's compliance program will help determine the responsibilities
of each individual compliance officer.
2. Compliance Committee
The OIG recommends that a compliance committee be established to
advise the compliance officer and assist in the implementation of the
compliance program.82 When developing an appropriate team of
people to serve as the nursing facility's compliance committee, a
facility should consider a variety of skills and personality traits
that are expected from those in such positions.83 Once a
nursing facility chooses the people that will accept the
responsibilities vested in members of the compliance committee, the
nursing facility needs to train these individuals on the policies and
procedures of the compliance program, as well as how to discharge their
duties.
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\82\ The compliance committee benefits from having the
perspectives of individuals with varying responsibilities in the
organization, such as operations, finance, audit, human resources,
and clinical management (e.g., the nursing facility physician), as
well as employees and managers of key operating units. The
compliance officer should be an integral member of the committee as
well. All committee members should have the requisite seniority and
comprehensive experience within their respective departments to
implement any necessary changes to policies and procedures as
recommended by the committee.
\83\ A health care provider should expect its compliance
committee members and compliance officer to demonstrate high
integrity, good judgment, assertiveness, and an approachable
demeanor, while eliciting the respect and trust of employees of the
nursing facility. These interpersonal skills are as important as the
professional experience of each member of the compliance committee.
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The committee's functions should include:
Analyzing the legal requirements with which the nursing
facility must comply, and specific risk areas;
Assessing existing policies and procedures that address
these risk areas for possible incorporation into the compliance
program;
Working with appropriate departments to develop standards
of conduct, and policies and procedures to promote compliance with
legal and ethical requirements;
Recommending and monitoring, in conjunction with the
relevant departments, the development of internal systems and controls
to carry out the organization's policies;
Determining the appropriate strategies and approaches to
promote compliance with program requirements and detection of any
potential violations, such as through hotlines and other fraud
reporting mechanisms;
Developing a system to solicit, evaluate, and respond to
complaints and problems; and
Monitoring internal and external audits and investigations
for the purpose of identifying deficiencies, and implementing
corrective action.
The committee may also undertake other functions as the compliance
concept becomes part of the overall nursing facility operating
structure and daily routine. The compliance committee is an extension
of the compliance officer and provides the organization with increased
oversight. The OIG recognizes that some nursing facilities may not have
the resources or the need to establish a compliance committee. However,
when potential problems are identified, the OIG recommends these
nursing facilities create a ``task force,'' to address the particular
problem. The members of the task force may vary depending upon the
issue. For example, if problems are identified as a result of a State
or Federal survey, the OIG recommends that a task force be created to
examine the deficiencies identified by the survey and to develop plans
of actions to correct the underlying causes of the deficiency.
D. Conducting Effective Training and Education
The proper education and training of corporate officers, managers
and health care professionals, and the continual retraining of current
personnel at all levels are critical elements of an effective
compliance program. These training programs should include sessions
summarizing the organization?s compliance program, fraud and abuse laws
and Federal and private payor health care program requirements. More
specific training on issues such as claims development and submission
processes, resident rights, and marketing practices should be targeted
at those employees and contractors whose job requirements make the
information relevant.84
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\84\ Specific compliance training should complement any ``in-
service'' training sessions that a nursing facility may regularly
schedule to provide an ongoing program for the training of employees
as required by its conditions of participation.
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The organization must take steps to communicate effectively its
standards and procedures to all affected employees, physicians,
independent contractors, and other significant agents by requiring
participation in such training programs and by other means, such as
disseminating publications that explain specific requirements in a
practical manner.85
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\85\ Some publications, such as OIG's Special Fraud Alerts,
audit and inspection reports, and advisory opinions are readily
available from the OIG and can provide a basis for educational
courses and programs for appropriate nursing facility employees.
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Managers of specific departments or groups can assist in
identifying areas that require training and in carrying out such
training.86 Training instructors may come from outside or
inside the organization, but must be qualified to present the subject
matter involved and sufficiently experienced in the issues presented to
adequately field questions and coordinate discussions among those being
trained.
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\86\ Significant variations in the functions and
responsibilities of different departments or groups may create the
need for training materials that are tailored to compliance concerns
associated with particular operations and duties.
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The nursing facility should train new employees soon after they
have started working.87 Training programs and materials
should be designed to take into account the skills, experience, and
knowledge of the individual trainees. The compliance officer should
document any formal training undertaken by the nursing facility as part
of the compliance program.
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\87\ Certain positions, such as those that involve billing,
coding and the submission of reimbursement data, create greater
organizational legal exposure, and therefore require specialized
training. Those hired to treat residents should undergo specialized
training in residents' rights and survey and certification
procedures.
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A variety of teaching methods, such as interactive training, and
where a nursing facility has a culturally diverse staff, training in
different languages, should be implemented so that all affected
employees understand the institution's standards of conduct and
procedures for alerting senior management to problems and
concerns.88
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\88\ Post-training tests can be used to assess the success of
training provided and employee comprehension of the nursing
facility's policies and procedures.
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In addition to specific training in the risk areas identified in
section II.B.2, primary training for appropriate corporate officers,
managers, and facility staff should include such topics as:
Compliance with Medicare conditions of participation;
[[Page 58431]]
Appropriate and sufficient documentation;
Prohibitions on paying or receiving remuneration to induce
referrals;
Improper alterations to clinical or financial records;
Resident rights; and
The duty to report misconduct.
The OIG suggests that all relevant personnel participate in the
various educational and training programs of the nursing
facility.89 Employees should be required to have a minimum
number of educational hours per year, as appropriate, as part of their
employment responsibilities.90 For example, for certain
employees involved in the nursing facility admission functions,
periodic training in applicable reimbursement coverage and eligibility
requirements should be required. In nursing facilities with high
employee turnover, periodic training updates are critical.
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\89\ In addition, where feasible, the OIG recommends that a
nursing facility give vendors and outside contractors the
opportunity to participate in the nursing facility's compliance
training and educational programs. Such training is particularly
important for facilities that rely on agencies to provide temporary
direct care staff. The introduction of consolidated billing gives
added importance to educating vendors about the facility's
compliance policies and procedures.
\90\ Currently, the OIG is monitoring a significant number of
corporate integrity agreements that require many of these training
elements. The OIG usually requires a minimum of one to three hours
annually for basic training in compliance areas. Additional training
is required for specialty fields such as claims development and
billing.
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The OIG recognizes that the format of the training program will
vary depending upon the resources of the nursing facility. For example,
a nursing facility with limited resources may want to create a
videotape for each type of training session so new employees can
receive training in a timely manner. If videos are used for compliance
training, the OIG suggests that a nursing facility make an individual
available to field questions from video trainees.
The OIG recommends that participation in training programs be made
a condition of continued employment and that failure to comply with
training requirements should result in disciplinary action, when such
failure is serious. Adherence to the training requirements as well as
other provisions of the compliance program should be a factor in the
annual evaluation of each employee. The nursing facility should retain
adequate records of its training of employees, including attendance
logs and material distributed at training sessions.
E. Developing Effective Lines of Communication
1. Access to the Compliance Officer
In order for a compliance program to work, employees must be able
to ask questions and report problems. The first line supervisors play a
key role in responding to employee concerns and it is appropriate that
they serve as a first line of communications. In order to encourage
communications, confidentiality and non-retaliation policies should be
developed and distributed to all employees.\91\
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\91\ In some cases, employees sue their employers under the
False Claims Act's qui tam provisions out of frustration because of
the company's failure to take action when the employee brought a
questionable, fraudulent, or abusive situation to the attention of
senior corporate officials. Whistle blowers must be protected
against retaliation, a concept embodied in the provisions of the
False Claims Act (See 31 U.S.C. 3730(h)).
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Open lines of communication between the compliance officer and
nursing facility employees is equally important to the successful
implementation of a compliance program and the reduction of any
potential for fraud and abuse. In addition to serving as a contact
point for reporting problems, the compliance officer should be viewed
as someone to whom personnel can go to get clarification on the
facility's policies. Questions and responses should be documented and
dated and, if appropriate, shared with other staff so that standards
can be updated and improved to reflect any necessary changes or
clarifications.\92\
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\92\ Nursing facilities can also consider rewarding employees
for appropriate use of established reporting systems. After all, the
employee who identifies and helps stop an abusive practice can
benefit the corporation as much as one who identifies cost-savings
measures or increases corporate revenues.
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2. Hotlines and Other Forms of Communication
The OIG encourages the use of hotlines,\93\ e-mails, newsletters,
suggestion boxes, and other forms of information exchange to maintain
open lines of communication.\94\ If the nursing facility establishes a
hotline, the telephone number should be made readily available to all
employees, independent contractors, residents, and family members by
circulating the number on wallet cards or conspicuously posting the
telephone number in common work areas.\95\ Employees should be
permitted to report matters on an anonymous basis. Matters reported
through the hotline or other communication sources that suggest
substantial violations of compliance policies or Federal health care
program statutes and regulations should be documented and investigated
promptly to determine their veracity. The compliance officer should
maintain a log that records such calls, including the nature of any
investigation and its results.\96\ Such information, redacted of
individual identifiers, should be included in reports to the governing
body, the CEO, and compliance committee.\97\ While the nursing facility
should always strive to maintain the confidentiality of an employee's
identity, it should also make clear that there may be a point where the
individual's identity may become known or may have to be revealed in
certain instances. The OIG recognizes that protecting anonymity may be
infeasible for small nursing facilities. However, the OIG believes all
facility employees, when seeking answers to questions or reporting
potential instances of fraud and abuse, should know to whom to turn for
attention and should be able to do so without fear of retribution.
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\93\ The OIG recognizes that it may not be financially feasible
for a smaller nursing facility to maintain a telephone hotline
dedicated to receiving calls about compliance issues. These
companies may want to explore alternative methods, e.g., outsourcing
the hotline or establishing a written method of confidential
disclosure.
\94\ In addition, an effective employee exit interview program
could be designed to solicit information from departing employees
regarding potential misconduct and suspected violations of nursing
facility policy and procedures.
\95\ Nursing facilities should also post in a prominent area the
HHS-OIG Hotline telephone number, 1-800-447-8477 (1-800-HHS-TIPS).
\96\ To efficiently and accurately fulfill such an obligation,
the nursing facility should create an intake form for all compliance
issues identified through reporting mechanisms. The form could
include information concerning the date that the potential problem
was reported, the results of the internal investigation, and, as
appropriate, the corrective action implemented, the disciplinary
measures imposed, and/or any identified overpayments returned.
\97\ Information obtained over the hotline may provide valuable
insight into management practices and operations, whether reported
problems are actual or perceived.
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F. Auditing and Monitoring
The OIG believes that an effective program should incorporate
thorough monitoring of its implementation and an ongoing evaluation
process. The compliance officer should document this ongoing
monitoring, including reports of suspected noncompliance, and share
these assessments with the nursing facility's senior management and the
compliance committee. The extent and frequency of the compliance audits
may vary depending on variables such as the nursing facility's
available resources, prior history of
[[Page 58432]]
noncompliance, and the risk factors particular to the facility.\98\
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\98\ Even when a nursing facility or group of facilities is
owned by a larger corporate entity, the regular auditing and
monitoring of the compliance activities of an individual facility
must be a key feature in any annual review. Appropriate reports on
audit findings should be periodically provided and explained to a
parent organization's senior staff and officers.
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Although many assessment techniques are available, one effective
tool is the performance of regular, periodic compliance audits by
internal or external evaluators who have expertise in Federal and State
health care statutes, regulations, and program requirements, as well as
private payor rules. These assessments should focus both on the nursing
facility's day-to-day operations, as well as its adherence to the rules
governing claims development, billing and cost reports, and
relationships with third parties. The reviews also should address the
nursing facility's compliance with the Medicare conditions of
participation and the specific rules and policies that have been the
focus of particular attention by the Medicare fiscal intermediaries or
carriers, survey agencies, and law enforcement.\99\
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\99\ See also section II.B.2.
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Monitoring techniques may include sampling protocols that permit
the compliance officer to identify and review variations from an
established performance baseline.\100\ Significant variations from the
baseline should trigger an inquiry to determine the cause of the
deviation. If the inquiry determines that the deviation occurred for
legitimate reasons, the compliance officer and nursing facility
management may want to take no action. If it is determined that the
deviation was caused by a departure from or misunderstanding of the
facility's policies, the nursing facility should take prompt steps to
correct the problem. Any overpayments discovered as a result of such
deviations should be returned promptly to the affected payor,\101\ with
appropriate documentation and a sufficiently detailed explanation of
the reason for the refund.\102\
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\100\ The OIG recommends that when a compliance program is
established in a nursing facility, the compliance officer, with the
assistance of department managers, should take a ``snapshot'' of
their operations from a compliance perspective. This assessment can
be undertaken by outside consultants or internal staff, provided
they have knowledge of health care program requirements. This
``snapshot'' can serve as a baseline for the compliance officer and
other managers to judge the nursing facility's progress in reducing
potential areas of vulnerability.
\101\ See Provider Reimbursement Manual 1, Sec. 2836(D)(3),
which sets out the MDS correction policy.
\102\ In addition, when appropriate, as referenced in section
H.2, below, reports of fraud or systemic problems should also be
made to the appropriate governmental authority.
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In addition to evaluating the facility's conformance with program
rules, an effective compliance program should also incorporate periodic
(at least annual) reviews of whether the program's compliance elements
have been satisfied, e.g., whether there has been appropriate
dissemination of the program's standards, ongoing educational programs,
and internal investigations of alleged non-compliance. This process
will assess actual conformance by all departments with the compliance
program and may identify areas for improvements in the program, as well
as the nursing facility's general operations.
The OIG requires a provider operating under a CIA to conduct an
annual assessment of its compliance with the elements of the CIA. A
compliance officer may want to review several CIAs in designing the
facility's self-audit protocol.\103\
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\103\ Examples of CIA audit protocols can be obtained from the
OIG by submitting a request pursuant to the Freedom of Information
Act. In addition, the American Institute of Certified Public
Accountants (AICPA) has issued a detailed guide for conducting an
independent assessment of a health care provider's conformance to a
CIA. See AICPA Statement of Position 99-1, ``Guidance to
Practitioners in Conducting and Reporting on an Agreed-Upon
Procedures Engagement to Assist in Evaluating Compliance with a
Corporate Integrity Agreement'' ( May 1999).
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As part of the review process, the compliance officer or reviewers
should consider techniques such as:
On-site visits to all facilities owned and/or operated by
the nursing home owner;
Testing the billing and claims reimbursement staff on its
knowledge of applicable program requirements and claims and billing
criteria;
Unannounced mock surveys and audits;
Examination of the organization's complaint logs and
investigative files;
Legal assessment of all contractual relationships with
contractors, consultants and potential referral sources;
Reevaluation of deficiencies cited in past surveys for
State requirements and Medicare conditions of participation;
Checking personnel records to determine whether
individuals who previously have been reprimanded for compliance issues
are now conforming to facility policies;
Questionnaires developed to solicit impressions of a broad
cross-section of the nursing facility's employees and staff;
Validation of qualifications of nursing facility
physicians and other staff, including verification of applicable State
license renewals;
Trend analysis, or longitudinal studies, that uncover
deviations in specific areas over a given period;
Analyzing past survey reports for patterns of deficiencies
to determine if the proposed corrective plan of action identified the
underlying problem and was undertaken within the assigned time limits.
The reviewers should:
Have the qualifications and experience necessary to
adequately identify potential issues with the subject matter that is
reviewed;
Be objective and independent of line management to the
extent reasonably possible;\104\
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\104\ The OIG recognizes that nursing facilities that have
limited resources may not be able to use internal reviewers who are
not part of line management or hire outside reviewers.
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Have access to existing audit and health care resources,
relevant personnel, and all relevant areas of operation;
Present written evaluative reports on compliance
activities to the CEO, governing body, and members of the compliance
committee on a regular basis, but no less often than annually; and
Specifically identify areas where corrective actions are
needed.
The extent and scope of a nursing facility's compliance self-audits
will depend on the facility's identified risk areas, past history of
deficiencies and enforcement actions, and resources. If the facility
comes under Government scrutiny in the future, the Government will
assess whether the facility developed a reasonable audit plan based
upon identified risk areas and resources. If the Government determines
that the nursing facility failed to develop an adequate audit program,
the Government will be less likely to afford the nursing facility
favorable treatment under the Federal Sentencing Guidelines.
G. Enforcing Standards Through Well-Publicized Disciplinary Guidelines
1. Disciplinary Policy and Enforcement
An effective compliance program should include disciplinary
policies that set out the consequences of violating the nursing
facility's standards of conduct, policies and procedures. Intentional
noncompliance should subject transgressors to significant sanctions.
Such sanctions could range
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from oral warnings to suspension, termination, or financial penalties,
as appropriate. Disciplinary action may be appropriate where a
responsible employee's failure to detect a violation is attributable to
his or her negligence or reckless conduct. Each situation must be
considered on a case-by-case basis to determine the appropriate
response.
The written standards of conduct should elaborate on the procedures
for handling disciplinary problems and those who will be responsible
for taking appropriate action. Some disciplinary actions can be handled
by department or agency managers, while others may have to be resolved
by a senior administrator. The nursing facility should advise personnel
that disciplinary action will be taken on a fair and equitable basis.
Managers and supervisors should be made aware that they have a
responsibility to discipline employees in an appropriate and consistent
manner.
It is vital to publish and disseminate the range of disciplinary
standards for improper conduct and to educate employees regarding these
standards. The consequences of noncompliance should be consistently
applied and enforced, in order for the disciplinary policy to have the
required deterrent effect. All levels of employees should be
potentially subject to the same types of disciplinary action for the
commission of similar offenses, because the commitment to compliance
applies to all personnel within a nursing facility. This means that
corporate officers, managers, and supervisors should be held
accountable for failing to comply with, or for the foreseeable failure
of their subordinates to adhere to, the applicable standards, laws, and
procedures.
H. Responding to Detected Offenses and Developing Corrective Action
Initiatives
Violations of a nursing facility's compliance program, failures to
comply with applicable Federal or State law, and other types of
misconduct threaten a facility's status as a reliable, honest and
trustworthy provider of health care. Detected but uncorrected
misconduct can seriously endanger the reputation and legal status of
the nursing facility. Consequently, upon receipt of reports or
reasonable indications of suspected noncompliance, it is important that
the compliance officer or other management officials immediately
investigate the allegations to determine whether a material violation
of applicable law or the requirements of the compliance program has
occurred, and if so, take decisive steps to correct the problem.\105\
As appropriate, such steps may include a corrective action plan,\106\
the return of any overpayments, a report to the Government,\107\ and/or
a referral to criminal and/or civil law enforcement authorities.
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\105\ Instances of noncompliance must be determined on a case-
by-case basis. The existence or amount of a monetary loss to a
health care program is not solely determinative of whether the
conduct should be investigated and reported to governmental
authorities. In fact, there may be instances where there is no
readily identifiable monetary loss, but corrective actions are still
necessary to protect the integrity of the applicable program and its
beneficiaries, e.g., where services required by a plan of care are
not provided.
\106\ The nursing facility may seek advice from its in-house
counsel or an outside law firm to determine the extent of the
facility's liability and to plan the appropriate course of action.
\107\ Nursing facilities are required to immediately report all
alleged incidents of mistreatment, neglect, abuse and
misappropriation of resident property to both the facility
administrator and other officials in accordance with State law (See
42 CFR 483.13(c)(2)). The OIG also has established a provider self-
disclosure protocol that encourages providers voluntarily to report
suspected fraud. The concept of voluntary self-disclosure is
premised on a recognition that the Government alone cannot protect
the integrity of the Medicare and other Federal health care
programs. Health care providers must be willing to police
themselves, correct underlying problems, and work with the
Government to resolve these matters. The self-disclosure protocol
can be located on the OIG's web site at: http://www.hhs.gov/oig.
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Where potential fraud is not involved, the OIG recommends that the
nursing facility use normal repayment channels to return overpayments
as they are discovered. However, even if the nursing facility's billing
department is effectively using the overpayment detection and return
process, the OIG believes that the facility needs to alert the
compliance officer to those overpayments that may reveal trends or
patterns indicative of a systemic problem.
Depending upon the nature of the alleged violations, an internal
investigation will probably include interviews and a review of relevant
documents. Under some circumstances, the facility may need to consider
engaging outside counsel, auditors, or health care experts to assist in
an investigation. Records of the investigation should contain
documentation of the alleged violation, a description of the
investigative process (including the objectivity of the investigators
and methodologies utilized), copies of interview notes and key
documents, a log of the witnesses interviewed and the documents
reviewed, the results of the investigation, e.g., any disciplinary
action taken, and the corrective action implemented. While any action
taken as the result of an investigation will necessarily vary depending
upon the situation, nursing facilities should strive for some
consistency by using sound practices and disciplinary protocols.\108\
Further, the compliance officer should review the circumstances that
formed the basis for the investigation to determine whether similar
problems have been uncovered or modifications of the compliance program
are necessary to prevent and detect other inappropriate conduct or
violations.
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\108\ The parameters of a claims review subject to an internal
investigation will depend on the circumstances surrounding the
issues identified. By limiting the scope of an internal audit to
current billing, a nursing facility may fail to discover major
problems and deficiencies in operations, and it may be subject to
certain liability.
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If the nursing facility undertakes an investigation of an alleged
violation and the compliance officer believes the integrity of the
investigation may be at stake because of the presence of employees
under investigation, the facility should remove those individuals from
their current responsibilities until the investigation is completed
(unless there is an ongoing internal or Government-led undercover
operation known to the nursing facility). In addition, the compliance
officer should take appropriate steps to secure or prevent the
destruction of documents or other evidence relevant to the
investigation. If the nursing facility determines that disciplinary
action is warranted, it should be promptly imposed in accordance with
the facility's written standards of disciplinary action.
Reporting
Where the compliance officer, compliance committee, or a management
official discovers credible evidence of misconduct from any source and,
after a reasonable inquiry, has reason to believe that the misconduct
may violate criminal, civil or administrative law, the facility should
promptly report the existence of misconduct to the appropriate Federal
and State authorities\109\ within a reasonable period, but not more
than 60 days\110\ after determining that there is
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credible evidence of a violation.\111\ Prompt voluntary reporting will
demonstrate the nursing facility's good faith and willingness to work
with governmental authorities to correct and remedy the problem. In
addition, reporting such conduct will be considered a mitigating factor
by the OIG in determining administrative sanctions (e.g., penalties,
assessments, and exclusion), if the reporting provider becomes the
target of an OIG investigation.\112\
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\109\ Appropriate Federal and State authorities include the OIG,
the Criminal and Civil Divisions of the Department of Justice, the
U.S. Attorney in relevant districts, the Federal Bureau of
Investigation, and the other investigative arms for the agencies
administering the affected Federal or State health care programs,
such as the State Medicaid Fraud Control Unit, the Defense Criminal
Investigative Service, the Department of Veterans Affairs, and the
Office of Personnel Management (which administers the Federal
Employee Health Benefits Program). See note 107.
\110\ In contrast, to qualify for the ``not less than double
damages'' provision of the False Claims Act, the provider must
provide the report to the Government within 30 days after the date
when the provider first obtained the information. 31 U.S.C. 3729(a).
\111\ Some violations may be so serious that they warrant
immediate notification to governmental authorities prior to, or
simultaneous with, commencing an internal investigation. By way of
example, the OIG believes a provider should report misconduct that:
(1) is a clear violation of OIG administrative authorities, civil
fraud, or criminal laws; (2) has a significant adverse effect on the
quality of care provided to residents (in addition to any other
legal obligations regarding quality of care); or (3) indicates
evidence of a systemic failure to comply with applicable laws or an
existing corporate integrity agreement, regardless of the financial
impact on Federal health care programs.
\112\ The OIG has published criteria setting forth those factors
that the OIG takes into consideration in determining whether it is
appropriate to exclude a health care provider from program
participation pursuant to 42 U.S.C. 1 320a-7(b)(7) for violations of
various fraud and abuse laws. See 62 FR 67392 (December 24, 1997).
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When reporting to the Government, a nursing facility should provide
all evidence relevant to the alleged violation of applicable Federal or
State law(s) and potential cost impact. The compliance officer, under
advice of counsel and with guidance from the governmental authorities,
could be requested to continue to investigate the reported violation.
Once the investigation is completed, the compliance officer should
notify the appropriate governmental authority of the outcome of the
investigation, including a description of the impact of the alleged
violation on the operation of the applicable health care programs or
their beneficiaries. If the investigation ultimately reveals that
criminal, civil or OIG violations have occurred, the nursing facility
should immediately notify appropriate Federal and State authorities.
As previously stated, the nursing facility should take appropriate
corrective action, including prompt identification of any overpayment
to the affected payor. If potential fraud is involved, the nursing
facility should return any overpayment during the course of its
disclosure to the Government. Otherwise, the nursing facility should
use normal repayment channels for reimbursing identified
overpayments.\113\ A knowing and willful failure to disclose
overpayments within a reasonable period of time could be interpreted as
an attempt to conceal the overpayment from the Government, thereby
establishing an independent basis for a criminal violation with respect
to the nursing facility, as well as any individual who may have been
involved.\114\ For this reason, nursing facility compliance programs
should emphasize that overpayments should be promptly disclosed and
returned to the entity that made the erroneous payment.
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\113\ A nursing facility should consult with its Medicare fiscal
intermediary (FI) and the appropriate sections of the PRM for
additional guidance regarding refunds under Medicare Part A. See
note 101. The FI may require certain information (e.g., alleged
violation or issue causing overpayment, description of the internal
investigative process with methodologies used to determine any
overpayments, and corrective actions taken, etc.) to be submitted
with return of any overpayments, and that such repayment information
be submitted to a specific department or individual. When
appropriate, interest may be assessed on the overpayment. See 42 CFR
405.376.
\114\See 42 U.S.C. 1320a-7b(a)(3) and 18 U.S.C. 669.
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III. Assessing the Effectiveness of a Compliance Program
Considering the financial and human resources needed to establish
an effective compliance program, sound business principles dictate that
the nursing home's management evaluate the return on that investment.
In addition, a compliance program must be ``effective'' for the
Government to view its existence as a mitigating factor when assessing
culpability. How a nursing facility assesses its compliance program
performance is therefore integral to its success. The attributes of
each individual element of a compliance program must be evaluated in
order to assess the program's ``effectiveness'' as a whole. Examining
the comprehensiveness of policies and procedures implemented to satisfy
these elements is merely the first step. Evaluating how a compliance
program performs during the provider's day-to-day operations becomes
the critical indicator.\115\
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\115\ Evaluation may be accomplished through techniques such as
employee surveys, management assessments, and periodic review of
benchmarks established for audits, investigations, disciplinary
action, overpayments, and employee feedback. The nursing facility
should evaluate all elements of its compliance program, including
policies, training, practices, and compliance personnel.
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As previously stated, a compliance program should require the
development and distribution of written compliance policies, standards,
and practices that identify specific areas of risk and vulnerability.
One way to judge whether these policies, standards, and practices
measure up is to observe how an organization's employees react to them.
Do employees experience recurring pitfalls because the guidance on
certain issues is not adequately covered in company policies? Do
employees flagrantly disobey an organization's standards of conduct
because they observe no sincere buy-in from senior management? Do
employees have trouble understanding policies and procedures because
they are written in legalese or at difficult reading levels? Does an
organization routinely experience systematic billing failures because
of poor instructions to employees on how to implement written policies
and practices? Written compliance policies, standards, and practices
are only as good as an organization's commitment to apply them in
practice.
Every nursing facility needs to seriously consider whoever fills
the integral roles of compliance officer and compliance committee
members, and periodically monitor how the individuals chosen satisfy
their responsibilities. Does a compliance officer have sufficient
professional experience working with billing, clinical records,
documentation, and auditing principles to perform assigned
responsibilities fully? Has a compliance officer or compliance
committee been unsuccessful in fulfilling their duties because of
inadequate funding, staff, and authority necessary to carry out their
jobs? Did the addition of the compliance officer function to a key
management position with other significant duties compromise the goals
of the compliance program (e.g., chief financial officer who discounts
certain overpayments identified to improve the company's bottom line
profits)? Since a compliance officer and a compliance committee can
have a significant impact on how effectively a compliance program is
implemented, those functions should not be taken for granted.
As evidenced throughout this guidance, the proper education and
training of corporate officers, managers, health care professionals,
and other applicable employees of a provider, and the continual
retraining of current personnel at all levels, are significant elements
of an effective compliance program. Accordingly, such efforts should be
routinely evaluated. Are employees trained frequently enough? Do
employees fail post-training tests that evaluate knowledge of
compliance? Do training sessions and materials adequately summarize
important aspects of the organization's compliance program, such as
fraud and abuse laws,
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Federal health care program and private payor requirements, and claims
development and submission processes? Are training instructors
qualified to present the subject matter and experienced enough to field
questions? When thorough compliance training is periodically conducted,
employees receive the reinforcement they need to ensure an effective
compliance program.
An open line of communication between the compliance officer and a
provider's employees is equally important to the success of a
compliance program. In today's intensive regulatory environment, the
OIG believes that a provider cannot possibly have an effective
compliance program if it receives minimal feedback from its employees
regarding compliance matters. For instance, if a compliance officer
does not receive appropriate inquiries from employees: Do policies and
procedures fail to adequately guide employees to whom and when they
should be communicating compliance matters? Do employees fear
retaliation if they report misconduct? Are employees reporting issues
not related to compliance through the wrong channels? Do employees have
bad-faith, ulterior motives for reporting? Regardless of the means that
a provider uses, whether it be telephone hotline, email, or suggestion
boxes, employees should seek clarification from compliance staff in the
event of any confusion or question dealing with compliance policies,
practices, or procedures.
An effective compliance program should include guidance regarding
disciplinary action for corporate officers, managers, health care
professionals, and other employees who have failed to adhere to an
organization's standards of conduct, Federal health care program
requirements, or Federal or State laws. The number and caliber of
disciplinary actions taken by an organization can be insightful. Have
appropriate sanctions been applied to compliance misconduct? Are
sanctions applied to all employees consistently, regardless of an
employee's level in the corporate hierarchy? Have double-standards in
discipline bred cynicism among employees? When disciplinary action is
not taken seriously or applied haphazardly, such practices reflect
poorly on senior management's commitment to foster compliance as well
as the effectiveness of an organization's compliance program in
general.
Another critical component of a successful compliance program is an
ongoing monitoring and auditing process. The extent and frequency of
the audit function may vary depending on factors such as the size and
available resources, prior history of noncompliance, and risk factors
of a particular nursing facility. The hallmark of effective monitoring
and auditing efforts is how an organization determines the parameters
of its reviews. Do audits focus on all pertinent departments of an
organization? Does an audit cover compliance with all applicable laws,
as well as Federal and private payor requirements? Are results of past
audits, pre-established baselines, or prior deficiencies reevaluated?
Are the elements of the compliance program monitored? Are auditing
techniques valid and conducted by objective reviewers? The extent and
sincerity of an organization's efforts to confirm its compliance often
proves to be a revealing determinant of a compliance program's
effectiveness.
It is essential that the compliance officer or other management
officials immediately investigate reports or reasonable indications of
suspected noncompliance. If a material violation of applicable law or
compliance program requirements has occurred, a provider must take
decisive steps to correct the problem. Nursing facilities that do not
thoroughly investigate misconduct leave themselves open to undiscovered
problems. When a provider learns of certain issues, does it knowingly
disregard associated legal exposure? Is there a correlation between
deficiency identified and the corrective action necessary to remedy?
Are isolated overpayment matters properly resolved through normal
repayment channels? Is credible evidence of misconduct that may violate
criminal, civil or administrative law promptly reported to the
appropriate Federal and State authorities? If the process of responding
to detected offenses is circumvented, such conduct would indicate an
ineffective compliance program.
Documentation is the key to demonstrating the effectiveness of a
nursing facility's compliance program. For example, documentation of
the following should be maintained: audit results; logs of hotline
calls and their resolution; corrective action plans; due diligence
efforts regarding business transactions; records of employee training,
including the number of training hours; disciplinary action; and
modification and distribution of policies and procedures. Because the
OIG encourages self-disclosure of overpayments and billing
irregularities, maintaining a record of disclosures and refunds to the
health care programs is strongly endorsed. A documented practice of
refunding of overpayments and self-disclosing incidents of non-
compliance with Federal and private payor health care program
requirements is powerful evidence of a meaningful compliance effort.
IV. Conclusion
Through this document, the OIG has attempted to provide a
foundation for the process necessary to develop an effective and cost-
efficient nursing facility compliance program. However, each program
must be tailored to fit the needs and resources of a particular
facility, depending upon its unique corporate structure, mission, and
employee composition. The statutes, regulations, and guidelines of the
Federal and State health insurance programs, as well as the policies
and procedures of the private health plans, should be integrated into
every nursing facility's compliance program.
The OIG recognizes that the health care industry in this country,
which reaches millions of beneficiaries and expends about a trillion
dollars annually, is constantly evolving. The time is right for nursing
facilities to implement a strong voluntary health care compliance
program. Compliance is a dynamic process that helps to ensure that
nursing facilities and other health care providers are better able to
fulfill their commitment to ethical behavior, as well as meet the
changes and challenges being placed upon them by Congress and private
insurers. Ultimately, it is the OIG's hope that a voluntarily created
compliance program will enable nursing facilities to meet their goals,
improve the quality of resident care, and substantially reduce fraud,
waste, and abuse, as well as the cost of health care to Federal, State,
and private health insurers.
Dated: October 22, 1999.
June Gibbs Brown,
Inspector General.
[FR Doc. 99-28094 Filed 10-28-99; 8:45 am]
BILLING CODE 4150-04-P
