Can Healthcare Companies Afford Not To Have an Effective Compliance Program?

Not a chance! 

At a time when healthcare reimbursements are in decline and shareholders’ pressure to increase revenue is at its highest, there is no wonder why some providers may elect to engage in what would be considered healthcare fraud and abuse, even unintentionally. For example, failing to train employees and executives on changes in local, state and federal law, fraud, waste and abuse, failing to correct a billing clerk who assumes a provider performed particular services, billing for services medically unnecessary, upcoding, billing for medications that a patient never picked up or received or coordinating with other provider organizations under value-based agreements. 

The federal government is stricter than ever when it comes to healthcare fraud and the fight against the opioid crisis. Predictive analytics are being used to flag fraudulent medical bills before providers receive payments. Healthcare providers may find that Medicare and Medicaid officials are scrutinizing provider enrollments and claim submissions more than ever before to detect potential incorrect billing practices. 

Healthcare fraud and abuse cases cost the industry billions of dollars a year. Without policies and procedures in place to detect and prevent fraudulent activities, healthcare providers could face an investigation that may cost them their reputation, revenue and even their freedom. Developing effective compliance programs may be difficult because providers face multiple healthcare fraud and abuse laws at the local, state, and federal levels. Complying with the numerous regulations can be difficult, expensive and overwhelming for providers who concentrate in care delivery, payer compliance, medical billing, and revenue cycle management. 

Providers and executives often complain that compliance programs take too many resources away from the day-to-day operations, are too expensive, and don’t see a return on their investment. 

Nothing could be further from the truth. An effective compliance program is essential to the existing operations of a business because it will help detect and prevent potential fraud, waste and abuse. It will help keep revenue in house by avoiding penalty fines and it will keep the provider in business avoiding criminal charges. 

The lack of an effective compliance program could result in providers facing the following sanctions: 

· False Claims Act: Up to 3X the programs’ loss plus $11,000/claim; 

· Anti-Kickback Statute: Criminal fines, jail time and/or exclusion from Federal programs; 

· Stark Law: Potential for exclusion; potential false claims liability, civil monetary penalties of $15,000 for knowingly presenting or causing another to present an improper claim, and up to $100,000 for scheming to circumvent the regulations; 

· Civil Monetary Penalties Law: The Office of the Inspector General seeks civil monetary penalties for Anti-Kickback and Stark violations and false or fraudulent claims; 

· HIPAA: Penalties for noncompliance are based on the level of negligence and may be up to $50,000 per violation, with a maximum penalty of $1.5 million per year; and 

· OSHA has several penalty fines. If your organization does not want to be the subject of a healthcare fraud and abuse investigation, it is imperative that you implement an effective compliance program, improve medical billing and your business operations practices. 

But, what is an effective compliance program and how do you know if you have one? When was the last time you measured the effectiveness of your compliance program? How have you assessed whether your policies and procedures have been effectively implemented? How do you know if your program works? 

The value of compliance must be made very clear to company executives and employees alike. Measuring the effectiveness of the compliance program requires a meaningful measure directly tied to a clearly communicated outcome. For example, measuring that employees truly understand the company’s policies and procedures, and code of conduct when they sign their attestations acknowledging that they read and understood the company’s policies and procedures and code of conduct. 

But how do you really know that your employees have indeed read and understood the company’s policies and procedures and code of conduct? Your employees may sign the acknowledgment without truly understanding what they are signing because the policies are written in legal or technical jargon. They need policies written in plain English that can be understood by all. In addition, they require periodic training in local, state and federal policy updates that can affect their job descriptions. 

It would be helpful for healthcare companies to engage independent compliance consultants to assist and perform independent assessments on the knowledge and understanding of employees, executives and board members of the company’s policies, procedures and code of conduct, as well as latest local, state and federal rules and regulations. The consultant will issue a report of his/her findings and will recommend remedies. An independent compliance consultant is essential to the organization when monitoring and auditing billing claims, vendors-employees arrangements, HIPAA and Privacy Breaches. 

In June of this year alone, the Justice Department charged more than 600 people in what Attorney General Jeff Sessions said was the nation’s largest health care fraud investigation and takedown. Among those arrested were doctors, nurses, pharmacists, pharmacy owners, licensed medical professionals and health care company owners. The defendants were alleged to have participated in schemes to defraud the government by submitting claims to Medicare, Medicaid, TRICARE, and private insurance companies for treatments that were medically unnecessary and often never provided. Furthermore, the Health and Human Services (HHS) Secretary Alex M. Azar said investigators have found that people were setting up fake pharmacies, “harvesting seniors’ Medicare information and coming up with new ways every day to steal from program beneficiaries and taxpayers.” One of the defendants allegedly used his position at a recovery center to prescribe controlled substances without a license while the center worked in tandem with other treatment centers to “bilk those trying to enter recovery,” he said. 

This investigation was led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit in conjunction with its Medicare Fraud Strike Force (MFSF) partners, a partnership between the Criminal Division, U.S. Attorney’s Offices, the FBI and HHS-OIG. In addition, the operation included the participation of the DEA, DCIS, IRS-CI, Department of Labor, other various federal law enforcement agencies, and State Medicaid Fraud Control Units. 

For the Strike Force locations, in the Southern District of Florida, 124 defendants were charged with offenses related to their participation in various fraud schemes involving over $337 million in false billings for services including home health care and pharmacy fraud. In one case, an owner, medical director, and two employees of a sober living facility were charged with conspiracy to commit health care and wire fraud, substantive counts of health care fraud, and substantive counts of money laundering. The indictment alleges a scheme that illegally recruited patients, paid kickbacks, and defrauded health care benefit programs for widespread fraudulent urine testing. During the course of the fraudulent scheme, the facility submitted more than $106 million in claims for substance abuse treatment services. 

This past Friday, the HME News reported that Lincare Inc. a Clearwater, Florida-based provider of in-home oxygen and respiratory therapy services paid $5.25 million to resolve allegations that it violated the federal False Claims Act and the Anti-Kickback Statute by offering illegal price reductions to Medicare beneficiaries, according to the U.S. Attorney’s Office for the Southern District of Illinois. The government alleged that, from 2011 to 2017, Lincare attempted to gain a competitive advantage in the market by unlawfully waiving or reducing co-insurance, co-payments and deductibles for beneficiaries who participated in a Medicare Advantage Plan operated through a private insurer. 

Earlier this year, the company paid $875,000 to settle a lawsuit filed by employees whose information may have been exposed in a “phishing attack.” As reported by the HME News 

Providers that invest in effective compliance and ethics programs can avoid fraud, waste and abuse allegations, sanctions and fines, attract and retain loyal customers, good staff and the goodwill of their communities resulting in better patient outcomes and increased revenues.

 Can you afford today to not have an effective compliance program?  


Yael Camhi

Yael Camhi is a healthcare industry insider with specialized experience and knowledge in the area of regulatory compliance and helping healthcare organizations compete profitably in a dynamic and often unpredictable environment. Learn more.