Mitchell Warner, P.A. - Medical Law Alert

Health Law Matters

DOES YOUR MEDICAL PRACTICE HAVE A COMPLIANCE PLAN?

By Steven K. Sanborn, Mitchell Warner, P.A.

It is easy for the small practitioner to think that enforcement agencies will only focus on the large providers (i.e. hospitals, nursing homes, and large practices) in pursuing health care fraud. However, not only have federal and state enforcement agencies gone after small practices with improper billing practices, but physicians have become vulnerable to another force - their own current and former employees. If a person gains first hand knowledge of wrongful or improper billing practices, that person can bring a qui tam lawsuit under the False Claims Act. Because qui tam relators receive a large recovery of the eventual judgment or settlement, it has become a very lucrative practice. Physicians need to protect themselves from this type of vulnerability by establishing compliance programs for their practices.

The first step in implementing a compliance program is to engage in a compliance review. This is in essence a "legal audit" that analyzes the practice's structure and internal procedures, focusing primarily on:

billing procedures;
contracts with outside consultants and suppliers;
leases or other contracts with potential referral sources or entities that receive referrals;
recruitment and retention mechanisms;
treatment protocols and admission procedures;
record retention practices;
advertising practices;
patient informed consent procedures; and
procedures relating to waiver of co- payments and deductibles.

Initially, the attorney performing the legal audit should review all corporate and partnership practice materials, employment agreements, contracts with consultants, advertising materials, billing procedures, procedure manuals, and any audits, evaluations or reviews performed within the past five years by an insurer, Medicare carrier or Medicaid agency. Next, the attorney would perform an onsite review, which would include interviewing key personnel. Following this review, the attorney would provide an exit conference with the practitioner to address any concerns that are identified and to answer any questions.

Once all of the data has been assimilated, the attorney will issue a report to the physician that identifies areas of weakness that needs to be addressed and to assure future compliance. The report should address not only the application of the appropriate billing regulations, but also the applicability of federal and state anti- kickback and self referral laws and the fee splitting and corporate practice of medicine doctrines. This report will outline an appropriate compliance program which the physician should implement.

The compliance program will require ongoing oversight by the physicians in the practice. The compliance program should include the following:

Employee training. When employees are trained to follow the proper standards and procedures, this decreases the chances that a false claim will be filed. Training should include periodic reviews and updates to ensure that employees are informed of changes in billing procedures.
A grievance reporting procedure. Employees should be provided with a procedure through which they can report perceived violations or problems, without fear of retribution or retaliation. It is important that the employee's issue be addressed immediately, so that the employee will be encouraged to report future problems.
Employee screening. A practice should have a mechanism to ensure that it does not hire or retain persons whom it should have known have a propensity for engaging in illegal activities. This should include background checks and a review of the OIG Cumulative Sanction Report, which is a list of health care providers, individuals and businesses that have been excluded from the Medicare program.
Monitoring and Discipline. The compliance program should include a monitoring system designed to detect criminal conduct by employees and other agents. If an employee or agent violates a compliance standard, or fails to report a fraudulent practice, there should be a policy for disciplining that person.

Importantly, the compliance program is designed not only to protect a physician in the case of an enforcement action, but to prevent or minimize the risk of enforcement actions being initiated. It is important that once the compliance program is initiated, it should be implemented effectively. Identifying applicable regulations, but failing to meet them, only provides additional evidence to encourage potential qui tam relators to file suit.

In addition to establishing an appropriate compliance program, physicians should also review their compliance with applicable employment laws. Physicians should establish an appropriate sexual harassment policy, under which employees can report allegations of sexual harassment in confidentiality and without fear of retaliation.

Regardless of the size of a physician's practice, physicians today need to consider the possibility that they could be facing either an enforcement action, a qui tam lawsuit, or both should they improperly bill claims or engage in other illegal conduct. Physicians need to examine how the various federal and state laws affect their practice, and how they can avoid liability. We recommend that physicians undergo a compliance review and implement a compliance program in order to identify problem areas in their practice and address them before they become a more serious problem.

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The Medical Law Alert is a publication of the Mitchell Warner Health Law Group. Its purpose is to provide general information about significant legal developments, and should not be construed as legal advice on specific factual scenarios. For more information on the issues discussed in this publication, please contact Edward E. Hollowell at (800) 662-7403 or ehollowell@nchealthlaw.com