Outpatient programs should start a compliance plan before it's too late

The longer you wait, the more it could hurt

(Editor's note: This is the first of a two-part series on establishing a compliance program. The June issue will include a story on how to audit, monitor, and investigate fraud and abuse issues.)

The federal government has released its guidelines to assist hospitals in the development of a corporate compliance program, and this action should be a signal to outpatient facilities that they should wait no longer before starting their own plans, according to experts interviewed by Outpatient Reimbursement Management.

Last year, the Office of Inspector General (OIG) of the Department of Health and Human Services in Washington, DC, published a model laboratory compliance plan. The hospital and laboratory compliance plans could serve as guidelines to outpatient programs.

The Rockford (IL) Ambulatory Surgery Center recently completed its compliance plan by first using the government's sample laboratory compliance plan. (For information on how to obtain a copy of the compliance plan, see source box, p. 36.) "Then we took the model hospital compliance plan and tried to incorporate some of the issues in our draft," says Cindi Peterson, ART, business manager. The multispecialty surgery center has five billing and coding employees, including Peterson. The center did more than 4,000 patient procedures in 1997.

"Our compliance plan requires continuous education on coding and reimbursement issues," Peterson says.

Peterson, who is a credentialed health information manager, had attended several seminars on fraud and abuse last fall.

"I realized we'd have to institute a compliance program and do a maintenance program of some type," Peterson says.

Creating a corporate compliance plan is not a federal requirement, but it is a smart thing to do because it will help an organization find problems before the federal government starts an investigation of potential fraud and abuse, she adds. "It's a proactive way to protect your own assets because these fraud and abuse fines can be up to $10,000 an offense."

Two experts say it's wise for facilities to start these programs as soon as possible. Although outpatient programs have not been targeted for many investigations in the past, they soon will be the target.

Plus, the physicians who work in outpatient centers could be targets of audits, says Sue Prophet, RRA, CCS, director of classification and coding for the American Health Information Management Association of Chicago.

Marty Karpiel, MPA, CHFP, president of Karpiel Associates - Ambulatory Care Consultant of Long Beach, CA, says, "Most of the folks they're going after these days for fraud and abuse seem to be the larger providers." Karpiel Associates is a health care, emergency, and ambulatory care operations and reimbursement-focused consulting firm.

But as the Health Care Financing Administra-tion (HCFA) collects money from fraud and abuse penalties, the agency is reinvesting those funds back into more investigations and audits, Karpiel says.

"So they're able to audit more health care providers: first the big guns, then the medium-sized guns," Karpiel says. "And some ambulatory care centers that represent enough dollars of Medicare claims are going to be in that next wave of investigations."

Ignoring issue won't make feds go away

Some facilities have not caught on, Prophet says.

"Unfortunately, I have talked with a few people from hospitals and ambulatory surgery centers who feel that since they have not been a target of investigation yet, and since no one has brought billing problems to their attention, then they don't need to focus time and money on a compliance program," Prophet says.

This attitude is frightening, Prophet adds, because the whole idea of a compliance program is to have it in place before a facility is the target of an investigation.

HCFA officials have said that their investigations will take into consideration compliance programs that facilities have in place. But for a compliance program to have a mitigating effect on a fraud and abuse investigation, the program would have to be in place before the investigation begins, Prophet adds.

While it could be costly and time-consuming, setting up a compliance program will be easier if you follow the OIG's guidelines and consider these suggestions offered by Prophet, Karpiel, and others:

1. Write policies that address potential fraud.

Written policies and procedures could include provider bulletins and information from payers.

"You should have all the information the staff need in order to access or answer how to bill or handle a case," Prophet says. "They need to keep up to date on new codes, guidelines, billing regulations, and whatever they need to do their jobs to the best of their abilities."

Also, Prophet suggests, ambulatory programs could put all policies and regulatory changes in one central location where every employee can easily find the information. This will increase productivity and lower mistakes.

2. Form a committee and hire a chief compliance officer to monitor the program.

Rockford Ambulatory Surgery Center has given its medical director the title of chief compliance officer. He'll be in charge of quarterly audits, Peterson says.

Larger facilities might hire an additional person to serve as compliance officer. (The Healthcare Financial Management Association in Westbrook, IL, has created a special interest group for members with responsibilities as compliance officers. See story, at right.)

Audits could be conducted in-house or by consultants.

"We've contacted several consulting firms to get a baseline audit," Peterson adds.

Then the quarterly audits will be done in-house by the chief compliance officer. He'll collect a random sampling of about 5% or 30 charts from all specialties, Peterson says. He'll check these charts' codes, diagnoses, and procedures to make sure the codes written on the charts match what the codes should be.

3. Educate and train staff.

Rockford Ambulatory Surgery Center will provide staff education through a consultant and has included continuous education in its compliance plan, Peterson says.

All coding staff will need to have credentials and some coding background, Peterson adds.

Employees should be taught that all procedures that are performed need a diagnosis that correlates to them, says Cynthia Kaiser, CCS, director of NJHA/NJUP of the New Jersey Hospital Association in Princeton.

"When the feds come in and do these reviews at hospitals, they're doing data runs," Kaiser says. Medicare has a database for hospitals, so it's easy for federal investigators to run comparisons of hospitals for various diagnoses to see which hospitals have more cases than others do with certain diagnoses.

After they look at the data, they will do a statistical analysis and target a hospital that has a higher incidence of certain diagnoses, Kaiser adds. For example, if a particular facility has an abnormally high ratio of bacterial pneumonia compared with simple pneumonia, then that facility might be a target.

Educate staff about compliance

Kaiser says Medicare does not have a good database for ambulatory centers yet. But this will change in 1999 when Medicare switches to the ambulatory patient classification (APC) system for hospitals in January 1999 and for freestanding centers later this year.

"So they need to get their outpatient coding up to speed and really know who's doing what type of coding throughout their facility because the APC system is mandated and will be here in January 1999," Kaiser adds.

Education programs should include physicians. Physicians need to write down diagnoses, instead of just writing the test that the patient is undergoing, Kaiser says.

"Physician education has always been a problem, but the FBI also is looking at physician billing," Kaiser adds.

4. Enhance communication and give employees a way to make complaints.

Larger facilities could give employees a hotline number to the corporate compliance officer's office, or they could hire a hotline service that employees or physicians could call to make a complaint or to report suspected fraud and abuse.

Smaller outpatient centers might set up a confidential complaint box. Rockford Ambulatory Surgery Center will use an anonymous suggestion box for this purpose, Peterson says.

Whatever complaint service is used, it should be available to employees on all shifts, Prophet says.

Better communication between departments and managers and staff is essential, Prophet says.

Mistakes often are made because a regulatory change was announced to one department and not shared with others that may be affected.

"A lot of things about a compliance program just make good sense," Prophet notes. "It can decrease duplication of efforts when a lot of different departments are running around doing the same thing because information was not communicated to each other."

5. Discipline violators consistently.

Enforcement may include verbal warnings, suspensions, terminations, revocation of physician privileges, and termination.

Whatever an outpatient center's policy, the discipline should be consistent, Prophet stresses. "Lower levels of employees should not be penalized more severely than a manager who had the same infraction."

Also, in each employee's performance evaluation, the facility should include information about the employee's efforts to follow regulations and adhere to the compliance plan.

Prophet says the OIG says managers can be held liable and disciplined for their subordinates' fraud and abuse mistakes if it is proven the manager did not provide proper direction that would have prevented the problems.