On April 16, 2008, the Office of Inspector General for the U.S. Department of Health and Human Services (the "OIG") issued draft supplemental compliance program guidance (the "Guidance") for nursing facilities. The final version of this new Guidance will supplement the OIG's 2000 Nursing Facility Compliance Program Guidance, which addresses the fundamentals of an effective compliance program. Together, these two sets of guidelines provide information that should be considered by nursing facilities when implementing and refining compliance programs, as they highlight areas that the OIG considers to be of particular concern and provide insight regarding upcoming enforcement efforts.
The Guidance explores the following five areas of potential risk, each of which are fully explained below:
1. Quality of Care;
2. Submission of Accurate Claims;
3. Federal Anti-Kickback Statute;
4. Other Risk Areas; and
5. HIPAA Privacy and Security Rules.
The OIG points out that its suggestions regarding risk areas are neither mandatory nor exhaustive, but are starting points for nursing facilities to develop and use internal controls to monitor their adherence to legal requirements. Facilities are encouraged to familiarize themselves with applicable laws and regulations, and to tailor their compliance efforts on those areas most relevant to their organization. Each of these areas will be discussed in turn.
1. Quality of Care
Facilities experiencing widespread failures in providing quality care may become liable for submitting false claims under the Federal False Claims Act, the Civil Monetary Penalties Law or similar laws. Common risk areas associated with quality of care issues include:
a) Sufficient Staffing. The OIG suggests that facilities conduct regular assessments of their staffing plans to adjust for changing needs.
b) Comprehensive Care Plans. Regulations require nursing facilities to develop a plan for each resident addressing medical, nursing, mental and psychosocial needs. Also, the OIG recommends that nursing facilities develop policies to ensure sufficient physician involvement in resident care.
c) Appropriate Use of Psychotropic Medications. The OIG advises nursing facilities to ensure that there is an adequate indication for the use of the medication and the facility should carefully monitor, document and review the use of each resident's psychotropic drugs.
d) Medication Management. Facilities are advised to commit to regulatory training and monitoring all relevant staff with respect to medication management techniques. Facilities should also consider monitoring drug records for patterns that may indicate inappropriate drug switching or steering.
e) Resident Safety. Of particular concern in this area is harm caused by staff and fellow residents. Confidential reporting should be implemented as a key component of an effective resident safety program.
2. Submission of Accurate Claims
Examples of false or fraudulent claims include claims for items not provided as claimed, claims for services that are not medically necessary, and claims when there has been a failure of care. Some significant risk areas include:
a) Proper Reporting of Resident Case-Mix. Training on appropriate collection and use of case-mix data is important to avoid improper upcoding, and both internal and external periodic validation of data may prove useful in this area.
b) Therapy Services. The provision of physical, occupational and speech therapy continues to be a risk area which may result in the submission of false claims. The OIG strongly advises nursing facilities to develop policies and procedures to ensure that residents receive only medically appropriate therapy services.
c) Screening for Excluded Individuals and Entities. To prevent hiring or contracting with an excluded person, the OIG advises nursing facilities to screen all prospective employees and agents against the OIG's List of Excluded Individuals/Entities, as well as the U.S. General Services Administration's Excluded Parties List System. Also, nursing facilities should periodically re-screen current employees and agents.
d) Restorative and Personal Care Services. Nursing facilities are encouraged to have comprehensive procedures in place to ensure that such services are of an appropriate quality and level and that services are in fact delivered to residents. To accomplish this, nursing facilities may engage in resident and staff interviews, medical record reviews, and personal observations of care delivery.
3. Federal Anti-Kickback Statute
The Anti-Kickback Statute (42 U.S.C. § 1320-7b(b)) broadly prohibits any person or entity from knowingly and willfully soliciting or receiving remuneration in exchange for the referral of goods or services payable by a federal health care program. Because the Anti-Kickback Statute contains broad language that could potentially prohibit many common and necessary transactions and relationships, the law contains several so-called "safe harbors" that exclude certain activities from its general prohibition. In addition, through the regulatory process, Centers for Medicare and Medicaid Services and the OIG have issued safe harbor regulations under which business arrangements that ostensibly violate the statute are immune from prosecution. In order to qualify for safe harbor protection, each and every element of a safe harbor must be met. However, that an arrangement does not meet all of the requirements of a safe harbor does not necessarily mean that there is a violation of law. Rather, the arrangement must be analyzed on a case-by-case basis to determine if it may result in abuse of a federally-funded health care program.
The OIG advises nursing facilities to evaluate arrangements that do not fit into a safe harbor by reviewing the totality of the facts and circumstances. Relevant factors may include:
a) Nature of the relationship between the parties;
b) Manner in which participants were selected;
c) Manner in which remuneration is determined;
d) Value of the remuneration;
e) Nature of items or services provided;
f) Potential federal program impact;
g) Potential conflicts of interest; and
h) Manner in which the arrangement is documented.
In addition, the OIG identified particular areas that have a potential for abuse and should receive close scrutiny from nursing facilities. These areas include:
a) Free goods and services;
b) Services contracts, including physician services and non-physician services;
c) Discounts, including price reductions and swapping;
d) Hospices; and
e) Reserved bed arrangements.
4. Other Risk Areas
Additional miscellaneous risk areas identified by the OIG in the Guidance include:
a) Physician Self-Referrals. The OIG advises nursing facilities to familiarize themselves with the physician self-referral law (42 U.S.C. 1395nn), commonly known as the Stark Law. The Stark Law prohibits entities that furnish designated health services from submitting claims for such services if the referral for such services comes from a physician with whom the entity has a prohibited financial relationship. Nursing facility services are not designated health services for purposes of the Stark Law, but laboratory services, physical therapy services and occupational services are among the designated health services covered by the statute. Accordingly, nursing facilities are advised to review financial relationships with physicians who refer or order such services to ensure compliance. In addition, nursing facilities should enter into appropriate written agreements with physicians, and have processes for making and documenting reasonable, consistent and objective determinations of fair market value. Also, the OIG suggests that nursing facilities should implement systems to track non-monetary compensation provided to referring physicians.
b) Anti-Supplementation. A nursing facility is required to accept the applicable Medicare or Medicaid payment for covered items and services as the complete payment for such items and services. For Medicaid and Medicaid beneficiaries, a nursing facility may not accept supplemental payments, including, but not limited to, cash and free or discounted items or services from a hospital or other source merely because the nursing facility considers the Medicare or Medicaid payment to be inadequate. However, a nursing facility may accept donations unrelated to the care of specific patients.
c) Medicare Part D. Medicare Part D extends voluntary prescription drug coverage to all Medicare beneficiaries, including nursing facility residents. Nursing facilities are advised to be particularly careful not to act in ways that could frustrate a Medicare beneficiary's freedom of choice in choosing a Part D plan. Accordingly, nursing facilities and their employees and contractors should not accept payments from any plan or pharmacy to influence a beneficiary to select a particular plan.
5. HIPAA Privacy and Security Rules
The Health Insurance Portability and Accountability Act's ("HIPAA") Privacy Rule addresses the use and disclosure of personally identifiable health information by covered nursing facilities and other covered entities. The Privacy Rule also governs the rights of individuals with respect to their health information. Nursing facilities are granted some flexibility to create their own privacy procedures, but they are advised to make sure that such procedures are compliant with all applicable provisions of the Privacy Rule, including standards for the use and disclosure of personally identifiable health information with and without patient authorization, along with standards governing permitted and required disclosures.
The HIPAA Security Rule provides services of administrative, technical and physical security safeguards that nursing facilities should implement to ensure the confidentiality of electronic personally identifiable health information. The Security Rule's requirements are flexible, allowing nursing facilities to tailor their approach to Security Rule compliance based on applicable circumstances.
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Public comments on the Guidance will be accepted through June 2, 2008.