Fraud & Abuse Compliance Programs

An active fraud and abuse compliance plan can significantly reduce the likelihood that a practice will be:

• found to have violated fraud and abuse laws;
• exposed to fraud and abuse allegations; or
• subject to an audit.

Because an active compliance plan requires practice personnel to stay abreast of guidance concerning key compliance issues (proper coding, medical necessity, appropriate documentation, etc.), an effective compliance plan can reduce the occurrence of innocent mistakes. Yet even if the practice finds itself subject to allegations as serious as fraud, evidence of an effective compliance plan can help the practice tremendously.

To establish that a practice has committed fraud, the government or private plaintiff must show that the practice either intentionally did something wrong (for example, intentionally upcoding an Evaluation and Management Service Code), or that the practice knew or should have known that it was engaging in noncompliant activity. But if a practice can document that it was making a conscientious effort to stay up to date and comply with payers’ requirements, the party attempting to prove fraud will have a difficult time establishing that the practice acted with the requisite "intent," or that the practice should have known about alleged noncompliance.

An effective fraud and abuse compliance program can be used for much more than purely defensive purposes. An active compliance program can have multiple affirmative benefits. These benefits include, but are not limited to:

• facilitating prompt claims submission and payment;
• identifying undercoding, as well as upcoding;
• reducing claim denials;
• improving medical record documentation; and
• improving staff education, which, in turn, should improve practice efficiency.

In October 2000, the Office of the Inspector General (OIG) issued its Compliance Program Guidance for Individual and Small Group Physician Practices (physician guidance). Although this guidance reiterates the seven elements generally required of all types of compliance plans, the OIG stated that, unlike guidance issued by OIG for other health care industry segments, the OIG in the physician guidance was not suggesting that small physician practices implement all seven components, given the financial and staffing resource constraints faced by physician practices. Instead, the OIG stated that the physician guidance could be viewed as a set of guidelines that physician practices can consider if they choose to develop and implement a compliance program.

Nevertheless, physicians would be well-advised to consider implementing the concepts underlying each of these seven requirements as they develop and implement fraud and abuse compliance programs that fit their particular practice settings. Specifically with respect to the fourth element, auditing and monitoring, the OIG suggests that for an effective fraud and abuse compliance plan, this should include a regular review of the organization's claim development and submission process, starting from the point where a service for a patient is initiated through the submission of a claim for payment.

Prior to the Patient Protection and Affordable Care Act (ACA), physician practices were not required to implement fraud and abuse compliance plans. However, section 6401 of the ACA will require physicians and other health care providers to have compliance plans in place as a condition of enrollment in Medicare, Medicaid and State Children's Health Insurance Program (SCHIP). The U.S. Department of Health and Human Services (HHS) must, in consultation with the OIG, develop the "core elements" of such compliance plans.

On November 16, 2010, the AMA, in response to a request for information issued by the Centers for Medicare and Medicaid Services (CMS), submitted comments urging that CMS not adopt core elements or other mandatory compliance plan requirements that would add to physicians’ already extensive regulatory burdens.