IG Issues Supplemental Compliance Program Guidance for Hospitals

The HHS Office of Inspector General has released OIG Supplemental Compliance Program Guidance for Hospitals. 70 Fed. Reg. 4858 (Jan, 31, 2005). Although much of the final guidance is unchanged from the OIG draft guidance issued June 8, 2004 (69 Fed. Reg. 32012), it supplements original compliance guidance first issued in 1998. 63 Fed. Reg. 8987 (Feb. 23, 1998). While the original guidance focused on how hospitals could design effective voluntary compliance programs, the supplemental guidance builds on this effort and provides voluntary guidelines on measuring and improving the effectiveness of existing compliance efforts. The guidance also discusses fraud and abuse risk areas for hospitals. These include:

• Submission of accurate claims and information ;
• Stark and Anti-kickback statutes (referral statutes);
• Payments to reduce or limit services (gainsharing arrangements);
• The Emergency Medical Treatment and Labor Act (EMTALA);
• Substandard care;
• Relationships with Federal health care beneficiaries;
• HIPAA Privacy and Security Rules; and
• Billing Medicare or Medicaid substantially in excess of usual charges.

Although the above risk areas are by no means an exhaustive list, they assist hospitals in identifying areas of their operations that can present a potential risk of liability under federal fraud and abuse statutes and regulations. In the antikickback risk area, the guidance highlights specific risks arising from hospital relationships in the following seven categories:

• Joint ventures;
• Compensation arrangements with physicians;
• Relationships with other health care entities;
• Recruitment arrangements;
• Discounts;
• Medical Staff credentialing; and
• Malpractice insurance subsidies.

Within the category of compensation arrangements with physicians, the guidance clarifies key issues related to hospital-based physicians (e.g. anesthesiologists, radiologists, and pathologists). The guidance explains that in an appropriate context an exclusive arrangement that requires a hospital-based physician or physician group to perform reasonable administrative or limited clinical duties directly related to the hospital-based professional services at no or a reduced charge would not violate the antikickback statute, provided that the overall arrangement is consistent with fair market value in an arm's-length transaction, taking into account the value attributable to the exclusivity. Depending on the circumstances, examples of directly-related administrative or clinical duties include, without limitation: participation on hospital committees, tumor boards, or similar hospital entities; participation in on-call rotation; and performance of quality assurance and oversight activities.

The guidance also addresses issues regarding:

• Discounts to uninsured patients;
• Preventive care services; and
• Professional courtesy.

The OIG clarifies that “[n]o OIG authority, including the Federal anti-kickback statute, prohibits or restricts hospitals from offering discounts to uninsured patients who are unable to pay their hospital bills.” In addition, the OIG emphasizes that it never excluded or attempted to exclude any provider or supplier for offering discounts to uninsured or underinsured patients under its permissive exclusion authority. To provide additional assurance to the industry, the OIG recently proposed regulations that would amend OIG exclusion regulations addressing excessive claims and defining key terms such as “usual charges” and “substantially in excess”. See 68 Fed. Reg. 53939 (Sept. 15, 2003). The guidance cautions in a footnote, however, that discounts offered to underinsured patients can potentially raise a more significant concern under the anti-kickback statute, and hospitals should exercise care to ensure that such discounts are not tied directly or indirectly to the furnishing of items or services payable by a Federal health care program. For more information, see February 2, 2004 paper on "Hospital Discounts Offered To Patients Who Cannot Afford To Pay Their Hospital Bills," and CMS's paper titled "Questions On Charges For The Uninsured."

Finally, the guidance identifies practical measures hospitals can use to gauge the effectiveness of their compliance programs. This section of the guidance highlights the important roles of corporate leadership and self-assessment of compliance programs.

Increasing enforcement activity, harsher penalties and enhanced obligations under fraud and abuse law make it essential for health care organizations to give renewed and close attention to compliance program effectiveness. Health care organizations should be careful, moreover, to assure their compliance programs are comprehensive and effective, not only on fraud and abuse topics, but also antitrust, government contracts, civil rights and employment law and other oversight areas, employing training and compliance review techniques regularly.