The Maze – Part 4
Medical Coding: Compliance Programs

This is a continuation of a series on medical coding, billing, and reimbursement.

Previous posts are here:

GorillaThere–glad you’re back. Hope you enjoyed your lunch. I know after a meal we all tend to get a little drowsy. So to keep you from dozing off, I thought I’d tell a really, really scary story.

A number of commenters have asked the question, in so many words: “How did physicians ever allow this crazy system to come to pass?”

Good question.

And the answer is easy: when you dance with an 600-pound gorilla, the dance ain’t over ’til the gorilla says it’s over.

The gorilla, of course, is the federal government, and the dance, the provision of health care services covered under federal programs such as Medicare and Medicaid. For most medical practices treating adult patients, Medicare constitutes a significant percentage of total patients in a practice–and therefore a substantial percentage of income. One cannot accept federal reimbursements for medical services without being subject to federal regulations and restrictions. Since the vast majority of patients over the age of 62 are covered by Medicare, you’re pretty much stuck with the gorilla. She ain’t pretty, but she’s the only gal available–and she sure can dance.

Initially, after the introduction of federal health care financing in 1964, the system was pretty easy-going. Billing was done on a UCR basis (see part 1), and while federal fraud statutes existed, they were rarely implemented except in egregious cases of financial mendacity. When the federal coding regulations and guidelines came out about 10 years ago, physicians were stunned and angry–although not entirely surprised: the feds had been tightening up on hospitals for several years using a fixed-payment-by-diagnosis-group system called DRGs (diagnosis related groups), which grouped hospital admission diagnoses into groups based on the resources they used, and paid accordingly. DRG’s started the chess match between federal payers and private providers, where the feds tried to slash expenditures, and the hospitals, under increasing financial pressure, sought to maximize revenues by “working the system”–taking advantage of its complexity and vague definitions to improve–or at least maintain–their bottom line. As you can imagine, the perspective of the federal payers and the hospitals on what constituted correct interpretation of the complex rules–and what constituted fraud–was quite different–and some hospitals (especially several large for-profit hospital chains) moved a bit (or more than a bit) too far into the gray zones, and found themselves under federal investigation.

Physicians watched this high-stakes chess match with fascination and horror. Hospitals were under intense pressure to discharge patients sooner (they were reimbursed a fixed amount by diagnosis, and lost a boatload of money if your stay was too long), and in turn pressured doctors on their staffs to follow suit. Even though it was the hospitals, not the doctors, who stood to lose, most physicians complied (the hospitals played hardball with physicians, kinda like your Italian cousin Guido: “It’d be a real shame if yuz had a terrible accident or sometin’ like dat”). While shortened hospital stays were not all bad–there was definitely fat in the system–the inevitable result was more patients were discharged “quicker and sicker.”

So when the coding guidelines for physicians were released, the rules of the game were already known: the feds would use the complexity of the rules, and their hand on the purse strings, to ratchet down reimbursements–and doctors knew they had to know the rules inside and out to avoid a financial bloodbath–or worse.

Nothing sharpens the mind quite like the threat of financial disaster. Except maybe jail time.

Doctors are nothing if not problem-solvers: throw them a bone and they’ll hollow out the marrow like a hungry dog. So they threw themselves with abandon into mastering the rules. The implementation of the coding guidelines for physicians was in reality the Medical Consultant Full Employment Act: everybody needed help mastering these bad boys. There were conferences, seminars, lectures, books galore; doctors paid thousands to practice consultants in courses and in-house practice assessments. But many physicians, calculating that the complexity of the rules–and safety in numbers–would keep the feds from looking too closely at the “little guy,” made an entirely rational choice: ignore the rules, and keep doing what you’re doing, taking care of patients.

This laisser-faire attitude came to a screeching halt with the introduction of federal compliance programs.

The shot over the bow was the passage of HIPAA–the Health Insurance Portability and Accountability Act of 1996. This act is best known by its privacy regulations: it is the reason for that proliferation of forms and brochures about information release and privacy policies you get to sign at your doctor’s office. But it also established a national Health Care Fraud and Abuse Control Program–a program designed to coordinate federal, state, and local enforcement activities with respect to health care fraud and abuse. With HIPAA’s enactment, the OIG (Office of Inspector General) launched a major initiative to promote “voluntary” adoption of compliance programs by provider organizations, such as hospitals, nursing homes, laboratories, and doctors’ practices.

OIG guidelines list seven components of a basic voluntary compliance program:

  1. Establish auditing and monitoring activities. A practice \'s standards and procedures are periodically reviewed for currency and accuracy and to identify where its current compliance program may put the practice at risk.
  2. Develop written practice standards and procedures to address all identified areas of risk. The practice should develop written procedures to reduce the chance of coding and billing errors, filing of erroneous claims, and to deal with those particular areas that have been identified during the audit that put the practice most at risk.
  3. Designate one or more individuals to provide compliance oversight. The designated compliance officer(s) can be responsible for developing a corrective strategy to cure areas of identified risk, and for overseeing the practice \'s implementation of its comprehensive compliance program.
  4. Conduct appropriate education and training of employees. At a minimum, OIG recommends all professional and support staff with any involvement in coding and billing be trained in the practice \'s compliance standards and procedures. Training should consist of, but not be limited to, coding requirements, information on developing and submitting claims, federal and private health care program requirements in order to submit accurate bills, and the sanctions for non-compliance.
  5. Respond to and cure compliance breaches. A practice \'s commitment to compliance includes ongoing monitoring in order to detect and respond to evidence of misconduct. If it becomes apparent that the compliance program is failing to prevent a particular type of violation, the program may require modification or that staff training be enhanced.
  6. Develop open lines of communication to foster compliance and reporting of violations. Policies should be developed to encourage meaningful and open communication to the designated compliance officer of suspected erroneous or fraudulent conduct and protecting, as much as possible, the anonymity of the reporting party.
  7. Develop and publicize guidelines to inform staff of the consequences of non-compliance. Employees at all levels must be accountable for the practice \'s compliance requirements and subject to disciplinary action for their intentional or reckless non-compliance.

Each and every health care entity–from the humble country GP treating your sore throat to national hospital and nursing home chains–was “encouraged” to implement these “voluntary” programs. No, there was no penalty if you didn’t–but if you got audited, and didn’t have one in place–well, as one summary succinctly put it:

The penalties for submitting fraudulent claims are significant: criminal prosecution and civil and administrative enforcement that can result in huge monetary penalties and sanctions that exclude the physician from Medicare and Medicaid. However, penalties for violating the law may not be as severe for those with a compliance program in place. Of course, establishing compliance duties and failing to live up to them may serve as evidence of intentional disregard of the law and may therefore enhance penalties. [emphasis mine]

Notice the Catch-22 here?

  • If you are audited, and problems found (as they always will be), and have no compliance program in place, you’re screwed.
  • If you are audited, and problems found (as they always will be), and have a compliance program in place, you’re still screwed–but maybe a little less–unless we determine you weren’t following your own policies (and we always will).
    Can you say, “Abu Ghraib”? (“Just stand on this platform, Doctor, while we hook up these electrodes. Nice cloak you’re wearing there…”)

Now, it’s not too hard to see that setting up a compliance program is no small undertaking: there’s policy and procedure manuals to write; extensive internal risk assesments; employee training on a regular (and well-documented) schedule; mandatory corrective disciplinary actions against employees who violate the rules (knowingly or unknowingly); formal lines of communication to establish (including the right to anonymity for anyone reporting a problem); internal and external audits. No small task even for a large organization such as a hospital or large medical group; absolutely crushing for small medical practices. The OIG’s solution for the small medical group? Deputize the physician to be the sheriff, policing not only his own staff but his own behavior. Anyone see a conflict of interest here? You decide your coding is just fine; the feds disagree. Not only are you guilty of fraud, but of a cover-up because you didn’t report your own failings to the proper authorities. If you think it sounds a little like Communist re-education camps (“I am a lowly worm, a bourgeois capitalist enemy of the State, unworthy of the Chairman’s mercy!”), you’re definitely getting good at this stuff. Want to come work in my office? I’ll make you the compliance officer.

The legislation uses the False Claims Act as its principle weapon to fight fraud. And what a weapon it is–and that’s where our story starts to get really scary. So stretch your legs and be back in five. Soft drinks and a bowl of Prozac will be in the hallway to the right.

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5 thoughts on “The Maze – Part 4
Medical Coding: Compliance Programs

  1. I’m sorry to tell you this Dr. Bob, but it’s going to take more than a 5 minute break and prozac and a soft drink to fix me up after that!!!!

    informative though … I think … I’ll let you know when I’ve untangled my brain.;)

  2. It must be horrible for doctors, etc., to be constantly under the blade of the guillotine like that. But I must say, as a newly-minted Medicare recipient (whose purse is none too large these days), I am extremely glad I have it.

  3. Hmm…sorry I didn’t note you had a more recent post up.

    As previously noted (without tooting my horn much), I as the Reimbursement manager at one time. We saw this coming long before they passed HIPPA and enforced it. We had several audits for reasons that were as simple as we had a very large percentage of our patient base receiving walkers and commodes together. This is where it gets really fun. Of course, more than 50% of our patients were elderly Medicare patients thus they had a higher rate of falls, hip and knee replacements. So, many more people with walkers. The problem of course is that they also received a commode.

    If you understand the complexity of the Medicare medical necessity program you could see they had a bit of a point that these items seemed to be “contra-indicated”. For a lay person, it seems reasonable that a person who had hip surgery might not be able to walk to their bathroom (after being discharged much earlier from the hospital than in the past and thus doing more recovery at home) and thus need a commode. However, a walker, to Medicare, implies that the patient has some mobility and should be able to walk to the bathroom on their own with this equipment.

    Which totally ignored the fact that earlier discharges meant that a home bound patient was at home in their bed and not ready to dance the tango to the bathroom so the walker was first used so the patient could pull themselves up and walk a few steps to the commode and back to the bed. Then there was the physical therapy that was taking place in the patients home (no longer at the hospital due to early discharge and limits to the amount of PT while admitted), that typically started within a few days of surgery but did not result with a day or two of the patient dancing the tango either.

    So, to the government, it seems contradictory to have a mobility item like a walker and a commode which implies lack of mobility. And the two forces could never meet. It was just too difficult for them to comprehend and train it internally or try to reprogram their system to NOT reject these claims, not to mention that the numbers of people receiving this service apparently seemed ready to break the Medicare bank. thus, they decided after much arguing that in order for a poor patient to have both a commode and a walker, instead of the once simple physicians prescription with patient name, date, diagnosis, order for walker and commode, physician signature, we now had to submit a statement or other documentation (such as physical therapy orders and notes) stating the patient was getting physical therapy and that is why they had the walker with the commode, along with the claim AND the order to get it paid. Get that, no one could use common sense and figure out that low mobility with a walker to get to the commode was a good idea (so the patient didn’t fall, re-injure themselves and go back for another expensive hospital stay), we had to tell them that the walker was for something totally different (though legal since most did get physical therapy and use a walker as such).

    And, no offense to doctors, but seeing as how they, like we, were not confused about the necessity for both of these items, it was like pulling teeth from a saber tooth tiger to get such statements from physicians.

    I can’t tell you how many times I received answers such as “I gave you the order, that should be sufficient” because of course, while Medicare was squeezing the equipment providers and telling them the new rules for getting paid, they did not inform the physicians. That was up to us.

    And that is one story out of a million I could tell you about the bizarre things that the government does to save money which, in the end, cost them more money because now that we had to submitt separate documents as extra proof for these items, all of these claims could no longer go through automatic “claims editing” for approval and payment but had to be perused by a human in order to establish medical necessity.

    All because they thought it was cheaper than fixing their computer system to allow it.

    Well, you should know what happened next. Because it also cost equipment companies more money to have people spend time trying to track down documents and physician statements to support payment for a relatively cheap piece of equipment, thus blowing any small overhead earned from the item, many refused to carry them.

    Now, the truth is, you could go down to walgreens and get a walker much cheaper and with less pain than going through Medicare. except those elderly people who had the surgery in the first place and were now immobile. Hopefully, they had family that would know what to get and where because medical equipment companies all over the place refused to stock them and deliver them, thus, many physicians began to circumnavigate the fed insistance on discharging patients so early after surgery because they could not go home to a safe environment for recovery (and yes, you could write that and keep a patient in longer), so now there are more hospital days for hip and knee surgery.

    But, you know, that’s under a different section of the federal financial review for services (ie, hospital v. home health) so the home health folks saved money on their budget and the hospital finance folks can now claim a large number of elderly patients that need social services (thus more money for other services) because they cannot stay at home to recover.

    Vicious circle and I’m quite certain the government did not save a dime.

  4. Flowers, Chocolate and Zoloft for my doctor…..

    And 600 mg of ibuprofen for my medical coding enduced headache.

    This has truly been an education for me, and I appreciate you taking the time to explain it in the best, most understandable way possible.


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