By David L. Schick Esq. and David B. Canning Esq.

The federal government has made it a top priority to crack down on waste, fraud and abuse in the federal health care programs.  In 2001, the OIG estimates that over $2 billion will be recovered from providers for fraud and abuse—up from $750 million in 1998.  In 2000, the government excluded 3,350 physicians from the federal health care programs and prosecuted 414 physicians.  A look at the size and frequency of recent physician settlements demonstrates the government's aggressiveness is escalating.

Penalties and government incentives.  Physician practices of all sizes across the United States are settling at an increasing rate with the federal government for astounding amounts of money due to false claims allegations.  The False Claims Act is the primary enforcement tool for the government, allowing either the government or private citizens to bring civil actions against physicians for filing false claims.  The Act provides for civil penalties starting at $10,000 per claim, plus three times the amount of damages that the government sustains.  Additionally, the Act provides for qui tam suits, or "whistleblower" suits, which are causes of actions brought on behalf of the government by a citizen.  The Act allows the whistleblower or relator to collect from 10% to 30% of the government's total recovery, plus attorney fees.  Recently terminated or disgruntled employees often bring these suits against physicians.  The government's aggressive investigative attitude, coupled with potentially lucrative incentives for citizens, has brought a serious need for all physicians to adequately protect themselves and their practices.

Government protection.  The Office of Inspector General of the Department of Health and Human Services ("OIG") released the OIG Compliance Program Guidance for Individual and Small Group Physician Practices on October 5, 2000, to assist physicians in protecting themselves and their practices.  This document establishes the basic elements or steps for an effective compliance plan, however, it is not an all-inclusive document.  The OIG document can be reviewed at www.dhhs.gov/progorg/oig/oigreg/physician.pdf

Though compliance plans are not yet mandatory, the OIG believes all providers have an ethical and legal duty to ensure the integrity of their dealings with federal health care programs.  The OIG fully expects every physician practice to have an effective compliance plan in place and to be "actively applying compliance principles."  To be effective, a compliance plan must become a living document that is woven into the culture of the physician practice.  A "cookie-cutter" plan that sits on the shelf will not suffice for these purposes.  Moreover, having a plan but not following it can also be dangerous.

Physician compliance plans.  Simply stated, a physician compliance plan is a set of effective internal controls that both promotes adherence to applicable federal and state laws and assists physicians in maintaining their ethical licensing requirements of billing the government accurately for health care claims.  An effective physician compliance plan provides general protection to the practice and its physicians and minimizes exposure to specific risk areas.  In physicians' terms, a compliance plan is a dose of preventive medicine for the practice.

A compliance plan contains policies and procedures designed to protect the practice and its physicians by preventing fraud and abuse.  In addition to this general protection, an effective plan can reduce the exposure from specific risk areas that often leave practices and physicians vulnerable to errors.  These specific risk areas often are the target of investigations and the basis for qui tam actions.

Aside from the most common specific risk area of billing and coding, patient privacy poses significant risk exposure.  A confidentiality/privacy policy helps protect the physician and the practice from violating any of the onerous, stringent new rules under the Health Insurance Portability and Accountability Act (HIPAA).  Under current federal law, a HIPAA policy will be mandatory within the next two years, so every physician should consider immediately implementing a compliance plan containing such a policy.

An effective plan also helps reduce the risk of qui tam actions by requiring all employees to acknowledge in writing annually, as well as upon termination, that they were aware of, read, understood, and complied with the compliance plan and that they knew of no violations. This acknowledgment will raise questions about the credibility of an employee who later becomes a qui tam relator or whistleblower.

Additional benefits of an effective compliance plan.  An effective compliance plan can provide other advantages as well.  For example, if a federal investigation does occur, the plan will help the practice inform all members and employees how to deal with the inquiry.  More importantly, the presence of an effective plan also may be considered as a mitigating factor in reducing or even eliminating any penalties related to an investigation.  Physician compliance plans also help practices run more efficiently, which can translate into higher revenues.

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