Doctors, Enforcement Risks and Compliance Programs

drcomplianceDoctors better get used to government regulation.  The Affordable Healthcare Act contains a lengthy complement of new laws and regulations.  Physicians are under greater government scrutiny.  As Medicare expands and inevitably grows, physicians face a growing number of risks.

Some doctors have sworn off Medicare and Medicaid patients because of government regulation.  Not all doctors can afford to do that.  As a result, physicians are becoming more familiar with compliance and ethics programs.

The five most important Federal fraud and abuse laws that apply to physicians are the False Claims Act (FCA), the Anti-Kickback Statute, the Physician Self-Referral Law (Stark Law), the Social Security Act, and the U S Criminal Code.  Doctors face a variety of civil and criminal enforcement risks, including civil monetary penalties, exclusion from the Medicare program and criminal and civil liability.

When the federal government pays for items or services to Medicare beneficiaries, the federal fraud and abuse laws kick in.  The federal government’s payments are based on claims submitted by physicians which implicitly and explicitly require certification by the physician that the documents are true and accurate.  Trouble arises when a doctor submits claims for:  services which were not actually rendered; services which were not medically necessary; services performed by an improperly supervised or unqualified employee; services that were performed by an employee who has been excluded from Federal healthcare programs; services that are low quality and virtually worthless; and services already included in a global fee.

Physicians have to pay attention to keeping accurate and complete medical records in order to document the services they have provided.  Claims have to be supported by adequate documentation.  Medicare audits focus on this issue and whether the documentation justifies the claim.  Applying best practices in this area is important to ensure that patients receive appropriate care and there is adequate support for services compliance

Aside from these significant risks, physicians need to focus on additional areas of concern:

Investments in Healthcare Business Ventures: Doctors like to leverage their incomes and participation in the health industry by investing in related services (e.g. imaging centers, laboratories, equipment vendors, or physical therapy clinics).  While these are lucrative ventures, doctors have to be careful that they do not refer more patients for the services provided by those parties than physicians who do not invest in the venture.  These business relationships can sometimes distort physician decision-making, resulting in violations of the Anti-Kickback Statute and the Physician Self-Referral Law (Stark Law).

Physician Recruitment: Hospitals often recruit and lure physicians to relocate to a hosppitl’s service area, or become a member of its medical staff, and establish a practice that helps serve that community’s medical needs.  Some hospitals may offer illegal inducements to seek a greater number of physician referrals to the hospital.  Hospitals and doctors have been subject to enforcement for improper financial arrangements involving free or low-cost rent or other benefits in order to induce the physician to refer more patients to the hospital.

doctorsPhysician Relationship with Vendors:

(i) Free Samples – Doctors receive a lot of free samples from drug and biologic companies.  Doctors can give the free samples to patients.  They just cannot charge for them.  Doctors have been prosecuted for billing Medicare for free samples.

(ii) Pharmaceutical and Medical Device companies — Pharmaceutical and device companies have been prosecuted along with physicians for entering into sham consulting agreements and other arrangements to buy physician loyalty to their products.  Doctors have to ensure that the consulting arrangement is for legitimate services which the physician can provide and is not motivated by an implicit requirement that the physician prescribe the specific drug or device.

(iii)  Sunshine Act Disclosures – Physicians will soon be listed in public disclosures by pharmaceutical and medical device companies under the Sunshine Payments Act which is effective later this year.  Under the Act, drug, device, and biologic companies have to publicly report nearly all gifts or payments they make to physicians.

In the face of all of these risks, physicians need to establish and follow a compliance program.  This is new territory for a number of physicians.  HHS has provided guidance in this area, suggesting that physicians design and implement a program with seven components: (1) Conduct internal monitoring and auditing; (2) Implement compliance and practice standards; (3) Designate a compliance officer or contact; (4) Conduct appropriate training and education; (5) Respond appropriately to detected offenses and develop corrective action; (6) Develop open lines of communication with employees and (7) Enforce disciplinary standards through well-publicized guidelines.

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