The federal government has issued draft compliance program guidance that illustrates what health-care providers should do to prevent fraudulent or other improper activities.

The guidance, issued June 12, is another step in the national, mammoth initiative to eliminate improper billing in health care, including upcoding, submitting claims for services not reasonable or necessary, billing for noncovered services and other prohibited actions. Through the guidance, the Office of the Inspector General (OIG) in the Department of Health and Human Services calls on practitioners to address seven basic compliance elements:

  • Implementing written guidelines.

  • Designating a compliance officer/or compliance contracts.

  • Conducting comprehensive training and education.

  • Developing accessible lines of communication.

  • Conducting internal monitoring and auditing.

  • Enforcing standards through well-publicized disciplinary guidelines.

  • Responding promptly to detected offenses and undertaking corrective action.

The guidance is "voluntary," but it comes in connection with the federal crackdown on health-care billing that is one of the largest enforcement pushes in recent history. The initiative has hit thousands of providers, including some psychologists, with audits, demands for repayments and even criminal investigations. Yet the OIG and the U.S. Department of Justice have said that psychology practitioners may be able to mitigate sanctions in the event of an audit by having an effective compliance program in place.

The OIG issued this new guidance as "Draft OIG Compliance Program for Individual and Small Group Physician Practices." However, a footnote says, "Much of this guidance can also apply to other independent practitioners, such a psychologists, physical therapists, speech language pathologists and occupational therapists."

Rules for most practices

Through the draft guidance, the OIG is clearly signaling that no practice is too small to pay attention to these recommendations. The compliance guidance asserts: "An effective compliance program is essential for physician practices of all sizes and does not have to be costly or resource-intensive."

Nor does OIG want that attention to be cursory: The guidance includes whole lists of potential problem areas for which it advises providers to write policies and, by implication, continuously work to adhere to those policies. For example, says the guidance, identifying risk areas associated with coding and billing should be a major part of any compliance program.

In addition, OIG says, a practice should make commitments on topics such as billing only for "reasonable and necessary services" (the insurers' definition), making timely and complete documentation, avoiding kickbacks and illegal financial arrangements, and retaining records.

And to back up those written policies, the guidance calls for ongoing training of staff who do the billing, coding and related tasks. The "compliance officer" or "compliance contacts" that practices should have in place to monitor compliance should "be sufficiently independent in his or her position so as to protect against any conflict of interest." Practices should also prominently post the HHS­OIG Hotline telephone number for reporting fraud.

Further, says the OIG, a practice must have an initial baseline audit of claims processes and an audit of randomly selected records at least annually. And, it warns, fraudulent or erroneous actions that are detected, but not corrected, "can seriously endanger the reputation and legal status of that practice."

The OIG gives a few hints that small practices may not have to be as comprehensive in their compliance processes. For example, it states, "Smaller practices should consider addressing each of the elements in a manner that best suits the practice," whereas larger practices would be expected to address each expectation more systematically. Several staffers might share the compliance officer function, or it might be outsourced. Training, although it must be effective, could be commensurate with the size and specialty of the practice.

So, what's it mean for you?

Terrie Storm, director of corporate compliance at New Life Treatment Centers, headquartered in Plano, Texas, advises psychologists to take all of the new compliance document seriously and to seek advice if needed.

She advises practitioners to document everything they do to stay in compliance. Be ready to show evidence of training, calls to carriers and various actions to ensure proper billing.

Storm and others advise psychologists to read the compliance guidance carefully even if they don't bill federal programs. It's true that most of the federal enforcement effort to this point seeks to protect federal funds. But under the rules of the Healthcare Insurance Portability and Accountability Act of 1996, federal agencies can target the incorrect billing of private insurers.

Perhaps most importantly, she says, psychologists should consider that, "Anything the federal government does just gives other insurers the green light to do the same thing."

The draft compliance guidance is at http://www.hhs.gov/oig/new.html. The document includes a number of Web sites for training and other compliance information.

The coding and billing risk areas where federal investigators most frequently take legal actions are:

  • Billing for items or services not rendered or provided as claimed.

  • Submitting claims for services or supplies not reasonable and necessary.

  • Double billing, which includes the practitioner billing for aservice more than once. Or two entities, such as a hospital anda practitioner, billing for the same service.

  • Billing for noncovered services as if they were covered.

  • Misuse of provider identification numbers, including improper use for payment for a supervised provider.

  • Billing for unbundled services--that is, for multiple components of services that should be included in a single fee.

  • Failure to properly use coding modifiers.

  • Upcoding the level of service--that is, billing for a service that is more expensive than the one performed.