By Karl A. Thallner, Jr., Esq. & Julia T. Ai

Published December 2000

Special supplement on
Compliance Program Guidance for Individual and Small Group Physician Practices

• Overview of OIG's MD compliance guidance
  

• Physician compliance plan risk areas
  

• How to deal with compliance lapses
  

• Employee education in compliance programs
  

• Compliance and relationships among providers
  

• React to this article in the Discussion Forum.

Once a compliance program is in place and operating, questions surely will arise as to whether particular conduct or practices are in compliance with the law. Frequently, how to handle these potential compliance lapses can raise difficult questions. Because the proper response will depend upon the specific facts of the situation, there are no uniformly appropriate answers. However, to determine whether there was, in fact, a compliance lapse and to minimize potential liability, an appropriate response may include conducting an investigation, consulting with legal counsel, enacting disciplinary actions, self-reporting the problem, and modifying the compliance program.

Conducting the Internal Investigation

If there is an indication of potential violations or misconduct, the compliance officer should begin by conducting an internal investigation of the incident. The internal investigation may include interviewing personnel with knowledge about the incident or issue in question and reviewing medical records, billing, and other relevant documents. Through the investigative process, care should be taken to avoid conduct that could be alleged to involve document tampering and witness intimidation. If necessary, individuals suspected of violating the law may be separated from the workplace while the investigation is pending.

The investigation should be conducted in an objective manner, with no pre-judging of the conclusions. Legal counsel may be consulted to assist in evaluating the substantive compliance questions that have been raised. It may also be necessary to consult with experts in medical records documentation, auditors and other experts. Where appropriate, the compliance officer may seek clarification, preferably in writing, from the government or its agents about ambiguous or gray areas. Where these authorities provide only verbal guidance, but that guidance is relevant to the investigation, a written confirmation should be sent to the person giving the advice to create a contemporaneous record.

Privileged Materials

In the course of conducting an internal investigation, it is possible that incriminating evidence will be developed. That evidence could very well be discoverable—and used against the practice—if the Office of Inspector General (OIG) or another enforcement agency institutes an investigation and seeks relevant information from the practice. If it appears that the investigation may lead to such incriminating evidence, consideration should be given engaging an attorney to oversee the investigation. The attorney-client privilege and "work product" doctrine may protect from discovery the notes, workpapers, and other internal documents of the internal investigation.

After the investigation concludes, in conjunction with legal counsel, the compliance officer should prepare a report. The report should include documentation of the alleged violation, a description of the interview process, copies of any key documents, a log of witnesses interviewed and documents reviewed, and a summary of the results of the investigation, with findings, conclusions, and recommendations specifically noted.

Education and Disciplinary Measures

After identifying a compliance problem, a physician practice has a responsibility to take demonstrable corrective actions, including steps to prevent further similar offenses. Once the investigation has been completed, the compliance officer may meet with the physicians and discuss the review findings either through small group or individual meetings. Examples of the actions that may need to be taken may include changing forms to improve the data entry process, educating the physicians and staff of the documentation requirements for each code and for medical necessity, and creating a Medicare medical policy book for each physician office as a reference resource for required coding and documentation elements for specific codes.

Corrective actions may also include disciplinary measures, such as retraining or termination of individuals in the organization. Because disciplinary measures may apply to any individual in an organization, there should not be wide variations in the application of discipline for similarly situated individuals. To assure fairness and consistency in the application of the disciplinary process, organizations should maintain a written internal enforcement and discipline policy. Individuals within an organization should be apprised of the disciplinary guidelines as part of the compliance education process, and organizations should maintain records on the application of internal disciplinary actions.

Overpayments: To Disclose or Not to Disclose

Where a practice’s internal investigation has identified the receipt of overpayments or other deviations from billing standards, corrective action should be discussed with legal counsel. Medicare billing irregularities arising from mistakes may be resolved, in some cases, by simply returning identified overpayments to the Medicare carrier or intermediary. If the practice believes that it violated the law in its submission of claims, it may be appropriate to consider self-reporting to the government under the OIG’s Voluntary Disclosure Program. The OIG’s Voluntary Disclosure Program applies if an entity, not an individual, is making the disclosure, no pending government investigation affecting the subject matter of the disclosure exists, the specific nature of the alleged wrongdoing and the harm to the federal program are disclosed, and the entity making the disclosure is not undergoing a bankruptcy proceeding.

The decision whether to voluntarily disclose compliance problems to the federal government involves many considerations that should be carefully evaluated. Some benefits of self-reporting include showing good faith, which can be a mitigating factor in the eyes of the enforcement authorities, reducing the risk of qui tam suits, and reducing fines under the False Claims Act and the civil monetary penalties law. Self-disclosure of an internal investigation can minimize the government’s intrusion into the provider’s business, ensure that a balanced presentation of the facts is given to the government, and expedite final resolution of the matter. Lastly, self-disclosure may persuade the Department of Justice (DOJ) and a sentencing judge to exercise leniency and favorable consideration under the federal sentencing guidelines.

The downsides of self-reporting include the fact that it will involve bringing to light a problem might have gone undetected, and the reality that there is no guarantee of government leniency. Self-reporting may predispose the DOJ or OIG to assume intentional or knowing violations rather than simple mistake. The disclosure may result in an "admission" of wrongdoing that can be used against the provider in any subsequent litigation and may result in waiver of attorney-client privileges that can compromise the ability to defend a suit brought against the disclosing provider. Self-disclosure does not provide immunity of the disclosing provider from criminal prosecution. Thus, the risks and benefits of utilizing the self-disclosure process must be carefully weighed.

Modification of Compliance Program

After a compliance lapse is discovered, the compliance program itself should be evaluated and analyzed to determine whether modification is warranted. If the violation occurred and was not timely detected, then the compliance program may require modification depending upon whether the compliance program failed to anticipate the detected problem or whether the compliance program’s procedures failed to prevent the violation. Thus, physician practices would be prudent periodically to review and modify their compliance programs.

Karl A. Thallner, Jr., Esq., is a partner with the law firm of Reed Smith LLP, where he heads the health care law practice of the firm’s Philadelphia office. Julia T. Ai, a law clerk with the firm, is a candidate for a joint degree in law and medicine.