As a refresher, the seven elements of such a program are as follows:

  • Designation of a compliance officer and compliance committee;
  • Development of compliance policies and procedures, including standards of conduct;
  • Development of open lines of communication;
  • Appropriate training and education;
  • Internal monitoring and auditing;
  • Response to detected deficiencies
  • Enforcement of disciplinary actions

An important element of your compliance program is your actions as they relate to individuals or entities that do not follow the rules. How does your organization respond to those that are not following your policies and procedures? This relates directly to your RAC preparation efforts.  With regard to such efforts, it is important to have in place policies to ensure that if you detect deficiencies or improprieties being caused by individuals or groups within your organization, you react appropriately, discipline if necessary, and also implement corrective actions.


Using Discipline to Correct Behavior

To demonstrate how taking discipline or counseling efforts can work in your organization’s favor in preparation for the RACs, let’s consider a real-life scenario.

A medium-sized community hospital has on its medical staff predominately “community” physicians, who oversee a large percentage of the hospital’s admissions. In preparation for its RAC, the hospital appropriately engages an independent firm to perform a chart review to assess compliance with billing, documentation and coding regulations.

The focus of the chart review is on areas of interest to the RAC (per their findings in the Demonstration Project), which include the medical necessity of short-stay admissions and whether cases are documented to support admission, outpatient service or observation care. The results of the chart review are presented to the hospital’s external counsel, which subsequently provides them to the C-Suite executives. The parties soon learn, to their dismay, that several of their key admitting physicians are placing the hospital at significant financial risk because their documentation does not always validate the medical necessity of cases being billed as inpatient.

The financial risk is that such a lack of documentation may result in the RAC recovering (taking back) entire inpatient payments with the very real possibility that some cases may not be able to be billed as an observation or outpatient case. There are also problems with the coding staff, but for the purposes of this example, let’s focus on the physicians.

What can the hospital do?

The first logical reaction is to inform the physicians confidentially that there is a significant problem that requires their immediate attention.

The offering of education to the physicians and a detailed review of the chart findings to explain and reinforce the importance of medical necessity documentation is critical. Hopefully, these physicians will understand the financial threats that substandard documentation creates for the hospital (not to mention risk-management issues) and will “get on board with the program.” Many healthcare colleagues have told me that they have spoken to their physicians about similar matters, and for a multitude of reasons some physicians still are not complying with their requests for enhanced documentation. After informing the physicians of their need to improve their documentation practices and implementing education efforts, it is then appropriate to do another chart review to see if improvements have been made.

If you still have problems, this is where your compliance program and its policies and procedures (including disciplinary standards) can be utilized to implement corrective actions as necessary. If you have a major financial risk in your hospital (i.e. – potential RAC take-backs) that is not being corrected today, at what point do you begin to show that your organization has “teeth” in its compliance program?

The development of management reports and the quantification of the financial impact that insufficient documentation presents to your organization need to be performed immediately. Disciplinary measures can range from letters to the file to suspension of privileges, with many options in the middle. But the reality is that you can’t let these behaviors continue unabated – the financial risk is too great!!

I’ve had several hospital executives tell me recently “I can’t do anything with these physicians – if I tell them to do all of this documentation, they will take their patients to our competitors.” My response is that if your competitors are not going to tolerate documentation that results in them not getting paid for short stays, why would you? If we were operating a fine restaurant and your best waiter kept telling his or her customers “the meal is on me because I don’t have time to give you the bill,” how long would that waiter stay employed?

The times that test management skills aren’t when things are easy – it is when times are tough that the good managers rise to the top. RACs will be tough on hospitals, but you owe it to your community to make sure that disciplinary/corrective measures are taken against those who may be costing you $5,000-$10,000 per admission just because their documentation is not complete and accurate.

In closing, I’ve tried to explain this concept to non-healthcare executives (all much smarter than me), describing a hospital providing care, many times exceptional care, maybe even saving a life (someone’s mother, father, son, daughter, wife, husband, brother, sister, etc.) – but then not getting paid for it (or getting paid, then getting that money taken away) because the proper documentation does not exist in the chart.  I then explain that the nonpayment has nothing to do with quality of care received or the patients’ outcomes.

Many of them then shake their heads and collectively say, “…Now I understand what is wrong with healthcare in America!”

About the Author

Bret S. Bissey is a nationally recognized expert in healthcare compliance. He is the author of the Compliance Officer’s Handbook, published in 2006, and has presented at more than 40 regional and national industry conferences/meetings on numerous compliance topics. He has more than 25 years of diversified healthcare management, operations and compliance experience. Contact the Author:

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