The discussions never stray far from the question of “how are we going to pay for a new, better system?” It is to that end that many people begin to talk about the incredible number of improper payments in the federal system today, and how that in particular needs to be fixed.  Depending on which study you believe, it could be $19, $20 or even $21 billion a year in improper payments. Today, everyone wants to fix the problem now, because it is getting the attention it deserves!


To me, this is a critically important issue for healthcare leaders to understand. The issue of improper Medicare payments made to physicians, hospitals, nursing homes, rehabilitation facilities, etc. is not a new revelation or finding. This has been documented, studied and reported as a problematic component of our healthcare system since the early 1990s – the difference is that today, the powers that be really want to fix it, and via data mining technology used by RACs, they will have some success! As a consultant friend of mine used to ask when change was needed (and while I was working in a hospital), “is the platform burning?” What he was really asking was “is the problem significant enough now that people understand that change is necessary, and that there are no other options?”


If you understand that this is a new paradigm in the arena of healthcare reimbursement monitoring, and that mechanisms like the RACs, MICs, ZPICs, etc. are now in place to identify improper payments and place corrective actions in the system to “fix” systemic payment inconsistencies, you will realize that this represents a very serious financial risk for healthcare providers that do not take necessary efforts to ensure compliance with billing and coding rules and regulations. Of particular concern has to be the denial of services for failing to meet medical necessity standards, including those of short-stay admissions.


Because of this changing landscape, today more than ever it is critically important that the components of a healthcare provider’s compliance program are sound. As a reminder, the seven basic elements of a compliance program are:


1.   Designation of a compliance officer and compliance committee;

2.   Development of compliance policies and procedures, including standards of conduct;

3.   Development of open lines of communication;

4.   Appropriate training and education;

5.   Internal monitoring and auditing;

6.   Response to detected deficiencies

7.   Enforcement of disciplinary actions


Furthermore, your compliance program should be structured and your compliance officer empowered to investigate issues and look for problems, including improper payments. My observation is that too many compliance programs are primarily reactive to findings or lack true independence, and too many program officials spend their time writing policies or waiting for deficiencies to be identified by someone else. A compliance program needs to be proactive on these matters, focusing on identifying and correcting improper payments before the RAC does.   Remember, the greatest financial risk with the RAC program is not the possible return of improper payments, but the possible discovery of a “pattern or practice” of billings with a “disregard” for regulations, which could lead to potential U.S. Attorney and/or OIG involvement.  No healthcare provider wants to be dealing with those issues!


If an organization’s compliance program is not intimately involved in leading reviews on RAC risk areas, educating everyone about the risk and taking all necessary corrective actions, then the compliance function itself needs to be reviewed. The board leadership of hospitals should demand an engaged compliance program that is proactive and continually looking for problems.


Today more than ever, a healthcare provider needs to be certain that it is receiving proper payments. The role of the provider’s compliance program should be to lead this initiative and remain empowered to take the proper independent actions to follow federal guidance and thus protect the organization.


Happy New Year!


About the Author


Bret S. Bissey, MBA, FACHE, CHC, 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.


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