Why Compliance?

My last column suggested that all of the many excuses for declining to create, launch and maintain an effective compliance program are manifestations of a single query, which I termed, “The Question They Dare Not Ask—Why Bother?”

The answer to that question is that there at least 21 ways in which an effective compliance program can produce ongoing benefits for a homecare company’s profitable growth.

These 21 benefits fall into three general categories. Seven benefits focus on helping an HME provider follow “the rules,” be they federal laws, payer communications or internal policies.

Another six benefits focus on ways a compliance system can help improve internal communications and personnel relations.

Finally, eight benefits focus on ways an effective compliance system can help an HME company pursue growth opportunities.

Why bother, indeed

Before we explore these benefits, it is important to appreciate that they only apply to compliance programs which are effective. Forget about those unused manuals on company bookshelves, or those isolated policies “which everyone understands” even though they are neither written down nor monitored.

Such half-hearted attempts fail the effectiveness test which the government requires for compliance protection.

To be effective, a compliance system must have clear policies that address how the HME provider actually operates. Policies should address billing, medical records, contracting activity, marketing and all of the other areas that implicate regulatory compliance.

Let’s focus first on the many ways an effective compliance system can help you follow the rules, for ongoing safety and financial betterment. Some of these benefits are obvious; some not. Note that these benefits not only include the obvious, oft-discussed ways in which a compliance program helps you stay out of trouble, but they also address how an effective compliance program helps minimize the consequences of mistakes and violations of law.

Reduces fraud risk

An effective compliance program reduces the likelihood that an HME provider will violate reimbursement and fraud rules. An effective compliance program establishes, or memorializes, standards, policies and procedures for personnel to follow when carrying out billing, documentation, contract negotiation and operational activities that impact reimbursement rules and federal and state anti-fraud laws.

An effective compliance program also establishes clear methods for reporting potential violations of law or of compliance procedures, for investigating and resolving concerns and for disciplining those involved with violations. As a result, an effective compliance program should significantly reduce the likelihood of violations, inadvertent or otherwise.

Reduces penalties

An effective compliance program can help substantially reduce penalties under federal law, if violations of the reimbursement rules or anti-fraud laws occur while the company has the program in place.

Federal Sentencing Guidelines released in 1992 instruct federal judges to take into account a company’s corporate compliance program when handing down criminal sentences. Similar guidelines were later created for civil violations. Although the U.S. Supreme Court later held that the U.S. Sentencing Guidelines may not impose mandatory obligations on judges to sentence within prescribed parameters, the OIG has embraced this principle, stating—and demonstrating in many settlements over the years—that an effective corporate compliance program can reduce a company’s fines by significant amounts.

An HME provider with an effective compliance program can better show that its errors were unfortunate slipups, not systemic, and therefore not rising to the level of willful, knowing or reckless activity.

Helps with disclosure

An effective compliance program can help an HME provider obey its disclosure obligations to the government or third parties, while still protecting the supplier.

There are many circumstances in which an HME provider is obligated to disclose violations of fraud and reimbursement rules to the government. At these times, the company must identify which information must be disclosed, and must determine how to disclose such information so as to minimize the company’s exposure to sanctions or other dangers.

Most HME providers violate reimbursement and/or fraud rules from time to time. But inappropriate or premature disclosure/nondisclosure of these violations can place any company in serious and long-lasting difficulty.

A cornerstone of an effective compliance program is an HME provider’s ability to investigate and disclose reimbursement or fraud violations. Legal counsel is involved at the right time, attorney-client privilege is preserved, prompt and thorough investigation puts the problem in the proper perspective and a coordinated strategy is explicitly addressed for communicating issues to the government in the most beneficial manner.

Indeed, if a compliance program merely enabled an HME provider to respond quickly and effectively to disclosure problems, this alone might prove of sufficient value to justify the program.

In the next issue: More ways an effective compliance program can help an HME provider follow the rules.

HomeCare, March 2012