OIG Issues Draft Compliance Program Guidance for Individual and Small Group Physician Practices

Health Law Alert

June 07, 2000

On June 7, 2000, the Department of Health and Human Service's Office of Inspector General ("OIG") issued long awaited draft guidance to assist physicians in solo or small group practices develop a compliance program. The draft guidance sets forth procedural and structural guidance for designing a program. It contains the OIG's views on the fundamental elements of physician practice compliance programs and principles that each physician practice should consider when developing and implementing an effective compliance program. The draft guidance is not, in and of itself, a compliance program.

The draft guidance can be accessed on the Internet at OIG's website or through our firm's website found here under our Health Care Issues/Health Law Link. It is scheduled for official publication later this month in the Federal Register and will have a forty-five day comment period following publication. Physicians are being asked to review the draft guidance and provide their comments to it during the comment period. A final version is expected later this year in the Federal Register. Based on our review of the draft guidance, we do not anticipate that the final version will be significantly changed from the draft version.

As we anticipated, the draft guidance is premised on the seven elements set forth in the Federal Sentencing Guidelines and include: (1) establishing compliance standards through the development of a code of conduct and written policies and procedures; (2) assigning compliance monitoring efforts to a designated compliance officer or contact; (3) developing training and education programs; (4) conducting internal monitoring and auditing focusing on high risk billing and coding issues through performance of periodic audits; (5) developing accessible lines of communication to keep practice employees updated regarding compliance activities; (6) establishing disciplinary standards that ensure employees are aware that compliance is treated seriously and violations will be dealt with consistently and uniformly; and (7) responding appropriately to detected violations including prompt corrective action.

The draft guidance further identifies specific compliance risk areas for physicians, such as coding and billing; provision of reasonable and necessary services; documentation; and improper inducements, kickbacks and self referrals. It also includes several appendices outlining additional physician risk areas, and contains information regarding the criminal, civil and administrative statutes related to the federal health care programs.

In developing compliance programs for our physician clients, we have stressed the importance of the programs being reasonable and functional, and have developed and designed programs accordingly. We are pleased that the draft guidance recognizes, as we have, the resource limitations that solo and small group practices face. In light of this recognition, there is a tone of reasonableness and practicality throughout the draft guidance. For example, in discussing the development of effective lines of communication, the guidance suggests that instead of operating a confidential hot line to receive complaints, the physician practice might implement a clear "open door" policy for employees to voice compliance concerns and create a user friendly process such as an anonymous drop box for effective reporting of fraudulent or erroneous conduct. Other practical suggestions include the dedication of an office bulletin board to compliance information, and the creation of a "binder" that contains publicly available compliance information and which would act as a compliance resource manual for the practice. The guidance also recognizes that there may be limitations upon a practice's ability to designate one employee to oversee compliance activities and discusses the option of a practice describing in its policies and procedures the compliance functions for which designated employees, known as "compliance contacts," would be responsible.

In providing directions to larger physician practices, the draft guidance suggests that these practices use both the physician guidance and previously issued guidance such as the third-party medical billing company compliance program guidance or the clinical laboratory compliance program guidance in order to meet the needs of a larger practice.

The OIG stresses in the draft program guidance that an effective compliance program is essential for physician practices of all sizes. In our view, all our physician practice and solo practitioner clients should attempt to develop a compliance program that fits their circumstances. In the face of highly complex health care laws and regulations and an active enforcement environment (see our October 25, 1999 Health Law Alert regarding Physician Practice Compliance Plans also found on our firm's website), a compliance program enables physicians to protect themselves by promoting adherence to the law and preventing and reducing fraudulent or erroneous conduct. Contact us with any questions you have concerning compliance programs or if you wish more information. We have already assisted numerous other physician practice clients in the development of their programs. We are happy to assist you in your decision-making and in the development of a program for your practice.

Thomas J. Tamburelli
Shareholder
Health Care Department

Health Law Alert is provided by Sherman, Silverstein, Kohl, Rose & Podolsky, P.A. as a courtesy. It is not intended as legal advice.