Many of you have probably already read about embattled laboratories HDL and Millennium Health. Recently, these two organizations settled with the United States Department of Justice for $47 million and $256 million dollars respectively for allegations of paying kickbacks and submitting false claims. Most likely, both organizations could have prevented, or at least significantly mitigated, these massive payments if they had performed regular and effective compliance audits.
Today's CodeMap® Compliance Briefing will discuss the annual compliance audit, perhaps one of the most time consuming, and often scrutinized aspects of an effective compliance program. Absolutely no compliance program will be considered effective and fully provide its organization with the resultant protections without thorough documentation of ongoing annual audits. Considering the heightened enforcement environment that now exists, now is not the time for clinical laboratories to forget about this essential component of their compliance programs. As always, please forward any questions, comments, and/or suggestions to us via email.
Gregory Root, Esq.
Annual Compliance Audits
by: Gregory Root, Esq.
As the end of the calendar year approaches, many provider organizations are planning and budgeting for the upcoming year. Those plans and budgets should include effective management of the organization's compliance program, including the performance of an annual compliance audit. Annual compliance audits are one of the most important aspects of a compliance program for many reasons. The most important reasons include the early identification of potential problems before they become major liabilities, and a clear demonstration that the organization continues to maintain an effective program.
OIG compliance guidance recommends that laboratories perform an annual compliance audit that includes an assessment of all operations, policies, and procedures to ensure compliance with the laws, rules, and regulations that govern participation in federally funded health care programs. Annual compliance audits should also assess the efficacy of the organization’s compliance program.Every set of compliance program guidance published by the OIG includes a thorough discussion of annual compliance audits. The following statement by the OIG demonstrates the importance of these reviews:
"An effective compliance program should also incorporate periodic (at least annual) reviews of whether the program’s compliance elements have been satisfied, e.g., whether there has been appropriate; (1) dissemination of the program’s standards; (2) training; (3) ongoing educational programs; and (4) disciplinary actions, among others. This process will verify actual conformance with the compliance program. The review also should look into whether appropriate records have been created and maintained to document the implementation of an effective program." The OIG's Compliance Program Guidance for Clinical Laboratories (August 1998).
The OIG reiterated its position in 2005 when the agency published supplemental compliance guidance for hospitals. In that guidance the OIG included an extensive set of considerations that hospitals must take into account when planning and performing annual compliance audits.
Finally, almost without exception, the OIG includes the requirement of an annual compliance audit in its corporate integrity agreements and settlements it executes with provider organizations. The OIG clearly considers the annual compliance audit an integral component of any effective compliance program. In fact, often the OIG's first consideration when determining whether an organization's compliance program is effective or not, is evidence and documentation of annual compliance reviews.
Scope of Annual Compliance Audits
The OIG's compliance guidance concerning clinical laboratories states the following considering the scope of annual compliance audits:
"At a minimum, these audits should be designed to address the clinical laboratory’s compliance with laws governing kickback arrangements, the physician self-referral prohibition, CPT/HCPCS coding and billing, ICD–9 coding, claim development and submission, reimbursement, marketing, reporting and record keeping."
In addition, the OIG recommends that the annual compliance audit also examines the organization's compliance with recently enacted, enforced, or revised laws, rules, and regulations. This recommendation will require organizations to review their compliance with the following, just to name a few:
state/federal provisions concerning the waiver of patient copays
anti-mark-up provisions for purchased diagnostic tests
direct billing rules, compliance with both federal and state provisions
developing coding, reimbursement, and coverage rules concerning molecular pathology procedures, drug/toxicology testing, and other developing technologies
issues identified by RAC/CERT investigations
PAMA reporting requirements
Finally, the annual compliance audit must include a thorough examination of the organization's compliance program including:
Screening of employees
Screening and registering of referring customers
Compliance policy manuals
Dissemination of compliance policies and standards
Compliance training for employees
All ongoing or concluded investigations
Ongoing auditing and monitoring
Any interactions with federal and/or state agencies/regulators/investigators/contractors
Compliance committee/officer functions and organization
Documentation of compliance program activities
Other Important Considerations: Providers may choose from an array of auditing tools and techniques including on-site interviews, questionnaires, claims reviews, data-mining, chargemaster reviews, transactional analyses, and document review. We believe that personnel interviews are an important first step in any annual compliance review that will help determine the need for further types of analyses and investigations. The organization's personnel are usually the best source of information, and most auditors will quickly discover the few key individuals that truly run and understand the organization. When conducting interviews, auditors must ensure they speak to a wide array of personnel that control key compliance areas including management, coding, billing, sales/marketing, customer service, order processing, and information technology.
Internal vs. External Auditors: The OIG's compliance guidance for clinical laboratories states that compliance audits should be performed by "internal or external auditors who have expertise in federal and state health care statutes, regulations and the program requirements of federal, state, and private insurers." While we agree that auditors must possess certain expertise, we feel external auditors offer many advantages over internal auditors. These advantages include objectivity, specialized knowledge and expertise, and extensive experience in performing compliance audits.
Documentation: The final, and one of the most important, components of an annual compliance audit is documentation. The provider organization must maintain thorough documentation of its annual audits including methods, activities, findings, recommendations, and remedial or corrective measures. The best way to ensure your organization maintains this critical documentation is to require either internal or external auditors to conclude the annual compliance audit with the presentation of a comprehensive final report.
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