A new and dangerous game.

The Balanced Budget Act brought with it a whole bevy of new acronyms, not the least of which was PPS (Prospective Payment System). Another acronym already well established at that point was ORT (Operation Restore Trust), which HCFA also identifies by another name: The Plan for Program Integrity. It is important that the provider be aware of all these names and acronyms because they could play a big part in determining the future.

In its most basic terms, ORT represents another effort by Medicare to recoup money. In this case, it is doing so in the context of stopping provider fraud and abusive billing practices. I am sure that I speak for many others in the postacute field when I say, "Good, get rid of the bums." No responsible member of the industry wants that type around. Now HCFA is turning up the heat on this issue by going around the country and holding meetings to encourage Medicare beneficiaries to report any questionable event involving billing.

Just what is HCFA's definition of fraud? "Fraud is the intentional deception or misrepresentation that an individual knows to be false or does not believe to be true and makes, knowing that the deception could result in some unauthorized benefit to himself or some other person."

Under HCFA's broad definition of fraud are other violations such as the acceptance or offering of kickbacks and the routine waiver of copayments. Most fraud arises out of misrepresentation that is material to entitlement or payment under the Medicare program. Obviously, skilled nursing facilities are on the list of potential violators.

According to a survey by the Health Insurance Association of America conducted in 1993, healthcare fraud breaks down thusly:

* 43%, fraudulent diagnosis

* 34%, billing for services not rendered

* 21%, waiver of patient deductibles and copayments

* 2%, other

HCFA, for its part, has identified the most common forms of fraud as: 1) billing for services not rendered, 2) misrepresenting the diagnosis to justify payment, 3) offering, receiving or soliciting a kickback, 4) unbundling or "exploding" charges, 5) falsifying treatment plans, medical records or certificates of necessity in order to receive payment, and 6) billing for services not furnished as billed, e.g., upcoding. With all the nuances of the PPS - a whole new set of rules, really - much of this presents opportunities for the federal government to interpret billing errors in the most unfavorable light.

Meanwhile, nursing facilities' options on the clinical side are limited by another HCFA initiative: a significant beefing up of OBRA survey enforcement. HCFA wants to impose greater sanctions on providers found to have deficiencies. Thus, for the first time, states are permitted to impose civil monetary penalties for each instance of serious or chronic violation. In the past, these penalties were only related to the number of days a facility was out of compliance. Further, HCFA will terminate nursing home funding to states that fail to improve inadequate survey systems or to perform survey functions, with HCFA contracting with "other entities" to perform these duties.

Nursing home inspection time will be staggered as to times and days of the week. Moreover, inspections will be conducted more often for repeat offenders, and particular enforcement efforts will be focused on nursing home chains that have a record of noncompliance.

And there's more:

* MDS updates - HCFA is continuing to refine development of Minimum Data Sets, which means that providers must continually stay up to date on these.

* Wounds, dehydration and malnutrition - SNFs with violations in these areas will be sanctioned. HCFA is working with other organizations to develop best practice guidelines.

* Prosecuting violators - HCFA has stated that it is working with the Office of the Inspector General (OIG) and the Department of Justice to make sure that the state survey agencies and others refer appropriate cases to the OIG who can then refer them to the Department of Justice for prosecution under federal civil and criminal statutes, particularly in cases that have resulted in harm to patients. The Office of the Inspector General and HCFA will work together to provide training to federal survey and certification personnel on how to correctly make such referrals.

* Resident abuse - Nursing homes will be reviewed to identify, stop or prevent physical or verbal abuse or neglect of residents or misappropriation of their property.

* Publication of results - Information about individual survey results and violations will be published and posted on the Internet in an effort to bring attention to repeat offenders and increase accountability for all providers.

All of which means that the new initiatives and acronyms have transformed post-acute care into a highly demanding - and potentially hazardous - arena. The PPS process is an attempt to reduce costs, as is the ORT process. The Survey Enforcement initiative restricts any possibility of exercising clinical options as a way out. If you want to remain in this business, learn the rules, and learn them well. Re-orient your business, if necessary, and document every step of the way. Winning won't be easy, but it is still possible.

If you have any ideas that you would like to contribute to this column, please address them to Laura Hyatt, Hyatt Associates, at 2956 Kelton Avenue, Los Angeles, CA 90064. Be sure and include your name, the name of your organization, address, area code and telephone number.

Laura Hyatt is president of Hyatt and Associates, Los Angeles, CA.