The DRA takes on Medicaid abuse: get ready to update your compliance plan.

The long-term care industry is facing yet another national government initiative, but for once, it's about Medicaid, not Medicare--and it will require you to dust off your compliance plans and update your training materials.

You'll need to, in order to comply with the Deficit Reduction Act of 2005 (DRA), the first comprehensive national strategy to detect fraud, waste, and abuse in the Medicaid program.

Congress has expanded the arsenal of tools available for the U.S. Department of Health and Human Services (HHS) to fight Medicaid fraud and abuse. It has also given the states incentives to implement state false claims acts if they have not yet done so.

Mandatory compliance training

Under the DRA, state Medicaid plans must require any facility receiving more than $5 million in annual Medicaid business to develop written policies and procedures dealing with detecting and preventing fraud and abuse. Effective January 1, 2007, as a condition of Medicaid payments, any facility that meets the $5 million threshold must have in place, for all employees, management, contractors, and agents, written policies that provide detailed information on the following:

* The federal Civil False Claims Act provisions, 31 U.S.C. 3729-3733

* The administrative remedies for false claims and statements under the Program Fraud Civil Remedies Act, 31 U.S.C. 3801-3811

* Any state law civil and criminal penalties for false claims and statements

* Protections for whistleblowers under state and federal law

* How these laws help prevent and detect fraud and abuse under Medicare, Medicaid, and other federal healthcare programs

* Detailed provisions regarding the facility's compliance policies for detecting and preventing fraud and abuse

* Specific discussion in the facility's employee handbook of false claims laws and the rights of whistleblowers

How effective is your compliance plan?

The DRA's necessities lay in stark contrast to the compliance program guidance issued by the HHS Office of Inspector General (OIG) in March of 2000, which laid out voluntary guidance to the industry.

That guidance was not intended to provide binding standards for nursing homes. But reviewing the OIG expectations for compliance programs can provide many benefits, particularly for facilities that will now be required to provide whistleblower training to staff.

Through proper implementation, a facility can encourage employees to identify and prevent misconduct internally. This process will potentially reduce exposure to civil damages and penalties, criminal sanctions, and administrative remedies--and, can ultimately, give a facility a better chance of defending itself against fraud allegations from either whistleblowers or the feds.

In developing compliance plans to help prevent fraud and abuse, a facility should include the seven essential elements of an effective compliance program, regardless of the facility's type of ownership, size, or structure:

1. Adopt a formal commitment to establish and maintain written standards of conduct and policies and procedures addressing specific areas of potential fraud and abuse.

2. Designate a compliance officer and compliance committee to develop, operate, and monitor each aspect of the compliance program. The compliance program should have sufficient finding and staff, as well as access to senior management and legal counsel.

3. Conduct effective training and education programs for all employees at all levels, as well as contractors and agents. Training should outline the program elements and ensure staff and contractors understand relevant federal and state standards.

4. Develop an open-door policy and effective lines of communication to ensure that all staff understand

--topics covered in training sessions

--the procedures for reporting compliance problems

--they are protected from retaliation 

5. Monitor compliance and engage in ongoing monitoring and auditing of facility conduct in high-risk areas. Reporting should be made to the CEO and governing body on a regular basis.

6. Enforce standards through well-publicized disciplinary policies for violations of laws and policies.

7. Respond promptly to offenses and take corrective action for violations of the compliance program and significant failures to comply with the law.

Focus on risk areas

An effective compliance program may reduce the facility's risk of the increased enforcement expected under the DRA. Nursing facilities are subject to numerous federal and state statutes, rules, regulations, and manual instructions, and it is a good idea to reevaluate your current compliance policies and procedures or develop new ones by focusing on risk areas.

Updating your knowledge of the guidance on risk areas identified in the OIG's Compliance Program Guidance for Nursing Facilities is a good place to begin. The OIG Guidance outlines a list of risk areas that affect nursing facilities--focusing on billing and coding, resident rights, survey and certification, employee screening, kickbacks and inducements to referral sources, and other referral relationships.

For a list of examples in each risk area, take a look at the table on p. 11. This list is a good starting point for an internal review of the vulnerabilities facing the facility.

An effective action plan

Begin today by reviewing the status of any current compliance program you have implemented under the OIG voluntary guidance. Facility compliance plans may need updating to reflect the new binding requirements under the Deficit Reduction Act. Most nursing facilities subject to the DRA have some level of formal compliance program in place that may need amendment, particularly in light of the employee handbook provision and the inclusion of whistleblower training.

Ensure each of your bases is covered:

* The compliance officer and the compliance committee coordinate a multifaceted training program that includes all of the elements of the compliance program and emphasizes the DRA requirements

* Publications outline and explain the specific state and federal requirements in a practical manner

* Trainers are qualified to present the subject matter and address questions from the staff

* Interactive teaching methods and post-teaching assessments allow the instructor to ensure staff understand the facility's procedures for alerting administrative staff of any misconduct

* Facility management train supervisory staff to encourage staff use of established reporting systems

Interestingly, the provisions of the DRA require that outside contractors and agents be included. Therefore, consider revising policies that address contractors and agents.

Certainly physicians, agency staff, therapy, and ancillary providers should be aware of and given the opportunity to participate in the provision of the facility's compliance program relevant to their areas.

With increased federal scrutiny and the additional resources dedicated to rooting out fraud and abuse in the Medicaid program, now is a good time to ensure your facility has comprehensive policies for dealing with fraud, abuse, and regulatory violations.

Amy S. Leopard is a partner at Walter & Haverfield LLP in Cleveland, OH, and chairs its healthcare regulatory compliance group. She can be reached at [e-mail]

Risk area                           Area to review

Quality of care, i.e., physical,    * Deficiencies in annual state
mental and psychosocial wellbeing     surveys or complaint surveys
                                    * Adequate staffing
                                    * Reporting and follow-up on
                                      incidents of mistreatment,
                                      abuse, or neglect

Resident's rights                   * Discriminatory admission,
                                      transfer, or discharge policies
                                    * Resident abuse (verbal, mental,
                                      physical), corporal punishment,
                                      or involuntary seclusion
                                    * Inappropriate use of physical
                                      or chemical restraints
                                    * Resident participation in care
                                      and treatment
                                    * Privacy, confidentiality, and
                                      access to medical records

Billing and documentation           * Accurate Minimum Data Sets for
                                      Resource Utilization Group
                                      (RUG) assignment
                                    * Upcoding/RUG creep
                                    * Underutilization of services
                                      and billing for inadequate or
                                      substandard care
                                    * Altering documentation or
                                      forging physician signatures
                                    * Unbundling of items included
                                      in the PPS rate
                                    * Credit balance refunds

Employee and contractor screening   * Background checks, including
                                      criminal and licensure
                                    * OIG List of Excluded
                                      Individuals, all employees,
                                      medical staff, and independent
                                      contractors
                                    * The National Practitioner Data
                                      Bank's medical staff and
                                      independent contractors
                                    * Include agency staffing

Vendor and referral relationships   * Arrangements with hospitals,
                                      hospices, vendors and
                                      physicians
                                    * Ancillary service provider
                                      swapping arrangements, i.e.,
                                      discounts for Medicare Part A
                                      services in return for referral
                                      of Part B service
                                    * Gifts or gratuities of more
                                      than nominal value
                                    * Bed reservation arrangements
                                      with hospitals at amounts that
                                      exceed the PPS rate
                                    * Vendor provision of noncovered
                                      items below market or free to
                                      obtain Medicare services or
                                      supplies