Internal Audit and Compliance - Health Care Compliance Association

Government enforcement of quality ...continued from page 13
fact that Congress has increased the OIG’s
matching-grant money by $25 million each
year for the next five years for bolstering state
Medicaid Fraud Control Units, fraud cases
focused on the quality of patient care can
only be expected to increase. 35
Integrating quality and compliance
What does this mean for providers today, and
how does this change the role of compliance
officers? It is clear that hospitals can no longer
consider quality an issue that can be addressed
through its normal peer review and quality programs.
Unless hospitals link compliance with
quality and peer review programs, they may well
find themselves defending a fraud case for filing
claims for services ultimately deemed medically
unnecessary or of poor quality. Health care
fraud cases present a far greater risk to hospitals
than malpractice claims (the historical risk faced
by hospitals when care was challenged as substandard
or unnecessary). Fraud claims are not
covered by insurance, cost thousands to defend
and millions to settle, gain public notoriety,
may lead to both criminal and civil penalties,
and undermine public confidence in the quality
of care provided by the hospital.
So, what should hospitals do now? First and
foremost, hospital compliance officers must
work hand-in-hand with hospital administration,
risk managers, quality officers, the
medical staff office, and medical staff peer
review committees. Lack of medical necessity
and substandard care should be recognized
as potential compliance issues, and should be
included among the other issues addressed by
compliance. Environmental risk assessments
(a component of most hospital compliance
programs), compliance policies, and standards
of conduct should all be revised to tie together
quality, risk management, peer review,
and compliance.
Second, compliance education programs
should include information about the link
between the delivery of quality, medically
necessary care, and the requirements that
must be met to bill for services. Quality and
risk management officials need to know
whom to contact in the compliance department
when they uncover instances of poor
quality or unnecessary care, and compliance
personnel need to know when to contact legal
counsel to determine whether a risk of health
care fraud may exist, and if so, what actions
should be taken.
Finally, compliance auditing and monitoring
programs need to be integrated with quality
chart reviews, risk management incident
reporting systems, and peer review investigations
to ensure that patterns of poor quality
or medically unnecessary care are identified
quickly and corrected. Part of any corrective
action plan developed to address a pattern of
unnecessary or poor quality care should also
evaluate the impact on reimbursement and
determine whether any repayment obligation
may exist.
The government’s focus on quality will grow
in the coming years. Faced with the increasing
pressure to hold down costs while making
the American health care system safer, the
government likely will use the FCA more
often to challenge poor quality or unnecessary
care. Unless proper steps are taken to integrate
quality into the compliance program, a
hospital could face disastrous consequences,
including fines, penalties, damage to reputation,
and a loss of confidence by physicians
and patients. And, unlike many of the other
compliance issues that hospitals face, allegations
of unnecessary or poor quality care can
take years to overcome.
Sophisticated hospital compliance officers
will make sure that quality and peer review
are integrated into the hospital’s compliance
program, so that circumstances that could
give rise to FCA liability can be addressed
before the government, the press, or other
critics intervene. n
1 In most jurisdictions, a hospital is held liable for malpractice committed
by members of its independent medical staff only if the hospital itself was
negligent because it either failed to respond appropriately when it knew or
should have known of the risk to a patient or because it failed to establish
and follow appropriate policies to guide quality of care. See Andrea G.
Nadel, J.D., Hospital’s Liability For Negligence In Failing To Review Or
Supervise Treatment Given By Doctor Or Require Consultation, 12 A.L.R.
4th 57 (1982).
2 Information on False Claims Act Litigation, GAO Briefing for Congressional
Requesters, December 15, 2005, p. 28.
3 United States v. United Memorial Hospital., WL 33001119 (D. Mich.
2002) (denying defendant’s motion to dismiss).
4 Tenet Healthcare Agrees to Pay $54 Million Settlement Over Alleged
Unnecessary Surgeries at Redding Hospital, California Healthline, Aug. 7,
2003, http://www.californiahealthline.org/index.cfm?Action=dspItem&ite
mID=95253&classed=CL350.
5 Louisiana Hospital Settles Federal Claims of Billing for Medically Unnecessary
Services, 10 BNA Health Care Fraud Reporter 679 (September 13,
2006).
6 See, e.g., A.M. Smith et al., Peer Review of the Quality of Care: Reliability
and Sources of Variability for Outcome and Process Assessments, 278 J.
Am. Med. Ass’n. 1573 (1997).
7 Health Care Quality Improvement Act of 1986, 42 U.S.C. § 11101.
8 Committee on Quality of Health Care in America Committee on Institute
of Medicine, To Err is Human: Building a Safer Health System (1999).
9 Committee on Quality of Health Care in America, Institute of Medicine,
Crossing the Quality Chasm: A New Health System for the 21st Century
(2001).
10 JCAHO’s launch of reporting on core measures was an outgrowth of its
ORYX initiative which began in 1997 to integrate the use of outcome and
other performance measures into the accreditation process. See http://www.
jointcommission.org/Jointcommission/Templates/GeneralInformation.asp.
11 Center for Medicare and Medicaid Services, Hospital Quality Initiative
Overview (Dec. 2005), http://www.cms.hhs.gov/HospitalQualityInits/
downloads/HospitalOverview200512.pdf.
12 www.hospitalcompare.com.
13 False Claims Act, 31 U.S.C. §§ 3729-3733.
14 GAO Report at 5.
15 Id. at 32.
16 Id. at 25.
17 False Claims Act Advocate Says Prosecuting FCA Cases is Good Investment
for Government, 10 BNA Health Care Fraud Report 478 (2006).
18 John J. Meyer et al., Health Care Fraud and Abuse: Enforcement and
Compliance, BNA’s Health Law & Business Series (2006).
19 Civil Rights of Institutionalized Persons Act (CRIPA), 42 U.S.C. § 1997.
20 Meyer, supra, at 2600:0328.
21 Health Insurance Portability and Accountability Act of 1996, 18 U.S.C. §
1347.
22 Meyer, supra, at 2600:0328(a).
23 See John T. Boese, Civil False Claims and Qui tam Actions, (3rd Ed.
Aspen Publishers (2006); Joan K. Krause, “Promises to Keep”: Health Care
Providers and the Civil False Claims Act, 23 Cardozo L. Rev. 1363, 1382
(2002); Joan K. Krause, Health Care Fraud and Quality of Care: a Patient-
Centered Approach, 37 J. Health L. 161 (2004).
24 See John T. Boese, When Angry Patients Become Angry Prosecutors:
Medical Necessity, 43 St. Louis U. L. J. 53 (1999); Meyer, supra, at
200:0316.
25 U.S. Attorney Eastern District of California, RMC/Tenet Settlement Fact
Sheet.
26 U.S. Office of the Attorney General, OIG and Tenet Healthcare Corporation
Reach Divestiture Agreement to Address Exclusion of Redding
Medical Center, OIG News, Dec. 11, 2003.
27 Tenet Healthcare agrees to pay $54 Million Settlement over Alleged
Unnecessary Surgeries at Redding Hospital, California Healthline, Aug. 7,
2003, http://www.californiahealthline.org/index.cfm?Action=dspItem&ite
mID=95253&classcd=CL350.
28 See, for example, United States ex rel. Swan v. Covenant Care, Inc., Case
No. Civ. S‐99-1981, DFL JFM (E.D. Cal. June 20, 2000 and United States
v. NHC Healthcare Corp., 115 F. Supp 2d 1149 (W.D. Mo. Aug. 30,
2000).
29 United States Attorney’s Office Eastern District of Pennsylvania, U.S.
Attorney’s Office Reaches Agreement with Hospital to Failure of Care
Allegations Stemming from Improper Use of Patient Restraints, News
Release, July 25, 2005.
30 Quality of Care Issues to Remain Focus of False Claims Act Cases, Sheehan
Says, 10 BNA’s Health Care Fraud Report, BNA’s Health Care Fraud
Report, 169 (2006.).
31 Id.
32 OIG’s Morris Tells AHLA to Watch For Increase in False Claims Act Cases,
10 BNA Health Care Fraud Report, 524 (2006).
33 Deficit Reduction Act of 2005 at § 6031.
34 Deficit Reduction Act of 2005, Pub. Law 109-171, § 6032.
35 Testimony of Daniel R. Levinson, Inspector General, Hearing before the
S. Comm. on Homeland Sec. and Gov’t Affairs, Subcomm. on Fed. Fin.
Mgmt., Gov’t Info., and Intn’l Sec., 109th Cong. 1, 2 (2006.)
November 2006
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