Guest Columns

Mandatory compliance programs for nursing facilities

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Terese Farhat
Terese Farhat

Nursing facilities have always faced an array of obligations in order to provide services to Medicare and Medicaid beneficiaries, which can sometimes seem burdensome in comparison with other providers.  The Affordable Care Act (ACA), commonly known as the healthcare reform law, is yet another example how nursing facilities remain a target – the notable new obligation is the mandatory compliance program requirement. Adoption and implementation of compliance programs has previously been voluntary, although encouraged. Now, Section 6102 of ACA created a mandate that nursing facilities have effective compliance and ethics programs in operation by March 23, 2013.  Another section of ACA, Section 6401, requires other providers to have these programs as a condition of participation in Medicare/Medicaid programs, but nursing facilities are the first provider group to be singled out.

To top it all off, last month we read headlines like that in The Wall Street Journal – “Nursing Homes Said to Overbill U.S.”  This publicity is fueled by the very recent OIG report that skilled nursing facilities cost Medicare more than $1 billion in 2009. Based on a random sample of medical record reviews for 2009, the OIG claims that 25% of claims submitted by skilled nursing facilities were in error!  Reportedly, these errors were largely due to misreported therapy information on the MDS – therapy being a significant factor in determining the RUG classifications.

So what this means is that effective compliance programs are now a matter of survival —  the commonly heard excuses like “we don't have the money to do this” or “we have a binder with our compliance plan, that's good enough” are no longer going to cut it if you want your facility to stay viable.

What guidance is available now?

The OIG has long since published compliance program guidelines for providers, and we all know about the 7 elements of an effective compliance program. Section 6102 of ACA embellishes them a bit. Here are the highlights:

  • Compliance standards must be truly effective in reducing violations of law
  • Compliance program oversight should rest with high-level personnel with sufficient resources and authority
  • Substantial discretionary authority should be kept away from individuals who had or likely have the propensity not to follow the law or established procedures designed to comply with the laws
  • Effective and practical compliance training and education
  • Monitoring and auditing systems reasonably designed to detect problems and a mechanism for employees to report without fear of retribution
  • Consistent enforcement of disciplinary mechanisms
  • Following detection of a problem, reasonable response must include steps to prevent similar problems/violations, including modifications to the program
  • Periodic reassessment of the program to identify modifications needed based on changes within the facility

Although ACA required HHS to promulgate regulations for nursing facility compliance programs, HHS has yet to publish final rules on compliance plan requirements. Even when they become available, the regulations might not contain a “model compliance program.” Having said that, the OIG has provided guidance specific to nursing facilities — OIG Compliance Program Guidance for Nursing Facilities published in March 2000 and OIG Supplemental Compliance Program Guidance for Nursing Facilities published in September 2008.  

The OIG previously advised us that there is not a “one-size fits all” compliance program. Instead, the OIG recommends that the program be specifically tailored to the uniqueness of your facility taking into account size, resources, culture, and corporate structure. In addition to billing and coding that has been historically an area of focus, the OIG also directs us to other known risk areas based on its audits, evaluations, inspections, and investigations — quality related matters like staffing, appropriateness of therapy services, comprehensive care plans, use of psychotropic medications, and resident safety. 

So, now what?

Regardless of whether you are big or small, nursing facility leaders need to be much more vigilant with compliance program efforts. In order to have an effective program, you may need to “beef up” your existing program by doing such things as: adding or enhancing internal risk controls; making sure you use interdisciplinary team approaches with active physician participation and engagement; and, developing well-known, publicized open and effective lines of communication between your residents, staff, management and the boards that govern your facilities.  While these are just examples to help get you motivated, now is the time to seek advice to help you determine your risk areas and evaluate where you are with compliance. 

Given ACA's far-reaching and growing regulatory and law enforcement scrutiny, failure to implement an effective compliance program will undoubtedly result in greater exposure. It's not a matter of choice anymore - it's time to take it up a notch with your compliance program in order to meet these new challenges. 

Terese Farhat is an attorney in the Health Care Practices Group at Clark Hill.

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Guest Columns

Guest columns are written by long-term care industry experts, ranging from academics and thought leaders to administrators and CEOs.

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