36818 Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices

TABLE 1.—LIST OF SAFETY AND EFFECTIVENESS SUMMARIES FOR APPROVED PMA’S MADE AVAILABLE JANUARY 1, 2000,

THROUGH MARCH 31, 2000—Continued

PMA Number/Docket No. Applicant Trade Name Approval Date

P850022(S9)/00M–0901 Biolectron Inc. SpinalPak Stimulator September 24, 1999

H990005/99M–4763 Nitinol Medical Technologies CardioSEAL Septal Occlusion System September 28, 1999

P930034(S12)/00M–0424 Summit Technology SVS Apex Plus Excimer Laser

Workstation w/the Emphasis Discs

October 21, 1999

P910066(S11)/00M–1073 Orthologic Corp. OrthologicTM 1000 Bone Growth StimulatorDecember 17, 1999

P990035/00M–0577 Sunlight Ultrasound Technologies, Ltd.The SunlightTM Omnisense Ultrasound

Bone Sonometer

January 20, 2000

P990066/00M–0579 GE Medical Systems Senographe 2000D January 28, 2000

H990011/00M–0599 Nitinol Medical Technologies CardioSEAL Septal Occlusion System February 1, 2000

P980040/00M–0445 Allergan Inc. Sensar Soft Acrylic UV–Light Absorbing

Posterior Chamber Intraocular Lens

February 3, 2000

P990016/00M–0580 McCue Corporation, Inc. McCue CUBAClinical Ultraonic Bone

Sonometry System w/CUBAplus+V4.1.0

February 15, 2000

P940034(S8)/00M–0578 Gen-Probe Incorporated Gen-Probe AmplifiedTM Mycobacterium

Tuberculosis Direct (MTD) Test

February 15, 2000

P900009(S6)/00M–0810 Smith & Nephew Inc. Exogen 2000 or Sonic Accelerated Fracture Healing SystemFebruary 22, 2000

P990023/00M–0809 Alcon Labs Cellugel Ophthalmic Viscosurgical DeviceFebruary 24, 2000

P950019(S9)/00M–1212 United States Surgical Corp. Ray Threaded Fusion Cage (TFC) w/InstrumentationMarch 2, 2000

Dated: May 23, 2000.

Linda S. Kahan,

Deputy Director for Regulations Policy, Center

for Devices and Radiological Health.

[FR Doc. 00–14702 Filed 6–9–00; 8:45 am]

BILLING CODE 4160–01–F

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Office of Inspector General

Draft OIG Compliance Program for

Individual and Small Group Physician

Practices

AGENCY: Office of Inspector General

(OIG), HHS.

ACTION: Notice and comment period.

SUMMARY: This Federal Register notice

seeks the comments of interested parties

on draft compliance guidance

developed by the Office of Inspector

General (OIG) for individual and small

group physician practices. Through this

notice, the OIG is setting forth its

general views on the value and

fundamental principles of individual

and small group physician practices’

compliance programs, and the specific

elements that these practices should

consider when developing and

implementing an effective compliance

program.

DATES: To ensure consideration,

comments must be delivered to the

address provided below by no later than

5 p.m. on July 27, 2000.

ADDRESSES: Please mail or deliver

written comments to the following

address: Office of Inspector General,

Department of Health and Human

Services, Attention: OIG–7P–CPG, Room

5246, Cohen Building, 330

Independence Avenue, S.W.,

Washington, D.C. 20201.

We do not accept comments by

facsimile (FAX) transmission. In

commenting, please refer to file code

OIG–7P–CPG. Comments received

timely will be available for public

inspection as they are received,

generally beginning approximately 2

weeks after publication of a document,

in Room 5541 of the Office of Inspector

General at 330 Independence Avenue,

S.W., Washington, D.C. 20201 on

Monday through Friday of each week

from 8 a.m. to 4:30 p.m.

FOR FURTHER INFORMATION CONTACT:

Kimberly Brandt, Office of Counsel to

the Inspector General, (202) 619–2078.

SUPPLEMENTARY INFORMATION:

Background

By issuing compliance program

guidance, the OIG seeks to engage the

private health care community in

combating fraud and abuse. In the last

few years, the OIG has developed and

issued compliance program guidance

directed at the following segments of the

health care industry: Hospitals; home

health agencies; clinical laboratories;

third-party medical billing companies;

suppliers of durable medical equipment,

prosthetics, orthotics and supplies;

hospices; Medicare+Choice

organizations; and nursing facilities.

The development of these types of

compliance program guidance is based

on the OIG’s belief that health care

providers and related entities can use

internal controls more effectively to

monitor adherence to applicable Federal

health care statutes, regulations and

program requirements.

Copies of these compliance program

guidances can be found on the OIG

website at http://www.hhs.gov/oig.

Developing Draft Compliance Program

Guidance for Individual and Small

Group Physician Practices

On September 8, 1999, the OIG

published a solicitation notice seeking

information and recommendations for

developing formal guidance for

individual and small group physician

practices (64 FR 48846). In response to

that solicitation notice, the OIG received

83 comments from various outside

sources. In developing this notice for

formal public comment, we have

considered those comments, as well as

previous OIG publications, such as

other compliance program guidance and

Special Fraud Alerts. In addition, we

have also taken into account

investigations and audits conducted by

the OIG, and have consulted with the

Health Care Financing Administration

and the Department of Justice.

This draft compliance program

guidance for individual and small group

physician practices contains seven

elements that the OIG has determined

are fundamental to an effective

compliance program:

• Implementing written policies;

• Designating a compliance officer/

contact;

Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices 36819

1For the purpose of this guidance, the term

‘‘physician’’ is defined as: (1) A doctor of medicine

or osteopathy; (2) a doctor of dental surgery or of

dental medicine; (3) a podiatrist; (4) an optometrist;

or (5) a chiropractor, all of whom must be

appropriately licensed by the State. 42 U.S.C.

1395x(r).

2Much of this guidance can also apply to other

independent practitioners, such as psychologists,

physical therapists, speech language pathologists,

and occupational therapists.

3Currently, the Office of Inspector General has

issued compliance program guidance for the

following eight industry sectors: hospitals, clinical

laboratories, home health agencies, durable medical

equipment suppliers, third-party medical billing

companies, hospices, Medicare+Choice

organizations offering coordinated care plans, and

nursing facilities. All of the guidance is available

on the OIG website at http://www.hhs.gov/oig in

the Electronic Reading Room, or by calling the OIG

Public Affairs office at (202) 619–1343.

4The OIG periodically issues Advisory Opinions

responding to specific inquiries concerning the

application of the OIG’s authorities, in particular,

the anti-kickback statute, and Special Fraud Alerts

setting forth activities that raise legal and

enforcement issues. These documents, as well as

reports from the OIG’s Office of Audit Services

(OAS) and Office of Evaluation and Inspections

(OEI) can be obtained on the Internet at: http://

www.hhs.gov/oig. We also recommend that

physician practices regularly review the Health

Care Financing Administration (HCFA) website on

the Internet at http://www.hcfa.gov, for up-to-date

regulations, manuals, and program memoranda

related to the Medicare and Medicaid programs.

5The OIG, for example, will consider the

existence of an effective compliance program that

pre-dated any governmental investigation when

addressing the appropriateness of administrative

sanctions. However, the burden is on the physician

practice to demonstrate the operational

effectiveness of the compliance program. See 62 FR

67392. In addition, criminal sanctions may be

mitigated by an effective compliance program that

was in place at the time of the criminal offense. See

United States Sentencing Commission Guidelines,

Guidelines Manual, 8 A1.2, Application Note 3(d).

• Conducting comprehensive training

and education;

• Developing accessible lines of

communication;

• Conducting internal monitoring and

auditing;

• Enforcing standards through wellpublicized disciplinary guidelines; and

• Responding promptly to detected

offenses and undertaking corrective

action.

These elements are contained in

previous guidance issued by the OIG. As

with previously-issued guidance, this

draft compliance program guidance

represents the OIG’s suggestions on how

individual and small group physician

practices can best voluntarily establish

internal controls to prevent fraudulent

or other improper activities. The

contents of this guidance are not

mandatory or binding, nor is this

guidance an exclusive discussion of the

advisable elements of a compliance

program.

Public Input and Comment in

Developing Final Guidance

To ensure that all parties have an

opportunity to provide input, we are

publishing this guidance in draft form,

and welcome all comments from

interested parties. The OIG will

consider all comments that are received

within the above-cited time frame,

incorporate any specific

recommendations, as appropriate, and

prepare a final version of the guidance

thereafter for publication in the Federal

Register.

Draft Compliance Program Guidance

for Individual and Small Group

Physician Practices

I. Introduction

This compliance program guidance is

intended to assist individual and small

group physician practices (‘‘physician

practices’’) 1 in developing and

implementing internal controls and

procedures that promote adherence to

statutes and regulations applicable to

the Federal health care programs

(‘‘Federal health care program

requirements’’) and private insurance

program requirements. Compliance

programs strengthen the efforts of

Government and the private sector to

prevent and reduce improper conduct.

These programs can also further the

mission of all physician practices 2 to

provide quality care to their patients.

Many physicians have expressed an

interest in better protecting their

practices from the potential for

fraudulent or erroneous conduct

through the implementation of

compliance programs. While the Office

of Inspector General (OIG) believes that

the great majority of physicians are

honest and share our goal of protecting

the integrity of Medicare and other

Federal health care programs, all health

care providers have a duty to ensure

that the claims submitted to Federal

health care programs are true and

accurate. The development of effective

compliance programs in physician

practices will go a long way toward

achieving this goal.

Through this document, the OIG

provides its views on the fundamental

elements of physician practice

compliance programs, as well as the

principles that each physician practice

should consider when developing and

implementing an effective compliance

program. While this document presents

basic procedural and structural

guidance for designing a compliance

program, it is not in and of itself a

compliance program. Rather, it is a set

of guidelines that physician practices

should consider when developing and

implementing a compliance program.

As stated in previous guidance,3 these

guidelines are not mandatory. Nor do

they represent an exclusive document of

advisable elements of a compliance

program. They are a resource to be

considered in addition to other OIG

outreach efforts, as well as other Federal

agency efforts to promote compliance.4

A. Benefits of a Compliance Program

The OIG believes that physician

practices can gain numerous benefits by

implementing an effective compliance

program. These benefits may include:

• The development of effective

internal procedures to ensure

compliance with regulations, payment

policies and coding rules;

• Improved medical record

documentation;

• Improved education for practice

employees;

• A reduction in the denial of claims;

• More streamlined practice

operations through better

communication and more

comprehensive policies;

• The avoidance of potential liability

arising from noncompliance; and

• Reduced exposure to penalties.5

An effective compliance program is

essential for physician practices of all

sizes and does not have to be costly or

resource-intensive. With the

development of a formal program, a

physician practice may find it easier to

comply with its affirmative duty to

ensure the accuracy of claims submitted

for reimbursement.

B. Application of Compliance Program

Guidance

The OIG recognizes that there is no

‘‘one size fits all’’ compliance program,

especially for physician practices. The

applicability of these recommendations

will depend on the circumstances of the

particular physician practice. Each

practice should undertake reasonable

steps to respond to each of the seven

elements of this guidance, depending on

the size and resources of that practice.

Compliance programs not only help to

prevent fraudulent or erroneous claims,

but they may also show that the

physician practice is making a good

faith effort to submit claims

appropriately. Physician practices

should view compliance programs as

analogous to practicing preventive

medicine.

An effective compliance program also

sends an important message to a

physician practice’s employees that

while the practice recognizes that

mistakes will occur, employees have an

affirmative, ethical duty to come

36820 Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices

6 31 U.S.C. 3729.

7 42 U.S.C. 1320a–7a.

8Reno Willing to Work With Hospitals to Ensure

Proper Use of False Claims Act, 6 Health Care Pol’y

Rep. 261 (1998).

9See United States Sentencing Commission

Guidelines, Guidelines Manual, 8 A1.2, Application

Note 3(k). The Federal Sentencing Guidelines are

detailed policies and practices for the Federal

criminal justice system that prescribe the

appropriate sanctions for offenders convicted of

Federal crimes.

10Available on the OIG website at http://

www.hhs.gov/oig.

forward and report fraudulent or

erroneous conduct, so that it may be

corrected.

C. The Difference Between Fraudulent

and ‘‘Erroneous’’ Claims to Federal

Health Programs

There appear to be significant

misunderstandings among physicians

regarding the critical differences

between fraudulent (intentionally or

recklessly false) health care claims on

the one hand and innocent ‘‘erroneous’’

claims on the other. Some physicians

feel that Federal law enforcement

agencies have maligned medical

professionals and are focused on

innocent billing errors. These

physicians are under the impression

that innocent billing errors can subject

them to civil penalties, or even jail.

These feelings and impressions are

mistaken.

To these concerns, OIG would like to

make the following points. First, we do

not disparage physicians, other medical

professionals or medical enterprises. In

our view, the great majority of them are

working ethically to render high quality

medical care to our Medicare

beneficiaries and to submit proper

claims to Medicare.

Second, under the law, physicians are

not subject to civil or criminal penalties

for innocent errors, or even negligence.

The Government’s primary enforcement

tool, the civil False Claims Act, covers

only offenses that are committed with

actual knowledge of the falsity of the

claim, reckless disregard, or deliberate

ignorance of the falsity of the claim.6

The False Claims Act simply does not

cover mistakes, errors, or negligence.

The other major civil remedy available

to the Federal Government, the Civil

Monetary Penalties Law, has exactly the

same standard of proof.7 The OIG is

very mindful of the difference between

innocent errors (‘‘erroneous claims’’) on

one hand, and reckless or intentional

conduct (‘‘fraudulent claims’’) on the

other. For criminal penalties, the

standard is even higher—criminal intent

to defraud must be proved beyond a

reasonable doubt. The Attorney General

of the United States has stated, ‘‘[i]t is

not the [Justice Department’s] policy to

punish honest billing mistakes * * *

[or] mere negligence. * * * These are

not cases where we are seeking to

punish someone for honest billing

mistakes.’’ 8

Third, even ethical physicians (and

their staffs) make billing mistakes and

errors through inadvertence or

negligence. When billing errors, honest

mistakes, or negligence result in

erroneous claims, the physician practice

will be asked to return the funds

erroneously claimed, but without

penalties. In other words, erroneous

claims result only in the return of funds

claimed in error.

Fourth, innocent billing errors are a

significant drain on the programs and

all parties (physicians, providers,

carriers, fiscal intermediaries,

Government agencies, and beneficiaries)

need to work cooperatively to reduce

the overall error rate. But again, it

should be emphasized that civil or

criminal penalty action will not be

initiated with respect to billing errors

due to inadvertence or negligence, or for

billings based on a negligent medical

judgment. Finally, it is reasonable for physicians

(and other providers) to ask: what duty

do they owe the Federal health care

programs? The answer is that all health

care providers have a duty to reasonably

ensure that the claims submitted to

Medicare and other Federal health care

programs are true and accurate. The OIG

continues to engage the provider

community in an extensive, good faith

effort to work cooperatively on

voluntary compliance to minimize

errors and to prevent potential penalties

for improper billings before they occur.

We encourage all physicians and other

providers to join in this effort.

II. Compliance Program Elements

A. The Seven Basic Compliance

Elements

The OIG believes that every effective

compliance program should begin with

a commitment by the physician practice

to address all of the applicable elements

listed below, which are based on the

seven elements set forth in the Federal

Sentencing Guidelines: 9

• Establishing compliance standards

through the development of a code of

conduct and written policies and

procedures; • Assigning compliance monitoring

efforts to a designated compliance

officer or contact; • Conducting comprehensive training

and education on practice ethics and

policies and procedures; • Conducting internal monitoring and

auditing focusing on high-risk billing

and coding issues through performance

of periodic audits; • Developing accessible lines of

communication, such as discussions at

staff meetings regarding fraudulent or

erroneous conduct issues and

community bulletin boards, to keep

practice employees updated regarding

compliance activities;

• Enforcing disciplinary standards by

making clear or ensuring employees are

aware that compliance is treated

seriously and that violations will be

dealt with consistently and uniformly;

and

• Responding appropriately to

detected violations through the

investigation of allegations and the

disclosure of incidents to appropriate

Government entities.

The OIG recognizes that full

implementation of all elements may not

be feasible for all physician practices.

However, as a first step, a good faith

meaningful commitment to compliance

will substantially contribute to the

program’s successful implementation.

Smaller practices should consider

addressing each of the elements in a

manner that best suits the practice. By

contrast, larger practices should address

the elements in a more systematic

manner. For example, larger practices

can use both this guidance and the

Third-Party Medical Billing Compliance

Program Guidance to create a

compliance program unique to the

practice.10

The OIG recognizes that physician

practices need to find the best way to

achieve compliance for their given

circumstances. Specifically, the OIG

encourages physician practices to

participate in other compliance

programs, such as the compliance

programs of the hospitals or other

settings in which the physicians

practice. A physician’s participation in

another provider’s compliance program

could be a way, at least partly, to satisfy

recommended elements of the

physician’s or physician practice’s own

compliance program. The OIG

encourages this type of collaborative

effort, where the content is appropriate

to the setting involved, because it

provides a means to promote the desired

objective without imposing an undue

burden or requiring physicians to

undertake duplicative action.

B. Written Policies and Procedures

Any effective compliance program

should have compliance standards and

procedures that will be followed by the

practice and that describe the lines of

responsibility for implementing the

compliance program. Those standards

and procedures should be reasonably

capable of reducing the prospect of

Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices 36821

11Practices with laboratories or arrangements

with third-party billing companies should check the

risk areas included in the guidance for those

industries. The guidance is available on the OIG

website at http://www.hhs.gov/oig.

12There are many published summaries of

reimbursement requirements of varying specificity

and quality. Various specialty and trade

associations may also have developed such

summaries.

13The OIG recommends that, in addition to the

list set forth below, physicians review the OIG’s

Work Plan to identify vulnerabilities and risk areas

on which the OIG will focus in the future. In

addition, it is recommended that physician

practices review the OIG’s semiannual reports,

which identify program vulnerabilities and risk

areas that the OIG has targeted during the preceding

six months. All of these documents are available on

the OIG’s webpage at http://www.hhs.gov/oig.

14A listing of additional risk areas that a

physician practice may want to include in its

Continued

fraudulent activity while also helping to

identify any incorrect billing practices.

1. Code of Conduct

Developing standards of conduct is

the first step to an effective compliance

program. A good way to begin creating

a standard of conduct for a physician

practice is by looking at the standards

of conduct implemented by other

physician practices and/or by requesting

information from professional

associations to get ideas as to the items

to include in a standard of conduct.

However, it is important that the

physician practice not simply copy

another practice’s standards. The

standards of conduct for the physician

practice should be specific to that

practice. This can be accomplished by

tailoring the standards of conduct to

address the particularized needs of the

practice.

The practice’s expectations with

respect to billing and coding, patient

care, documentation, and payer

relationships should be made clear to

practice employees in the form of a code

of conduct. This can also be succinctly

stated in a practice mission statement.

For example, employees should be told

that the practice bills only for services

that are actually rendered, codes

accurately, documents medical

necessity and appropriateness, and

adheres to all payer contracts.

The concept of commitment to

compliance is different from the mere

existence of written policies and

procedures. This commitment should be

clearly established during training and

in the practice’s policies. Everyone in

the practice should understand the

obligation to comply with the applicable

standards. They should be informed and

understand that the organization will

take actions to uphold those standards.

Upon development, the code of conduct

and policies should be distributed and/

or made continually available to all

employees, contractors and agents, once

implemented. These materials should be

reviewed at least annually and revised

as necessary.

2. Policies and Procedures

The code of conduct should be

reinforced with basic policies

reaffirming the key points in the code of

conduct. The practice’s policies should

explain in clear and plain language the

procedures by which compliance

measures are to be incorporated into

standard operating practices.

The OIG believes that written policies

and procedures are essential to all

physician practices, regardless of size

and capability. If a lack of resources to

develop such policies is genuinely an

issue, the OIG recommends that a

physician practice focus first on those

risk areas most likely to arise in its

particular practice.11 Additionally, if

the physician practice relies on a

physician practice management

company (PPMC) or management

services organization (MSO), the

practice can incorporate the compliance

policies of those entities, if appropriate,

into its own policies.

Physician practices can meet the goal

of developing policies and procedures

by: (1) Developing a written compliance

manual; and (2) updating clinical forms

periodically to make sure they elicit the

data required for the different levels of

coding. All written policies and

procedures should be tailored to the

physician practice where they will be

applied.

Areas in which a policy may be

helpful to the practice include:

• Employee hiring and retention;

• Creation and maintenance of

encounter forms, including the

registration form, history and physical

form and charge master (superbill and

patient statement);

• Coding and billing competency and

responsibilities;

• Correct coding initiatives;

• Patient outreach and

communication;

• General marketing; and

• Patient quality of care.

Creating a resource manual from

publicly available information may be a

cost-effective approach for developing

policies and procedures. For example,

the practice can develop a ‘‘binder’’ that

contains the practice’s written policies

and procedures, relevant HCFA

directives and carrier bulletins, and

summaries of informative OIG

documents (e.g., Special Fraud Alerts,

Advisory Opinions, inspection and

audit reports). This binder should be

regularly updated and should be

accessible to all employees. It could also

include a summary of the relevant

reimbursement requirements of Federal

and private payer plans (including those

relating to reasonable and necessary

services, coding and documentation).12

In the case of more technical materials,

it may be advisable to provide

summaries in the handbook and make

the source documents available upon

request. If individualized copies of this

handbook are not made available to all

employees, then a reference copy

should be available in a readily

accessible location.

If updates to the policies and

procedures are necessary, those updates

should be given to employees. New

employees should receive both the code

of conduct and policies when hired and

be trained on their contents

immediately thereafter. As part of the

compliance effort, the distribution of the

code and policies should be

documented.

3. Specific Risk Areas

The OIG recognizes that many

physician practices may not have in

place policies and procedures to prevent

fraudulent or erroneous conduct in their

practices. In order to develop policies

and procedures, the physician practice

should determine what types of fraud

and abuse related topics need to be

addressed based on its specific needs.

One of the most important things in

making that determination is a listing of

risk areas where the practice may be

vulnerable.

To assist physician practices in

performing this initial assessment, the

OIG has developed a list of potential

risk areas affecting physician providers.

These risk areas include: (a) Coding and

billing; (b) reasonable and necessary

services; (c) documentation and (d)

improper inducements, kickbacks and

self-referrals. This list of risk areas is not

exhaustive, or all encompassing. Rather,

it should be viewed as a starting point

for an internal review of potential

vulnerabilities within the physician

practice.13 The objective of such an

assessment should be to ensure that key

personnel in the physician practice is

aware of these risk areas and that steps

are taken to minimize, to the extent

possible, the types of problems

identified. While there are many ways

to accomplish this objective, clear

written policies and procedures that are

communicated to all employees are

important to ensure the effectiveness of

a compliance program. Specifically, the

following are discussions of risk areas

for physicians: 14

36822 Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices

policies can be found at Appendix A of this

document.

15For example, Dr. X, an ophthalmologist, bills

for laser surgery he did not perform. As proof, he

did not even have laser equipment or access to such

equipment at the place of service designated on the

claim form to perform the surgery.

16Billing for services which are not reasonable

and necessary, supplies and equipment involves

seeking reimbursement for a service that is not

warranted by a patient’s documented medical

condition. See 42 U.S.C. 1395i(a)(1)(A) (‘‘no

payment may be made under part A or part B [of

Medicare] for any expenses incurred for items or

services which * * * are not reasonable and

necessary for the diagnosis or treatment of illness

or injury or to improve the functioning of the

malformed body member’’). See also Appendix A

for further discussion on this topic.

17 Double billing occurs when the physician bills

for the same item or service more than once or

when another party bills the Federal health care

program for an item or service also billed by the

physician. Although duplicate billing can occur due

to simple error, the knowing submission of

duplicate claims—which is sometimes evidenced

by systematic or repeated double billing—can create

liability under criminal, civil, and/or administrative

law.

18Of particular concern, physician practices

should be aware of the provisions of reassignment

of benefits. These provisions govern who may

receive payment due to a provider or supplier of

services or a beneficiary. See 42 CFR 424.70–

424.80. See also Medicare Carrier Manual

§ 3060.10.

19Unbundling is the practice of a physician

billing for multiple components of a service that

must be included in a single fee. For example, if

dressings and instruments are included in a fee for

a minor procedure, the provider may not also bill

separately for the dressings and instruments.

20A modifier, as defined by the CPT–4 manual,

provides the means by which the physician practice

can indicate a service or procedure that has been

performed has been altered by some specific

circumstance, but not changed in its definition or

code. Assuming the modifier is used correctly and

appropriately, this specificity provides the

justification for payment for those services. For

correct use of modifiers, the physician practice

should reference the appropriate sections of the

Medicare Carrier Manual. See Medicare Carrier

Manual § 4630. For general information on the

correct use of modifiers, the physician practice

should also consult the National Correct Coding

Initiative (NCCI) system. See Appendix F for

information on how to access the NCCI system. The

NCCI coding edits are updated on a quarterly basis

and are used to process claims and determine

payments to physicians.

21Upcoding is billing for a more expensive

service than the one actually performed. For

example, Dr. X defrauds Medicare by intentionally

billing at a higher evaluation and management (E

& M) code than what he actually renders to the

patient. Upcoding has been a major focus of the

OIG’s law enforcement efforts. In fact, the Health

Insurance Portability and Accountability Act of

1996 added another civil monetary penalty to the

OIG’s sanction authorities for upcoding violations.

See 42 U.S.C. 1320a–7a(a)(1)(A).

22The official coding guidelines are promulgated

by HCFA, the National Center for Health Statistics,

the American Medical Association and the

American Health Information Management

Association. See International Classification of

Diseases, 9th Revision, Clinical Modification (ICD–

9 CM) (and its successors); 1998 Health Care

Financing Administration Common Procedure

Coding System (HCPCS) (and its successors); and

Physicians’ Current Procedural Terminology (CPT).

In addition, there are specialized coding systems for

specific segments of the health care industry.

Among these are ADA (for dental procedures), DSM

IV (psychiatric health benefits) and DMERCs (for

durable medical equipment, prosthetics, orthotics

and supplies).

23The failure of a physician practice to: (i)

document items and services rendered; and (ii)

properly submit them for reimbursement is a major

area of potential fraudulent or erroneous conduct

involving Federal health care programs. The OIG

has undertaken numerous audits, investigations,

inspections and national enforcement initiatives

aimed at reducing potential and actual fraud, abuse

and waste in these areas.

24See 42 U.S.C. 1395y(a)(1)(A).

25For additional information on proper

documentation, physician practices should also

reference the Documentation Guidelines for

Evaluation and Management (E and M) Services,

published by HCFA. These guidelines are available

on the Internet at http://www.hcfa.gov/medicare/

mcarpti.htm.

a. Coding and Billing. The

identification of risk areas associated

with coding and billing should be a

major part of any physician practice’s

compliance program.

The following risk areas associated

with billing have been among the most

frequent subjects of investigations and

audits by the OIG:

• Billing for items or services not

rendered or not provided as claimed;15

• Submitting claims for equipment,

medical supplies and services that are

not reasonable and necessary;16

• Double billing;17

• Billing for non-covered services as

if covered;

• Knowing misuse of provider

identification numbers, which results in

improper billing;18

• Billing for unbundled services;19

• Failure to properly use coding

modifiers;20

• Upcoding the level of service

provided.21

The written policies and procedures

concerning proper coding should reflect

the current reimbursement principles

set forth in applicable statutes,

regulations 22 and Federal, State or

private payer health care program

requirements and should be developed

in tandem with coding and billing

standards used in the physician

practice. Furthermore, written policies

and procedures should ensure that

coding and billing are based on medical

record documentation. Particular

attention should be paid to issues of

appropriate diagnosis codes and

individual Medicare Part B claims

(including documentation guidelines for

evaluation and management services).23

The physician practice should also

institute a policy that all rejected claims

pertaining to diagnosis and procedure

codes be reviewed by the coder. This

should facilitate a reduction in similar

errors.

b. Reasonable and Necessary Services.

The compliance program should

provide guidance that claims be

submitted only for services that the

physician practice finds to be

reasonable and necessary in the

particular case. The OIG recognizes that

physicians should be able to order any

tests, including screening tests, they

believe are appropriate for the treatment

of their patients. However, the

physician practice should be aware that

Medicare will only pay for services that

meet the Medicare definition of

reasonable and necessary.24

Medicare (and many insurance plans)

may deny payment for a service that the

physician believes is clinically

appropriate, but which is not reasonable

and necessary. Thus, when a physician

provides services to a patient, he or she

should only bill those services believed

to be reasonable and necessary for the

diagnosis and treatment of a patient.

Upon request, the physician practice

should be able to provide

documentation, such as a patient’s

medical records and physician’s orders,

to support the appropriateness of a

service that the physician has provided.

c. Documentation. Timely, accurate

and complete documentation is critical

to nearly every aspect of a physician

practice. Therefore, one of the most

important physician practice

compliance issues is the appropriate

documentation of diagnosis and

treatment. Physician documentation is

necessary to determine the appropriate

medical treatment for the patient and is

the basis for coding and billing

determinations. Most importantly,

failure to document properly has the

potential to compromise good patient

care. Thorough and accurate

documentation helps to ensure accurate

recording and timely transmission of

information.

i. Medical Record Documentation. In

addition to facilitating high quality

patient care, a properly documented

medical record verifies and documents

precisely what services were actually

provided. The medical record may be

used to validate: (a) The site of the

service; (b) the appropriateness of the

services provided; and (c) the accuracy

of the billing. Accurate medical record

documentation should comply, at a

minimum, with the following

principles: 25

• The medical record should be

complete and legible;

• The documentation of each patient

encounter should include the reason for

the encounter; any relevant history;

physical examination findings; prior

diagnostic test results; assessment,

clinical impression, or diagnosis; plan

Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices 36823

26The anti-kickback statute provides criminal

penalties for individuals and entities that

knowingly offer, pay, solicit, or receive bribes or

kickbacks or other remuneration in order to induce

business reimbursable by Federal health care

programs. See 42 U.S.C. 1320a–7b(b). Civil

penalties, exclusion from participation in the

Federal health care programs, and civil False

Claims Act liability may also result from a violation

of the prohibition. See 42 U.S.C. 1320a–7a(a)(5), 42

U.S.C. 1320a–7(b)(7), and 31 U.S.C. 3729–3733.

27The physician self-referral law, 42 U.S.C.

1395nn, (also known as the ‘‘Stark law’’), prohibits

a physician from making a referral to an entity with

which the physician or any member of the

physician’s immediate family has a financial

relationship if the referral is for the furnishing of

designated health services, unless the financial

relationship fits into an exception set forth in the

statute or implementing regulations.

28See Appendix B for additional information on

the anti-kickback statute.

29The OIG’s definition of ‘‘fair market value’’ is

not the typical commercial definition of this term.

The OIG’s definition of this term excludes any

value attributable to referrals of Federal program

business on the ability to influence the flow of such

business. Adhering to the rule of keeping business

arrangements at fair market value is not a guarantee

of legality, but is a highly useful general rule.

30See 42 U.S.C. 1128A(a)(5).

31 In the OIG Special Fraud Alert ‘‘Routine

Waiver of Part B Co-payments/ Deductibles’’ (May

1991), the OIG describes several reasons why

routine waivers of these cost-sharing amounts pose

concerns. The Alert sets forth the circumstances

under which it may be appropriate to waive these

amounts. See also 42 U.S.C. 1320a–7a(a)(5).

32All physician contracts and agreements with

parties in a position to influence Federal health care

program business or to whom the doctor is in such

a position to influence should be reviewed to avoid

violation of the anti-kickback, self-referral, and

other relevant Federal and State laws. The OIG has

published safe harbors that define practices not

subject to the anti-kickback statute, because such

arrangements would be unlikely to result in fraud

or abuse. Failure to comply with a safe harbor

provision does not make an arrangement per se

illegal. Rather, the safe harbors set forth specific

conditions that, if fully met, would assure the

entities involved of not being prosecuted or

sanctioned for the arrangement qualifying for the

safe harbor. One such safe harbor applies to

personal services contracts. See 42 CFR

1001.952(d).

33See OIG Special Fraud Alert ‘‘Joint Venture

Arrangements’’ (August 1989) available on the OIG

website at http://www.hhs.gov/oig. See also OIG

Advisory Opinion 97–5.

34Physician practices should establish clear

policies governing gift-giving because such

exchanges may be viewed as inducements to

influence business decisions. Practice policies

should emphasize that accepting gifts of any kind

may influence the employee’s independent

judgment. To the extent such gifts are accepted,

they should be reported to the designated person

charged with recording such information for the

practice.

35Practices should also check the HCFA website

for the most recent regulations regarding these

issues.

of care; and date and legible identity of

the observer;

• If not documented, the rationale for

ordering diagnostic and other ancillary

services should be easily inferred by an

independent reviewer or third party.

Past and present diagnoses should be

accessible to the treating and/or

consulting physician; and

• Appropriate health risk factors

should be identified. The patient’s

progress, his or her response to, and any

changes in, treatment, and any revision

in diagnosis should be documented.

The CPT and ICD–9–CM codes

reported on the health insurance claims

form should be supported by

documentation in the medical record

and the medical chart should contain all

required information. Additionally,

HCFA and the local carriers should be

able to determine who provided the

services. These issues can be the root of

investigations of inappropriate or

erroneous conduct, and have been

identified by HCFA and OIG as a

leading cause of inappropriate

payments.

ii. HCFA 1500 Form. Another

documentation area that physician

practices should monitor closely is the

proper completion of the HCFA 1500

form. The following practices will help

ensure that the form has been properly

completed:

• Link the diagnosis code with the

steps taken to perform an examination

and the record of personal history

obtained;

• Link a single most appropriate

diagnosis with the corresponding

procedure code;

• Use modifiers appropriately; and

• Provide Medicare with all

information about a patient’s other

insurance coverage.

d. Kickbacks, Inducements and SelfReferrals. A physician practice should

have policies and procedures to ensure

compliance with the anti-kickback

statute,26 and the physician self-referral

law.27 Remuneration for referrals is

illegal because it can distort medical

decision-making, cause overutilization

of services or supplies, increase costs to

Federal health care programs, and result

in unfair competition by shutting out

competitors who are unwilling to pay it.

Remuneration for referrals can also

affect the quality of patient care by

encouraging physicians to order services

or supplies based on profit rather than

the patients’ best medical interests.28

In particular, arrangements with

hospitals, hospices, nursing facilities,

home health agencies, durable medical

equipment suppliers and vendors are

areas of potential concern. In general the

anti-kickback statute prohibits knowing

and willfully giving or receiving

anything of value to induce referrals of

Federal health care program business. It

is generally recommended that all

business arrangements wherein

physician practices refer business to an

outside entity should be on a fair market

value basis.29 Whenever a physician

practice intends to enter into a business

arrangement that involves its making

referrals, the arrangement should be

reviewed by counsel familiar with the

anti-kickback statute and physician selfreferral statute.

In addition to developing policies to

address arrangements with other health

care providers and suppliers, physician

practices should implement measures to

avoid offering inappropriate

inducements to patients.30 Examples of

such inducements include routinely

waiving coinsurance or deductible

amounts without a good faith

determination that the patient is in

financial need or failing to make

reasonable efforts to collect the costsharing amount.31

Possible risk areas that should be

addressed in the policies and

procedures include:

• Financial arrangements with

outside entities to whom the practice

may refer Federal health care program

business;32

• Joint ventures with entities

supplying goods or services to the

physician practice or its patients;33

• Consulting contracts or medical

directorship;

• Office and equipment leases with

entities to which the physician refers;

and

• Soliciting, accepting or offering any

gift or gratuity of more than nominal

value to or from those who may benefit

from a physician practice’s referral of

Federal health care program business.34

In order to keep current with this area

of the law, a physician practice may

obtain copies, available on the OIG

website, of all relevant OIG Special

Fraud Alerts and Advisory Opinions

that address the application of the antikickback and physician self-referral

laws to ensure that the policies reflect

current positions and opinions.35

4. Retention of Records. A physician

practice’s policies and procedures

should also contain a section on the

retention of compliance, business and

medical records. These records

primarily include documents relating to

patient care and the practice’s business

activities. The physician practice’s

designated compliance officer should

keep an updated binder or record of

compliance-related activities. This

involves, at a minimum, keeping track

of compliance meetings, educational

activities, and internal audit results.

Particular attention should be paid to

documenting violations uncovered by

the compliance program and the

resulting remedial action.

36824 Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices

36Among the materials useful in documenting the

compliance program are employee certifications

relating to training and other compliance initiatives,

copies of compliance training materials, and any

corresponding reports of investigation, outcomes,

and employee disciplinary actions. In addition, the

physician practice should keep all relevant

correspondence with carriers, private payer

insurers, and HCFA.

37The HHS–OIG ‘‘List of Excluded Individuals/

Entities’’ provides information to health care

providers, patients, and others regarding

individuals and entities that are excluded from

participation in Federal health care programs. This

report, in both an on-line searchable and

downloadable database, can be located on the

Internet at http://www.hhs.gov/oig. The OIG

sanction information is readily available to users in

two formats on over 15,000 individuals and entities

currently excluded from program participation

through action taken by the OIG. The on-line

searchable database allows users to obtain

information regarding excluded individuals and

entities sorted by: (1) The legal bases for exclusions;

(2) the types of individuals and entities excluded

by the OIG; and (3) the States where excluded

individuals reside or entities do business. In

addition, the General Services Administration

maintains a monthly listing of debarred contractors,

‘‘List of Parties Debarred from Federal Programs,’’

at http://www.arnet.gov/epls.

Physician practices that implement a

compliance program should provide for

the development and implementation of

a records retention system. This system

should establish policies and

procedures regarding the creation,

distribution, retention, and destruction

of documents. In designing a record

system, privacy concerns and Federal

and State regulatory requirements

should be taken into consideration. In

addition to maintaining appropriate and

thorough medical records on each

patient, the OIG recommends that the

system include the following types of

documents:

• All records and documentation

(e.g., billing and claims documentation)

required for participation in Federal,

State, and private payer health care

programs; and

• All records necessary to

demonstrate the integrity of the

physician practice’s compliance process

and to confirm the effectiveness of the

program.36

While conducting its compliance

activities, as well as its daily operations,

a physician practice should document

its efforts to comply with applicable

Federal health care program

requirements. For example, when a

physician practice requests advice from

a Government agency (including a

Medicare fiscal intermediary or carrier)

charged with administering a Federal

health care program, the practice should

document and retain a record of the

request and any written or oral

response. This step is extremely

important if the practice intends to rely

on that response to guide it in future

decisions, actions, or claim

reimbursement requests or appeals. A

log of oral inquiries between the

practice and third parties, such as

carrier representatives, will help the

practice document its attempts at

compliance. In addition, in a

subsequent investigation these records

may become relevant to the issue of

whether the practice’s reliance was

‘‘reasonable’’ and whether it exercised

due diligence in developing procedures

and practices to implement the advice.

In short, all physician practices,

regardless of size, should have

procedures to create and retain

appropriate documentation. The

following record retention guidelines

should be followed:

• The length of time that a

physician’s medical record

documentation is to be retained should

be specified in the physician practice’s

policies and procedures (Federal and

State statutes should be consulted for

specific time frames);

• Medical records should be secured

against loss, destruction, unauthorized

access, unauthorized reproduction,

corruption, or damage; and

• Policies and procedures should

stipulate the disposition of medical

records in the event the practice is sold

or closed.

C. Designation of a Compliance Officer/

Contact

To administer the compliance

program, the practice should designate

an individual who is responsible for

overseeing the compliance program.

This person, often called a ‘‘compliance

officer,’’ may have duties in addition to

serving in this role. This person could

be the office manager or the primary

biller. The key, however, is that the

person be sufficiently independent in

his or her position so as to protect

against any conflicts of interest that may

arise from performing assigned duties

and compliance duties. Additional

attributes and qualifications that this

person should possess include:

• Attention to detail;

• Experience in billing and coding;

and

• Effective communication skills,

both oral and written, with employees,

physicians and carriers.

It is acceptable for a physician

practice to designate more than one

employee with compliance monitoring

responsibility. In lieu of having a

designated compliance officer, the

physician practice could instead

describe in its policies and procedures

the compliance functions for which

designated employees, known as

‘‘compliance contacts,’’ would be

responsible. For example, one employee

could be responsible for preparing

written policies and procedures, while

another could be responsible for

conducting or arranging for periodic

audits and ensuring that billing

questions are answered. Therefore, the

compliance-related responsibilities of

the designated person or persons may be

only a portion of his or her duties.

Another possibility is that one

individual could serve as compliance

officer for more than one entity. In

situations where staffing limitations

mandate that the practice cannot afford

to designate a person(s) to oversee

compliance activities, the practice could

outsource all or part of the functions of

a compliance officer to a third party,

such as a consultant, PPMC, MSO,

Independent Physician Association,

billing company or professional

association. However, if this role is

outsourced, the compliance officer

should have sufficient interaction with

the physician practice to be able to

effectively serve as the compliance

officer. Outsourced compliance officers,

who spend most of their time offsite,

will naturally have certain limitations

that a physician practice should

consider before making such a critical

decision.

The primary responsibilities assigned

to a compliance officer/contact should

include the following:

• Overseeing and monitoring the

implementation of the compliance

program;

• Establishing methods, such as

periodic audits, to improve the

practice’s efficiency and quality of

services, and to reduce the practice’s

vulnerability to fraud and abuse;

• Periodically revising the

compliance program in light of changes

in the needs of the practice or changes

in the law and in the policies and

procedures of Government and private

payer health plans;

• Developing, coordinating and

participating in a training program that

focuses on the elements of the

compliance program, and seeks to

ensure that training materials are

appropriate;

• Ensuring that the HHS–OIG’s List of

Excluded Individuals and Entities, and

the General Services Administration’s

List of Parties Debarred from Federal

Programs have been checked with

respect to all employees, medical staff

and independent contractors;37

• Ensuring that employees and

physicians know, and comply with,

pertinent Federal and State statutes,

regulations and standards;

Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices 36825

38HCFA also offers free online training for

general fraud and abuse issues at http://

www.medicaretraining.com. See Appendix F for

additional information.

39Another way for physician practices to receive

effective training is for the physicians and/or the

employees of the practice to attend training

programs offered by larger entities, such as a

hospital, a local medical society or a carrier. This

sort of collaborative effort is an excellent way for

the practice to meet the desired training objective

without having to expend the resources to develop

and implement in-house training.

40The OIG’s work plan is currently available on

the Internet at http://www.hhs.gov/oig. The OIG

Work Plan details the various projects the OIG

intends to address in the fiscal year. The Work Plan

contains the projects of the Office of Audit Services,

Office of Evaluation and Inspections, Office of

Investigations and the Office of Counsel to the

Inspector General.

41Some publications, such as OIG’s Special Fraud

Alerts, audit and inspection reports, and Advisory

Opinions are readily available from the OIG and can

provide a basis for educational courses and

programs for physician practice employees. These

can be obtained through the Internet. See Appendix

F.

• Investigating any report or

allegation concerning possible unethical

or improper business practices, and

monitoring subsequent corrective action

and/or compliance.

Each physician practice needs to

assess its own practice situation and

determine what best suits that practice

in terms of compliance oversight.

D. Conducting Effective Training and

Education

Education is an important part of any

compliance program. Education

programs should be tailored to the

physician practice’s needs and include

both compliance and specific training.

Training expectations should be

commensurate with the size and

speciality of the practice.

There are three basic steps for setting

up educational objectives:

• Determining who needs training

(both in coding and billing and in

compliance);

• Determining the type of training

that best suits the practice’s needs (e.g.,

seminars, in-service training, self-study

or other programs); and

• Determining when the education is

needed and how much each person

should receive.

Training can be accomplished

through a variety of means, including

in-person training sessions (i.e., either

on site or at outside seminars),

distribution of newsletters, 38 or even a

readily accessible office bulletin board.

Regardless of the training modality

used, a physician practice should

ensure that the necessary education is

communicated effectively. Simply

providing individuals with documents

for their own reading and

comprehension is seldom sufficient.

1. Compliance Training

Under the direction of the designated

compliance officer/contact, both initial

and recurrent training in compliance is

advisable, both with respect to the

compliance program itself and

applicable statutes and regulations. The

operation and importance of the

compliance program, the consequences

of violating the policies set forth in the

program, and the role of each employee

in the operation of the compliance

program should also be addressed.

Compliance training should have two

goals: (1) All employees should receive

training on how to perform their jobs in

compliance with the standards of the

practice and any applicable regulations;

and (2) each employee should

understand that compliance is a

condition of continued employment.

Compliance training should center on

explaining why the practice is

developing and establishing a code of

conduct and written policies and

procedures. The training should

emphasize that following the policies

will not get a practice employee in

trouble, but violating the policies will.

New employees should be trained on

the compliance program within 60 days

of their start date and such training

should be documented. Thereafter,

employees should receive refresher

training on an annual basis or as

appropriate.

2. Coding and Billing Training

Coding and billing training on the

Federal health care program

requirements may be necessary for

certain members of the physician

practice staff depending on their

respective responsibilities. Individuals

who are directly involved with billing,

coding or other aspects of the Federal

health care programs should receive

extensive education specific to that

individual’s responsibilities. Items to

cover in coding and billing training can

include:

• Coding requirements;

• Claim development and submission

processes;

• Marketing practices that reflect

current legal and program standards;

• The ramifications of submitting a

claim for physician services when

rendered by a non-physician;

• Signing a form for a physician

without the physician’s authorization;

• The ramifications of altering

medical records;

• Proper documentation of services

rendered;

• How to report misconduct;

• Proper billing standards and

procedures and submission of accurate

bills for services or items rendered to

Federal health care program

beneficiaries;

• The personal obligation of each

person involved in the billing process to

ensure claims are properly and

accurately submitted;

• The legal sanctions for submitting

deliberately false or reckless billings;

• Informing physicians that they

cannot receive payment or any type of

incentive to induce referrals and that

claims should not be submitted for

physician services when those services

are rendered by a non-physician (unless

they follow the applicable Federal

health care program requirements, e.g.,

‘‘incident to’’ rules).

3. Format of the Training Program

Training may be conducted either inhouse or by an outside source.39

Training at outside seminars, instead of

internal programs and in-service

sessions, can be an effective way to

achieve the practice’s training goals. In

fact, many community colleges offer

certificate or associate degree programs

in billing and coding, and professional

associations provide various kinds of

continuing education and certification

programs. Many carriers also offer

billing training.

As part of the training, practices

should make sure all employees are

familiar with at least the key risk areas

in this guidance and areas of particular

OIG interest as identified in the OIG’s

Work Plan published each year.40 The

physician practice also needs to work

with its third-party billing company, if

one is used, to ensure that

documentation is of a level that is

adequate for the billing company to

submit accurate claims on behalf of the

physician practice. If it is not, these

problem areas should also be covered in

the training. In addition to the billing

training, physician practices should be

certain that updated ICD–9, HCPCS and

CPT manuals (in addition to the carrier

bulletins construing those sources) are

available to all employees involved in

the billing process. A source of

continuous updates on current billing

policies should also be readily

available.41

Physician practices are not required to

have separate education and training

programs for both the compliance and

coding and billing training. All inservice training and continuing

education can integrate compliance

issues, as well as other core values

adopted by the practice, such as quality

improvement and improved patient

service, into their curriculum.

36826 Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices

42Currently, the OIG is monitoring a significant

number of corporate integrity agreements that

require many of these training elements. The OIG

usually requires a minimum of one hour annually

for basic training in compliance areas. Additional

training is required for specialty fields such as

claims development and billing.

43 In addition to whatever other method of

communication is being utilized, practices should

post in a prominent area the HHS–OIG Hotline

telephone number (1–800–HHS–TIPS). See

Appendix D for additional information.

44Available on the OIG website at http://

www.hhs.gov/oig.

45See Appendix D.II. referencing the Provider

Self-Disclosure Protocol for information on how to

conduct a baseline audit.

4. Continuing Education on Compliance

Issues

There is no set formula for

determining how often training sessions

should occur.42 The OIG recommends

that there be at least an annual training

program for all individuals involved in

the coding and billing aspects of the

practice. New billing and coding

employees should be trained within 60

days of assuming their duties and

should work under an experienced

employee until their training has been

completed.

E. Developing Effective Lines of

Communication

An open line of communication is

essential to proper implementation of an

effective compliance program. Guidance

previously issued by the OIG has

encouraged the use of several forms of

communication between the compliance

officer/committee and provider

personnel, many of which focus on

formal processes and are more costly to

implement (e.g., hotlines and e-mail).

However, the OIG recognizes that the

nature of some physician practices is

not as conducive to implementing these

types of measures. The nature of a small

physician practice dictates that such

communication and information

exchanges need to be conducted

through a less formalized process than

that which has been envisioned by prior

OIG guidance.

In the small physician practice

setting, the communication element can

be met by implementing a clear ‘‘open

door’’ policy between the physicians

and compliance personnel and practice

employees. This policy can be

implemented in conjunction with less

formal communication techniques, such

as conspicuous notices posted in

common areas and/or the development

and placement of a compliance bulletin

board where everyone in the practice

can go for up-to-date compliance

information.43

A compliance program’s system for

effective communication should include

the following:

• The requirement that employees

report conduct that a reasonable person

would, in good faith, believe to be

fraudulent or erroneous;

• Creation of a user-friendly process,

such as an anonymous drop box, for

effectively reporting fraudulent or

erroneous conduct;

• Provisions in the policies and

procedures that state that a failure to

report fraudulent or erroneous conduct

is a violation of the compliance

program;

• Development of a simple and

readily accessible procedure to process

reports of fraudulent or erroneous

conduct;

• Utilization of a process that

maintains the confidentiality of the

persons involved in the alleged

fraudulent or erroneous conduct and the

person making the allegation; and

• Provisions in the policies and

procedures that there will be no

retribution for reporting conduct that a

reasonable person acting in good faith

would have believed to be fraudulent or

erroneous.

The OIG recognizes that protecting

anonymity may be infeasible for small

physician practices. However, the OIG

believes all practice employees, when

seeking answers to questions or

reporting potential instances of

fraudulent or erroneous conduct, should

know to whom to turn for assistance in

these matters and should be able to do

so without fear of retribution. While the

physician practice should always strive

to maintain the confidentiality of an

employee’s identity, it should also make

clear that there may be a point at which

the individual’s identity may become

known or may have to be revealed in

certain instances.

F. Auditing and Monitoring

An ongoing evaluation process is

important to a successful compliance

program. This ongoing evaluation

should include not only whether the

practice’s standards and procedures are

in fact current and accurate, but also

whether or not the compliance program

is effective, i.e., whether individuals are

properly carrying out their

responsibilities and claims are

submitted appropriately.

1. Policies and Procedures

It is recommended that the

individual(s) in charge of the

compliance program also be charged

with the responsibility of periodically

reviewing the policies and procedures

to see if they are current and complete.

If the policies and procedures are found

to be ineffective or outdated, they

should be updated to reflect changes in

CPT codes and Government regulations.

2. Claims Submission Audit

In addition to the policies and

procedures themselves, bills and

medical records should be reviewed for

compliance with applicable coding,

billing and documentation

requirements. The people involved in

these self-audits should include the

person in charge of billing compliance

and a medically trained person (e.g.,

registered nurse or preferably a

physician (physicians can rotate in this

position)). Each practice needs to decide

for itself whether to review claims

retrospectively or concurrently with the

claims submission. In the Third-Party

Medical Billing Compliance Program

Guidance,44 the OIG recommended that

a baseline, or ‘‘snapshot,’’ be used as

part of the benchmarking analysis that

would enable a practice to judge its

progress in reducing or eliminating

potential areas of vulnerability.

The practice’s self-audits should be

used to determine whether:

1. Bills are accurately coded and

accurately reflect the services provided;

• Services or items provided are

reasonable and necessary;

• Any incentives for unnecessary

services exist; and

• Medical records contain sufficient

documentation to support the charge.

A baseline audit should examine the

claim development and submission

process, from patient intake through

claim submission and payment, and

identify elements within this process

that may contribute to non-compliance

or that may need to be the focus for

improving execution.45 This audit

should establish a consistent

methodology for selecting and

examining records, and this

methodology should serve as a basis for

future audits. It should be conducted

based on claims submitted during the

initial three months after

implementation of the education and

training program so as to give the

physician practice a benchmark against

which to measure future compliance

effectiveness.

Following the baseline audit, periodic

audits could be conducted at least once

each year to ensure that the compliance

program is being followed. A randomly

selected number of medical records

could be reviewed to ensure that the

coding was performed accurately.

Although there is no set formula to how

many medical records should be

reviewed, a basic guide is two to five

Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices 36827

46See Footnote 37 for information on how to

access these lists.

47 Instances of noncompliance must be

determined on a case-by-case basis. The existence

or amount of a monetary loss to a health care

program is not solely determinative of whether the

conduct should be investigated and reported to

governmental authorities. In fact, there may be

instances where there is no readily identifiable

monetary loss, but corrective actions are still

necessary to protect the integrity of the applicable

program and its beneficiaries, e.g., where services

required by a plan of care are not provided.

48The physician practice may seek advice from

its legal counsel to determine the extent of the

practice’s liability and to plan the appropriate

course of action.

49The OIG has established a Provider SelfDisclosure Protocol that encourages providers to

voluntarily report suspected fraud. The concept of

voluntary self-disclosure is premised on a

recognition that the Government alone cannot

protect the integrity of the Medicare and other

Federal health care programs. Health care providers

must be willing to police themselves, correct

underlying problems, and work with the

Government to resolve these matters. The Provider

Self-Disclosure Protocol can be located on the OIG’s

website at: www.hhs.gov/oig. See Appendix D for

further information on the Provider Self-Disclosure

Protocol.

medical records per payer, or five to ten

medical records per physician. Of

course, the larger the sample size, the

greater the confidence in the results. If

problems are identified, focused review

should be conducted on a more frequent

basis. When audit results reveal areas

needing additional information or

education of employees and physicians,

these areas should be incorporated into

the training and educational system.

Periodic audits could include the

following:

• A valid sample of the practice’s top

ten denials, or the practice’s top ten

services provided;

• Confirmation that the physician

practice has been using specific codes,

as some codes are too general for

‘‘reasonable and necessary’’ purposes;

• A check for data entry errors;

• Confirmation that all orders are

written and signed by a physician;

• A check for reasonable and

necessary services performed;

• Confirmation that all tests ordered

by the physician(s) were actually

performed and documented and that

only those tests were billed; and

• A review of assignment codes and

modifiers to the claims.

One of the most important elements of

a successful billing compliance program

is appropriate action when the

physician practice identifies a problem

in its internal audit. This action should

be taken as soon as possible, but it is

recommended that the action be taken

within 60 days from the date the

problem is identified. The specific

action a physician practice takes should

depend on the circumstances of the

situation it has identified. In some

cases, the action can be as simple as

generating a repayment to Medicare or

the appropriate payer. Alternatively, the

repayment could be effectuated through

offsets to other billings, such as

undercodings. In others, the physician

practice may want to seek legal advice

and/or consult with a coding/billing

expert to determine the next best course

of action. There is no boilerplate

solution to how to handle problems that

are identified.

It is important that the physician

practice monitor its billing program to

ensure claims are correctly submitted. If

a physician practice identifies, through

its internal audits, what it believes is a

potential problem, there should be

sufficient confidence in the compliance

procedures developed by the physician

practice to reasonably believe that the

problem is in fact a potential issue.

Steps should be taken to remedy the

situation immediately.

All physician practices should create

a system to address how they will

respond to and report potential

problems. In addition, preserving

information relating to identification of

the problem is as important as

preserving information that tracks the

physician practice’s reaction to, and

solution for, the issue.

G. Enforcing Standards Through WellPublicized Disciplinary Guidelines

An effective physician practice

compliance program includes

procedures for enforcing and

disciplining individuals who violate the

practice’s compliance standards.

Enforcement and disciplinary

provisions are necessary to put teeth

into a compliance program.

A physician practice’s enforcement

and disciplinary mechanisms should

ensure that violations of the practice’s

compliance policies will result in

consistent and appropriate sanctions,

including the possibility of termination,

against the offending individual. At the

same time, the practice’s enforcement

and disciplinary procedures should be

flexible enough to account for mitigating

or aggravating circumstances. The

program should also stipulate that

individuals who fail to detect or report

violations of the compliance program

may also be subject to discipline.

Disciplinary actions could include:

warnings (oral); reprimands (written);

probation; demotion; temporary

suspension; discharge of employment;

restitution of damages; and referral for

criminal prosecution. Inclusion of

disciplinary guidelines in in-house

training and procedure manuals is

sufficient to meet the ‘‘well publicized’’

standard of this element.

Any communication resulting in the

finding of non-compliant conduct

should be documented in the

compliance files by including the date

of incident, name of the reporting party,

name of the person responsible for

taking action, and the follow-up action

taken. Physician practices should also

conduct checks to make sure all current

and potential practice employees are not

listed on the OIG or GSA lists of

individuals excluded from participation

in Federal health care or Government

procurement programs.46

H. Responding to Detected Offenses and

Developing Corrective Action Initiatives

Violations of a physician practice’s

compliance program, significant failures

to comply with applicable Federal or

State law, and other types of

misconduct threaten a practice’s status

as a reliable, honest, and trustworthy

provider of health care. Fraudulent or

erroneous conduct that has been

detected, but not corrected, can

seriously endanger the reputation and

legal status of the practice.

Consequently, upon receipt of reports or

reasonable indications of suspected

noncompliance, it is important that the

compliance officer or other practice

employee investigate the allegations to

determine whether a material violation

of applicable law or the requirements of

the compliance program has occurred,

and, if so, take decisive steps to correct

the problem.47 As appropriate, such

steps may include a corrective action

plan,48 the return of any overpayments,

a report to the Government, 49 and/or a

referral to law enforcement authorities.

There are several key warning signs of

when a compliance program is not

working well, e.g., high rates of rejected

and/or suspended claims and the

placement of a practice on pre-payment

review by the carrier. These warning

signs should be followed up on

immediately and the compliance

procedures of the practice changed to

prevent the problem from recurring.

As previously stated, the physician

practice should take appropriate

corrective action, including prompt

identification of any overpayment to the

affected payer. A knowing and willful

failure to disclose overpayments within

a reasonable period of time could be

interpreted as an attempt to conceal the

overpayment from the Government,

thereby establishing an independent

basis for a criminal violation with

respect to the physician practice, as well

as any individual who may have been

36828 Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices

50See 42 U.S.C. 1320a–7b(a)(3) and 18 U.S.C.

669.

51Previous OIG Compliance Program Guidance

have set forth criteria for assessing the effectiveness

of a compliance program. See Footnote 3 for a

listing of previous Compliance Program Guidance

and information on how to access them.

1HCFA has recently developed a website which,

when completed by the end of the year 2000, will

contain the LMRPs for each of the contractors

across the country. The website can be accessed at

http://www.lmrp.net.

2The relevant manual provisions are located at

MCM, Part III, §§ 7300, 7320. This section of the

manual also includes the carrier’s recommended

form of an ABN.

involved.50 For this reason, physician

practice compliance programs should

emphasize that overpayments should be

promptly disclosed and returned to the

entity that made the erroneous payment.

After an offense has been detected, a

physician or group practice should take

all reasonable steps to respond to the

offense and to prevent similar offenses.

The compliance program should

provide for a full internal investigation

of all reports of detected violations. The

goodwill that physicians generate by

developing an effective compliance

program will quickly dissipate if the

physician ignores reports of possible

fraudulent activity.

The compliance program procedures

should include provisions to ensure that

a violation is not compounded once

discovered. The individuals involved in

the violation should either be retrained,

or, if appropriate, terminated. The

physician practice may also prevent the

compounding of the violation by

conducting a review of all confirmed

violations, and, if appropriate, selfreporting the violations to the

applicable authority. This should be

done within 90 days of the discovery of

a violation.

The physician practice should

recognize that if a violation occurred

and was not immediately detected, its

compliance program may require

modification. Physicians who detect

violations should analyze the situation

to determine whether a flaw in their

compliance program failed to anticipate

the detected problem, or whether the

compliance program’s procedures failed

to prevent the violation. In any event, it

is prudent, even absent the detection of

any violations, for physician practices to

periodically review and modify their

compliance programs.51

III. Conclusion

Just as immunizations are given to

patients to prevent them from becoming

ill, physician practices should view the

implementation of an effective

compliance program as comparable to a

form of preventive medicine to protect

against fraudulent or erroneous conduct.

This compliance program guidance is

intended to assist physician practices in

developing and implementing internal

controls and procedures that promote

adherence to Federal health care

program and private insurance program

requirements. By implementing an

effective compliance program, physician

practices can help prevent and reduce

fraudulent or erroneous conduct in their

practices, as well as furthering their

mission to provide quality care to their

patients.

Dated: June 6, 2000.

Michael F. Mangano,

Principal Deputy Inspector General.

Appendix A: Additional Risk Areas

I. Reasonable and Necessary Services

A. Local Medical Review Policy

An area of concern relating to

determinations of reasonable and necessary

services is the variation in local medical

review policies (LMRPs) among carriers.

Physicians are supposed to bill the Federal

health care programs only for items and

services that are reasonable and necessary.

However, in order to determine whether an

item or service is reasonable and necessary

under Medicare guidelines, the physician

must apply the appropriate LMRP.1

Physician practices are to bill the Federal

health programs only for items and services

that are covered. In order to determine if an

item or service is covered for Medicare,

physician practices must be knowledgeable

of the LMRPs applicable to their practices

jurisdiction. When the LMRP indicates that

an item or service may not be covered by

Medicare, the physician practice is

responsible to convey this information to the

patient so that the patient can make an

informed decision concerning the health care

services he/she may want to receive.

Physician practices convey this information

through Advanced Beneficiary Notices

(ABNs).

B. Advanced Beneficiary Notices

Physicians are required to provide ABNs

before they provide services that they know

or believe Medicare does not consider

reasonable and necessary. A properly

executed ABN acknowledges that coverage is

uncertain or yet to be determined, and

stipulates that the patient promises to pay the

bill if Medicare does not. Patients who are

not notified before they receive such services

are not responsible for payment. The ABN

must be sufficient to put the patient on notice

of the reasons why the physician believes

that the payment may be denied. The

objective is to give the patient sufficient

information to allow an informed choice as

to whether to pay for the service.

Accordingly, each ABN should:

1. Be in writing;

2. Identify the specific service that may be

denied (procedure name and CPT/HCPC code

is recommended);

3. State the specific reason why the

physician believes that service may be

denied; and

4. Be signed by the patient acknowledging

that the required information was provided

and that the patient assumes responsibility to

pay for the service.

The Medicare Carrier’s Manual 2 provides

that an ABN will not be acceptable if: (1) The

patient is asked to sign a blank ABN form;

and (2) the ABN is used routinely without

regard to a particularized need. The routine

use of ABNs is generally prohibited because

the ABN must state the specific reason the

physician anticipates that the specific service

will not be covered.

A common risk area associated with ABNs

is in regard to diagnostic tests or services.

There are four steps that a physician practice

can take to help ensure it is in compliance

with the regulations concerning ABNs for

diagnostic tests or services:

1. Determine which tests are not covered

under national coverage rules;

2. Determine which tests are not covered

under local coverage rules such as LMRPs

(contact the practice’s carrier to see if a

listing has been assembled); and

3. Determine which tests are only covered

for certain diagnoses.

The OIG is aware that the use of ABNs is

an area where physician practices experience

numerous difficulties. Practices can help to

reduce problems in this area by educating

their physicians on the correct use of ABNs,

obtaining guidance from the carrier regarding

their interpretation of whether an ABN is

necessary where the service is not covered,

developing a standard form for all diagnostic

tests (most carriers have a developed model),

and developing a process for handling

patients who refuse to sign ABNs.

C. Physician Liability for Certifications in the

Provision of Medical Equipment and

Supplies and Home Health Services

In January 1999, the OIG issued a Special

Fraud Alert on this topic, which is available

on the OIG website at www.hhs.gov/oig/

frdalrt/index.htm. The following is a

summary of the Special Fraud Alert.

The OIG issued the Special Fraud Alert to

reiterate to physicians the legal and

programmatic significance of physician

certifications made in connection with the

ordering of certain items and services for

Medicare patients. In light of information

obtained through OIG provider audits, the

OIG deemed it necessary to remind

physicians that they may be subject to

criminal, civil, and administrative penalties

for signing a certification when they know

that the information is false or for signing a

certification with reckless disregard as to the

truth of the information. (See Appendix B

and Appendix C for more detailed

information on the applicable statutes).

Medicare has conditioned payment for

many items and services on a certification

signed by a physician attesting that the

physician has reviewed the patient’s

condition and has determined that an item or

service is reasonable and necessary. Because

Medicare primarily relies on the professional

judgment of the treating physician to

determine the reasonable and necessary

nature of a given service or supply, it is

Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices 36829

3See 42 U.S.C. 1395dd(a).

4See 42 U.S.C. 1395dd(b)(1).

5See 42 U.S.C. 1395dd(b)(2)–(3).

6See 42 U.S.C. 1395dd(c)(1)(A).

7Hospitals and physicians, including on-call

physicians, who violate the statute may face stiff

penalties. Those penalties include civil fines of up

to $50,000 (or not more than $25,000 in the case

of a hospital with less than 100 beds) per violation

and exclusion of a physician from participation in

the Federal health care programs.

8 42 CFR 415.150-.190.

9 Id.

10This section is not intended to be and is not

a complete reference for teaching physicians. It is

strongly recommended that those physicians who

practice in a teaching setting consult their

respective hospitals for more guidance.

important that physicians provide complete

and accurate information on any

certifications they sign. Physician

certification is obtained through a variety of

forms, including prescriptions, orders, and

Certificates of Medical Necessity (CMNs).

Two areas where physician certification as to

whether an item or service is reasonable and

necessary is essential and which can result

in fraudulent or erroneous conduct are: (1)

home health services; and (2) durable

medical equipment.

By signing a CMN, the physician

represents that:

1. He or she is the patient’s treating

physician and that the information regarding

the physician’s address and unique physician

identification number (UPN) is correct;

2. The entire CMN, including the sections

filled out by the supplier, was completed

prior to the physician’s signature; and

3. The information in section B relating to

whether the item or service is reasonable and

necessary is true, accurate, and complete to

the best of the physician’s knowledge.

Activities such as signing blank CMNs,

signing CMNs without seeing the patient to

verify the item or service is reasonable and

necessary, and signing a CMN for a service

that the physician knows is not reasonable

and necessary are activities that can lead to

criminal, civil and administrative penalties.

Ultimately, physicians should be sure to

carefully review any form of certification

(order, prescription or CMN) before signing it

to verify that the information contained in

the certification is both complete and

accurate.

D. Billing for Non-Covered Services as If

Covered

In some instances, we are aware that

physician practices submit claims for

services in order to receive a denial from the

carrier, thereby enabling the patient to

submit the denied claim for payment to a

secondary payer.

A common question relating to this risk is:

If the medical services provided are not

covered under Medicare, but the secondary

or supplemental insurer requires a Medicare

rejection in order to cover the services, then

would the original submission of the claim

to Medicare be considered fraudulent? Under

the applicable regulations, the OIG would not

consider such submissions to be fraudulent.

For example, the denial may be necessary to

establish patient liability protections as

stated in section 1879 of the Social Security

Act (the Act) (codified at 42 U.S.C. 1395pp).

As stated, Medicare denials may also be

required so that the patient can seek payment

from a secondary insurer. In instances where

a claim is being submitted to Medicare for

this purpose, the physician should indicate

on the claim submission that the claim is

being submitted for the purpose of receiving

a denial, in order to bill a secondary

insurance carrier. This step should assist

carriers and prevent inadvertent payments to

which the physician is not entitled. In some

instances, however, the carrier pays the claim

even though the service is non-covered, and

even though the physician did not intend for

payment to be made. When this occurs, the

physician has a responsibility to refund the

amount paid and indicate that the service is

not covered.

II. Physician Relationships With Hospitals

A. The Physician Role in the Patient AntiDumping Statute

The Patient Anti-Dumping Statute, 42

U.S.C. 1395dd, is an area that has been

receiving increasing scrutiny. The statute is

intended to ensure that all patients who

come to the emergency department of a

hospital receive care, regardless of their

insurance or ability to pay. Both hospitals

and physicians need to work together to

ensure compliance with the provisions of

this law.

The statute imposes three fundamental

requirements upon hospitals that participate

in the Medicare program with regard to

patients requesting emergency care. First, the

hospital must conduct an appropriate

medical screening examination to determine

if an emergency medical condition exists.3

Second, if the hospital determines that an

emergency medical condition exists, it must

either provide the treatment necessary to

stabilize the emergency medical condition or

comply with the statute’s requirements to

effect a proper transfer of a patient whose

condition has not been stabilized.4 A hospital

is considered to have met this second

requirement if an individual refuses the

hospital’s offer of additional examination or

treatment, or refuses to consent to a transfer,

after having been informed of the risks and

benefits.5

If an individual’s emergency medical

condition has not been stabilized, the

statute’s third requirement is activated. A

hospital may not transfer an individual with

an unstable emergency medical condition

unless: (1) The individual or his or her

representative makes a written request for

transfer to another medical facility after being

informed of the risk of transfer and the

transferring hospital’s obligation under the

statute to provide additional examination or

treatment; (2) a physician has signed a

certification summarizing the medical risks

and benefits of a transfer and certifying that,

based upon the information available at the

time of transfer, the medical benefits

reasonably expected from the transfer

outweigh the increased risks; or (3) if a

physician is not physically present when the

transfer decision is made, a qualified medical

person signs the certification after the

physician, in consultation with the qualified

medical person, has made the determination

that the benefits of transfer outweigh the

increased risks. The physician must later

countersign the certification.6

Physician and/or hospital misconduct may

result in violations of the statute.7 One area

of particular concern is physician on-call

responsibilities. Physician practices whose

members serve as on-call emergency room

physicians with hospitals should make sure

they are familiar with the hospital’s policies

regarding on-call physicians. This can be

done by reviewing the medical staff bylaws

or policies and procedures of the hospital

that must define the responsibility of on-call

physicians to respond to, examine, and treat

patients with emergency medical conditions.

Physicians should also be aware that, in most

cases, on-call physicians must come to the

hospital to examine the patient when a

request is made for their services. If,

however, their offices are located in a

hospital-owned facility on contiguous land or

on the hospital campus, the patient may be

seen in the physician’s office.

B. Teaching Physicians

Special regulations apply to teaching

physicians’ billings. Regulations provide that

services provided by teaching physicians in

teaching settings are payable under the

physician fee schedule only if the services

are personally furnished by a physician who

is not a resident or the services are furnished

by a resident in the presence of a teaching

physician.8

The teaching physician must be present

during the key portion of any service or

procedure for which payment is sought.9

Physicians should ensure the following with

respect to services provided in the teaching

physician setting:10

1. Only services actually provided are

billed;

2. Every physician who provides or

supervises the provision of services to a

patient is responsible for the correct

documentation of the services that were

rendered;

3. Every physician is responsible for

assuring that in cases where the physician

provides evaluation and management (E and

M) services, a patient’s medical record

includes appropriate documentation of the

applicable key components of the E and M

services provided or supervised by the

physician (e.g., patient history, physician

examination, and medical decision making),

as well as documentation to adequately

reflect the procedure or portion of the

services provided by the physician; and

4. Every physician must document his or

her presence during the key portion of any

service or procedure for which payment is

sought.

C. Gainsharing Arrangements and Civil

Monetary Penalties for Hospital Payments to

Physicians To Reduce or Limit Services to

Beneficiaries

In July 1999, the OIG issued a Special

Fraud Alert on this topic, which is available

on the OIG website at www.hhs.gov/oig/

frdalrt/index.htm. The following is a

summary of the Special Fraud Alert.

36830 Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices

11This concern is noted in Advisory Opinion No.

98–4 and also the Office of Inspector General

Compliance Program Guidance for Third-Party

Medical Billing Companies. Both are available on

the OIG website at http://www.hhs.gov/oig.

The term ‘‘gainsharing’’ typically refers to

an arrangement in which a hospital gives a

physician a percentage share of any

reduction in the hospital’s costs for patient

care attributable in part to the physician’s

efforts. The civil monetary penalty (CMP)

that applies to gainsharing arrangements is

set forth in 42 U.S.C. 1320a–7a(b)(1). This

section prohibits any hospital or critical

access hospital from knowingly making a

payment directly or indirectly to a physician

as an inducement to reduce or limit services

to Medicare or Medicaid beneficiaries under

a physician’s care.

It is the OIG’s position that the CMP law

clearly prohibits any gainsharing

arrangements that involve payments by or on

behalf of a hospital to physicians with

clinical care responsibilities, directly or

indirectly, to induce a reduction or limitation

of services to Medicare or Medicaid patients.

However, hospitals and physicians are not

prohibited from working together to reduce

unnecessary hospital costs through other

arrangements. For example, hospitals and

physicians may enter into personal services

contracts where hospitals pay physicians

based on a fixed fee at fair market value for

services rendered to reduce costs rather than

a fee based on a share of cost savings.

III. Physician Billing Practices

A. Third-Party Billing Services

Physicians should remember that they

remain responsible to the Medicare program

for bills sent in the physician’s name or

containing the physician’s signature, even if

the physician had no actual knowledge of a

billing impropriety. The attestation on the

HCFA 1500 form, i.e., the physician’s

signature line, states that the physician’s

services were billed properly. In other words,

it is no defense for the physician if the

physician’s billing service improperly bills

Medicare.

One of the most common risk areas

involving billing services deals with

physician practices contracting with billing

services on a percentage basis. Although

percentage based billing arrangements are not

illegal per se, the Office of Inspector General

has a longstanding concern that such

arrangements may increase the risk of

intentional upcoding and similar abusive

billing practices.11

A physician may contract with a billing

service on a percentage basis. However, the

billing service cannot directly receive

Medicare payments made to the physician.

Under 42 U.S.C. 1395u(b)(6), Medicare

payments can only be made to either the

beneficiary or a party (such as a physician)

that furnished the services and accepted

assignment of the beneficiary’s claim. A

billing service that contracts on a percentage

basis does not qualify as a party that

furnished services to a beneficiary, thus a

billing service cannot directly receive

Medicare payments. According to the

Medicare Carriers Manual § 3060(A), a

payment is considered to be made directly to

the billing service if the service can convert

the payment to its own use and control

without the payment first passing through

the control of the physician. For example, the

billing service cannot bill the claims under

its own name or tax identification number.

The billing service must bill claims under the

physician’s name and tax identification

number. Nor can a billing service have the

Medicare payments sent directly to its office

or its bank account. The Medicare payments

should instead be sent to the physician’s

office or bank account.

Physician practices should review the

third-party medical billing guidance for

additional information on third-party billing

companies and the compliance risk areas

associated with billing companies.

B. Billing Practices by Non-Participating

Physicians

Even though nonparticipating physicians

do not accept payment directly from the

Medicare program, there are a number of

laws that apply to the billing of Medicare

beneficiaries by non-participating physicians.

Limiting Charges

42 U.S.C. 1395w–4(g) prohibits a

nonparticipating physician from knowingly

and willfully billing or collecting on a

repeated basis an actual charge for a service

that is in excess of the Medicare limiting

charge. For example, a nonparticipating

physician may not bill a Medicare

beneficiary $50 for an office visit when the

Medicare limiting charge for the visit is $25.

Additionally, there are numerous provisions

that prohibit nonparticipating physicians

from knowingly and willfully charging

patients in excess of the statutory charge

limitations for certain specified procedures,

such as cataract surgery, mammography

screening, and coronary artery bypass

surgery. Physicians who fail to comply with

these sections may be fined up to $10,000 per

violation or be excluded from participation

in Federal health care programs for up to five

years.

Refund of Excess Charges

42 U.S.C. 1395w–4(g) mandates that if a

nonparticipating physician collects an actual

charge for a service that is in excess of the

limiting charge, the physician must refund

the amount collected above the limiting

charge to the individual within 30 days

notice of the violation. For example, if a

physician collected $50 from a Medicare

beneficiary for an office visit, but the limiting

charge for the visit was $25, the physician

must refund $25 to the beneficiary, which is

the difference between the amount collected

($50) and the limiting charge ($25).

Physicians who fail to comply may be fined

up to $10,000 per violation or be excluded

from participation in Federal health care

programs for up to 5 years.

42 U.S.C. 1395u(l)(A)(iii) mandates that a

nonparticipating physician must refund

payments received from a Medicare

beneficiary if it is later determined by a Peer

Review Organization or a Medicare carrier

that the services were not reasonable and

necessary. Physicians who fail to refund the

payments may be fined up to $10,000 per

violation or be excluded from participation

in Federal health care programs for up to 5

years.

C. Professional Courtesy

The term ‘‘professional courtesy’’ is used to

describe a number of analytically different

practices. The traditional definition is the

practice by a physician of waiving all, or a

part, of the fee for services provided to the

physician’s office staff, other physicians,

and/or their families. In recent times,

‘‘professional courtesy’’ has come to also

mean the waiver of coinsurance obligations

or other out-of-pocket expenses for

physicians or their families (i.e., ‘‘insurance

only’’ billing), and similar payment

arrangements by hospitals or other

institutions for services provided to their

medical staffs or employees. While only the

first of these practices is truly ‘‘professional

courtesy,’’ in the interests of clarity and

completeness, we will address all three.

In general, whether a professional courtesy

arrangement runs afoul of the fraud and

abuse laws is determined by two factors: (i)

how the recipients of the professional

courtesy are selected; and (ii) how the

professional courtesy is extended. If

recipients are selected in a manner that

directly or indirectly takes into account their

ability to affect past or future referrals, the

anti-kickback statute—which prohibits giving

anything of value to generate Federal health

care program business—may be implicated. If

the professional courtesy is extended through

a waiver of copayment obligations (i.e.,

‘‘insurance only’’ billing), other statutes may

be implicated, including the prohibition of

inducements to beneficiaries, section

1128A(a)(5) of the Act (codified at 42 U.S.C.

1320a–7a(a)(5)). Claims submitted as a result

of either practice may also implicate the civil

False Claims Act.

The following are general observations

about professional courtesy arrangements

that physician practices should consider:

• A physician’s regular and consistent

practice of extending professional courtesy

by waiving the entire fee for services

rendered to a group of persons (including

employees, physicians, and/or their family

members) may not implicate any of the OIG’s

fraud and abuse authorities so long as

membership in the group receiving the

courtesy is determined in a manner that does

not take into account directly or indirectly

any group member’s ability to refer to, or

otherwise generate Federal health care

program business for, the physician.

• A non-referring physician’s regular and

consistent practice of extending professional

courtesy by waiving otherwise applicable

copayments for services rendered to

physicians, referring and non-referring alike,

their employees and family members, would

not implicate the anti-kickback statute so

long as membership in the group is

determined in a manner that does not take

into account directly or indirectly any group

member’s ability to refer to, or otherwise

generate Federal health care program

business for, the physician.

• Any waiver of copayment practice,

including that described in the preceding

bullet, does implicate section 1128A(a)(5) of

Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices 36831

the Act if the patient for whom the

copayment is waived is a Federal health care

program beneficiary who is not financially

needy.

The legality of particular professional

courtesy arrangements will turn on the

specific facts presented, and, with respect to

the anti-kickback statute, on the specific

intent of the parties. Physicians who are

concerned that their particular practices may

run afoul of the Federal fraud and abuse laws

may request an OIG advisory opinion

pursuant to regulations at 42 CFR Part 1008

(See Appendix D for further detail), except

for matters pertaining to the physician selfreferral law, which are addressed by HCFA.

IV. Other Risk Areas

A. Rental of Space in Physician Offices by

Persons or Entities to Which Physicians Refer

In February 2000, the OIG issued a Special

Fraud Alert on this topic, which is available

on the OIG website at www.hhs.gov/oig/

frdalrt/index.htm. The following is a

summary of the Special Fraud Alert.

Among various relationships between

physicians and labs, hospitals, home health

agencies, etc., the OIG has identified

potentially illegal practices involving the

rental of space in a physician’s office by

suppliers that provide items or services to

patients who are referred or sent to the

supplier by the physician-landlord. An

example of a suspect arrangement is the

rental of physician office space by a durable

medical equipment (DME) supplier in a

position to benefit from referrals of the

physician’s patients. The OIG is concerned

that in such arrangements the rental

payments may be disguised kickbacks to the

physician-landlord to induce referrals.

Space Rental Safe Harbor to the AntiKickback Statute

To avoid potentially violating the antikickback Statute, the OIG recommends that

rental agreements should comply with all of

the following criteria for the space rental safe

harbor:

• The agreement is set out in writing and

signed by the parties.

• The agreement covers all of the space

rented by the parties for the term of the

agreement and specifies the space covered by

the agreement.

• If the agreement is intended to provide

the lessee with access to the space for

periodic intervals of time rather than on a

full-time basis for the term of the rental

agreement, the rental agreement specifies

exactly the schedule of such intervals, the

precise length of each interval, and the exact

rent for each interval.

• The term of the rental agreement is for

not less than one year.

• The aggregate rental charge is set in

advance, is consistent with fair market value,

and is not determined in a manner that takes

into account the volume or value of any

referrals or business otherwise generated

between the parties for which payment may

be made in whole or in part under Medicare

or a State health care program.

• The aggregate space rented does not

exceed that which is reasonably necessary to

accomplish the commercially reasonable

business purpose of the rental.

B. Unlawful Advertising

42 U.S.C. 1320b–10 makes it unlawful for

any person to advertise using the names,

abbreviations, symbols, or emblems of the

Social Security Administration, Health Care

Financing Administration, Department of

Health and Human Services, Medicare,

Medicaid or any combination or variation of

such words, abbreviations, symbols or

emblems in a manner that such person

knows or should know would convey the

false impression that the advertised item is

endorsed by the named entities. For instance,

a physician may not place an ad in the

newspaper that reads ‘‘Dr. X is a cardiologist

approved by both the Medicare and Medicaid

programs.’’ A violation of this section may

result in a penalty of up to $5,000 ($25,000

in the case of a broadcast or telecast) for each

violation.

Appendix B: Criminal Statutes

This Appendix contains a description of

criminal statutes related to fraud and abuse

in the context of health care. The Appendix

is not intended to be a compilation of all

Federal statutes related to health care fraud

and abuse. It is merely a summary of some

of the more frequently cited Federal statutes.

I. Health Care Fraud (18 U.S.C. 1347)

Description of Unlawful Conduct

It is a crime to knowingly and willfully

execute (or attempt to execute) a scheme to

defraud any health care benefit program, or

to obtain money or property from a health

care benefit program through false

representations. Note that this law applies

not only to Federal health care programs, but

to most other types of health care benefit

programs as well.

Penalty for Unlawful Conduct

The penalty may include the imposition of

fines, imprisonment of up to 10 years, or

both. If the violation results in serious bodily

injury, the prison term may be increased to

a maximum of 20 years. If the violation

results in death, the prison term may be

expanded to include any number of years, or

life imprisonment.

Examples

1. Dr. X, a chiropractor, intentionally billed

Medicare for physical therapy and

chiropractic treatments that he knew were

never rendered.

2. Dr. X, a psychiatrist, billed Medicare,

Medicaid, CHAMPUS, and private insurers

for psychiatric services that were provided by

his nurses rather than himself.

II. Theft or Embezzlement in Connection

With Health Care (18 U.S.C. 669)

Description of Unlawful Conduct

It is a crime to knowingly and willfully

embezzle, steal or intentionally misapply any

of the assets of a health care benefit program.

Note that this law applies not only to Federal

health care programs, but to most other types

of health care benefit programs as well.

Penalty for Unlawful Conduct

The penalty may include the imposition of

a fine, imprisonment of up to 10 years, or

both. If the value of the asset is $100 or less,

the penalty is a fine, imprisonment of up to

a year, or both.

Example

An office manager for Dr. X knowingly

embezzles money from the bank account for

Dr. X’s practice. The bank account includes

reimbursement received from the Medicare

program; thus, intentional embezzlement of

funds from this account is a violation of the

law.

III. False Statements Relating to Health Care

Matters (18 U.S.C. 1035)

Description of Unlawful Conduct

It is a crime to knowingly and willfully

falsify or conceal a material fact, or make any

materially false statement or use any

materially false writing or document in

connection with the delivery of or payment

for health care benefits, items or services.

Note that this law applies not only to Federal

health care programs, but to most other types

of health care benefit programs as well.

Penalty for Unlawful Conduct

The penalty may include the imposition of

a fine, imprisonment of up to 5 years, or

both.

Example

Dr. X certified on a claim form that he

performed laser surgery on a Medicare

beneficiary when he knew that the surgery

was not actually performed on the patient.

IV. Obstruction of Criminal Investigations of

Health Care Offenses (18 U.S.C. 1518)

Description of Unlawful Conduct

It is a crime to willfully prevent, obstruct,

mislead, delay or attempt to prevent,

obstruct, mislead, or delay the

communication of records relating to a

Federal health care offense to a criminal

investigator. Note that this law applies not

only to Federal health care programs, but to

most other types of health care benefit

programs as well.

Penalty for Unlawful Conduct

The penalty may include the imposition of

a fine, imprisonment of up to 5 years, or

both.

Examples

1. Dr. X instructs his employees to tell OIG

investigators that Dr. X personally performs

all treatments when, in fact, medical

technicians do the majority of the treatment

and Dr. X is rarely present in the office.

2. Dr. X was under investigation by the FBI

for reported fraudulent billings. Dr. X altered

patient records in an attempt to cover up the

improprieties.

V. Mail and Wire Fraud (18 U.S.C. 1341,

1343)

Description of Unlawful Conduct

It is a crime to use the mail, private

courier, or wire service to conduct a scheme

to defraud another of money or property. The

term ‘‘wire services’’ includes the use of a

telephone, fax machine or computer. Each

use of a mail or wire service to further

fraudulent activities is considered a separate

36832 Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices

crime. For instance, each fraudulent claim

that is submitted electronically to a carrier

would be considered a separate violation of

the law.

Penalty for Unlawful Conduct

The penalty may include the imposition of

a fine, imprisonment of up to 5 years, or

both.

Examples

1. Dr. X electronically submits claims to

the Medicare fiscal intermediary via his

computer for office visits that he did not

actually provide to Medicare beneficiaries.

2. Dr. X, a neurologist, knowingly

submitted claims for tests that were not

reasonable and necessary and intentionally

upcoded office visits and Electromyograms to

Medicare.

VI. Criminal Penalties for Acts Involving

Federal Health Care Programs (42 U.S.C.

1320a–7b)

Description of Unlawful Conduct

False Statements and Representations

It is a crime to knowingly and willfully:

• Make, or cause to be made, false

statements or representations in applying or

benefits or payments under all Federal health

care programs;

• Make, or cause to be made, any false

statement or representation for use in

determining rights to such benefit or

payment;

• Conceal any event affecting an

individual’s initial or continued right to

receive a benefit or payment with the intent

to fraudulently receive the benefit or

payment either in an amount or quantity

greater than that which is due or authorized;

• Convert a benefit or payment to a use

other than for the use and benefit of the

person for whom it was intended;

• Present, or cause to be presented, a claim

for a physician’s service when the service

was not furnished by a licensed physician;

• For a fee, counsel an individual to

dispose of assets in order to become eligible

for medical assistance under a State health

program, if disposing of the assets results in

the imposition of an ineligibility period for

the individual.

Anti-Kickback Statute

It is a crime to knowingly and willfully

solicit, receive, offer, or pay remuneration of

any kind (e.g., money, goods, services):

• For the referral of an individual to

another for the purpose of supplying items or

services that are covered by a Federal health

care program; or

• For purchasing, leasing, ordering, or

arranging for any good, facility, service, or

item that is covered by a Federal health care

program.

There are a number of limited exceptions

to the law, also known as ‘‘safe harbors,’’

which provide immunity from criminal

prosecution and which are described in

greater detail in the statute and related

regulations (found at 42 CFR 1001.952 and at

www.hhs.gov/oig/ak/index.htm#OIG Safe

Harbor Regulations). Current safe harbors

include:

• Investment interests;

• Space rental;

• Equipment rental;

• Personal services and management

contracts;

• Sale of practice;

• Referral services;

• Warranties;

• Discounts;

• Employment relationships;

• Waiver of Part A co-insurance and

deductible amounts;

• Group purchasing organizations;

• Increased coverage or reduced cost

sharing under a risk-basis or prepaid plan;

and

• Charge reduction agreements with health

plans.

Penalty for Unlawful Conduct

The penalty may include the imposition of

a fine of up to $25,000, imprisonment of up

to 5 years, or both. In addition, the provider

can be excluded from participation in

Federal health care programs. The

regulations defining the aggravating and

mitigating circumstances that must be

reviewed by the OIG in making an exclusion

determination are set forth in 42 CFR Part

1001.

Examples

1. Dr. X accepted payments to sign

Certificates of Medical Necessity for durable

medical equipment for patients she never

examined.

2. Home Health Agency disguises referral

fees as salaries by paying referring physician

Dr. X for services Dr. X never rendered to

Medicare beneficiaries or by paying Dr. X a

sum in excess of fair market value for the

services he rendered to Medicare

beneficiaries.

Appendix C: Civil and Administrative

Statutes

This Appendix contains a description of

civil and administrative statutes related to

fraud and abuse in the context of health care.

The Appendix is not intended to be a

compilation of all Federal statutes related to

health care fraud and abuse. It is merely a

summary of some of the more frequently

cited Federal statutes.

I. The False Claims Act (31 U.S.C. 3729–

3733)

Description of Unlawful Conduct

This is the law most often used to bring a

case against a health care provider for the

submission of false claims to a Federal health

care program. The False Claims Act prohibits

knowingly presenting (or causing to be

presented) to the Federal Government a false

or fraudulent claim for payment or approval.

Additionally, it prohibits knowingly making

or using (or causing to be made or used) a

false record or statement to get a false or

fraudulent claim paid or approved by the

Federal Government or it agents, like a

carrier, other claims processor, or state

Medicaid program.

Definitions

False Claim—A false claim is a claim for

payment for services or supplies that were

not provided specifically as presented or for

which the provider is otherwise not entitled

to payment. Examples of false claims for

services or supplies that were not provided

specifically as presented include, but are not

limited to:

• A claim for a service or supply that was

never provided.

• A claim indicating the service was

provided for some diagnosis code other than

the true diagnosis code in order to obtain

reimbursement for the service (which would

not be covered if the true diagnosis code

were submitted).

• A claim indicating a higher level of

service than was actually provided.

• A claim for a service that the provider

knows is not reasonable and necessary.

• A claim for services provided by an

unlicensed individual.

Knowingly—To ‘‘knowingly’’ present a

false or fraudulent claim means that the

provider: (1) has actual knowledge that the

information on the claim is false; (2) acts in

deliberate ignorance of the truth or falsity of

the information on the claim; or (3) acts in

reckless disregard of the truth or falsity of the

information on the claim. It is important to

note the provider does not have to

deliberately intend to defraud the Federal

Government in order to be found liable under

this Act. The provider need only

‘‘knowingly’’ present a false or fraudulent

claim in the manner described above.

Deliberate Ignorance—To act in ‘‘deliberate

ignorance’’ means that the provider has

deliberately chosen to ignore the truth or

falsity of the information on a claim

submitted for payment, even though the

provider knows, or has notice, that

information may be false. An example of a

provider who submits a false claim with

deliberate ignorance would be a physician

who ignores provider update bulletins and

thus does not inform his/her staff of changes

in the Medicare billing guidelines or update

his/her billing system in accordance with

changes to Medicare billing practices. When

claims for non-reimbursable services are

submitted as a result, the False Claims Act

has been violated.

Reckless Disregard—To act in ‘‘reckless

disregard’’ means that the provider pays no

regard to whether the information on a claim

submitted for payment is true or false. An

example of a provider who submits a false

claim with reckless disregard would be a

physician who assigns the billing function to

an untrained office person without inquiring

whether the employee has the requisite

knowledge and training to accurately file

such claims.

Penalty for Unlawful Conduct

The penalty for violating the False Claims

Act is a minimum of $5,000 up to a

maximum of $10,000 for each false claim

submitted. In addition to the penalty, a

provider could be found liable for up to three

times the amount unlawfully claimed.

Examples

• A physician and his oncology clinic

knowingly submitted improper claims to

Medicare and Medicaid for services rendered

at the clinic by nonphysicians without a

physician’s supervision or attendance.

Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices 36833

• Dr. X intentionally upcoded office visits

and angioplasty consultations that were

submitted for payment to Medicare.

• Dr. X, a podiatrist, knowingly submitted

claims to the Medicare and Medicaid

programs for non-routine surgical procedures

when he actually performed routine, noncovered services such as the cutting and

trimming of toenails and the removal of corns

and calluses.

II. Civil Monetary Penalties Law (42 U.S.C.

1320a–7a)

Description of Unlawful Conduct

The Civil Monetary Penalties Law (CMPL)

is a comprehensive statute that covers an

array of fraudulent and abusive activities and

is very similar to the False Claims Act. For

instance, the CMPL prohibits a health care

provider from presenting, or causing to be

presented, claims for services that the

provider ‘‘knows or should know’’ were:

• Not provided as indicated by the coding

on the claim;

• Not reasonable or necessary;

• Furnished by a person who is not

licensed as a physician (or who was not

properly supervised by a licensed physician);

• Furnished by a licensed physician who

obtained his or her license through

misrepresentation of a material fact (such as

cheating on a licensing exam);

• Furnished by a physician who was not

certified in the medical specialty that he or

she claimed to be certified in; or

• Furnished by a physician who was

excluded from participation in the Federal

health care program to which the claim was

submitted.

Additionally, the CMPL contains various

other prohibitions, including:

• Offering remuneration to a Medicare or

Medicaid beneficiary that the person knows

or should know is likely to influence the

beneficiary to obtain items or services billed

to Medicare or Medicaid from a particular

provider; and

• Employing or contracting with an

individual or entity that the person knows or

should know is excluded from participation

in a Federal health care program.

The term ‘‘should know’’ means that a

provider: (1) Acted in deliberate ignorance of

the truth or falsity of the information; or (2)

acted in reckless disregard of the truth or

falsity of the information. The Federal

Government does not have to show that a

provider specifically intended to defraud a

Federal health care program in order to prove

a provider violated the statute.

Penalty for Unlawful Conduct

Violation of the CMPL may result in a

penalty of up to $10,000 per item or service

and up to three times the amount unlawfully

claimed. In addition, the provider may be

excluded from participation in Federal health

care programs. The regulations defining the

aggravating and mitigating circumstances

that must be reviewed by the OIG in making

an exclusion determination are set forth in 42

CFR Part 1003.

Examples

1. Dr. X paid Medicare and Medicaid

beneficiaries $20 each time they visited him

to receive services and have tests performed

that were not preventive care services and

tests.

2. Dr. X hired Physician Assistant P to

provide services to Medicare and Medicaid

beneficiaries without conducting a

background check on P. Had Dr. X performed

a background check by reviewing the HHS–

OIG List of Excluded Individuals/Entities, Dr.

X. would have discovered that he should not

hire P because P is excluded for a period of

5 years from participation in Federal health

care programs.

3. Dr. X and his oximetry company billed

Medicare for pulse oximetry that they knew

they did not perform and services that had

been intentionally upcoded.

III. Limitations on Certain Physician

Referrals (‘‘Stark Laws’’) (42 U.S.C. 1395nn)

Description of Unlawful Conduct

Physicians (and immediate family

members) who have an ownership,

investment or compensation relationship

with an entity providing ‘‘designated health

services’’ are prohibited from referring

patients for these services where payment

may be made by a Federal health care

program unless a statutory or regulatory

exception applies. An entity providing a

designated health service is prohibited from

billing for the provision of a service that was

provided based on a prohibited referral.

Designated health services include: clinical

laboratory services; physical therapy

services; occupational therapy services;

radiology services, including magnetic

resonance imaging, axial tomography scans,

and ultrasound services; radiation therapy

services and supplies; durable medical

equipment and supplies; parenteral and

enteral nutrients, equipment and supplies;

prosthetics, orthotics, prosthetic devices and

supplies; home health services; outpatient

prescription drugs; and inpatient and

outpatient hospital services.

New regulations clarifying the exceptions

to the Stark Laws are expected to be issued

by HCFA during the summer of 2000. Current

exceptions articulated within the Stark Laws

include the following, provided all

conditions of each exception as set forth in

the statute and regulations are satisfied.

Exceptions for Ownership or Compensation

Arrangements

1. Physician’s services;

2. In-office ancillary services; and

3. Prepaid plans.

Exceptions for Ownership or Investment in

Publicly Traded Securities and Mutual

Funds

1. Ownership of investment securities

which may be purchased on terms

generally available to the public;

2. Ownership of shares in a regulated

investment company as defined by

Federal law, if such company had, at the

end of the company’s most recent fiscal

year, or on average, during the previous

3 fiscal years, total assets exceeding

$75,000,000;

3. Hospital in Puerto Rico;

4. Rural provider; and

5. Hospital ownership (whole hospital

exception).

Exceptions Relating to Other Compensation

Arrangements

1. Rental of office space and rental of

equipment;

2. Bona fide employment relationship;

3. Personal service arrangement;

4. Remuneration unrelated to the provision

of designated health services;

5. Physician recruitment;

6. Isolated transactions;

7. Certain group practice arrangements

with a hospital (pre-1989); and

8. Payments by a physician for items and

services

Penalty for Unlawful Conduct

Violations of the statute subject the billing

entity to denial of payment for the designated

health services, refund of amounts collected

from improperly submitted claims, and a

civil monetary penalty of up to $15,000 for

each improper claim submitted. Physicians

who violate the statute may also be subject

to additional fines per prohibited referral. In

addition, providers that enter into an

arrangement that they know or should know

circumvents the referral restriction law may

be subject to a CMP of up to $100,000 per

arrangement.

Examples

1. Dr. A worked in a medical clinic located

in a major city. She also owned a free

standing laboratory located in a major city.

Dr. A referred all orders for laboratory tests

on her patients to the laboratory she owned.

2. Dr. X agreed to serve as the Medical

Director of Home Health Agency, HHA for

which he was paid a sum substantially above

the fair market value for his services. In

return, Dr. X routinely referred his Medicare

and Medicaid patients to HHA for home

health services.

3. Dr. Y received a monthly stipend of $500

from a local hospital to assist him in meeting

practice expenses. Dr. Y performed no

specific service for the stipend and had no

obligation to repay the hospital. Dr. Y

referred patients to the hospital for in-patient

surgery.

IV. Exclusion of Certain Individuals and

Entities From Participation in Medicare and

Other Federal Health Care Programs (42

U.S.C. §1320a–7)

Mandatory Exclusion

Individuals or entities convicted of the

following conduct must be excluded from

participation in Medicare and Medicaid for a

minimum of five years:

• A criminal offense related to the delivery

of an item or service under Medicare or

Medicaid;

• A conviction under Federal or State law

of a criminal offense relating to the neglect

or abuse of a patient;

• A conviction under Federal or State law

of a felony relating to fraud, theft,

embezzlement, breach of fiduciary

responsibility or other financial misconduct

against a health care program financed by

any Federal, State, or local government

agency; or

• A conviction under Federal or State law

of a felony relating to unlawful manufacture,

distribution, prescription, or dispensing of a

controlled substance.

36834 Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices

1Available through the OIG website at http://

www.hhs.gov/oas/ratstat.html.

If there is one prior conviction, the

exclusion will be for 10 years. If there are two

prior convictions, the exclusion will be

permanent.

Permissive Exclusion

Individuals or entities may be excluded

from participation in Federal health care

programs for a minimum of 3 years if they

meet any of the following criteria:

• A criminal offense related to the delivery

of an item or service under Medicare or

Medicaid;

• A misdemeanor related to fraud, theft,

embezzlement, breach of fiduciary

responsibility or other financial misconduct

against a health care program financed by

any Federal, State, or local government

agency;

• Interference with, or obstruction of, any

investigation into certain criminal offenses;

• A misdemeanor related to the unlawful

manufacture, distribution, prescription or

dispensing of a controlled substance;

• Exclusion or suspension under a Federal

or State health care program;

• Submission of claims for excessive

charges, unnecessary services or services that

were of a quality which fails to meet

professionally recognized standards of health

care;

• Violating the CMP law or the statute

entitled ‘‘Criminal Penalties for Acts

Involving Federal Health Care Programs’’;

• Ownership or control of an entity by a

sanctioned individual or immediate family

member (spouse, natural or adoptive parent,

child, sibling, stepparent, stepchild,

stepbrother or stepsister, in-laws,

grandparent and grandchild);

• Failure to disclose information required

by law;

• Failure to supply claims payment

information; and

• Defaulting on health education loan or

scholarship obligations.

The above list is not all inclusive.

Additional grounds for permissive exclusion

are detailed in the statute.

Examples

1. Nurse R was excluded based on a

conviction involving obtaining dangerous

drugs by forgery. She also altered

prescriptions that were given for her own

health problems before she presented them to

the pharmacist to be filled.

2. Practice T was excluded due to its

affiliation with its excluded owner. The

practice owner, excluded from participation

in the Federal health care programs for

soliciting and receiving illegal kickbacks, was

still participating in the day-to-day

operations of the practice after his exclusion

was effective.

Appendix D: OIG–HHS Contact

Information

I. OIG Hotline Number

One method for providers to report

potential fraud, waste, and abuse problems is

to contact the OIG Hotline number. All HHS

and contractor employees have a

responsibility to assist in combating fraud,

waste and abuse in all departmental

programs. As such, providers are encouraged

to report matters involving fraud, waste and

mismanagement in any departmental

program to the OIG. The OIG maintains a

hotline that offers a confidential means for

reporting these matters.

Contacting the OIG Hotline

By Phone: 1–800–HHS–TIPS (1–800–447–

8477)

By E–Mail: HTips@os.dhhs.gov

By Mail: Office of Inspector General

Department of Health and Human Services

Attn: HOTLINE,

330 Independence Ave., S.W.,

Washington, D.C. 20201

When contacting the Hotline, please

provide the following information to the best

of your ability:

• Type of Complaint:

Medicare Part A

Medicare Part B

Indian Health Service

TRICARE

Other (please specify)

• HHS Department or program being affected

by your allegation of fraud, waste, abuse/

mismanagement:

Health Care Financing Administration

(HCFA)

Indian Health Service

Other (please specify)

Please provide the following information.

(However, if you would like your referral

to be submitted anonymously, please

indicate such in your correspondence or

phone call.)

Your Name

Your Street Address

Your City/County

Your State

Your Zip Code

Your email Address

• Subject/Person/Business/Department that

allegation is against.

Name of Subject

Title of Subject

Subject’s Street Address

Subject’s City/County

Subject’s State

Subject’s Zip Code

• Please provide a brief summary of your

allegation and the relevant facts.

II. Provider Self-Disclosure Protocol

The recommended method for a provider

to contact the OIG regarding potential fraud

or abuse issues that may exist in the

provider’s own organization is through the

use of the Provider Self-Disclosure Protocol.

This program encourages providers to

voluntarily disclose irregularities in their

dealings with Federal health care programs.

While voluntary disclosure under the

protocol does not guarantee a provider

protection from civil, criminal or

administrative actions, the fact that a

provider voluntarily disclosed possible

wrongdoing is a mitigating factor in OIG’s

recommendations to prosecuting agencies.

Self-reporting offers providers the

opportunity to minimize the potential cost

and disruption of a full-scale audit and

investigation, to negotiate a fair monetary

settlement, and to avoid an OIG permissive

exclusion preventing the provider from doing

business with Federal health care programs.

In addition, if the provider is obligated to

enter into an Integrity Agreement (IA) as part

of the resolution of a voluntary disclosure,

there are three benefits the provider might

receive as a result of self-reporting:

• If the provider has an effective

compliance program and agrees to maintain

its compliance program as part of the False

Claims Act settlement, the OIG may not even

require an IA;

• In cases where the provider’s own audits

detected the disclosed problem, the OIG may

consider alternatives to the IA’s auditing

provisions. The provider may be able to

perform some or all of its billing audits

through internal auditing methods rather

than be required to retain an independent

review organization to perform the billing

review; and

• Self-disclosing can help to demonstrate a

provider’s trustworthiness to the OIG and

may result in the OIG determining that they

can sufficiently safeguard the Federal health

care programs through an IA without the

exclusion remedy for a material breach,

which is typically included in an IA.

Specific instructions on how to submit a

voluntary disclosure under the Provider SelfDisclosure Protocol can be found on the

OIG’s internet site at www.hhs.gov/oig or in

the Federal Register at 63 FR 58399.

The Provider Self-Disclosure Protocol can

also be a useful tool for conducting baseline

audits. The protocol details the OIG’s views

on the appropriate elements of an effective

investigative and audit plan for providers.

Physician practices can use the selfdisclosure protocol as a model for conducting

audits and self-assessments.

In relying on the protocol for audit design

and sample selection, a physician practice

should pay close attention to the sections on

self-assessment and sample selection. These

two sections provide valuable guidance

regarding how these two functions should be

performed.

The self-assessment section of the protocol

contains information that can be applied to

audit design. Self-assessment is an internal

financial assessment to determine the

monetary impact of the matter. The approach

of a review can include reviewing either all

claims affected or a statistically valid sample

of the claims.

Sample selection must include several

elements. These elements are drawn from the

Government sampling program known as

RAT–STATS.1 All of these elements are set

forth in more detail in the Provider SelfDisclosure Protocol, but the elements

include: (1) Sampling unit, (2) sampling

frame, (3) probe sample, (4) sample size, (5)

random numbers, (6) sample design and (7)

missing sample items. All of these sampling

elements should be clearly documented by

the physician practice and compiled in the

format set forth in the Provider SelfDisclosure Protocol. Use of the format set

forth in the Provider Self-Disclosure Protocol

will help physician practices to ensure that

the elements of their internal audits are in

conformance with OIG standards.

Federal Register / Vol. 65, No. 113 / Monday, June 12, 2000 / Notices 36835

III. Advisory Opinion Requests

Health care professionals or others may

request an advisory opinion from OIG on the

following issues:

• What constitutes prohibited

‘‘remuneration’’ or payment under the antikickback statute;

• Whether the arrangement or proposed

arrangement fits into a safe harbor to the antikickback statute;

• What constitutes an inducement to

reduce or limit services to Medicare/

Medicaid beneficiaries; and

• Whether any activity or proposed

activity constitutes grounds for the

imposition of fraud and abuse sanctions.

The OIG issues Advisory Opinions on

specific existing or proposed arrangements in

which the requesting party is engaged or in

good faith intends to engage; the OIG does

not issue Advisory Opinions on hypothetical

arrangements. Advisory Opinions will not be

issued on questions of fair market value or

whether an individual is a bona fide

employee. Advisory Opinions will be

binding only on the requesting party and the

OIG. Failure to seek an Advisory Opinion is

not admissible as evidence of intent to

violate the law.

Procedures for requesting an Advisory

Opinion are available on the OIG website at

www.hhs.gov/oig or at 42 CFR 1008.1

through 1008.59.

Appendix E: Carrier Contract

Information

Medicare

A complete list of contact information

(address, phone number, email address) for

Medicare Part A Fiscal Intermediaries,

Medicare Part B Carriers, Regional Home

Health Intermediaries, and Durable Medical

Equipment Regional Carriers can be found on

the HCFA website at www.hcfa.gov/

medicare/incardir.htm.

Medicaid

Contact information (address, phone

number, email address) for each state

Medicaid carrier can be found on the HCFA

website at www.hcfa.gov/medicaid/

mcontact.htm. In addition to a list of

Medicaid carriers, the website includes

contact information for each State survey

agency and the HCFA Regional Offices.

Contact information for each state

Medicaid Fraud Control Unit can be found

on the OIG website at www.hhs.gov/oig/oi/

mfcu/index.htm.

Appendix F: Internet Resources

Office of Inspector General—U.S.

Department of Health and Human Services

(www.hhs.gov/oig)

This website includes a variety of

information relating to Federal health care

programs, including the following:

Advisory Opinions

Anti-Kickback Information

Compliance Program Guidance

Corporate Integrity Agreements

Fraud Alerts

Links to web pages for the:

Office of Audit Services (OAS)

Office of Evaluation and Inspections (OEI)

Office of Investigations (OI)

OIG List of Excluded Individuals/Entities

OIG News

OIG Regulations

OIG Semi-Annual Report

OIG Workplan

Health Care Financing Administration

(www.hcfa.gov)

This website includes information on a

wide array of topics, including the following:

Medicare

National Correct Coding Initiative

Intermediary-Carrier Directory

Payment

Program Manuals

Program Transmittals & Memorandum

Provider Billing/HCFA Forms

Statistics and Data

Medicaid

HCFA Regional Offices

Letters to State Medicaid Directors

Medicaid Hotline Numbers

Policy & Program Information

State Medicaid Contacts

State Medicaid Manual

State Survey Agencies

Statistics and Data

HCFA Medicare Training

(www.medicaretraining.com)

This site provides computer-based training

on the following topics:

HCFA 1500 Form

Fraud & Abuse

ICD–9–CM Diagnosis Coding

Adult Immunization

Medicare Secondary Payer (MSP)

Women’s Health

Front Office Management

Introduction to the World of Medicare

Home Health Agency

HCFA 1450 (UB92)

Government Printing Office

(www.access.gpo.gov)

This site provides access to Federal laws

and regulations pertaining to Federal health

care programs.

The U.S. House of Representatives Internet

Library (uscode.house.gov/usc.htm)

This site provides access to the United

States Code, which contains laws pertaining

to Federal health care programs.

[FR Doc. 00–14703 Filed 6–9–00; 8:45 am]

BILLING CODE 4152–01–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

National Institute of Health

National Cancer Institute; Notice of

Closed Meeting

Pursuant to section 10(d) of the

Federal Advisory Committee Act, as

amended (5 U.S.C. Appendix 2), notice

is hereby given of the following

meeting.

The meeting will be closed to the

public in accordance with the

provisions set forth in section 552b(c)(4)

and 552b(c)(6). Title 5 U.S.C., amended.

The grant applications and the

discussions could disclose confidential

trade secrets or commercial property

such as patentable material, and

material, and personal information

concerning individuals associated with

the grant applications, the disclosure of

which would constitute a clearly

unwarranted invasion of personal

privacy.

Name of Committee: National Cancer

Institute Special Emphasis Panel Cancer

Education Grant (R25 application).

Date: June 28, 2000.

Time: 4 PM to 5 PM.

Agenda: To review and evaluate grant

applications.

Place: Georgetown Holiday Inn,

Kaleidoscope Room, 2101 Wisconsin Ave,

NW, Washington, DC 20007.

Contact Person: David E. Maslow, PhD,

Scientific Review Administrator, Grants

Review Administrator, Grants Review

Branch, Division of Extramural Activities,

National Cancer Institute, National Institutes

of Health, 6116 Executive Boulevard—Room

8054, Bethesda, MD 20892–7405, 301/496–

2330.

This notice is being published less than 15

days prior to the meeting due to the timing

limitations imposed by the review and

funding cycle.

(Catalogue of Federal Domestic Assistance

Program Nos. 93.392, Cancer Construction;

93.393, Cancer Cause and Prevention

Research; 93.394, Cancer Detection and

Diagnosis Research; 93.395, Cancer

Treatment Research; 93.396, Cancer Biology

Research; 93.397, Cancer Centers Support;

93.398, Cancer Research Manpower; 93.399,

Cancer Control, National Institutes of Health,

HHS)

Dated: June 5, 2000.

LaVerne Y. Stringfield,

Director, Office of Federal Advisory

Committee Policy.

[FR Doc. 00–14745 Filed 6–9–00; 8:45 am]

BILLING CODE 4140–01–M

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

National Institutes of Health

National Cancer Institute; Notice of

Meeting

Pursuant to section 10(a) of the

Federal Advisory Committee Act, as

amended (5 U.S.C. Appendix 2), notice

is hereby given of a meeting of the

National Cancer Institute Board of

Scientific Advisors.

The meeting will be open to the

public, with attendance limited to space

available. Individuals who plan to

attend and need special assistance, such

as sign language interpretation of other

reasonable accommodations, should