[Federal Register Volume 73, Number 190 (Tuesday, September 30, 2008)]
[Notices]
[Pages 56832-56848]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-22796]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Inspector General
OIG Supplemental Compliance Program Guidance for Nursing
Facilities
AGENCY: Office of Inspector General (OIG), HHS.
ACTION: Notice.
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SUMMARY: This Federal Register notice sets forth the supplemental
compliance program guidance (CPG) for nursing facilities developed by
the Office of Inspector General (OIG). OIG is supplementing its prior
CPG for nursing facilities issued in 2000. The supplemental CPG
contains new compliance recommendations and an expanded discussion of
risk areas. The supplemental CPG takes into account Medicare and
Medicaid nursing facility payment systems and regulations, evolving
industry practices, current enforcement priorities (including the
Government's heightened focus on quality of care), and lessons learned
in the area of nursing facility compliance. The supplemental CPG
provides voluntary guidelines to assist nursing facilities in
identifying significant risk areas and in evaluating and, as necessary,
refining ongoing compliance efforts.
FOR FURTHER INFORMATION CONTACT: Amanda Walker, Associate Counsel,
Office of Counsel to the Inspector General, (202) 619-0335; or
Catherine Hess, Senior Counsel, Office of Counsel to the Inspector
General, (202) 619-1306.
Background
Beginning in 1998, OIG embarked on a major initiative to engage the
private health care community in preventing the submission of erroneous
claims and in combating fraud and abuse in the Federal health care
programs through voluntary compliance efforts. As part of that
initiative, OIG has developed a series of CPGs directed at the
following segments of the health care industry: Hospitals; clinical
laboratories; home health agencies; third-party billing companies; the
durable medical equipment, prosthetics, orthotics, and supply industry;
hospices; Medicare Advantage (formerly known as
[[Page 56833]]
Medicare+Choice) organizations; nursing facilities; ambulance
suppliers; physicians; and pharmaceutical manufacturers.\1\ It is our
intent that CPGs encourage the development and use of internal controls
to monitor adherence to applicable statutes, regulations, and program
requirements. The suggestions made in the CPGs are not mandatory, and
nursing facilities should not view the CPGs as exhaustive discussions
of beneficial compliance practices or relevant risk areas.
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\1\ Copies of the CPGs are available on our Web site at http://www.oig.hhs.gov/fraud/complianceguidance.html.
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OIG originally published a CPG for the nursing facility industry on
March 16, 2000.\2\ Since that time, there have been significant changes
in the way nursing facilities deliver, and receive reimbursement for,
health care services, as well as significant changes in the Federal
enforcement environment and increased concerns about quality of care in
nursing facilities, which continues to be a high priority of OIG. In
response to these developments, and in an effort to receive initial
input on this guidance from interested parties, OIG published a notice
in the Federal Register on January 24, 2008, seeking stakeholder
comments.\3\ After consideration of the public comments and the issues
raised, OIG published a draft supplemental CPG for Nursing Facilities
in the Federal Register on April 16, 2008, to ensure that that all
parties had a reasonable and meaningful opportunity to provide input
into the final product.\4\
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\2\ See 65 FR 14289 (March 16, 2000), ``Publication of the OIG
Compliance Program Guidance for Nursing Facilities'' (2000 Nursing
Facility CPG), available on our Web site at http://oig.hhs.gov/authorities/docs/cpgnf.pdf.
\3\ See 73 FR 4248 (January 24, 2008), ``Solicitation of
Information and Recommendations for Revising the Compliance Program
Guidance for Nursing Facilities,'' available on our Web site at
http://oig.hhs.gov/authorities/docs/08/CPG_Nursing_Facility_Solicitation.pdf.
\4\ See 73 FR 20680 (April 16, 2008), ``Draft OIG Supplemental
Compliance Program Guidance for Nursing Facilities,'' available on
our Web site at http://oig.hhs.gov/fraud/docs/complianceguidance/NurseCPGIIFR.pdf.
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We received seven comments on the draft document, all from trade
associations. We also held stakeholder meetings with the commenters who
chose to meet with us. OIG considered the written comments and input
from the meetings during the development of the final supplemental CPG.
Commenters uniformly supported OIG's efforts to update the 2000 Nursing
Facility CPG. Some of the commenters suggested that OIG clarify the
draft supplemental CPG to reflect more fully the role consultant
pharmacists can play, in conjunction with other members of residents'
care teams, in achieving appropriate medication management in nursing
facilities. Other commenters suggested modifications to other aspects
of the draft supplemental CPG, including physician roles and
contractual issues. The final supplemental CPG incorporates
clarifications responsive to these comments. Several commenters
suggested legislative or policy changes outside the scope of the
supplemental CPG, and those comments are not addressed by the final
supplemental CPG.
In the draft supplemental CPG, we specifically solicited
suggestions regarding specific measures of compliance program
effectiveness tailored to nursing facilities. We did not receive
suggestions proposing such measures, and therefore did not include an
effectiveness measures section in the final supplemental CPG.
OIG Supplemental Compliance Program Guidance for Nursing Facilities
This document is organized in the following manner:
I. Introduction
A. Benefits of a Compliance Program
B. Application of Compliance Program Guidance
II. Reimbursement Overview
A. Medicare
B. Medicaid
III. Fraud and Abuse Risk Areas
A. Quality of Care
1. Sufficient Staffing
2. Comprehensive Resident Care Plans
3. Medication Management
4. Appropriate Use of Psychotropic Medications
5. Resident Safety
(a) Promoting Resident Safety
(b) Resident Interactions
(c) Staff Screening
B. Submission of Accurate Claims
1. Proper Reporting of Resident Case-Mix by SNFs
2. Therapy Services
3. Screening for Excluded Individuals and Entities
4. Restorative and Personal Care Services
C. The Federal Anti-Kickback Statute
1. Free Goods and Services
2. Service Contracts
(a) Non-Physician Services
(b) Physician Services
3. Discounts
(a) Price Reductions
(b) Swapping
4. Hospices
5. Reserved Bed Payments
D. Other Risk Areas
1. Physician Self-Referrals
2. Anti-Supplementation
3. Medicare Part D
E. HIPAA Privacy and Security Rules
IV. Other Compliance Considerations
A. An Ethical Culture
B. Regular Review of Compliance Program Effectiveness
V. Self-Reporting
VI. Conclusion
I. Introduction
Continuing its efforts to promote voluntary compliance programs for
the health care industry, the Office of Inspector General (OIG) of the
Department of Health and Human Services (Department) publishes this
Supplemental Compliance Program Guidance (CPG) for Nursing
Facilities.\5\ This document supplements, rather than replaces, OIG's
2000 Nursing Facility CPG, which addressed the fundamentals of
establishing an effective compliance program for this industry.\6\
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\5\ For purposes of convenience in this guidance, the term
``nursing facility'' or ``facility'' includes a skilled nursing
facility (SNF) and a nursing facility (NF) that meet the
requirements of sections 1819 and 1919 of the Social Security Act
(Act) (42 U.S.C. 1395i-3, 1396r), respectively, as well as entities
that own or operate such facilities. Where appropriate, we
distinguish SNFs from NFs. While long-term care providers other than
SNFs or NFs, such as assisted living facilities, should find this
CPG useful, we recognize that they may be subject to different laws,
rules, and regulations and, accordingly, may have different or
additional risk areas and may need to adopt different compliance
strategies. We encourage all long-term care providers to establish
and maintain effective compliance programs.
\6\ See 2000 Nursing Facility CPG, supra note 2.
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Neither this supplemental CPG, nor the original 2000 Nursing
Facility CPG, is a model compliance program. Rather, the two documents
collectively offer a set of guidelines that nursing facilities should
consider when developing and implementing a new compliance program or
evaluating an existing one. We are mindful that many nursing facilities
have already devoted substantial time and resources to compliance
efforts. For those nursing facilities with existing compliance
programs, this document may serve as a roadmap for updating or refining
their compliance plans. For facilities with emerging compliance
programs, this supplemental CPG, read in conjunction with the 2000
Nursing Facility CPG, should facilitate discussions among facility
leadership regarding the inclusion of specific compliance components
and risk areas.
In drafting this supplemental CPG, we considered, among other
things, public comments; relevant OIG and Centers for Medicare &
Medicaid Services (CMS) statutory and regulatory authorities (including
CMS's regulations governing long-term care facilities at 42 CFR part
483; CMS transmittals, program memoranda, and other guidance; and the
Federal fraud and abuse statutes, together with the anti-kickback safe
[[Page 56834]]
harbor regulations and preambles); other OIG guidance (such as OIG
advisory opinions, special fraud alerts, bulletins, and other public
documents); experience gained from investigations conducted by OIG's
Office of Investigations, the Department of Justice (DOJ), and the
State Medicaid Fraud Control Units; and relevant reports issued by
OIG's Office of Audit Services and Office of Evaluation and
Inspections. We also consulted with CMS, DOJ, and nursing facility
resident advocates.
This supplemental CPG responds to developments in the nursing
facility industry, including significant changes in the way nursing
facilities deliver, and receive reimbursement for, health care
services, evolving business practices, and changes in the Federal
enforcement environment. Moreover, this supplemental CPG reflects OIG's
continued focus on quality of care in nursing facilities. Together with
our law enforcement partners, we have used, with increasing frequency,
Federal civil fraud remedies to address cases involving poor quality of
care, including troubling failure of care on a systemic level in some
organizations. To promote compliance and prevent fraud and abuse, OIG
is supplementing the 2000 Nursing Facility CPG with specific risk areas
related to quality of care, claims submissions, the Federal anti-
kickback statute, and other emerging areas.
A. Benefits of a Compliance Program
Nursing facilities are vital to the health and welfare of millions
of Americans. OIG recognizes that most facilities and the people who
work in them strive daily to provide high quality, compassionate, cost-
effective care to residents. A successful compliance program addresses
the public and private sectors' common goals of reducing fraud and
abuse, enhancing health care providers' operations, improving the
quality of health care services, and reducing their overall cost.
Meeting these goals benefits the nursing facility industry, the
Government, and residents alike. Compliance programs help nursing
facilities fulfill their legal duty to provide quality care; to refrain
from submitting false or inaccurate claims or cost information to the
Federal health care programs; and to avoid engaging in other illegal
practices.
A nursing facility may gain important additional benefits by
voluntarily implementing a compliance program, including:
Demonstrating the nursing facility's commitment to honest
and responsible corporate conduct;
Increasing the likelihood of preventing unlawful and
unethical behavior or identifying and correcting such behavior at an
early stage;
Encouraging employees and others to report potential
problems, which permits appropriate internal inquiry and corrective
action and reduces the risk of False Claims Act lawsuits, and
administrative sanctions (e.g., penalties, assessments, and exclusion),
as well as State actions;
Minimizing financial loss to the Government and taxpayers,
as well as corresponding financial loss to the nursing facility;
Enhancing resident satisfaction and safety through the
delivery of improved quality of care; and
Improving the nursing facility's reputation for integrity
and quality, increasing its market competitiveness and reputation in
the community.
OIG recognizes that implementation of a compliance program may not
entirely eliminate improper or unethical conduct from nursing facility
operations. However, an effective compliance program demonstrates a
nursing facility's good faith effort to comply with applicable
statutes, regulations, and other Federal health care program
requirements, and may significantly reduce the risk of unlawful conduct
and corresponding sanctions.
B. Application of Compliance Program Guidance
Given the diversity of the nursing facility industry, there is no
single ``best'' nursing facility compliance program. OIG recognizes the
complexities of the nursing facility industry and the differences among
facilities. Some nursing facilities are small and may have limited
resources to devote to compliance measures; others are affiliated with
well-established, large, multi-facility organizations with a widely
dispersed work force and significant resources to devote to compliance.
Accordingly, OIG does not intend this supplemental CPG to be a
``one-size-fits-all'' guidance. OIG strongly encourages nursing
facilities to identify and focus their compliance efforts on those
areas of potential concern or risk that are most relevant to their
organizations. A nursing facility should tailor its compliance measures
to address identified risk areas and to fit the unique environment of
the facility (including its structure, operations, resources, the needs
of its resident population, and prior enforcement experience). In
short, OIG recommends that each nursing facility adapt the objectives
and principles underlying this guidance to its own particular
circumstances.
In section II below, for contextual purposes, we provide a brief
overview of the reimbursement system. In section III, entitled ``Fraud
and Abuse Risk Areas,'' we present several fraud and abuse risk areas
that are particularly relevant to the nursing facility industry. Each
nursing facility should carefully examine these risk areas and identify
those that potentially affect it. Next, in section IV, ``Other
Compliance Considerations,'' we offer recommendations for establishing
an ethical culture and for assessing and improving an existing
compliance program. Finally, in section V, ``Self-Reporting,'' we set
forth the actions nursing facilities should take if they discover
credible evidence of misconduct.
II. Reimbursement Overview
We begin with a brief overview of Medicare and Medicaid
reimbursement for nursing facilities as context for the subsequent risk
areas section. This overview is intended to be a summary only. It does
not establish or interpret any program rules or regulations. Nursing
facilities are advised to consult the relevant program's payment,
coverage, and participation rules, regulations, and guidance, which
change over time. Any questions regarding payment, coverage, or
participation in the Medicare or Medicaid programs should be directed
to the relevant contractor, carrier, CMS office, or State Medicaid
agency.
A. Medicare
Medicare reimbursement to SNFs and NFs depends on several factors,
including the character of the facility, the beneficiary's
circumstances, and the type of items and services provided. Generally
speaking, SNFs are Medicare-certified facilities that provide extended
skilled nursing or rehabilitative care under Medicare Part A. They are
typically reimbursed under Part A for the costs of most items and
services, including room, board, and ancillary items and services. In
some circumstances (discussed further below), SNFs may receive payment
under Medicare Part B. Facilities that are not SNFs are not reimbursed
under Part A. They may be reimbursed for some items and services under
Part B.
Medicare pays SNFs under a prospective payment system (PPS) for
beneficiaries covered by the Part A extended care benefit.\7\ Covered
[[Page 56835]]
beneficiaries are those who require skilled nursing or rehabilitation
services and receive the services from a Medicare-certified SNF after a
qualifying hospital stay of at least 3 days.\8\ The PPS rate is a
fixed, per diem rate.\9\ The maximum benefit is 100 days per ``spell of
illness.'' \10\
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\7\ Section 1888(e) of the Act (42 U.S.C. 1395yy(e)) (noting the
PPS rate applied to services provided on or after July 1, 1998). See
also CMS, ``Consolidated Billing,'' available on CMS's Web site at
http://www.cms.hhs.gov/SNFPPS/05_ConsolidatedBilling.asp.
\8\ Sections 1812(a)(2) and 1861(i) of the Act (42 U.S.C.
1395d(a)(2), 1395x(i)).
\9\ Section 1888(e) of the Act (42 U.S.C. 1395yy(e)).
\10\ Section 1812(a)(2)(A) of the Act (42 U.S.C.
1395d(a)(2)(A)).
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CMS adjusts the PPS per diem rate per resident to ensure that the
level of payment made for a particular resident reflects the resource
intensity that would typically be associated with that resident's
clinical condition.\11\ This methodology, referred to as the Resource
Utilization Group (RUG) classification system, currently in version
RUG-III, uses beneficiary assessment data extrapolated from the Minimum
Data Set (MDS) to assign beneficiaries to one of the RUG-III
groups.\12\ The MDS is composed of data variables for each resident,
including diagnoses, treatments, and an evaluation of the resident's
functional status, which are collected via a Resident Assessment
Instrument (RAI).\13\ Such assessments are conducted at established
intervals throughout a resident's stay. The resident's RUG assignment
and payment rate are then adjusted accordingly for each interval.\14\
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\11\ Section 1888(e)(4)(G)(i) of the Act (42 U.S.C.
1395yy(e)(4)(G)(i)).
\12\ Id.
\13\ Sections 1819(b)(3) and 1919(b)(3) of the Act (42 U.S.C.
1395i-3(b)(3), 1396r(b)(3)), and their implementing regulation, 42
CFR 483.20, require nursing facilities participating in the Medicare
or Medicaid programs to use a standardized RAI to assess each
nursing facility resident's strengths and needs.
\14\ See id.
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The PPS payments cover virtually all of the SNF's costs for
furnishing services to Medicare beneficiaries covered under Part A.
Under the ``consolidated billing'' rules, SNFs bill Medicare for most
of the services provided to Medicare beneficiaries in SNF stays covered
under Part A, including items and services that outside practitioners
and suppliers provide under arrangement with the SNF.\15\ The SNF is
responsible for paying the outside practitioners and suppliers for
these services.\16\ Services covered by this consolidated billing
requirement include, by way of example, physical therapy, occupational
therapy, and speech therapy services; certain non-self-administered
drugs and supplies furnished ``incident to'' a physician's services
(e.g., ointments, bandages, and oxygen); braces and orthotics; and the
technical component of most diagnostic tests.\17\ These items and
services must be billed to Medicare by the SNF.\18\
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\15\ Sections 1842(b)(6)(E) and 1862(a)(18) of the Act (42
U.S.C. 1395u, 1395aa); Section 1888(e) of the Act (42 U.S.C.
1395yy(e)) (noting the PPS rate applied to services provided on or
after July 1, 1998). See also Consolidated Billing, supra note 7.
\16\ See id.
\17\ Section 1888(e) of the Act (42 U.S.C. 1395yy); Consolidated
Billing, supra note 7.
\18\ Id.
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The consolidated billing requirement does not apply to a small
number of excluded services, such as physician professional fees and
certain ambulance services.\19\ These excluded services are separately
billable to Part B by the individual or entity furnishing the service.
For example, professional services furnished personally by a physician
to a Part A SNF resident are excluded from consolidated billing and are
billed by the physician to the Part B carrier.\20\
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\19\ Id.
\20\ Id.
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Some Medicare beneficiaries reside in a Medicare-certified SNF, but
are not eligible for Part A extended care benefits (e.g., a beneficiary
who did not have a qualifying hospital stay of at least 3 days or a
beneficiary who has exhausted his or her Part A benefit). These
beneficiaries--sometimes described as being in ``non-covered Part A
stays''--may still be eligible for Part B coverage of certain
individual services. Consolidated billing would not apply to such
individual services, with the exception of therapy services.\21\
Physical therapy, occupational therapy, and speech language pathology
services furnished to SNF residents are always subject to consolidated
billing.\22\ Claims for therapy services furnished during a non-covered
Part A stay must be submitted to Medicare by the SNF itself.\23\ Thus,
according to CMS guidance, the SNF is reimbursed under the Medicare fee
schedule for the therapy services, and is responsible for reimbursing
the therapy provider.\24\
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\21\ Section 1888(e)(2)(A) of the Act (42 U.S.C.
1395yy(e)(2)(A)); CMS, ``Skilled Nursing Facilities (SNF)
Consolidated Billing (CB) as It Relates to Therapy Services,'' MLN
Matters Number: SE0518 (MLN Matters SE0518), available on CMS's Web
site at http://www.cms.hhs.gov/MLNMattersArticles/downloads/SE0518.pdf.
\22\ Id.
\23\ MLN Matters SE0518, supra note 21.
\24\ Id.
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When a beneficiary resides in a nursing facility (or part thereof)
that is not certified as an SNF by Medicare, the beneficiary is not
considered an SNF resident for Medicare billing purposes.\25\
Accordingly, ancillary services, including therapy services, are not
subject to consolidated billing.\26\ Either the supplier of the
ancillary service or the facility may bill the Medicare carrier for the
Part B items and services directly.\27\ In these circumstances, it is
the joint responsibility of the facility and the supplier to ensure
that only one of them bills Medicare.
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\25\ Id.
\26\ Id.
\27\ Id.
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Part B coverage for durable medical equipment (DME) presents
special circumstances because the benefit extends only to items
furnished for use in a patient's home.\28\ DME furnished for use in an
SNF or in certain other facilities providing skilled care is not
covered by Part B. Instead, such DME is covered by the Part A PPS
payment or applicable inpatient payment.\29\ In some cases, NFs that
are not SNFs can be considered a ``home'' for purposes of DME coverage
under Part B.\30\
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\28\ Section 1861(n) of the Act (42 U.S.C. 1395x(n)).
\29\ Section 1861(h)(5) of the Act (42 U.S.C. 1395x(h)(5)).
\30\ Section 1861(n) of the Act (42 U.S.C. 1395x(n)).
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B. Medicaid
Medicaid provides another means for nursing facility residents to
pay for skilled nursing care, as well as room and board in a nursing
facility certified by the Government to provide services to Medicaid
beneficiaries. Medicaid is a State and Federal program that covers
certain groups of low-income and medically needy people. Medicaid also
helps residents dually eligible for Medicare and Medicaid pay their
Medicare premiums and cost-sharing amounts. Because Medicaid
eligibility criteria, coverage limitations, and reimbursement rates are
established at the State level, there is significant variation across
the nation. Many States, however, pay nursing facilities a flat daily
rate that covers room, board, and routine care for Medicaid
beneficiaries.
III. Fraud and Abuse Risk Areas
This section should assist nursing facilities in their efforts to
identify operational areas that present potential liability risks under
several key Federal fraud and abuse statutes and regulations. This
section focuses on areas that are currently of concern to the
enforcement community. It is not intended to address all potential risk
areas for nursing facilities. Identifying a particular practice or
activity in this section is not intended to imply that the practice or
activity is necessarily illegal
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in all circumstances or that it may not have a valid or lawful purpose.
This section addresses the following areas of significant concern for
nursing facilities: Quality of care, submission of accurate claims,
Federal anti-kickback statute, other risk areas, and Health Insurance
Portability and Accountability Act of 1996 (HIPAA) privacy and security
rules.
This guidance does not create any new law or legal obligations, and
the discussions in this guidance are not intended to present detailed
or comprehensive summaries of lawful or unlawful activity. This
guidance is not intended as a substitute for consultation with CMS, a
facility's fiscal intermediary or Program Safeguard Contractor, a State
Medicaid agency, or other relevant State agencies with respect to the
application and interpretation of payment, coverage, licensure, or
other provisions that are subject to change. Rather, this guidance
should be used as a starting point for a nursing facility's legal
review of its particular practices and for development or refinement of
policies and procedures to reduce or eliminate potential risk.
A. Quality of Care
By 2030, the number of older Americans is estimated to rise to 71
million,\31\ making the aging of the U.S. population ``one of the major
public health challenges we face in the 21st century.'' \32\ In
addressing this challenge, a national focus on the quality of health
care is emerging.
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\31\ Centers for Disease Control and Prevention (CDC), ``The
State of Aging and Health in America 2007,'' available on CDC's Web
site at http://www.cdc.gov/aging/pdf/saha_2007.pdf.
\32\ Id. (quoting Julie Louise Gerberding, M.D., MPH, Director,
CDC, U.S. Department of Health and Human Services).
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In cases that involve failure of care on a systemic and widespread
basis, the nursing facility may be liable for submitting false claims
for reimbursement to the Government under the Federal False Claims Act,
the Civil Monetary Penalties Law (CMPL), or other authorities that
address false and fraudulent claims or statements made to the
Government.\33\ Thus, compliance with applicable quality of care
standards and regulations is essential for the lawful behavior and
success of nursing facilities.
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\33\ ``Listening Session: Abuse of Our Elders: How We Can Stop
It: Hearing Before the Senate Special Committee on Aging,'' 110th
Congress (2007) (testimony of Gregory Demske, Assistant Inspector
General for Legal Affairs, Office of Inspector General, U.S.
Department of Health and Human Services), available at http://aging.senate.gov/events/hr178gd.pdf; see also 18 U.S.C. 287
(concerning false, fictitious, or fraudulent claims); 18 U.S.C. 1001
(concerning statements or entries generally); 18 U.S.C. 1035
(concerning false statements relating to health care matters); 18
U.S.C. 1347 (concerning health care fraud); 18 U.S.C. 1516
(concerning obstruction of a Federal audit); the Federal False
Claims Act (31 U.S.C. 3729-3733); section 1128A of the Act (42
U.S.C. 1320a-7a) (concerning civil monetary penalties); section
1128B(c) of the Act (42 U.S.C. 1320a-7b(c)) (concerning false
statements or representations with respect to condition or operation
of institutions). In addition to the Federal criminal, civil, and
administrative liability for false claims and kickback violations
outlined in this CPG, nursing facilities also face exposure under
State laws, including criminal, civil, and administrative sanctions.
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Nursing facilities that fail to make quality a priority, and
consequently fail to deliver quality health care, risk becoming the
target of governmental investigations. Highlighted below are common
risk areas associated with the delivery of quality health care to
nursing facility residents that frequently arise in enforcement cases.
These include sufficient staffing, comprehensive care plans, medication
management, appropriate use of psychotropic medications, and resident
safety. This list is not exhaustive. Moreover, nursing facilities
should recognize that these issues are often inter-related. Nursing
facilities that attempt to address one issue will often find that they
must address other areas as well. The risk areas identified in sections
III.B. (Submission of Accurate Claims), III.C. (Anti-Kickback), and
III.D. (Other Risk Areas) below are also intertwined with quality of
care risk areas and should be considered as well.
As a starting point, nursing facilities should familiarize
themselves with 42 CFR part 483 (part 483), which sets forth the
principal requirements for nursing facility participation in the
Medicare and Medicaid programs. It is essential that key members of the
organization understand these requirements and support their facility's
commitment to compliance with these regulations. Targeted training for
care providers, managers, administrative staff, officers, and directors
on the requirements of part 483 will help nursing facilities ensure
that they are fulfilling their obligation to provide quality health
care.\34\
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\34\ The requirement to deliver quality health care is a
continuing obligation for nursing facilities. As regulations change,
so too should the training. Therefore, this recommendation envisions
more than an initial employee ``orientation'' training on the
nursing facility's obligations to provide quality health care. CMS
has multiple resources available to assist nursing facilities in
developing training programs. See CMS, ``Sharing Innovations in
Quality, Resources for Long Term Care,'' available on CMS's Web site
at http://siq.air.org/default.aspx; CMS, ``Skilled Nursing
Facilities/Long-Term Care Open Door Forum,'' available on CMS's Web
site at http://www.cms.hhs.gov/OpenDoorForums/25_ODF_SNFLTC.asp;
CMS, ``State Operations Manual,'' Pub. No. 100-07, available on
CMS's Web site at http://www.cms.hhs.gov/Manuals/IOM/list.asp; see
also Medicare Quality Improvement Community, ``MedQIP--Medicare
Quality Improvement Community,'' available on CMS's Web site at
http://www.medqic.org. Nursing facilities may also find it useful to
review the CMS Quality Improvement Organizations Statement of Work,
available at http://www.cms.hhs.gov/QualityImprovementOrgs/04_9thsow.asp. In addition, facilities may wish to stay abreast of
emerging best practices, which are often promoted by industry
associations.
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1. Sufficient Staffing
OIG is aware of facilities that have systematically failed to
provide staff in sufficient numbers and with appropriate clinical
expertise to serve their residents. Although most facilities strive to
provide sufficient staff, nursing facilities must be mindful that
Federal law requires sufficient staffing necessary to attain or
maintain the highest practicable physical, mental, and psychosocial
well-being of residents.\35\ Thus, staffing numbers and staff
competency are critical.
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\35\ Sections 1819(b)(4)(A) and 1919(b)(4)(A) of the Act (42
U.S.C. 1395i-3(b)(4)(A), 1396r(b)(4)(A)); 42 CFR 483.30.
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The relationship between staff ratios, staff competency, and
quality of care is complex.\36\ No single staffing model will suit
every facility. A staffing model that works in a nursing facility today
may not meet the facility's needs in the future. Nursing facilities,
therefore, are strongly encouraged to assess their staffing patterns
regularly to evaluate whether they have sufficient staff members who
are competent to care for the unique acuity levels of their residents.
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\36\ For example, State nursing facility staffing standards,
which exist for the majority of States, vary in types of regulated
staff, the ratios of staff, and the facilities to which the
regulations apply. See Jane Tilly, et al., ``State Experiences with
Minimum Nursing Staff Ratios for Nursing Facilities: Findings from
Case Studies of Eight States'' (November 2003) (joint paper by The
Urban Institute and the Department), available at http://aspe.hhs.gov/daltcp/reports/8statees.htm.
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Important considerations for assessing staffing models include,
among others, resident case-mix, staff skill levels, staff-to-resident
ratios, staff turnover,\37\ staffing schedules, disciplinary records,
payroll records, timesheets, and adverse
[[Page 56837]]
event reports (e.g., falls or adverse drug events), as well as
interviews with staff, residents, and residents' family or legal
guardians. Facilities should ensure that the methods used to assess
staffing accurately measure actual ``on-the-floor'' staff rather than
theoretical ``on-paper'' staff. For example, payroll records that
reflect actual hours and days worked may be more useful than
prospectively generated staff schedules.
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\37\ Nursing facilities operate in an environment of high staff
turnover where it is difficult to attract, train, and retain an
adequate workforce. Turnover among nurse aides, who provide most of
the hands-on care in nursing facilities, means that residents are
constantly receiving care from new staff who often lack experience
and knowledge of individual residents. Furthermore, research
correlates staff shortages and insufficient training with
substandard care. See OIG, OEI Report OEI-01-04-00070, ``Emerging
Practices in Nursing Homes,'' March 2005, available on our Web site
at http://oig.hhs.gov/oei/reports/oei-01-04-00070.pdf (reviewing
emerging practices that nursing facility administrators believe
reduce their staff turnover).
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2. Comprehensive Resident Care Plans
Development of comprehensive resident care plans is essential to
reducing risk. Prior OIG reports revealed that a significant percentage
of resident care plans did not reflect residents' actual care
needs.\38\ Through its enforcement and compliance monitoring
activities, OIG continues to see insufficient care plans and their
impact on residents as a risk area for nursing facilities.
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\38\ See, e.g., OIG, OEI Report OEI-02-99-00040, ``Nursing Home
Resident Assessment Quality of Care,'' January 2001, available on
our Web site at http://oig.hhs.gov/oei/reports/oei-02-99-00040.pdf.
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Medicare and Medicaid regulations require nursing facilities to
develop a comprehensive care plan for each resident that addresses the
medical, nursing, and mental and psychosocial needs for each resident
and includes reasonable objectives and timetables.\39\ Nursing
facilities should ensure that care planning includes all disciplines
involved in the resident's care.\40\ Perfunctory meetings or plans
developed without the full clinical team may create less than
comprehensive resident-centered care plans. Inadequately prepared plans
make it less likely that residents will receive coordinated,
multidisciplinary care. Insufficient plans jeopardize residents' well-
being and risk the provision of inadequate care, medically unnecessary
care services, or medically inappropriate services.
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\39\ 42 CFR 483.20(k). An effective compliance program would
also monitor discharge and transfer of residents for compliance with
Federal and State regulations. See, e.g., 42 CFR 483.12 (detailing
transfer and discharge obligations). Because many of the legitimate
reasons for transfer or discharge relate to the medical or
psychosocial needs of the resident, the care plan team may be in a
position to provide recommendations on discharge or transfer of a
resident.
\40\ 42 CFR 483.20(k)(2)(ii) (requiring an interdisciplinary
team, including the physician, a registered nurse with
responsibility for the resident, and other disciplines involved in
the resident's care).
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To reduce these risks, nursing facilities should design measures to
ensure an interdisciplinary and comprehensive approach to developing
care plans. Basic steps, such as appropriately scheduling meetings to
accommodate the full interdisciplinary team, completing all clinical
assessments before the meeting is convened,\41\ opening lines of
communication between direct care providers and interdisciplinary team
members, involving the resident and the residents' family members or
legal guardian,\42\ and documenting the length and content of each
meeting, may assist facilities with meeting this requirement.
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\41\ Nursing facilities with residents with mental illness or
mental retardation should ensure that they have the Preadmission
Screening and Resident Review (PASRR) screens for their residents.
See 42 CFR 483.20(m). In addition, for residents who do not require
specialized services, facilities should ensure that they are
providing the ``services of lesser intensity'' as set forth in CMS
regulations. See 42 CFR 483.120(c). Care plan meetings can provide
nursing facilities with an ideal opportunity to ensure that these
obligations are met.
\42\ Where possible, residents and their family members or legal
guardians should be included in the development of care and
treatment plans. Unless the resident has been declared incompetent
or otherwise found to be incapacitated under State law, the resident
has a right to participate in his or her care planning and
treatment. 42 CFR 483.10(d)(3).
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Another risk area related to care plans includes the involvement of
attending physicians in resident care. Although specific regulations
govern the role and responsibilities of attending physicians,\43\ the
nursing facility also has a critical role--ensuring that a physician
supervises each resident's care.\44\ Facilities must also include the
attending physician in the development of the resident's care plan.\45\
Thus, an effective compliance program would ensure physician
involvement in these processes.\46\ For example, many facilities
schedule meetings to discuss a particular resident's care plan.
Facilities may wish to develop policies and procedures to facilitate
participation by attending physicians, who often are not physically
present at the nursing facility on a daily basis. Facilities may
improve communication with physicians by providing advance notice of
care planning meetings. Nursing facilities should evaluate, in
conjunction with the attending physician, how best to ensure physician
participation--whether via consultation and post-meeting debriefing, or
telephone or personal attendance at meetings--with a focus on serving
the best interests of the resident and complying with applicable
regulations.
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\43\ See, e.g., 42 CFR 483.40(b), (c), (e).
\44\ 42 CFR 483.40(a).
\45\ 42 CFR 483.20(k)(2)(ii).
\46\ See 42 CFR 483.40(a) (obligating a facility to ensure a
physician supervises resident care); 42 CFR 483.40(b) (requiring
physicians to review the resident's ``total program of care'').
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3. Medication Management
The Act requires nursing facilities to provide ``pharmaceutical
services (including procedures that assure accurate acquiring,
receiving, dispensing, and administering of all drugs and biologicals)
to meet the needs of each resident.'' \47\ Nursing facilities should be
mindful of potential quality of care problems when adopting and
implementing policies and procedures to provide these services. A
failure to manage pharmaceutical services properly can seriously
jeopardize resident safety and even result in resident deaths.
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\47\ Sections 1819(b)(4)(A)(iii) and 1919(b)(4)(A)(iii) of the
Act (42 U.S.C. 1395i-3(b)(4)(A)(iii) and 1396r(b)(4)(A)(iii)). In
addition, under 42 CFR 483.60, SNFs and NFs must ``provide routine
and emergency drugs and biologicals to [their] residents, or obtain
them under an agreement described in [section] 483.75(h) * * *''
Nursing facilities must meet this obligation even if a pharmacy
charges a Medicare Part D copayment to a dual eligible beneficiary
who cannot afford to pay the copayment. See CMS, ``Part D Questions
re: Co-pays for Institutionalized Individuals April 19, 2006,''
Question 2. and Response, in ``Medicare Part D Claims Filing Window
Extended to 180 Days,'' Medicare Rx Update: May 9, 2006, available
on CMS's Web site at http://www.cms.hhs.gov/Pharmacy/downloads/update050906.pdf.
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Nursing facilities can promote compliance by having in place proper
medication management processes that advance patient safety, minimize
adverse drug interactions, and ensure that irregularities in a
resident's drug regimen are promptly discovered and addressed. Nursing
facilities should implement policies and procedures for maintaining
accurate drug records and tracking medications. Nursing facilities
should provide appropriate training on a regular basis to familiarize
all staff involved in the pharmaceutical care of residents with proper
medication management. To this end, the facility's consultant
pharmacist is an important resource. Consultant pharmacists, who
specialize in the medication needs specific to older adults or
institutionalized individuals, can help facilities ``identify,
evaluate, and address medication issues that may affect resident care,
medical care, and quality of life.'' \48\
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\48\ CMS, ``State Operations Manual,'' Pub. No. 100-07, Appendix
PP, section 483.60, available on CMS's Web site at http://cms.hhs.gov/manuals/Downloads/som107ap_pp_guidelines_ltcf.pdf.
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CMS regulations require that nursing facilities employ or obtain
the services of a licensed pharmacist to ``provide[] consultation on
all aspects of the provision of pharmacy services in the facility * *
*.'' \49\ The pharmacist must review the drug regimen of each resident
at least once a month and
[[Page 56838]]
report any irregularities discovered in a resident's drug regimen to
the attending physician and the director of nursing.\50\ These
pharmacists are also required to: (1) ``[e]stablish[] a system of
records of receipt and disposition of all controlled drugs * * * ;''
and (2) ``[d]etermine[] that drug records are in order and that an
account of all controlled drugs is maintained and periodically
reconciled.'' \51\ As indicated in CMS guidance, ``[t]he facility may
provide for this service through any of several methods (in accordance
with [S]tate requirements) such as direct employment or contractual
agreement with a pharmacist.'' \52\ Some of the consultant pharmacists
obtained by nursing facilities are employed by long-term care
pharmacies that furnish drugs and supplies to nursing facilities.\53\
Whatever the arrangement or method used, the nursing facility and
consultant pharmacist should work together to achieve proper medication
management in the facility.
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\49\ 42 CFR 483.60(b)(1).
\50\ 42 CFR 483.60(c).
\51\ 42 CFR 483.60(b)(2), (3).
\52\ CMS, ``State Operations Manual,'' Pub. No. 100-07, Appendix
PP, section 483.60, available on CMS's Web site at http://cms.hhs.gov/manuals/Downloads/som107ap_pp_guidelines_ltcf.pdf. In
cases where the nursing facilities employ or contract directly with
pharmacists to provide consultant pharmacist services, the nursing
facility should ensure that the pharmacist's compensation is not
structured in any manner that reflects the volume or value of drugs
prescribed for, or administered to, patients.
\53\ Nursing facilities that receive consultant pharmacist
services under contract with a long-term care pharmacy should be
mindful that the provision or receipt of free services or services
at non-fair-market value rates between actual or potential referral
sources present a heightened risk of fraud and abuse. For further
discussion of the anti-kickback statute and service arrangements,
see sections III.C.1. and III.C.2.
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4. Appropriate Use of Psychotropic Medications
Based on our enforcement and compliance monitoring activities, OIG
has identified inappropriate use of psychotropic medications for
residents as a risk area in at least two ways--the prohibition against
inappropriate use of chemical restraints and the requirement to avoid
unnecessary drug usage.
Facilities have affirmative obligations to ensure appropriate use
of psychotropic medications. Specifically, nursing facilities must
ensure that psychopharmacological practices comport with Federal
regulations and generally accepted professional standards.\54\ The
facility is responsible for the quality of drug therapy provided in the
facility. Federal law prohibits facilities from using any medication as
a means of chemical restraint for ``purposes of discipline or
convenience, and not required to treat the resident's medical
symptoms.'' \55\ In addition, resident drug regimens must be free from
unnecessary drugs.\56\ For residents who specifically require
antipsychotic medications, CMS regulations also require, unless
contraindicated, that residents receive gradual dose reductions and
behavioral interventions aimed at reducing medication use.\57\
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\54\ See, e.g., 42 CFR 483.20(k)(3) (requiring services that are
``provided or arranged by the facility'' to comport with
professional standards of quality); 42 CFR 483.25 (requiring
facilities to provide necessary care and services, including the
resident's right to be free of unnecessary drugs); 42 CFR 483.75(b)
(requiring facilities to provide services in compliance ``with all
applicable Federal, State, and local laws, regulations, and codes,
and with accepted professional standards and principles * * *'').
\55\ 42 CFR 483.13(a).
\56\ 42 CFR 483.25(l)(1). An unnecessary drug includes any
medication, including psychotropic medications, that is excessive in
dose, used excessively in duration, used without adequate
monitoring, used without adequate indications for its use, used in
the presence of adverse consequences, or any combination thereof.
Id.
\57\ 42 CFR 483.25(l)(2).
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In light of these requirements, nursing facilities should ensure
that there is an adequate indication for the use of the medication and
should carefully monitor, document, and review the use of each
resident's psychotropic drugs. Working together, the attending
physicians, medical director, consultant pharmacist, and other resident
care providers play a critical role in achieving these objectives.
Compliance measures could include educating care providers regarding
appropriate monitoring and documentation practices and auditing drug
regimen reviews \58\ and resident care plans to determine if they
incorporate an assessment of the resident's ``medical, nursing, and
mental and psychosocial needs,'' \59\ including the need for
psychotropic medications for a specific medical condition.\60\ The
attending physicians, the medical director, the consultant pharmacist,
and other care providers should collaborate to analyze the outcomes of
care using the results of the drug regimen reviews, progress notes, and
monitoring of the resident's behaviors.
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\58\ 42 CFR 483.60(c).
\59\ 42 CFR 483.20(k).
\60\ 42 CFR 483.25(l)(2).
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5. Resident Safety
Nursing facility residents have a legal right to be free from abuse
and neglect.\61\ Facilities should take steps to ensure that they are
protecting their residents from these risks.\62\ Of particular concern
is harm caused by staff and fellow residents.\63\
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\61\ Sections 1819 and 1919 of the Act (42 U.S.C. 1351i-3 and
1396r); 42 CFR 483.10; see also 42 CFR 483.15 and 483.25.
\62\ See id.
\63\ For an overview of research relating to resident abuse and
neglect, see Catherine Hawes, Ph.D., ``Elder Abuse in Residential
Long-Term Care Settings: What is Known and What Information is
Needed?,'' in Elder Mistreatment: Abuse, Neglect, and Exploitation
in an Aging America (National Research Council, 2003); U.S.
Government Accountability Office (GAO), GAO Report GAO-02-312,
``Nursing Homes: More Can Be Done to Protect Residents from Abuse,''
March 2002, available on GAO's Web site at http://www.gao.gov/new.items/d02312.pdf; Administration on Aging, Elder Abuse Web site,
available at http://www.aoa.gov/eldfam/elder_rights/elder_abuse/elder_abuse.aspx.
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(a) Promoting Resident Safety
Federal regulations mandate that nursing facilities develop and
implement policies and procedures to prohibit mistreatment, neglect,
and abuse of residents.\64\ Facilities must also thoroughly investigate
and report incidents to law enforcement, as required by State laws.\65\
Although experts continue to debate the most effective systems for
enhancing the reporting, investigation, and prosecution of nursing
facility resident abuse, an effective compliance program recognizes the
value of a demonstrated internal commitment to eliminating resident
abuse.\66\ An effective compliance program will include policies,
procedures, and practices to prevent, investigate, and respond to
instances of potential resident abuse, neglect, or mistreatment,
including injuries resulting from staff-on-resident abuse and neglect,
resident-on-resident abuse, and abuse from unknown causes.
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\64\ 42 CFR 483.13(c); see also 42 CFR 483.13(a).
\65\ Id.
\66\ Under State mandatory reporting statutes, persons such as
health care professionals, human service professionals, clergy, law
enforcement, and financial professionals may have a legal obligation
to make a formal report to law enforcement officials or a central
reporting agency if they suspect that a nursing facility resident is
being abused or neglected. To ensure compliance with these statutes,
nursing facilities should consider training relating to compliance
with their relevant States' laws. Nursing facilities can also assist
by providing ready access to law enforcement contact information.
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Confidential reporting is a key component of an effective resident
safety program. Such a mechanism enables staff, contractors, residents,
family members, visitors, and others to report threats, abuse,
mistreatment, and other safety concerns confidentially to senior staff
empowered to take immediate action. Posters, brochures, and online
resources that encourage readers to report suspected safety problems to
senior facility staff are commonly used. Another commonly
[[Page 56839]]
used compliance component for reporting violations is a dedicated
hotline that allows staff, contractors, residents, family members,
visitors, and others with concerns to report suspicions. Regardless of
the reporting vehicle, ideally coverage for reporting and addressing
resident safety issues would be on a constant basis (i.e., 24 hours per
day/7 days per week). Moreover, nursing facilities should make clear to
caregivers, facility staff, and residents that the facility is
committed to protecting those who make reports from retaliation.
Facilities may also want to consider a program to engage everyone
who comes in contact with nursing facility residents--whether health
care professionals, administrative and custodial staff, family and
friends, visiting therapists, or community members--in the mission of
protecting residents. Such a program could include specialized training
for everyone who interacts on a regular basis with residents on
recognizing warning signs of neglect or abuse and on effective methods
to communicate with potentially fearful residents in a way likely to
induce candid self-reporting of neglect or abuse.\67\
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\67\ Facilities could explore partnering with the ombudsmen and
other consumer advocates in sponsoring or participating in special
training programs designed to prevent abuse. See ``Elder Justice:
Protecting Seniors from Abuse and Neglect: Hearing Before the Senate
Committee on Finance,'' 107th Congress (2002) (testimony of
Catherine Hawes, Ph.D., titled ``Elder Abuse in Residential Long-
Term Care Facilities: What is Known About the Prevalence, Causes,
and Prevention''), available at http://finance.senate.gov/hearings/testimony/061802chtest.pdf.
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(b) Resident Interactions
The nursing facility industry, resident advocacy groups, and law
enforcement are becoming increasingly concerned about resident abuse
committed by fellow residents. Abuse can occur as a result of the
failure to properly screen and assess, or the failure of staff to
monitor, residents at risk for aggressive behavior. Such failures can
jeopardize both the resident with aggressive behaviors and the
victimized resident.
Heightened awareness and monitoring for abuse are crucial to
eradicating resident-on-resident abuse. Nursing facilities can advance
their mission to provide a safe environment for residents through
targeted education relating to resident-on-resident abuse (particularly
for staff with responsibilities for admission evaluations). Thorough
resident assessments, comprehensive care plans, periodic resident
assessments, and proper staffing assignments would also assist nursing
facilities in their mission to provide a safe environment for
residents.
(c) Staff Screening
Nursing facilities cannot employ individuals ``[f]ound guilty of
abusing, neglecting, or mistreating residents,'' or individuals with
``a finding entered into [a] State nurse aide registry concerning
abuse, neglect, mistreatment of residents or misappropriation of their
property.'' \68\ Effective recruitment, screening, and training of care
providers are essential to ensure a viable workforce. Although no pre-
employment background screening can provide nursing facilities with
absolute assurance that a job applicant will not commit a crime in the
future, nursing facilities must make reasonable efforts to ensure that
they have a workforce that will maintain the safety of their residents.
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\68\ 42 CFR 483.13(c)(1)(ii).
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Commonly, nursing facilities screen potential employees against
criminal record databases. OIG is aware that there is a ``great
diversity in the way States systematically identify, report, and
investigate suspected abuse.'' \69\ Nonetheless, a comprehensive
examination of a prospective employee's criminal record in all States
in which the person has worked or resided may provide a greater degree
of protection for residents.\70\
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\69\ OIG, Audit Report A-12-12-97-0003, ``Safeguarding Long-Term
Care Residents,'' September 1998, available on our Web site at
http://oig.hhs.gov/oas/reports/aoa/d9700003.pdf.
\70\ Because there is no one central repository for criminal
records, there is a significant limitation to searching the criminal
record databases only for the State in which the facility is
located. A better practice may be to search databases for all States
in which the applicant resided or was employed.
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Verification of education, licensing, certifications, and training
for care providers can also assist nursing facilities in their efforts
to ensure they provide patients with qualified and skilled caregivers.
Many States have requirements that nursing facilities conduct these
checks for all professional care providers, such as therapists, medical
directors, and nurses. Federal regulations require a nursing facility
to check its State nurse aide registry to ensure that potential hires
for nurse aide positions have met competency evaluation requirements or
are otherwise exempted from registration requirements.\71\ In addition,
the facility must also check every State nurse aide registry it
``believes will include information'' on the individual.\72\ To ensure
compliance with this requirement, facilities should have mechanisms in
place to identify which State registries they must examine.
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\71\ 42 CFR 483.75(e)(5).
\72\ 42 CFR 483.75(e)(6).
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B. Submission of Accurate Claims
Nursing facilities must submit accurate claims to Federal health
care programs. Examples of false or fraudulent claims include claims
for items not provided or not provided as claimed, claims for services
that are not medically necessary, and claims when there has been a
failure of care. Submitting a false claim, or causing a false claim to
be submitted, to a Federal health care program may subject the
individual, the entity, or both to criminal prosecution, civil
liability (including treble damages and penalties) under the False
Claims Act, and exclusion from participation in Federal health care
programs.
Common and longstanding risks associated with claim preparation and
submission include duplicate billing, insufficient documentation, and
false or fraudulent cost reports. While nursing facilities should
continue to be vigilant with respect to these important risk areas, we
believe these risk areas are relatively well understood in the
industry, and therefore they are not specifically addressed in this
section.
As reimbursement systems have evolved, OIG has uncovered other
types of fraudulent transactions related to the provision of health
care services to residents of nursing facilities reimbursed by Medicare
and Medicaid. In this section, we will discuss some of these risk
areas. This list is not exhaustive. It is intended to assist facilities
in evaluating their own risk areas. In addition, section III.A. above
outlines other regulatory requirements that, if not met, may subject
nursing facilities to potential liability for submission of false or
fraudulent claims.
1. Proper Reporting of Resident Case-Mix by SNFs
We are aware of instances in which SNFs have improperly upcoded
resident RUG assignments.\73\ Classifying a resident into the correct
RUG, through resident assessments, requires accurate and comprehensive
reporting about the resident's conditions and needs. Inaccurate
reporting of data could result in the misrepresentation of the
resident's status, the submission of false claims, and potential
enforcement actions. Therefore, we have identified
[[Page 56840]]
the assessment, reporting, and evaluation of resident case-mix data as
a significant risk area for SNFs.\74\
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\73\ A 2006 OIG report found that 22 percent of claims were
upcoded, representing $542 million in potential overpayments for FY
2002. OIG, OEI Report OEI-02-02-00830, ``A Review of Nursing
Facility Resource Utilization Groups,'' February 2006, available on
our Web site at http://oig.hhs.gov/oei/reports/oei-02-02-00830.pdf.
\74\ To the extent a State Medicaid program relies upon RUG
classification, or a variation of this system, to calculate its
reimbursement rate, nursing facilities, as defined in section 1919
of the Act (42 U.S.C. 1396r), should be aware of this risk area as
well.
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Because of the critical role resident case-mix data play in
resident care planning and reimbursement, training on the collection
and use of case-mix data is important. An effective compliance program
will include training of responsible staff to ensure that persons
collecting the data and those charged with analyzing and responding to
the data are knowledgeable about the purpose and utility of the data.
Facilities must also ensure that data reported to the Federal
Government are accurate. Both internal and external periodic validation
of data may prove useful. Moreover, as authorities continue to
scrutinize quality-reporting data,\75\ nursing facilities are well-
advised to review such data regularly to ensure their accuracy and to
identify and address potential quality of care issues.\76\
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\75\ See, e.g., CMS, ``2007 Action Plan for (Further Improvement
of) Nursing Home Quality,'' September 2006, available on CMS's Web
site at http://www.cms.hhs.gov/SurveyCertificationGenInfo/downloads/2007ActionPlan.pdf.
\76\ In addition to assisting facilities with ensuring that
claims data are accurate, monitoring MDS data may assist facilities
in recognizing common warning signs of a systemic care problem
(e.g., increase in or excessive pressure ulcers or falls).
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2. Therapy Services
The provision of physical, occupational, and speech therapy
services continues to be a risk area for nursing facilities. Potential
problems include: (i) Improper utilization of therapy services to
inflate the severity of RUG classifications and obtain additional
reimbursement; (ii) overutilization of therapy services billed on a
fee-for-service basis to Part B under consolidated billing; and (iii)
stinting on therapy services provided to patients covered by the Part A
PPS payment.\77\ These practices may result in the submission of false
claims.\78\
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\77\ There may be additional risk areas for outside therapy
suppliers.
\78\ Additional risks related to the anti-kickback statute are
discussed below in section III.C.
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In addition, unnecessary therapy services may place frail but
otherwise functioning residents at risk for physical injury, such as
muscle fatigue and broken bones, and may obscure a resident's true
condition, leading to inadequate care plans and inaccurate RUG
classifications.\79\ Too few therapy services may expose residents to
risk of physical injury or decline in condition, resulting in potential
failure of care problems.
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\79\ See 42 CFR 483.20(b) and (k).
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OIG strongly advises nursing facilities to develop policies,
procedures, and measures to ensure that residents are receiving
medically appropriate therapy services.\80\ Some practices that may be
beneficial include: Requirements that therapy contractors provide
complete and contemporaneous documentation of each resident's services;
regular and periodic reconciliation of the physician's orders and the
services actually provided; interviews with the residents and family
members to be sure services are delivered; and assessments of the
continued medical necessity for services during resident care planning
meetings at which the attending physician attends.
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\80\ See OIG, OEI Report OEI-09-99-00563, ``Physical,
Occupational, and Speech Therapy for Medicare Nursing Home Patients:
Medical Necessity and Quality of Care Based on Treatment
Diagnosis,'' August 2001, available on our Web site at http://oig.hhs.gov/oei/reports/oei-09-99-00563.pdf.
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3. Screening for Excluded Individuals and Entities
No Federal health care program payment may be made for items or
services furnished by an excluded individual or entity.\81\ This
payment ban applies to all methods of Federal health care program
reimbursement. Civil monetary penalties (CMP) may be imposed against
any person who arranges or contracts (by employment or otherwise) with
an individual or entity for the provision of items or services for
which payment may be made under a Federal health care program,\82\ if
the person knows or should know that the employee or contractor is
excluded from participation in a Federal health care program.\83\
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\81\ 42 CFR 1001.1901. Exclusions imposed prior to August 5,
1997, cover Medicare and all State health care programs (including
Medicaid), but not other Federal health care programs. See The
Balanced Budget Act of 1997 (Pub. L. 105-33) (amending section 1128
of the Act (42 U.S.C. 1320a-7) to expand the scope of exclusions
imposed by OIG).
\82\ Such items or services could include administrative,
clerical, and other activities that do not directly involve patient
care. See section 1128A(a)(6) of the Act (42 U.S.C. 1320a-7a(a)(6)).
\83\ Id.
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To prevent hiring or contracting with an excluded person, OIG
strongly advises nursing facilities to screen all prospective owners,
officers, directors, employees, contractors,\84\ and agents prior to
engaging their services against OIG's List of Excluded Individuals/
Entities (LEIE) on OIG's Web site,\85\ as well as the U.S. General
Services Administration's Excluded Parties List System.\86\ In
addition, facilities should consider implementing a process that
requires job applicants to disclose, during the pre-employment process
(or, for vendors, during the request for proposal process), whether
they are excluded. Facilities should strongly consider periodically
screening their current owners, officers, directors, employees,
contractors, and agents to ensure that they have not been excluded
since the initial screening.
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\84\ A nursing facility that relies upon third-party agencies to
provide temporary or contract staffing should consider including
provisions in its contracts that require the vendors to screen staff
against OIG's List of Excluded Individuals/Entities before
determining that they are eligible to work at the nursing facility.
Although a nursing facility would not avoid liability for violating
Medicare's prohibition on payment for services rendered by the
excluded staff person merely by including such a provision,
requiring the vendors to screen staff may help a nursing facility
avoid engaging the services of excluded persons, and could be taken
into account in the event of a Government enforcement action.
\85\ Available on our Web site at http://oig.hhs.gov/fraud/exclusions/listofexcluded.html.
\86\ Available at http://www.epls.gov/.
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Facilities should also take steps to ensure that they have policies
and procedures that require removal of any owner, officer, director,
employee, contractor, or agent from responsibility for, or involvement
with, a facility's business operations related to the Federal health
care programs if the facility has actual notice that such a person is
excluded. Facilities may also wish to consider appropriate training for
human resources personnel on the effects of exclusion. Exclusion
continues to apply to an individual even if he or she changes from one
health care profession to another while excluded. That exclusion
remains in effect until OIG has reinstated the individual, which is not
automatic.\87\ A useful tool for the training is OIG's Special Advisory
Bulletin, titled ``The Effect of Exclusion From Participation in
Federal Health Care Programs.'' \88 \
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\87\ Reinstatement of excluded entities and individuals is not
automatic. Those wishing to again participate in the Medicare,
Medicaid, and all Federal health care programs must apply for
reinstatement and receive authorized notice from OIG that
reinstatement has been granted. Obtaining a provider number from a
Medicare contractor, a State agency, or a Federal health care
program does not reinstate eligibility to participate in those
programs. There are no provisions for retroactive reinstatement. See
42 CFR 1001.1901.
\88\ OIG, ``The Effect of Exclusion From Participation in
Federal Health Care Programs,'' September 1999, available on our Web
site at http://oig.hhs.gov/fraud/docs/alertsandbulletins/effected.htm.
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4. Restorative and Personal Care Services
Facilities must ensure that residents receive appropriate
restorative and
[[Page 56841]]
personal care services to allow residents to attain and maintain their
highest practicable level of functioning.\89\ These services include,
among others, care to avoid pressure ulcers, active and passive range
of motion, ambulation, fall prevention, incontinence management,
bathing, dressing, and grooming activities.\90\
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\89\ 42 CFR 483.25 (requiring facilities to provide care and
services necessary to ensure a resident's ability to participate in
activities of daily living do not diminish unless a clinical
condition makes the decline unavoidable).
\90\ Id.
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OIG is aware of facilities that have billed Federal health care
programs for restorative and personal care services despite the fact
that the services were not provided or were so wholly deficient that
they amounted to no care at all. Federal health care programs do not
reimburse for restorative and personal care services under these
circumstances. Nursing facilities that fail to provide necessary
restorative and personal care services risk billing for services not
rendered as claimed, and therefore may be subject to liability under
fraud and abuse statutes and regulations.
To avoid this risk, nursing facilities are strongly encouraged to
have comprehensive procedures in place to ensure that services are of
an appropriate quality and level and that services are in fact
delivered to nursing facility residents. To accomplish this, facilities
may wish to engage in resident and staff interviews; medical record
reviews; \91\ consultations with attending physicians, the medical
director, and consultant pharmacists; and personal observations of care
delivery. Moreover, complete and contemporaneous documentation of
services is critical to ensuring that services are rendered.
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\91\ Indicators to watch for include, but are not limited to,
bedsores, falls, unexplained weight loss, and dehydration.
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C. The Federal Anti-Kickback Statute
The Federal anti-kickback statute, section 1128B(b) of the Act,\92\
places constraints on business arrangements related directly or
indirectly to items or services reimbursable by Federal health care
programs, including, but not limited to, Medicare and Medicaid. The
anti-kickback statute prohibits the health care industry from engaging
in some practices that are common in other business sectors, such as
offering or receiving gifts to reward past or potential new referrals.
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\92\ 42 U.S.C. 1320a-7b(b).
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The anti-kickback statute is a criminal prohibition against
remuneration (in any form, whether direct or indirect) made
purposefully to induce or reward the referral or generation of Federal
health care program business. The anti-kickback statute prohibits
offering or paying anything of value for patient referrals. It also
prohibits offering or paying of anything of value in return for
purchasing, leasing, ordering, or arranging for or recommending the
purchase, lease, or order of any item or service reimbursable in whole
or in part by a Federal health care program. The statute also covers
the solicitation or acceptance of remuneration for referrals for, or
the generation of, business payable by a Federal health care program.
Liability under the anti-kickback statute is determined separately for
each party involved. In addition to criminal penalties, violators may
be subject to CMPs and exclusion from the Federal health care programs.
Nursing facilities should also be aware that compliance with the anti-
kickback statute is a condition of payment under Medicare and other
Federal health care programs.\93\ As such, liability may arise under
the False Claims Act if the anti-kickback statute violation results in
the submission of a claim for payment under a Federal health care
program.
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\93\ See, e.g., CMS, Form 855A, ``Medicare Federal Health Care
Provider/Supplier Application,'' Certification Statement at section
15, paragraph A.3., available on CMS's Web site at http://www.cms.hhs.gov/CMSForms/downloads/CMS855a.pdf.
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Nursing facilities make and receive referrals of Federal health
care program business. Nursing facilities need to ensure that these
referrals comply with the anti-kickback statute. Nursing facilities may
obtain referrals of Federal health care program beneficiaries from a
variety of health care sources, including, for example, physicians and
other health care professionals, hospitals and hospital discharge
planners, hospices, home health agencies, and other nursing facilities.
Physicians, pharmacists, and other health care professionals may
generate referrals for items and services reimbursed to the nursing
facilities by Federal health care programs. In addition, when
furnishing services to residents, nursing facilities often direct or
influence referrals to others for items and services reimbursable by
Federal health care programs. For example, nursing facilities may refer
patients to, or order items or services from, hospices; DME companies;
laboratories; diagnostic testing facilities; long-term care pharmacies;
hospitals; physicians; other nursing facilities; and physical,
occupational, and speech therapists. All of these circumstances call
for vigilance under the anti-kickback statute.
Although liability under the anti-kickback statute ultimately turns
on a party's intent, it is possible to identify arrangements or
practices that may present a significant potential for abuse. For
purposes of identifying potential kickback risks under the anti-
kickback statute, the following inquiries are useful:
Does the nursing facility (or its affiliates or
representatives) provide anything of value to persons or entities in a
position to influence or generate Federal health care program business
for the nursing facility (or its affiliates) directly or indirectly?
Does the nursing facility (or its affiliates or
representatives) receive anything of value from persons or entities for
which the nursing facility generates Federal health care program
business, directly or indirectly?
Could one purpose of an arrangement be to induce or reward
the generation of business payable in whole or in part by a Federal
health care program? Importantly, under the anti-kickback statute,
neither a legitimate business purpose for an arrangement nor a fair-
market value payment will legitimize a payment if there is also an
illegal purpose (i.e., inducing Federal health care program business).
Any arrangement for which the answer to any of these inquiries is
affirmative implicates the anti-kickback statute and requires careful
scrutiny.
Several potentially aggravating considerations are useful in
identifying arrangements at greatest risk of prosecution. In
particular, in assessing risk, nursing facilities should ask the
following questions, among others, about any potentially problematic
arrangements or practices they identify:
Does the arrangement or practice have a potential to
interfere with, or skew, clinical decision-making?
Does the arrangement or practice have a potential to
increase costs to Federal health care programs or beneficiaries?
Does the arrangement or practice have a potential to
increase the risk of overutilization or inappropriate utilization?
Does the arrangement or practice raise patient safety or
quality of care concerns?
Nursing facilities should be mindful of these concerns when structuring
and reviewing arrangements. An affirmative answer to one or more of
these questions is a red flag signaling an arrangement or practice that
may be particularly susceptible to fraud and abuse.
Nursing facilities that have identified potentially problematic
arrangements or
[[Page 56842]]
practices can take a number of steps to reduce or eliminate the risk of
an anti-kickback violation. Most importantly, the anti-kickback statute
and the corresponding regulations establish a number of ``safe
harbors'' for common business arrangements. The safe harbors protect
arrangements from liability under the statute. The following safe
harbors are of most relevance to nursing facilities:
Investment interests safe harbor (42 CFR 1001.952(a)),
Space rental safe harbor (42 CFR 1001.952(b)),
Equipment rental safe harbor (42 CFR 1001.952(c)),
Personal services and management contracts safe harbor (42
CFR 1001.952(d)),
Discount safe harbor (42 CFR 1001.952(h)),
Employee safe harbor (42 CFR 1001.952(i)),
Electronic health records items and services safe harbors
(42 CFR 1001.952(y)), and
Managed care and risk sharing arrangements safe harbors
(42 CFR 1001.952(m), (t), and (u)).
To receive protection, an arrangement must fit squarely in a safe
harbor. Safe harbor protection requires strict compliance with all
applicable conditions set out in the relevant regulation.\94\
Compliance with a safe harbor is voluntary. Failure to comply with a
safe harbor does not mean an arrangement is illegal per se.
Nevertheless, we recommend that nursing facilities structure
arrangements to fit in a safe harbor whenever possible.
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\94\ Parties to an arrangement cannot obtain safe harbor
protection by entering into a sham contract that complies with the
written agreement requirement of a safe harbor and appears, on
paper, to meet all of the other safe harbor requirements, but does
not reflect the actual arrangement between the parties. In other
words, in assessing compliance with a safe harbor, the question is
not whether the terms in a written contract satisfy all of the safe
harbor requirements, but whether the actual arrangement satisfies
the requirements.
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Nursing facilities should evaluate potentially problematic
arrangements with referral sources and referral recipients that do not
fit into a safe harbor by reviewing the totality of the facts and
circumstances, including the intent of the parties. Depending on the
circumstances, some relevant factors include:
Nature of the relationship between the parties. What
degree of influence do the parties have, directly or indirectly, on the
generation of business for each other?
Manner in which participants were selected. Were parties
selected to participate in an arrangement in whole or in part because
of their past or anticipated referrals?
Manner in which the remuneration is determined. Does the
remuneration take into account, directly or indirectly, the volume or
value of business generated? Is the remuneration conditioned in whole
or in part on referrals or other business generated between the
parties? Is the arrangement itself conditioned, directly or indirectly,
on the volume or value of Federal health care program business? Is
there any service provided other than referrals?
Value of the remuneration. Is the remuneration fair-market
value in an arm's-length transaction for legitimate, reasonable, and
necessary services that are actually rendered? Is the nursing facility
paying an inflated rate to a potential referral source? Is the nursing
facility receiving free or below-market-rate items or services from a
provider or supplier? Is compensation tied, directly or indirectly, to
Federal health care program reimbursement? Is the determination of
fair-market value based upon a reasonable methodology that is uniformly
applied and properly documented?
Nature of items or services provided. Are items and
services actually needed and rendered, commercially reasonable, and
necessary to achieve a legitimate business purpose?
Potential Federal program impact. Does the remuneration
have the potential to affect costs to any of the Federal health care
programs or their beneficiaries? Could the remuneration lead to
overutilization or inappropriate utilization?
Potential conflicts of interest. Would acceptance of the
remuneration diminish, or appear to diminish, the objectivity of
professional judgment? Are there patient safety or quality-of-care
concerns? If the remuneration relates to the dissemination of
information, is the information complete, accurate, and not misleading?
Manner in which the arrangement is documented. Is the
arrangement properly and fully documented in writing? Are the nursing
facilities and outside providers and suppliers documenting the items
and services they provide? Is the nursing facility monitoring items and
services provided by outside providers and suppliers? Are arrangements
actually conducted according to the terms of the written agreements? It
is the substance, not the written form, of an arrangement that is
determinative.
These inquiries--and appropriate follow-up inquiries--can help nursing
facilities identify, address, and avoid problematic arrangements.
Available OIG guidance on the anti-kickback statute includes OIG
Special Fraud Alerts and advisory bulletins. OIG also issues advisory
opinions to specific parties about their particular business
arrangements.\95\ A nursing facility concerned about an existing or
proposed arrangement may request a binding OIG advisory opinion
regarding whether the arrangement violates the Federal anti-kickback
statute or other OIG fraud and abuse authorities. Procedures for
requesting an advisory opinion are set out at 42 CFR part 1008. The
safe harbor regulations (and accompanying Federal Register preambles),
fraud alerts and bulletins, advisory opinions (and instructions for
obtaining them, including a list of frequently asked questions), and
other guidance are available on our Web site at http://oig.hhs.gov.
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\95\ While informative for guidance purposes, an OIG advisory
opinion is binding only with respect to the particular party or
parties that requested the opinion. The analyses and conclusions set
forth in OIG advisory opinions are fact-specific. Accordingly,
different facts may lead to different results.
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The following discussion highlights several known areas of
potential risk under the anti-kickback statute. The propriety of any
particular arrangement can only be determined after a detailed
examination of the attendant facts and circumstances. The
identification of a given practice or activity as ``suspect'' or as an
area of risk does not mean it is necessarily illegal or unlawful, or
that it cannot be properly structured to fit in a safe harbor. It also
does not mean that the practice or activity is not beneficial from a
clinical, cost, or other perspective. Instead, the areas identified
below are practices that have a potential for abuse and that should
receive close scrutiny from nursing facilities.
1. Free Goods and Services
OIG has a longstanding concern about the provision of free goods or
services to an existing or potential referral source. There is a
substantial risk that free goods or services may be used as a vehicle
to disguise or confer an unlawful payment for referrals of Federal
health care program business. For example, OIG gave the following
warning about free computers in the preamble to the 1991 safe harbor
regulations:
A related issue is the practice of giving away free computers.
In some cases the computer can only be used as part of a particular
service that is being provided, for example, printing out the
results of laboratory tests. In this situation, it appears
[[Page 56843]]
that the computer has no independent value apart from the service
being provided and that the purpose of the free computer is not to
induce an act that is prohibited by the statute * * *. In contrast,
sometimes the computer that is given away is a regular personal
computer, which the physician is free to use for a variety of
purposes in addition to receiving test results. In that situation
the computer has a definite value to the physician, and, depending
on the circumstances, may well constitute an illegal inducement.\96\
\96\ 56 FR 35952, 35978 (July 29, 1991), ``Medicare and State
Health Care Programs: Fraud and Abuse; OIG Anti-Kickback
Provisions,'' available on our Web site at http://oig.hhs.gov/fraud/docs/safeharborregulations/072991.htm.
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Similarly, with respect to free services, OIG observed in a Special
Fraud Alert that:
While the mere placement of a laboratory employee in the
physician's office would not necessarily serve as an inducement
prohibited by the anti-kickback statute, the statute is implicated
when the phlebotomist performs additional tasks that are normally
the responsibility of the physician's office staff. These tasks can
include taking vital signs or other nursing functions, testing for
the physician's office laboratory, or performing clerical services.
Where the phlebotomist performs clerical or medical functions not
directly related to the collection or processing of laboratory
specimens, a strong inference arises that he or she is providing a
benefit in return for the physician's referrals to the laboratory.
In such a case, the physician, the phlebotomist, and the laboratory
may have exposure under the anti-kickback statute. This analysis
applies equally to the placement of phlebotomists in other health
care settings, including nursing homes, clinics and hospitals.\97\
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\97\ 59 FR 65372, 65377 (December 19, 1994), ``Publication of
OIG Special Fraud Alerts,'' available on our Web site at http://oig.hhs.gov/fraud/docs/alertsandbulletins/121994.html.
The principles illustrated by each of the above examples also apply
in the nursing facility context. The provision of goods or services
that have independent value to the recipient or that the recipient
would otherwise have to provide at its own expense confers a benefit on
the recipient. This benefit may constitute prohibited remuneration
under the anti-kickback statute, if one purpose of the remuneration is
to generate referrals of Federal health care program business.
Examples of suspect free goods and services arrangements that
warrant careful scrutiny include:
Pharmaceutical consultant services, medication management,
or supplies offered by a pharmacy;
Infection control, chart review, or other services offered
by laboratories or other suppliers;
Equipment, computers, or software applications \98\ that
have independent value to the nursing facility;
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\98\ There is a safe harbor for electronic health records
software arrangements at 42 CFR 1001.952(y), which can be used by
nursing facilities. The safe harbor is available if all of its
conditions are satisfied. The safe harbor does not protect free
hardware or equipment.
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DME or supplies offered by DME suppliers for patients
covered by the SNF Part A benefit;
A laboratory phlebotomist providing administrative
services;
A hospice nurse providing nursing services for non-hospice
patients; and
A registered nurse provided by a hospital.
Nursing facilities should be mindful that, depending on the
circumstances, these and similar arrangements may subject the parties
to liability under the anti-kickback statute, if the requisite intent
is present.
2. Services Contracts
(a) Non-Physician Services
Often kickbacks are disguised as otherwise legitimate payments or
are hidden in business arrangements that appear, on their face, to be
appropriate. In addition to the provision of free goods and services,
the provision or receipt of goods or services at non-fair-market value
rates presents a heightened risk of fraud and abuse. Nursing facilities
often arrange for certain services and supplies to be provided to
residents by outside suppliers and providers, such as pharmacies;
clinical laboratories; DME suppliers; ambulance providers; parenteral
and enteral nutrition (PEN) suppliers; diagnostic testing facilities;
rehabilitation companies; and physical, occupational, and speech
therapists. These relationships need to be scrutinized closely under
the anti-kickback statute to ensure that they are not vehicles to
disguise kickbacks from the suppliers and providers to the nursing
facility to influence the nursing facility to refer Federal health care
program business to the suppliers and providers.
To minimize their risk, nursing facilities should periodically
review contractor and staff arrangements to ensure that: (i) There is a
legitimate need for the services or supplies; (ii) the services or
supplies are actually provided and adequately documented; (iii) the
compensation is at fair-market value in an arm's-length transaction;
and (iv) the arrangement is not related in any manner to the volume or
value of Federal health care program business. Nursing facilities are
well-advised to have all of the preceding facts documented
contemporaneously and prior to payment to the provider of the supplies
or services. To eliminate their risk, nursing facilities should
structure services arrangements to comply with the personal services
and management contracts safe harbor \99\ whenever possible.
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\99\ 42 CFR 1001.952(d).
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Nursing facilities should also adopt and implement policies and
procedures to minimize the risk of improper pharmaceutical decisions
tainted by kickbacks. For example, depending on the circumstances, a
consultant pharmacist employed by a long-term care pharmacy may face a
potential conflict of interest when making recommendations about a
resident's drug regimen if a drug that is not on the pharmacy's
formulary is prescribed.\100\ Nursing facilities should establish
policies that make clear that all prescribing decisions must be based
on the best interests of the individual patient.\101\ Drug switches may
only be made upon authorization of the attending physician, medical
director, or other licensed prescriber (except in certain limited
circumstances where permitted by State law, e.g., permissible generic
substitutions or changes allowed under a collaborative practice
agreement between a physician and a pharmacist). Nursing facilities
should consider implementing policies and procedures to monitor drug
records for patterns that may indicate inappropriate drug switching or
steering. All staff and practitioners involved in prescribing,
administering, and managing pharmaceuticals should be educated on the
legal prohibition against accepting anything of value from a pharmacy
or pharmaceutical manufacturer to influence the choice of drug or to
switch a resident from one drug to another.
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\100\ Long-term care pharmacies, many of which employ consultant
pharmacists, have purchasing agreements with pharmaceutical
manufacturers and contracts with health plans. In addition, long-
term care pharmacies typically employ their own formularies for some
residents. As a result of these arrangements and contracts, long-
term care pharmacies may prefer that nursing facility customers and
residents use some drugs over others.
\101\ In all cases, prescribing decisions should be based upon
the unique needs of the patients being served in that facility,
established clinical guidelines, and evidence of cost effectiveness.
The determination of clinical efficacy and appropriateness of the
particular drugs should precede, and be paramount to, the
consideration of costs.
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(b) Physician Services
Nursing facilities also arrange for physicians to provide medical
director, quality assurance, and other services. Such physician
oversight and
[[Page 56844]]
involvement at the nursing facility contributes to the quality of care
furnished to the residents. These physicians, however, may also be in a
position to generate Federal health care program business for the
nursing facility. For instance, these physicians may refer patients for
admission. They may order items and services that result in an
increased RUG or that are billable separately by the nursing facility.
Physician arrangements need to be closely monitored to ensure that they
are not vehicles to pay physicians for referrals. As with other
services contracts, nursing facilities should periodically review these
arrangements to ensure that: (i) There is a legitimate need for the
services; (ii) the services are provided; (iii) the compensation is at
fair-market value in an arm's-length transaction; and (iv) the
arrangement is not related in any manner to the volume or value of
Federal health care program business. In addition, prudent nursing
facilities will maintain contemporaneous documentation of the
arrangement, including, for example, the compensation terms, time logs
or other accounts of services rendered, and the basis for determining
compensation. Prudent facilities will also take steps to ensure that
they have not engaged more medical directors or other physicians than
necessary for legitimate business purposes. They will also ensure that
compensation is commensurate with the skill level and experience
reasonably necessary to perform the contracted services. To eliminate
their risk, nursing facilities should structure services arrangements
to comply with the personal services and management contracts safe
harbor \102\ whenever possible.
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\102\ 42 CFR 1001.952(d).
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3. Discounts
(a) Price Reductions
Public policy favors open and legitimate price competition in
health care. Thus, the anti-kickback statute contains an exception for
discounts offered to customers that submit claims to the Federal health
care programs, if the discounts are properly disclosed and accurately
reported. However, to qualify for the exception, the discount must be
in the form of a reduction in the price of the good or service based on
an arm's-length transaction. In other words, the exception covers only
reductions in the product's or service's price.
In conducting business, nursing facilities routinely purchase items
and services reimbursable by Federal health care programs. Therefore,
they should familiarize themselves with the discount safe harbor at 42
CFR 1001.952(h). In particular, nursing facilities should ensure that
all discounts--including any rebates--are properly disclosed and
accurately reflected on their cost reports (and in any claims as
appropriate) filed with a Federal program. In addition, some nursing
facilities purchase products through group purchasing organizations
(GPO) to which they belong. Any discounts received from vendors who
sell their products under a GPO contract should be properly disclosed
and accurately reported on the nursing facility's cost reports.
Although there is a safe harbor for administrative fees paid by a
vendor to a GPO,\103\ that safe harbor does not protect discounts
provided by a vendor to purchasers of products.
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\103\ 42 CFR 1001.952(j).
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(b) Swapping
Nursing facilities often obtain discounts from suppliers and
providers on items and services that the nursing facilities purchase
for their own account. In negotiating arrangements with suppliers and
providers, a nursing facility should be careful that there is no link
or connection, explicit or implicit, between discounts offered or
solicited for business that the nursing facility pays for and the
nursing facility's referral of business billable by the supplier or
provider directly to Medicare or another Federal health care program.
For example, nursing facilities should not engage in ``swapping''
arrangements by accepting a low price from a supplier or provider on an
item or service covered by the nursing facility's Part A per diem
payment in exchange for the nursing facility referring to the supplier
or provider other Federal health care program business, such as Part B
business excluded from consolidated billing, that the supplier or
provider can bill directly to a Federal health care program. Such
``swapping'' arrangements implicate the anti-kickback statute and are
not protected by the discount safe harbor. Nursing facility
arrangements with clinical laboratories, DME suppliers, and ambulance
providers are some examples of arrangements that may be prone to
``swapping'' problems.
As we have previously explained in other guidance,\104\ the size of
a discount is not determinative of an anti-kickback statute violation.
Rather, the appropriate question to ask is whether the discount is tied
or linked, directly or indirectly, to referrals of other Federal health
care program business. When evaluating whether an improper connection
exists between a discount offered to a nursing facility and referrals
of Federal health care program business billed by a supplier or
provider, suspect arrangements include below-cost arrangements or
arrangements at prices lower than the prices offered by the supplier or
provider to other customers with similar volumes of business, but
without Federal health care program referrals. Other suspect practices
include, but are not limited to, discounts that are coupled with
exclusive provider agreements and discounts or other pricing schemes
made in conjunction with explicit or implicit agreements to refer other
facility business. In sum, if any direct or indirect link exists
between a price offered by a supplier or provider to a nursing facility
for items or services that the nursing facility pays for out-of-pocket
and referrals of Federal business for which the supplier or provider
can bill a Federal health care program, the anti-kickback statute is
implicated.
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\104\ See, e.g., OIG's September 22, 1999, letter regarding
``Discount Arrangements Between Clinical Laboratories and SNFs''
(referencing OIG Advisory Opinion No. 99-2 issued February 26,
1999), available on our Web site at http://oig.hhs.gov/fraud/docs/safeharborregulations/rs.htm; 56 FR 35952 at the preamble (July 29,
1991), ``Medicare and State Health Care Programs: Fraud and Abuse;
OIG Anti-Kickback Provisions,'' available on our Web site at http://oig.hhs.gov/fraud/docs/safeharborregulations/072991.htm.
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4. Hospices
Hospice services for terminally ill patients are typically provided
in the patients' homes. In some cases, however, a nursing facility is
the patient's home. In such cases, nursing facilities often arrange for
the provision of hospice services in the nursing facility if the
resident meets the hospice eligibility criteria and elects the hospice
benefit. These arrangements pose several fraud and abuse risks. For
example, to induce referrals, a hospice may offer a nursing facility
remuneration in the form of free nursing services for non-hospice
patients; additional room and board payments; \105\ or inflated
payments for providing hospice services to the
[[Page 56845]]
hospice's patients.\106\ Nursing facilities should be mindful that
requesting or accepting remuneration from a hospice may subject the
nursing facility and the hospice to liability under the anti-kickback
statute if the remuneration might influence the nursing facility's
decision to do business with the hospice.\107\
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\105\ The Medicare reimbursement rate for routine hospice
services provided in a nursing facility does not include room and
board expenses, so payment for room and board may be the
responsibility of the patient. CMS, ``Medicare Benefit Policy
Manual,'' Pub. No. 100-02, chapter 9, section 20.3, available on
CMS's Web site at http://www.cms.hhs.gov/Manuals/IOM/list.asp. For
Medicaid patients, the State will pay the hospice at least 95
percent of the State's Medicaid daily nursing facility rate, and the
hospice is then responsible for paying the nursing facility for the
beneficiary's room and board. Section 1902(a)(13)(B) of the Act (42
U.S.C. 1396a(a)(13)(B)).
\106\ Under the regulations at 42 CFR 418.80, hospices must
generally furnish substantially all of the core hospice service
themselves. Hospices are permitted to furnish non-core services
under arrangements with other providers or suppliers, including
nursing facilities. 42 CFR 418.56; CMS, ``State Operations Manual,''
Pub. No. 100-07, chapter 2, section 2082C, available on CMS's Web
site at http://www.cms.hhs.gov/Manuals/IOM/list.asp.
\107\ Under certain circumstances, a nursing facility that
knowingly refers to hospice patients who do not qualify for the
hospice benefit may be liable for the submission of false claims.
The Medicare hospice eligibility criteria are found at 42 CFR
418.20.
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Some of the practices that are suspect under the anti-kickback
statute include:
A hospice offering free goods or goods at below-fair-
market value to induce a nursing facility to refer patients to the
hospice;
A hospice paying room and board payments to the nursing
facility in excess of what the nursing facility would have received
directly from Medicaid had the patient not been enrolled in hospice.
Any additional payment must represent the fair-market value of
additional services actually provided to that patient that are not
included in the Medicaid daily rate;
A hospice paying amounts to the nursing facility for
additional services that Medicaid considers to be included in its room
and board payment to the hospice;
A hospice paying above fair-market value for additional
services that Medicaid does not consider to be included in its room and
board payment to the nursing facility;
A hospice referring its patients to a nursing facility to
induce the nursing facility to refer its patients to the hospice;
A hospice providing free (or below-fair-market value) care
to nursing facility patients, for whom the nursing facility is
receiving Medicare payment under the SNF benefit, with the expectation
that after the patient exhausts the SNF benefit, the patient will
receive hospice services from that hospice; and
A hospice providing staff at its expense to the nursing
facility.
For additional guidance on arrangements with hospices, nursing
facilities should review OIG's Special Fraud Alert on Nursing Home
Arrangements with Hospices.\108\ Whenever possible, nursing facilities
should structure their relationships with hospices to fit in a safe
harbor, such as the personal services and management contracts safe
harbor.\109\
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\108\ OIG Special Fraud Alert on Fraud and Abuse in Nursing Home
Arrangements With Hospices, March 1998, available on our Web site at
http://oig.hhs.gov/fraud/docs/alertsandbulletins/hospice.pdf.
\109\ 42 CFR 1001.952(d).
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5. Reserved Bed Payments
Sometimes hospitals enter into reserved bed arrangements with
nursing facilities to receive guaranteed or priority placement for
their discharged patients.\110\ Under some reserved bed arrangements,
hospitals provide remuneration to nursing facilities to keep certain
beds available and open. These arrangements could be problematic under
the anti-kickback statute if one purpose of the remuneration is to
induce referrals of Federal health care program business from the
nursing facility to the hospital.\111\ Payments should not be
determined in any manner that reflects the volume or value of existing
or potential referrals of Federal health care program business from the
nursing facility to the hospital. Examples of some reserved bed
payments that may give rise to an inference that the arrangement is
connected to referrals include: (1) Payments that result in double-
dipping by the nursing facility (e.g., sham payments for beds that are
actually occupied or for which the facility is otherwise receiving
reimbursement); (2) payments for more beds than the hospital
legitimately needs; and (3) excessive payments (e.g., payments that
exceed the nursing facility's actual costs of holding a bed or the
actual revenues a facility reasonably stands to forfeit by holding a
bed given the facility's occupancy rate and patient acuity mix).
Reserved bed arrangements should be entered into only when there is a
bona fide need to have the arrangement in place. Reserved bed
arrangements should serve the limited purpose of securing needed beds,
not future referrals.
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\110\ The Provider Reimbursement Manual provides as follows:
Providers are permitted to enter into reserved bed agreements,
as long as the terms of that agreement do not violate the provisions
of the statute and regulations which govern provider agreements,
which (1) prohibit a provider from charging the beneficiary or other
party for covered services; (2) prohibit a provider from
discriminating against Medicare beneficiaries, as a class, in
admission policies; or (3) prohibit certain types of payments in
connection with referring patients for covered services. A provider
may jeopardize its provider agreement or incur other penalties if it
enters into a reserved bed agreement that violates these
requirements.
CMS, ``Provider Reimbursement Manual,'' Pub. No. 15-1, pt. 1,
ch. 21, section 2105.3(D), available on CMS's Web site at http://www.cms.hhs.gov/Manuals/PBM.
\111\ Nursing facilities should be mindful that conditioning the
offer of reserved beds specifically on referrals of Federal health
care program beneficiaries by the hospital to the nursing facility
would raise concerns under the anti-kickback statute, even if no
payments were made.
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D. Other Risk Areas
1. Physician Self-Referrals
Nursing facilities should familiarize themselves with the physician
self-referral law (section 1877 of the Act),\112\ commonly known as the
``Stark'' law. The physician self-referral law prohibits entities that
furnish ``designated health services'' (DHS) from submitting--and
Medicare from paying--claims for DHS if the referral for the DHS comes
from a physician with whom the entity has a prohibited financial
relationship. This is true even if the prohibited financial
relationship is the result of inadvertence or error. Violations can
result in refunding of the prohibited payment and, in cases of knowing
violations, CMPs, and exclusion from the Federal health care programs.
Knowing violations of the physician self-referral law can also form the
basis for liability under the False Claims Act.
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\112\ 42 U.S.C. 1395nn.
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Nursing facility services, including SNF services covered by the
Part A PPS payment, are not DHS for purposes of the physician self-
referral law. However, laboratory services, physical therapy services,
and occupational therapy services are among the DHS covered by the
statute.\113\ Nursing facilities that bill Part B for laboratory
services, physical therapy services, occupational therapy services, or
other DHS pursuant to the consolidated billing rules are considered
entities that furnish DHS.\114\ Accordingly, nursing facilities should
review all financial relationships with physicians who refer or order
such services to ensure compliance with the physician self-referral
law.
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\113\ The complete list of DHS is found at section 1877(h)(6) of
the Act (42 U.S.C. 1395nn(h)(6)) and 42 CFR 411.351.
\114\ See 66 FR 856, 923 (January 4, 2001), ``Medicare and
Medicaid Programs; Physicians' Referrals to Health Care Entities
With Which They Have Financial Relationships; Final Rule,''
available on CMS's Web site at http://www.cms.hhs.gov/PhysicianSelfReferral/Downloads/66FR856.pdf.
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When analyzing potential physician self-referral situations, the
following three-part inquiry is useful:
Is there a referral (including, but not limited to,
ordering a service for a resident) from a physician for a designated
health service? If not, there
[[Page 56846]]
is no physician self-referral issue. If yes, then the next inquiry is:
Does the physician (or an immediate family member) have a
direct or indirect financial relationship with the nursing facility? A
financial relationship can be created by ownership, investment, or
compensation; it need not relate to the furnishing of DHS. If there is
no financial relationship, there is no physician self-referral issue.
If there is a financial relationship, the next inquiry is:
Does the financial relationship fit in an exception? If
not, the statute is violated.
Detailed regulations regarding the italicized terms are set forth at 42
CFR 411.351 through 411.361 (substantial additional explanatory
material appears in preambles to the final regulations: 66 FR 856
(January 4, 2001), 69 FR 16054 (March 26, 2004), 72 FR 51012 (September
5, 2007), and 73 FR 48434 (August 19, 2008)).\115\
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\115\ Available on CMS's Web site at http://www.cms.hhs.gov/PhysicianSelfReferral/.
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Nursing facilities should pay particular attention to their
relationships with attending physicians who treat residents and with
physicians who are nursing facility owners, investors, medical
directors, or consultants. The statutory and regulatory exceptions are
key to compliance with the physician self-referral law. Exceptions
exist for many common types of arrangements.\116\ To fit in an
exception, an arrangement must squarely meet all of the conditions set
forth in the exception. Importantly, it is the actual relationship
between the parties, and not merely the paperwork, that must fit in an
exception. Unlike the anti-kickback safe harbors, which are voluntary,
fitting in an exception is mandatory under the physician self-referral
law. Compliance with a physician self-referral law exception does not
immunize an arrangement under the anti-kickback statute. Therefore,
arrangements that implicate the physician self-referral law should also
be analyzed under the anti-kickback statute.
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\116\ Section 1877(b)-(e) of the Act (42 U.S.C. 1395nn(b)-(e)).
See also 42 CFR 411.351-.357.
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In addition to reviewing particular arrangements, nursing
facilities can implement several systemic measures to guard against
violations. First, many of the potentially applicable exceptions
require written, signed agreements between the parties. Nursing
facilities should enter into appropriate written agreements with
physicians. In addition, nursing facilities should review their
contracting processes to ensure that they obtain and maintain signed
agreements covering all time periods for which an arrangement is in
place. Second, many exceptions require fair-market value compensation
for items and services actually needed and rendered. Thus, nursing
facilities should have appropriate processes for making and documenting
reasonable, consistent, and objective determinations of fair-market
value and for ensuring that needed items and services are furnished or
rendered. Nursing facilities should also implement systems to track
non-monetary compensation provided annually to referring physicians
(such as free parking or gifts) and ensure that such compensation does
not exceed limits set forth in the physician self-referral regulations.
Further information about the physician self-referral law and
applicable regulations can be found on CMS's Web site at http://www.cms.hhs.gov/PhysicianSelfReferral/. Information regarding CMS's
physician self-referral advisory opinion process can be found at http://www.cms.hhs.gov/PhysicianSelfReferral/07_advisory_opinions.asp#TopOfPage.
2. Anti-Supplementation
As a condition of its Medicare provider agreement and under
applicable Medicaid regulations and a criminal provision precluding
supplementation of Medicaid payment rates, a nursing facility must
accept the applicable Medicare or Medicaid payment (including any
beneficiary coinsurance or copayments authorized under those programs),
respectively, for covered items and services as the complete
payment.\117\ For covered items and services, a nursing facility may
not charge a Medicare or Medicaid beneficiary, or another person in
lieu of the beneficiary, any amount in addition to what is otherwise
required to be paid under Medicare or Medicaid (i.e., a cost-sharing
amount). For example, an SNF may not condition acceptance of a
beneficiary from a hospital upon receiving payment from the hospital or
the beneficiary's family in an amount greater than the SNF would
receive under the PPS. For Medicare and Medicaid beneficiaries, a
nursing facility may not accept supplemental payments, including, but
not limited to, cash and free or discounted items and services, from a
hospital or other source merely because the nursing facility considers
the Medicare or Medicaid payment to be inadequate (although a nursing
facility may accept donations unrelated to the care of specific
patients). The supplemental payment would be a prohibited charge
imposed by the nursing facility on another party for services that are
already covered by Medicare or Medicaid.\118\
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\117\ Section 1866(a) of the Act (42 U.S.C. 1395cc(a)); 42 CFR
489.20; section 1128B(d) of the Act (42 U.S.C. 1320a-7b(d)); 42 CFR
447.15; 42 CFR 483.12(d)(3).
\118\ See id.; see also CMS, ``Skilled Nursing Facility
Manual,'' Pub. No. 12, chapter 3, sections 317 and 318, available on
CMS's Web site at http://www.cms.hhs.gov/Manuals/PBM/list.asp.
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3. Medicare Part D
Medicare Part D extends voluntary prescription drug coverage to all
Medicare beneficiaries,\119\ including individuals who reside in
nursing facilities. Like all Medicare beneficiaries, nursing facility
residents who decide to enroll in Part D have the right to choose their
Part D plans.\120\ Part D plans offer a variety of drug formularies and
have arrangements with a variety of pharmacies to dispense drugs to the
plan's enrollees. Nursing facilities also enter into arrangements with
pharmacies to dispense drugs. Typically, these are exclusive or semi-
exclusive arrangements designed to ease administrative burdens and
coordinate accurate administration of drugs to residents. When a
resident is selecting a particular Part D plan, it may be that the Part
D plan that best satisfies a beneficiary's needs does not have an
arrangement with the nursing facility's pharmacy. CMS has stated that
it expects nursing facilities ``to work with their current pharmacies
to assure that they recognize the Part D plans chosen by that
facility's Medicare beneficiaries, or, in the alternative, to add
additional pharmacies to achieve that objective.'' \121\ CMS also
suggests that a nursing facility ``could contract exclusively with
another pharmacy that contracts more broadly with Part D plans.'' \122\
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\119\ Section 1860D-1 of the Act (42 U.S.C. 1395w-101).
\120\ Id.
\121\ See CMS Survey and Certification Group's May 11, 2006,
letter to State Survey Agency Directors, available on CMS's Web site
at http://www.cms.hhs.gov/SurveyCertificationGenInfo/downloads/SCLetter06-16.pdf. This letter communicates CMS's current guidance
on these Part D issues. As the Part D program evolves, nursing
facilities should keep current with any guidance issued by CMS and
conform their policies and procedures accordingly.
\122\ Id.
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CMS has explained that ``[n]ursing homes may, and are encouraged
to, provide information and education to residents on all available
Part D plans.'' \123\ When educating residents,
[[Page 56847]]
nursing facilities should ensure that the information provided is
complete and objective. It may be helpful for nursing facilities to
walk residents through the important details of the plans available to
the residents, including items such as premium and cost-sharing
structures, and to discuss the extent to which each plan does, or does
not, provide coverage of the resident's medications. Nursing facilities
must be particularly careful, however, not to act in ways that would
frustrate a beneficiary's freedom of choice in choosing a Part D plan.
As stated by CMS, ``[u]nder no circumstances should a nursing home
require, request, coach or steer any resident to select or change a
plan for any reason,'' nor should it ``knowingly and/or willingly allow
the pharmacy servicing the nursing home'' to do the same.\124\
Providing residents with complete and objective information about all
of the plans available to the residents helps reduce the risk that
efforts to educate residents will lead to steering.
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\123\ Id.
\124\ Id.
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Nursing facilities and their employees and contractors should not
accept any payments from any plan or pharmacy to influence a
beneficiary to select a particular plan. Beneficiary freedom of choice
in choosing a Part D Plan is ensured by section 1860D-1 of the
Act.\125\ Nursing facilities may not limit this choice in the Part D
program.
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\125\ 42 U.S.C. 1395w-101.
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E. HIPAA Privacy and Security Rules
As of April 14, 2003, all nursing facilities that conduct
electronic transactions governed by HIPAA are required to comply with
the Privacy Rule adopted under HIPAA.\126\ Generally, the HIPAA Privacy
Rule addresses the use and disclosure of individuals' personally
identifiable health information (called ``protected health
information'' or ``PHI'') by covered nursing facilities and other
covered entities. The Privacy Rule also covers individuals' rights to
understand and control how their health information is used. The
Privacy Rule also requires nursing facilities to disclose PHI to the
individual who is the subject of the PHI or to the Secretary of the
Department of Health and Human Services under certain circumstances.
The Privacy Rule and helpful information about how it applies can be
found on the Web site of the Department's Office for Civil Rights
(OCR).\127\ Questions about the Privacy Rule should be submitted to
OCR.\128\
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\126\ 45 CFR parts 160 and 164, subparts A and E; available at
http://www.hhs.gov/ocr/hipaa/finalreg.html. In addition to the HIPAA
Privacy and Security Rules, facilities should also take steps to
adhere to the privacy and confidentiality requirements for
residents' personal and clinical records, 42 CFR 483.10(e), and any
applicable State privacy laws.
\127\ OCR, ``HHS--Office of Civil Rights--HIPAA,'' available at
http://www.hhs.gov/ocr/hipaa/.
\128\ Nursing facilities can contact OCR by following the
instructions on its Web site, available at http://www.hhs.gov/ocr/contact.html, or by calling the HIPAA toll-free number, (866) 627-
7748.
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The Privacy Rule gives covered nursing facilities and other covered
entities some flexibility to create their own privacy procedures. Each
nursing facility should make sure that it is compliant with all
applicable provisions of the Privacy Rule, including standards for the
use and disclosure of PHI with and without patient authorization and
the provisions pertaining to permitted and required disclosures.
The HIPAA Security Rule specifies a series of administrative,
technical, and physical security safeguards for covered entities to
ensure the confidentiality of electronic PHI.\129\ Nursing facilities
that are covered entities were required to be compliant with the
Security Rule by April 20, 2005. The Security Rule requirements are
flexible and scalable, which allows each covered entity to tailor its
approach to compliance based on its own unique circumstances. Covered
entities may consider their organization and capabilities, as well as
costs, in designing their security plans and procedures. Questions
about the HIPAA Security Rule should be submitted to CMS.\130\
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\129\ 45 CFR parts 160 and 164, subparts A and C, available on
CMS's Web site at http://www.cms.gov/SecurityStandard/02_Regulations.asp.
\130\ Nursing facilities can contact CMS by following the
instructions on its Web site, http://www.cms.hhs.gov/HIPAAGenInfo/.
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IV. Other Compliance Considerations
A. An Ethical Culture
As laid out in the 2000 Nursing Facility CPG, it is important for a
nursing facility to have an organizational culture that promotes
compliance. OIG commends nursing facilities that have adopted a code of
conduct that details the fundamental principles, values, and framework
for action within the organization, and that articulates the
organization's commitment to compliance. OIG encourages those
facilities that have not yet adopted codes of conduct to do so.
In addition to codes of conduct, an organization can adopt other
measures to express its commitment to compliance. First, and foremost,
a nursing facility's leadership should foster an organizational culture
that values, and even rewards, the prevention, detection, and
resolution of quality of care and compliance problems. Good compliance
practices may include the development of a mechanism, such as a
``dashboard,'' \131\ designed to communicate effectively appropriate
compliance and performance-related information to a nursing facility's
board of directors and senior officers. The dashboard or other
communication tool should include quality of care information. Further
information and resources about quality of care dashboards are
available on our Web site.\132\
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\131\ Much like the dashboard of a car, a ``dashboard'' is an
instrument that provides the recipient with a user-friendly (i.e.,
presented in an appropriate context) snapshot of the key pieces of
information needed by the recipient to oversee and manage
effectively the operation of an organization and forestall potential
problems, while avoiding information overload.
\132\ See, e.g., OIG, ``Driving for Quality in Long-Term Care: A
Board of Director's Dashboard--Government-Industry Roundtable,''
available on our Web site at http://oig.hhs.gov/fraud/docs/complianceguidance/Roundtable013007.pdf.
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When communication tools such as dashboards are properly
implemented and include quality of care information, the directors and
senior officers can, among other things: (1) Demonstrate a commitment
to quality of care and foster an organization-wide culture that values
quality of care; (2) improve the facility's quality of care through
increased awareness of and involvement in the oversight of quality of
care issues; and (3) track and trend quality of care data (e.g., State
agency survey results, outcome care and delivery data, and staff
retention and turnover data) to identify potential quality of care
problems, identify areas in which the organization is providing high
quality of care, and measure progress on quality of care initiatives.
Each dashboard should be tailored to meet the specific needs and
sophistication of the implementing nursing facility, its board members,
and senior officers. OIG views the use of dashboards, and similar
tools, as a helpful compliance practice that can lead to improved
quality of care and assist the board members and senior officers in
fulfilling, respectively, their oversight and management
responsibilities.
In summary, the nursing facility should endeavor to develop a
culture that values compliance from the top down and fosters compliance
from the bottom up. Such an organizational culture is the foundation of
an effective compliance program.
[[Page 56848]]
B. Regular Review of Compliance Program Effectiveness
Nursing facilities should regularly review the implementation and
execution of their compliance program systems and structures. This
review should be conducted periodically, typically on annual basis. The
assessment should include an evaluation of the overall success of the
program, as well as each of the basic elements of a compliance program
individually, which include:
Designation of a compliance officer and compliance
committee;
Development of compliance policies and procedures,
including standards of conduct;
Developing open lines of communication;
Appropriate training and teaching;
Internal monitoring and auditing;
Response to detected deficiencies; and
Enforcement of disciplinary standards.
Nursing facilities seeking guidance for establishing and evaluating
their compliance operations should review OIG's 2000 Nursing Facility
CPG, which explains in detail the fundamental elements of a compliance
program.\133\ Nursing facilities may also wish to consult quality of
care corporate integrity agreements (CIA) entered into between OIG and
parties settling specific matters.\134\ Other issues a nursing facility
may want to evaluate are whether there has been an allocation of
adequate resources to compliance initiatives; whether there is a
reasonable timetable for implementation of the compliance measures;
whether the compliance officer and compliance committee have been
vested with sufficient autonomy, authority, and accountability to
implement and enforce appropriate compliance measures; and whether
compensation structures create undue pressure to pursue profit over
compliance.
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\133\ 2000 Nursing Facility CPG, supra note 2, at 14289.
\134\ OIG, ``HHS--OIG--Fraud Prevention & Detection--Corporate
Integrity Agreements,'' available on our Web site at http://oig.hhs.gov/fraud/cias.html.
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V. Self-Reporting
If the compliance officer, compliance committee, or a member of
senior management discovers credible evidence of misconduct from any
source and, after a reasonable inquiry, believes that the misconduct
may violate criminal, civil, or administrative law, the nursing
facility should promptly report the existence of the misconduct to the
appropriate Federal and State authorities.\135\ The reporting should
occur within a reasonable period, but not longer than 60 days,\136\
after determining that there is credible evidence of a violation.\137\
Prompt voluntary reporting will demonstrate the nursing facility's good
faith and willingness to work with governmental authorities to correct
and remedy the problem. In addition, prompt reporting of misconduct
will be considered a mitigating factor by OIG in determining
administrative sanctions (e.g., penalties, assessments, and exclusion)
if the reporting nursing facility becomes the subject of an OIG
investigation.\138\
To encourage providers to make voluntary disclosures to OIG, OIG
published the Provider Self-Disclosure Protocol.\139\ When reporting to
the Government, a nursing facility should provide all relevant
information regarding the alleged violation of applicable Federal or
State law(s) and the potential financial or other impact of the alleged
violation. The compliance officer, under advice of counsel and with
guidance from governmental authorities, may be requested to continue to
investigate the reported violation. Once the investigation is
completed, and especially if the investigation ultimately reveals that
criminal, civil, or administrative violations have occurred, the
compliance officer should notify the appropriate governmental authority
of the outcome of the investigation. This notification should include a
description of the impact of the alleged violation on the applicable
Federal health care programs or their beneficiaries.
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\135\ Appropriate Federal and State authorities include OIG,
CMS, the Criminal and Civil Divisions of the Department of Justice,
the U.S. Attorney in relevant districts, the Food and Drug
Administration, the Department's Office for Civil Rights, the
Federal Trade Commission, the Drug Enforcement Administration, the
Federal Bureau of Investigation, and the other investigative arms
for the agencies administering the affected Federal or State health
care programs, such as the State Medicaid Fraud Control Unit, the
Defense Criminal Investigative Service, the Department of Veterans
Affairs, the Health Resources and Services Administration, and the
Office of Personnel Management (which administers the Federal
Employee Health Benefits Program).
\136\ To qualify for the ``not less than double damages''
provision of the False Claims Act, the provider must provide the
report to the Government within 30 days after the date when the
provider first obtained the information. 31 U.S.C. 3729(a).
\137\ Some violations may be so serious that they warrant
immediate notification to governmental authorities prior to, or
simultaneous with, commencing an internal investigation. By way of
example, OIG believes a provider should immediately report
misconduct that: (i) Is a clear violation of administrative, civil,
or criminal laws; (ii) poses an imminent danger to a patient's
safety; (iii) has a significant adverse effect on the quality of
care provided to Federal health care program beneficiaries; or (iv)
indicates evidence of a systemic failure to comply with applicable
laws or an existing corporate integrity agreement, regardless of the
financial impact on Federal health care programs.
\138\ OIG has published criteria setting forth those factors
that OIG takes into consideration in determining whether it is
appropriate to exclude an individual or entity from program
participation pursuant to section 1128(b)(7) of the Act (42 U.S.C.
1320a-7(b)(7)) for violations of various fraud and abuse laws. See
62 FR 67392 (December 24, 1997), ``Criteria for Implementing
Permissive Exclusion Authority Under Section 1128(b)(7) of the
Social Security Act.''
\139\ For details regarding the Provider Self-Disclosure
Protocol, including timeframes and required information, see 63 FR
58399 (October 30, 1998), ``Publication of the OIG's Provider Self-
Disclosure Protocol,'' available on our Web site at http://oig.hhs.gov/authorities/docs/selfdisclosure.pdf. See also OIG's
April 15, 2008, Open Letter to Health Care Providers, available on
our Web site at http://oig.hhs.gov/fraud/docs/openletters/OpenLetter4-15-08.pdf; OIG's April 24, 2006, Open Letter to Health
Care Providers, available on our Web site at http://oig.hhs.gov/fraud/docs/openletters/Open%20Letter%20to%20Providers%202006.pdf.
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VI. Conclusion
In today's environment of increased scrutiny of corporate conduct
and increasingly large expenditures for health care, it is imperative
for nursing facilities to establish and maintain effective compliance
programs. These programs should foster a culture of compliance and a
commitment to delivery of quality health care that begins at the
highest levels and extends throughout the organization. This
supplemental CPG is intended as a resource for nursing facilities to
help them operate effective compliance programs that decrease errors,
fraud, and abuse and increase quality of care and compliance with
Federal health care program requirements for the benefit of the nursing
facilities and their residents.
Dated: September 24, 2008.
Daniel R. Levinson,
Inspector General.
[FR Doc. E8-22796 Filed 9-29-08; 8:45 am]
BILLING CODE 4152-01-P