Office of Inspector General’s Compliance Program Guidance for Nursing Facilities

The Office of Inspector General (OIG) of the Department of Health and Human Services (DHHS) continues in its efforts to promote voluntarily implemented compliance programs for the health care industry.¹ This compliance guidance is intended to assist nursing facilities ² develop and implement internal controls and procedures that promote adherence to applicable statutes and regulations of the Federal health care programs ³ and private insurance program requirements. Compliance programs strengthen Government efforts to prevent and reduce fraud and abuse, as well as further the mission of all nursing facilities to provide quality care to their residents.

Through this document, the OIG provides its views on the fundamental elements of nursing facility compliance programs, as well as the principles that each nursing facility should consider when developing and implementing an effective compliance program. While this document presents basic procedural and structural guidance for designing a compliance program, it is not in and of itself a compliance program. Rather, it is a set of guidelines that nursing facilities should consider when developing and implementing a compliance program. For those nursing facilities that have an existing program or are already in the process of implementing a compliance program, these guidelines may serve as a benchmark against which to measure their ongoing efforts.

Implementing an effective compliance program in a nursing facility may require a significant commitment of time and resources by all parts of the organization. However, superficial efforts or programs that are hastily constructed and implemented without a long term commitment to a culture of compliance likely will be ineffective and may expose the nursing facility to greater liability than if it had no program at all.⁴ Although an effective compliance program may require a reallocation of existing resources, the long term benefits of establishing a compliance program significantly outweigh the initial costs. In short, compliance measures are an investment that advance the goals of the nursing facility, the solvency of the Federal health care programs, and the quality of care provided to the nursing home resident.

In a continuing effort to collaborate closely with health care providers and the private sector, the OIG placed a notice in the Federal Register soliciting comments and recommendations on what should be included in this compliance program guidance. ⁵ In addition to considering these comments in drafting this guidance, we reviewed previous OIG publications, including OIG Special Fraud Alerts and OIG Medicare Advisory Bulletins, as well as reports issued by OIG’s Office of Audit Services (OAS) and Office of Evaluation and Inspections (OEI) affecting the nursing home industry.⁶ In addition, we relied on the experience gained from fraud investigations of nursing home operators conducted by OIG’s Office of Investigations, the Department of Justice, and the Medicaid Fraud Control Units.

A. Benefits of a Compliance Program

The OIG believes a comprehensive compliance program provides a mechanism that brings the public and private sectors together to reach mutual goals of reducing fraud and abuse, enhancing operational functions, improving the quality of health care services, and decreasing the cost of health care. Attaining these goals provides positive results to the nursing facility, the Government, and individual citizens alike. In addition to fulfilling its legal duty to ensure that it is not submitting false or inaccurate claims to Government and private payors, a nursing facility may gain numerous other benefits by voluntarily implementing a compliance program. The benefits may include:

• the formulation of effective internal controls to ensure compliance with statutes, regulations and rules;
• a concrete demonstration to employees and the community at large of the nursing facility’s commitment to responsible corporate conduct;
• the ability to obtain an accurate assessment of employee and contractor behavior;
• an increased likelihood of identifying and preventing unlawful and unethical behavior;
• the ability to quickly react to employees’ operational compliance concerns and effectively target resources to address those concerns;
• an improvement in the quality, efficiency, and consistency of providing services;
• a mechanism to encourage employees to report potential problems and allow for appropriate internal inquiry and corrective action;
• a centralized source for distributing information on health care statutes, regulations and other program directives; ⁷
• a mechanism to improve internal communications;
• procedures that allow prompt and thorough investigation of alleged misconduct; and
• through early detection and reporting, minimizing loss to the Government from false claims, and thereby reducing the nursing facility’s exposure to civil damages and penalties, criminal sanctions, and administrative remedies.⁸

The OIG recognizes that the implementation of a compliance program may not entirely eliminate fraud and abuse from the operations of a nursing facility. However, a sincere effort by the nursing facility to comply with applicable statutes and regulations as well as Government and private payer health care program requirements, through the establishment of a compliance program, significantly reduces the risk of unlawful or improper conduct.

B. Application of Compliance Program Guidance

Given the diversity within the long term care industry, there is no single ‘‘best’’ nursing facility compliance program. The OIG recognizes the complexities of this industry and is sensitive to the differences among large national chains, regional multi-facility operators, and small independent homes. However, the elements of this guidance can be used by all nursing facilities to establish a compliance program, regardless of size (in terms of employees and gross revenues), number of locations, or corporate structure.

Similarly, a corporation that provides long term care as part of an integrated health care delivery system may incorporate these elements into its structure.⁹

We recognize that some nursing facilities may not be able to adopt certain elements to the same degree as others with more extensive resources. At the end of several sections of this document, the OIG has offered suggestions to assist these smaller nursing facility providers in implementing the principles expressed in this guidance. Regardless of size, structure or available resources, the OIG recommends that every nursing facility should strive to accomplish the objectives and principles underlying all of the compliance polices and procedures in this guidance.

By no means should the contents of this guidance be viewed as an exclusive or complete discussion of the advisable elements of a compliance program. On the contrary, the OIG strongly encourages nursing facilities to develop and implement compliance elements that uniquely address the areas of potential problems, common concerns, or high risk areas that apply to their own facilities. Furthermore, this guidance may be modified and expanded as more information and knowledge is obtained by the OIG, and as changes occur in the statutes, regulations and rules of the Federal health care programs and private health plans. New compliance practices also may be incorporated into this guidance if the OIG discovers enhancements that promote effective compliance.

Summary
Background
I. Introduction
II. Compliance Program Elements
   A. The Seven Basic Compliance Elements
   B. Written Policies and Procedures
   C. Designation of a Compliance Officer and a Compliance Committee
   D. Conducting Effective Training and Education
   E. Developing Effective Lines of Communication
   F. Auditing and Monitoring
   G. Enforcing Standards Through Well-Publicized Disciplinary Guidelines
   H. Responding to Detected Offenses and Developing Corrective Action Initiatives
III. Assessing the Effectiveness of a Compliance Program
IV. Conclusion
Appendix