H. Responding to Detected Offenses and Developing Corrective Action Initiatives

Violations of a nursing facility’s compliance program, failures to comply with applicable Federal or State law, and other types of misconduct threaten a facility’s status as a reliable, honest and trustworthy provider of health care. Detected but uncorrected deficiencies can seriously endanger the reputation and legal status of the nursing facility. Consequently, upon receipt of reports or reasonable indications of suspected noncompliance, it is important that the compliance officer or other management officials immediately investigate the allegations to determine whether a material violation of applicable law or the requirements of the compliance program has occurred and, if so, take decisive steps to correct the problem.108 As appropriate, such steps may include a corrective action plan,109 the return of any overpayments, a report to the Government,110 and/or a referral to criminal and/or civil law enforcement authorities.

Where potential fraud is not involved, the OIG recommends that the nursing facility use normal repayment channels to return overpayments as they are discovered. However, even if the nursing facility’s billing department is effectively using the overpayment detection and return process, the OIG believes that the facility needs to alert the compliance officer to those overpayments that may reveal trends or patterns indicative of a systemic problem.

Where there are indications of potential fraud, an internal investigation may be warranted and will probably include interviews and a review of relevant documents. Under some circumstances, the facility may need to consider engaging outside counsel, auditors, or health care experts to assist in an investigation. The investigative file should contain documentation of the alleged violation, a description of the investigative process (including the objectivity of the investigators and methodologies utilized), copies of interview notes and key documents, a log of the witnesses interviewed and the documents reviewed, the results of the investigation, e.g., any disciplinary action taken, and the corrective action implemented. While any action taken as the result of an investigation will necessarily vary depending upon the situation, nursing facilities should strive for some consistency by using sound practices and disciplinary protocols.111 Further, the compliance officer should review the circumstances that formed the basis for the investigation to determine whether similar problems have been uncovered or modifications of the compliance program are necessary to prevent and detect other inappropriate conduct or violations.

If the nursing facility undertakes an investigation of an alleged violation and the compliance officer believes the integrity of the investigation may be at stake because of the presence of employees under investigation, the facility should remove those individuals from their current responsibilities until the investigation is completed (unless there is an ongoing internal or Government-led undercover operation known to the nursing facility). In addition, the compliance officer should take appropriate steps to secure or prevent the destruction of documents or other evidence relevant to the investigation. If the nursing facility determines that disciplinary action is warranted, it should be promptly imposed in accordance with the facility’s written standards of disciplinary action.

1. Reporting

Where the compliance officer, compliance committee, or a management official discovers credible evidence of misconduct from any source and, after a reasonable inquiry, has reason to believe that the misconduct may violate criminal, civil or administrative law, the facility should promptly report the existence of misconduct to the appropriate Federal and State authorities 112 within a reasonable period, but not more than 60 days 113 after determining that there is credible evidence of a violation.114 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, reporting such conduct will be considered a mitigating factor by the OIG in determining administrative sanctions (e.g., penalties, assessments, and exclusion), if the reporting provider becomes the target of an OIG investigation.115

When reporting to the Government, a nursing facility should provide all evidence relevant to the alleged violation of applicable Federal or State law(s) and potential cost impact. The compliance officer, under advice of counsel and with guidance from the governmental authorities, could be requested to continue to investigate the reported violation. Once the investigation is completed, the compliance officer should notify the appropriate governmental authority of the outcome of the investigation, including a description of the impact of the alleged violation on the operation of the applicable health care programs or their beneficiaries. If the investigation ultimately reveals that criminal, civil or administrative violations have occurred, the nursing facility should immediately notify appropriate Federal and State authorities.

As previously stated, the nursing facility should take appropriate corrective action, including prompt identification and return of any overpayment to the affected payor. If potential fraud is involved, the nursing facility should return any overpayment during the course of its disclosure to the Government. Otherwise, the nursing facility should use normal repayment channels for reimbursing identified overpayments.116 A knowing and willful failure to disclose overpayments within a reasonable period of time could be interpreted as an attempt to conceal the overpayment from the Government, thereby establishing an independent basis for a criminal violation with respect to the nursing facility, as well as any individual who may have been involved.117 For this reason, nursing facility compliance programs should emphasize that overpayments should be promptly disclosed and returned to the entity that made the erroneous payment.


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