Health care act compliance critical for nursing homes

January 21, 2011
| By Pete Daly |
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Before PPACA, the government just made suggestions to nursing homes on how they should prove they are in compliance with Medicare and Medicaid programs. But under the Patient Protection and Affordable Care Act passed last year, the clock is running on preparation of compliance programs: They must be in place at every nursing home by March 2013.

“It takes what has previously been advisory” suggestions for a compliance plan “and is making them mandatory,” said John Lichtenberg, an attorney at Rhoades McKee who practices health law.

Lichtenberg noted that the Office of Inspector General at the Department of Health & Human Services first issued guidance in 2000 for nursing and skilled nursing facilities that must comply with Medicare and Medicaid regulations, and later updated it with more detail in 2008. But those were still just suggestions on how to prove they comply.

PPACA specifically mandates that nursing home facilities establish and implement a Compliance and Ethics Program within three years after the act was signed into law by President Obama on March 23, 2010. The statute includes reference to several factors that should be part of a compliance plan, but it also stipulates that HHS Secretary Kathleen Sebelius “shall” issue specific regulations within two years; she now has 14 months left to do so. One year after those regulations come out, every nursing home involved with Medicare/Medicaid will have to have its plan in place.

“My suspicion is that what you will see coming out in regulatory form will be something very similar to the guidance” that was already released in 2000 and 2008 by the OIG, said Lichtenberg.

A compliance program is supposed to reduce the risk of a nursing home either intentionally or unintentionally violating Medicare/Medicaid regulations, which could result in criminal, civil or administrative actions.

“These are going to be rather lengthy documents,” said Lichtenberg. “It’s more than simply having your lawyer or your advisor sit down and type up a plan.”

The federal government, he said, has already emphasized that every Compliance and Ethics Program must be implemented with “commitment at the top to it,” and driven down through the entire organization. Implementation must include “deliberate training programs” for the nursing home employees “who are actually doing the work” that could result in erroneous coding or erroneous billing.

There must also be implemented (if not already in place) appropriate quality programs “to make sure residents are getting the care and treatment they are supposed to, and that is required to be given to them under the Medicare/Medicaid regulations.”

Each organization will need to have an ongoing process for evaluating its compliance with the regulations, which will include internal auditing.

When an nursing home finds out it has not been in compliance, it must have in place prescribed steps it will undertake to not merely correct the problem but also to determine why it happened, who was responsible and what corrective actions will be taken. Those could include staff training, disciplinary action and even discharge of those responsible, said Lichtenberg.

Nursing homes also must make “timely and appropriate disclosures” to government officials when the organization discovers it has been billing Medicare/Medicaid improperly, and then make repayment.

If the organization does not follow the letter of the law, he said, the resulting penalties upon discovery are “pretty severe.”

There is a “relatively low level of intent” required to get a nursing home into hot water when inappropriate payments from Medicare/Medicaid are discovered, said Lichtenberg.

According to the U.S. Government Accountability Office, in FY2009 there were a total of 15,923 nursing homes in America, 1,175 hospital-based and the remainder independent, stand-alone facilities. Sixty-eight percent of nursing homes are for-profit.

From FY2005 through FY2009, 88 nursing homes, or 0.6 percent, were terminated from the Medicare program as the result of audits by the government. “You almost have to work at that,” said Lichtenberg, but he added that federal officials “certainly” will be stricter under the PPACA.

He said the new programs are intended to help organizations avoid problems, rather than catch them after the fact.

“A lot of this is quality oriented. The notion is that if we can improve the quality of care in these organizations, we will ultimately reduce health care costs,” because nursing home residents will be able to avoid the more expensive acute care costs, said Lichtenberg.

Under the quality of care guidance issued in 2008 are specific problem areas, including: sufficient staffing; comprehensive care plans for each resident — integrated care that includes the facility staff as well as the resident, and his or her family members who are involved with the decisions; medication management that reduces adverse drug reactions; appropriate use of psychotropic drugs; and residents’ safety.

Another area of risk for nursing homes under PPACA will be submission of Medicare/Medicaid claims. Medicare uses a reimbursement model called the Prospective Payment System. It means that a resident in a skilled nursing facility is classified based on the individual’s particular needs and acuity, and based on placement in one of three levels, there are certain expectations on what the reimbursement to the facility will be.

An area of potential abuse, said Lichenberg, is when a facility moves a resident to a higher classification and they achieve a higher level of reimbursement than they should.

He said Department of Justice prosecutors who handle those cases oversee recovery audit contractors, and as of Jan. 1, RAC audits became mandatory for some facilities.

Lichtenberg said that DOJ prosecutors have stated that they expect to find some coding errors or classification errors by nursing facilities, “but when all of them are errors that benefit the facility, and none of them benefit  the government, that kind of gets their antenna up.”

There is also an anti-kickback statute that prohibits organizations or individuals participating in Medicare/Medicaid from giving or receiving inducements that might refer patients to someone else.

In the business world, he noted, it’s perfectly legal to treat someone to a round of golf in hope of a better business relationship. “Business works that way pretty much the world over, but it’s not allowed to work that way with respect to the federal Medicare/Medicaid system,” he said.

Issues relating to quality of care, submission of accurate claims and anti-kickback rules “are the big three” in enforcement, he said.

Lichtenberg said the regulations coming from the HHS secretary “may include a model compliance program” for nursing homes to use. “Those of us who are in this line of work … would dearly love to see these come out with a model compliance program. Whether they will do that, remains to be seen.”

The impact of the new law will differ depending on the size of the organization.

Lichtenberg said that a large organization that owns several facilities might not be too challenged by the time and expense of preparing and implementing its compliance plan. On the other hand, a “single-facility kind of business” — which, he noted, are “not high margin businesses” — might find it “really difficult” to invest the time and money.

That challenge has been recognized in the guidance issued previously, he said: PPACA gives the secretary, in developing the regulations, opportunity to “differentiate between smaller and larger organizations,” with larger organizations required to implement a more formal and detailed program.

If an organization has five or more nursing facilities, “you’re in the whole deal” under the new law, he said.

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