COMPLIANCE AUDITS 
Legal Red Flags
 

By: Michael J. Schoppmann, Esq.
 
It is estimated that approximately $60 billion is lost annually to fraud. During the 2014 Fiscal Year, the Federal Government recovered $2.3 billion in Federal fraud judgments and settlements. Laws that fall within the scope of fraud and abuse include: Federal False Claims Act, State False Claims Act, Federal Anti-Kickback Statute, Federal Stark Law, and NJ “Codey Law”. Similarly, there are many types of medical fraud such as; False Patients, False Claims, Unbundling, Upcoding, Self-Referrals, Criminal Activity, and Unnecessary Treatment and/or issues concerning the prescribing of Durable Medical Equipment (“DME”). The Federal Government monitors the provision of healthcare throughout the United States for medical fraud “triggers” such as Statistical Outliers, Patient Complaints, Pharmacy Sweeps, Records Reviews and a host of other factors warranting further investigation, audit and/or legal action. Consequently, healthcare compliance audits can be generated at the federal, state, commercial and/or internal level. 
In order to learn how to avoid future audits, it is imperative to understand how the audit process works. Some of the “audit warning signs” physicians and healthcare providers can look for can be found in medical records requests, patient reports of being contacted, a change in payment practice (i.e., slow pay, no pay, prepayment review, etc.), and/or demands for additional review in order to provide services.  Medical records may be requested via subpoena, which gives a provider an opportunity to respond in a reasonable timeframe. Medical records may also be requested via a search warrant (in criminal actions/investigations) and directly by health insurance companies.
 
For those physicians and practices faced with an audit and overpayment refund demand, caution should be ever paramount in addressing, and even resolving, the audit itself.  The settlement of an audit carries with it potential civil, criminal, administrative, licensure, National Practitioner Data Bank, hospital privileges, and other health insurance company implications. The biggest issue a physician or healthcare provider might face in dealing with an audit is the fact that all of the involved parties in insurance and law enforcement (Medicare, Medicaid, Medicaid HMO’s, insurance companies, federal civil and criminal departments, state licensing boards, etc.) are all empowered and at times, obligated, to “talk” to each other, and if known as an “easy target”, the ramifications will only continue to grow, and potentially escalate in dramatic fashion.
 
It is within the power of every medical practice to avoid becoming a target. As a proactive physician and/or healthcare provider, securing compliant Electronic Medical Records Systems (EMR’s), performing internal compliance audits, providing proper training for billing staff and seeking the assistance of qualified external consultants can dramatically reduce the likelihood of an audit, investigation and/or action. Further advantages can be found in employing only reputable, properly vetted billing companies, understanding (and potentially fighting) overpayment refund requests, creating a compliance plan and, where indicated, designating a compliance officer.
 
The Office of Inspector General (“OIG”) offers healthcare providers a compliance plan, and although it is not mandatory, it should be considered preventive medicine for practices seeking to avoid an audit. When designing any compliance plan, attention should be paid to cross-relate and integrate the plan with the practice’s Office Policy and Procedure Manual. Typically, such manuals include sections covering proper medical record documentation, staff training and policies for internal and external auditing. Ensuring that any compliance plan can, and will, be carried out in sync with existing policies, and policies yet to be created, is critical to avoiding the creation of “admissions by omission.”  
 
Moving forward, basic tools of the trade for every physician and practice include a Medical Dictionary, Medical Abbreviations, Coder’s Handbook/Desk Reference, CPT, ICD-9-CM, HCPCS Books, 1995 & 1997 Documentation Guidelines, Auditing Tools, and Medicare Local Coverage Determinations (“LCDs”). LCDs are particularly important as they are a tool to assist providers, physicians & suppliers in submitting correct claims for payment by providing correct coding guidance, indicating medical necessity, and by listing documentation requirements. 
 
Designing compliance plans to avoid audits, investigations or actions will require every physician, provider and practice to become, and remain, closely involved in the construction, implementation and maintenance of the plan – following a fundamental, yet critical set of rules – never speak to an investigator without the benefit of preparation, context and counsel; never accept that any inquiries or requests for records are benign, academic or educational and always appreciate that compliance must adapt to meet an ever changing set of rules, regulations, policies and standards.  
 
 
 
Kern Augustine Conroy & Schoppmann, P.C., Attorneys to Health Professionals, DrLaw.com, is solely devoted to the representation and defense of physicians and other health care professionals. Mr. Schoppmann may be contacted at 1-800-445-0954 or via email at MSchoppmann@DrLaw.com.