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1. MI hospital pleads guilty to criminal fraud
2. CMS adopts quality improvement requirement
3. Pay-per-view article: Commercial insurance regulations in your compliance plan
4. TX pharmacist pleads guilty to fraud
5. Tip: Compliance checks and balances

Compliance Monitor, January 28, 2003

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1. MI hospital pleads guilty to criminal fraud

In a rare case, a Michigan hospital has pled guilty to a felony fraud charge.

United Memorial Hospital in Greenville admitted January 8 that an un-credentialed anesthesiologist had performed hundreds of unnecessary pain management procedures, all of which the hospital billed Blue Cross Blue Shield for, according to Margaret Chiara, U.S. attorney for the western district of Michigan.

As part of its guilty plea, United faces a three-year probationary period, during which time its billing and coding practices will be subject to independent annual audits. United also must implement a compliance plan that guarantees its cooperation with all federal and state laws. The hospital will also pay a $1,050,908 fine. The money will be reimbursed to Blue Cross Blue Shield of Michigan, Medicare, Medicaid, and Priority Health Insurance. If the hospital performs well during the probationary period, the government will dismiss the charges against the hospital, according to Chiara.

Under the agreement, the hospital will not be excluded from federal Medicare and Medicaid programs. Exclusion would have been mandatory if the hospital was convicted at trial.

The Centers for Medicare and Medicaid Services (CMS) will now require hospitals to develop a data-driven program for quality assessment and performance improvement (QAPI), according to the January 24 Federal Register.

Beginning March 25, all Medicare and Medicaid participating hospitals will be responsible for showing state CMS surveyors that they've collected patient data, made the proper comparisons, and taken actions for improvement.

This regulation puts CMS requirements more in line with the Joint Commission on Accreditation of Health Care Organizations (JCAHO), which currently requires hospitals to have a QAPI program.

Click here for the full requirements of this new rule.

Go to "Include commercial insurance regulations in your compliance plan" for the rest of this article. The cost is $10. Strategies for Health Care Compliance subscribers have free access via their online subscriptions. Subscribers to the print edition can find this article in their February issues.

A $30 steal!

You can read this article-and much more-in the entire February issue of Strategies for Health Care Compliance. Your cost: Four stories for only $30! You'll learn how to draft compliant medical director and administrative service agreements, and how you can help the Office of Inspector General develop rules for economic credentialing. You'll also learn how the Office of Civil Rights will enforce HIPAA. Choose between a PDF and HTML version for just $30. Online subscribers have free access to this issue; print newsletter subscribers can find it in their mailboxes.

A Texas pharmacist pled guilty on January 22 to submitting false claims to Blue Cross Blue Shield for prescriptions that weren't authorized by a physician, according to Michael Shelby, U.S. attorney for the southern district of Texas.

If convicted, James Frank Parma Jr. faces up to ten years in prison and fines up to $250,000. Parma also pled guilty to submitting false claims to Medicare from 1999 to 2001. As part of the plea, he gave up his pharmacy license, and agreed not to seek reinstatement.

Parma's sentencing is scheduled for April 21.

Auditing and compliance programs can work together to check and balance each other. This can help the two departments achieve a common goal: creating a culture of integrity. The compliance staff ensures that everyone knows about and complies with regulations. The auditors create an internal control system to prevent mistakes. One department should not exist without the other. However, there is often a weak relationship among compliance officers and external and internal auditors.

Here are some tips to help compliance officers reach out to auditors:

• Begin by learning the role and function of auditors. Their responsibility is to make sure financial statements are free of errors and omissions. Financial statements include Medicare and Medicaid cost reports, credit balances, accounts receivables, cash management, and bad debts.
• Learn the terminology that auditors use. Start with the most common, but least understood term: internal controls. Ask auditors to help you better understand its meaning, and the meaning of other audit terms.

Here are some tips to help auditors reach out to compliance officers

• Work with the board of directors, chief executive officer, operations director, medical director, chief of nurses, and other senior officials on ways to strengthen the communication between the auditor and compliance staff
• Work with these people to identify areas of overlap and duplication
• Meet regularly with the compliance staff to exchange input and develop joint audit and compliance work plans
• Suggest to the compliance department that the next presentation to the board of directors be a joint one

Just as our government uses a system of checks and balances for the common good of the American people, compliance and audit departments should do the same for the good of their organizations.

This column was written by Hank Vanderbeek, MPA, CIA, CFE. IRP, Inc.

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