Posted by: Robert Markette
April 25, 2006

The Department of Health and Human Services Office of Inspector General (“OIG”) issued an open letter to providers on Monday. This letter addresses recent issues raised with the OIG by providers regarding concerns about improper relationships between hospitals and physicians.

Certain providers have discovered through their own internal compliance programs, that they are engaged in inappropriate relationships with physicians. These relationships include renting office space to physicians at less than fair market value. As a result of these contacts, OIG is attempting to “increase awareness” for providers of ways to resolve these issues. It appears that this amounts to supplementing the current self-disclosure program.

Because the letter discusses specific concerns of the hospital industry, it would not be to surprising to discover this “supplementation” has little bearing on the home care industry. However, because home health agencies and hospices do contract with physicians, it may provide some additional guidance to HHAs and Hospices as to what OIG will require from a self disclosure of an anti-kickback or self-referral violation.

It seems quite likely that the major effort here will be in provider education. In other words, OIG will be reminding hospitals that they are free to self disclose to OIG and that a properly performed self-disclosure will potentially lessen the provider’s burden. There may be some clarification as to the protocol for this type of self-disclosure. The main point is that this collaborative effort will be starting soon and aimed at these particular concerns.

Much like the original self-disclosure protocol and the open letter to providers issued in 2000, this letter does not provide a clear statement regarding “amnesty.” OIG leaves itself rather free to decide what to do to providers after a self-disclosure. As a former criminal defense attorney, it strikes me that this provides very little incentive to come forward. If a provider self-discloses, they may simply provide the government the evidence it needs to prosecute the self-disclosing provider.

Of course, in most instances, a proper compliance program is going to discover employees making mistakes or employee fraud. These types of discoveries are likely to lead to the provider simply repaying the overpayment and the employee being prosecuted.

Which leads to a second point – compliance programs. OIG would like every provider to have its own compliance program. In fact, having a compliance program can reduce your liability after a self-disclosure as well as provide a basis for a less restrictive post compliance agreement with OIG.

More importantly, even if you were disinclined to self disclose, having a proper compliance program can help you to catch problems early. The procedures and internal audit functions required by a proper compliance program are likely to catch errors early. This would allow you to correct the problem immediately. In turn, the amount of overpayment and potential penalties would be lessened, because the inappropriate conduct was terminated quickly. That alone is a strong reason to institute a corporate compliance program.

OIG has issue compliance guidances for both home health and hospice. I can only attach one document to each blog post, so I will have both of them posted on our website under health law articles. (This will probably not occur until tomorrow, because my secretary, Mandisa, is out today.) You can link to that page here.

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