Thursday, January 27, 2011

Every Medical Practice Must Have A Compliance Plan; Or Suffer The Consequences

The Health Care Reform Act now requires that every medical practice must have a Healthcare Law Compliance Plan. The primary purposes for such a plan are to insure:
  1. accuracy in all claims for reimbursement;
  2. adequate clinical and billing records to support the accuracy of the claims; and that
  3. significant errors or omissions in items (1) and (2) are quickly detected and remedied through regular, periodic internal audits and quarterly audits by a retained outside auditor.
Please click here to download your free model Compliance Plan. Your practice should consider this model Compliance Plan in determining how it will comply with this new requirement. (In providing this model document, MSGLD is not giving any legal advice to your practice.)

Not only the Act, but also the practice's and the physicians' interests in self-preservation, dictate that the practice implement such a Plan. This is true because a properly implemented and functioning Compliance Plan is the primary defense against claims of fraudulent billing. Such claims can result in criminal and civil penalties and fines, personally, for the physicians. Under recent changes in the laws, what are really just innocent, or at most negligent, billing errors can be considered fraudulent and result in such penalties for the physicians.

Specifically, the Patient Protection and Affordable Care Act significantly expands the scope of the False Claims Act which provides criminal and civil penalties for physicians filing fraudulent (i.e. intentionally inaccurate) claims for reimbursement to Medicare, Medicaid, and any other federally funded health-care programs. The civil penalties include, but are not limited to, a refund of three times the payments made.

Now, to prove a false claim, and subject the physicians to such penalties, the government does not have to prove that the physicians had actual knowledge of the federal laws that prohibit fraud, and does not have to prove that the physicians had a specific intent to violate these laws. All the government has to prove is that the physicians had a general intent to file a fraudulent claim (e.g., a claim which the government asserts was for more of a reimbursement than what the physician was entitled-to for the medical services performed.)

The New Jersey Insurance Prevention Act permits private insurance carriers to file law suits against physicians, and other healthcare providers, for fraudulent claims. This Act similarly provides civil penalties which include a refund of three times the overpayment, plus mandatory referral to the Insurance Fraud Prosecutor in the New Jersey Attorney General's office.

Private insurance carriers in New Jersey are stepping-up audits of physician claims. Recently, some carriers have adopted a new tactic to coerce refunds. When a carrier has a question about certain practice claims, and it requests sample patient files to conduct an audit, the carrier places a "hold" on all further payments to the provider, even for those claims the carrier does not question; until the audit is completed and resolved to the carrier's satisfaction, of course!

A Compliance Plan is the primary defense against all such claims and their potentials for severe adverse consequences for the physicians, personally. However, the Plan must be actually implemented and operational to be an effective defense. This includes the training required by the Plan, and the regular, periodic internal audits and quarterly external audits by an outside consultant the practice retains.

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The Healthcare Law Department of Mandelbaum Salsburg Lazris & Discenza, P.D. provides regulatory, litigation, licensure, employment, business, tax, estate planning asset protection, and a wide variety of other legal services for physicians and other healthcare professionals.


Dennis J. Alessi, Chairman/Partner, specializing in regulatory matters, licensure, and health-care related litigation. You can contact Mr. Alessi at 973.736.4600 or dalessi@msgld.com. He will be happy to answer any questions about his articles or on any other health care law and business issues.

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