July 01, 2011 11:35:52 am
How to Ensure You Abide by the Rules
Hospital governing bodies — the board of directors or trustees — have a fiduciary duty to ensure the facility complies with all applicable statutes and regulations. This is mandated by the state laws under which hospitals are incorporated and by the Joint Commission under its criteria for hospital accreditation.
The sheer number of legal obligations that apply to hospital operations grows annually. And the consequences of violating or not complying with those obligations can result in large damages awards or settlements, government-imposed compliance programs, and exclusion from Medicare participation. Fortunately, there are ways to reduce your risk.
Education is key
Most hospital board members don’t fully understand the hospital’s legal obligations and what must be done to satisfy them. Therefore, your management team and legal counsel should educate them about the high-risk areas for hospital compliance and the programs needed to minimize those risks. Such programs should include:
• Procedures for performing repetitive tasks such as physician contracting, billing and reimbursement, and leasing of facilities or equipment,
• Training to sensitize employees to the risks they may encounter or create,
• Regular audits and reviews of parameters in high-risk areas,
• Reports on those reviews, their findings and resulting action plans, and
• Systems for collecting and analyzing data on performance in high-risk areas.
Communicating this information to board members is essential to ensure your hospital complies fully with state laws and Joint Commission requirements.
Know where risk lies
For hospitals, the highest risk for noncompliance is in two areas:
1. Billing and reimbursement. For instance, consider graduate medical education. Medicare is the largest program that provides support for such education. Teaching hospitals receive direct graduate medical education funds to cover a portion of the direct costs of training residents, such as their stipends, physician instructor salaries and related overhead costs.
To vouchsafe these payments, the hospital must closely watch the number of residents it’s allowed to count, the per-resident payment amount specific to the hospital, and the proportion of its inpatient population that are Medicare beneficiaries. You also must be able to verify the administrative and clinical services billed for physicians under their medical school affiliation agreements.
Another billing risk to be aware of relates to Medicare patients participating in clinical trials. CMS’s clinical trial policy authorizes payments for “routine patient care costs … and costs due to medical complications associated with participation in clinical trials.” It’s critical that your hospital avoid billing Medicare for services covered by these clinical trials.
In addition, numerous billing risks can arise in seeking payment for Part B services provided by hospital-employed physicians. Such risks may include the possibility of duplicate payments when interpretations are made and billed by both the emergency department and the radiology department. And you should audit E&M billings to prevent upcoding.
2. Fraud and abuse. To avoid the perception of fraud and abuse, make sure incentives for physician recruitment, such as income guarantees, grants, loans, practice support, space and equipment leases and medical directorships, are reasonable and reflect fair market value.
Similarly, directorship duties and the adequacy of directors’ performance should be documented and compensation based on fair market value. There should also be a demonstrable need for all the directorships.
For hospital/physician joint ventures, the return on those investments must be reasonable and balanced with the risks assumed. Make sure your hospital tracks all referrals to ensure appropriate use of hospital resources. And investment interests should be sold back to the venture if a physician retires or leaves the area.
Last, all medical office building leases must be in writing and reflect fair market value, and lease payments must be current and documented.
More areas to scrutinize
Although the above areas of risk are more prominent, it’s important to realize that noncompliance with the Clinical Laboratory Improvement Amendments (CLIA) law, the Independent Review Board (IRB), and HIPAA and EMTALA rules can also get your hospital in trouble.
CLIA was designed to establish quality standards for all laboratory testing to ensure the accuracy, reliability and timeliness of patient test results regardless of where the test was performed. All clinical laboratories must be certified to receive Medicare or Medicaid payments. CLIA specifies quality standards for proficiency testing, patient test management, quality control, personnel qualifications and quality assurance for laboratories performing moderate and/or high complexity tests.
When a hospital engages in its own clinical research, it should establish an IRB to ensure research proposals are drafted correctly, the interests of human subjects are protected, and the research isn’t connected in any way to generation of referrals.
HIPAA privacy law provides federal protections for personal health information held by covered entities such as hospitals. It gives patients an array of rights with respect to that information. Hospitals must comply with a comprehensive set of administrative, physical and technical safeguards by implementing and documenting appropriate policies and procedures.
EMTALA regulations specify the manner in which your hospital should respond to patients who present themselves at the emergency department. Failure to comply with those regulations can result in stiff penalties.
Staying out of hot water
As you can see, there are significant risks in almost every aspect of hospital administration. Some are less onerous; others can land you and your staff in hot water. To learn more about the dangers of noncompliance, work with your attorney and your health care management advisor.
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