What Is Healthcare Compliance?

The Evolution of Healthcare Compliance Regulations

Key Regulatory Milestones

Healthcare compliance regulations have evolved significantly over time, marked by key regulatory milestones:

1991: United States Sentencing Commission Guidelines Manual established foundational compliance elements that organizations still use today as blueprints for designing compliance programs

1998: Office of Inspector General (OIG) expanded compliance foundations by providing detailed guidance with core implementation steps for hospitals and specialized guidance for various healthcare organizations

Ongoing: Social Security Act (SSA) Section 1128I reinforces compliance requirements for nursing and skilled nursing facilities accepting Medicare and Medicaid payments. The SSA outlines essential program components, beginning with reasonably designed compliance and ethics programs aimed at preventing violations. It requires designated high-level personnel to oversee compliance, emphasizing careful delegation of authority to trustworthy individuals. Furthermore, the SSA stresses the importance of effective communication and mandatory training programs to ensure standards are understood. To maintain adherence, it mandates regular monitoring and auditing, coupled with consistent enforcement through disciplinary mechanisms. Finally, programs must include prompt response procedures for detected offenses and undergo periodic reassessment for necessary updates.

The Centers for Medicare & Medicaid Services (CMS) provides additional compliance guidance through various manuals, including the Medicare Managed Care Manual, Chapter 11, which addresses Medicare Advantage Application Procedures and Contract Requirements. This guidance emphasizes the necessity of demonstrating commitment to compliance, integrity, and ethical values through comprehensive compliance planning.

7 Elements of Healthcare Compliance Programs

Healthcare organizations build effective compliance programs around seven fundamental elements that promote education, communication, and proactive measures while establishing an ethical organizational culture. These elements apply to all healthcare entities regardless of payer relationships:

1. Comprehensive written documentation: Includes policies, procedures, and conduct standards showing commitment to federal and state compliance. These documents guide program development and include procedures like biannual internal coding reviews.

2. Leadership accountability structure: Through designated compliance officers and committees reporting to senior management. Organizations can use dedicated compliance personnel or assign responsibilities to existing staff.

3. Systematic training and education initiatives: Connecting compliance officers with all employees. Programs must include scheduled training, comprehension assessments, and diverse teaching methods.

4. Open communication channels: Allowing employees and contractors to report concerns without retaliation. This includes hotlines, secure messaging, and anonymity protection.

5. Transparent enforcement mechanisms: Publicized disciplinary guidelines ensure universal compliance awareness. Standards apply equally across all organizational levels with clear violation response protocols.

6. Continuous monitoring and assessment: Including regular coding audits, billing reviews, and formal evaluations. Organizations establish review frequencies and error response procedures.

7. Responsive corrective action procedures: Outlining specific steps for addressing compliance violations, including disciplinary measures and breach escalation protocols

Is Compliance Mandatory?
Yes, healthcare compliance is mandated, though with varying enforcement specifics.

ACA Mandate and Enforcement Date: The Patient Protection and Affordable Care Act (ACA), Section 6401, mandated compliance plans for providers as a condition for Medicare, Medicaid, or CHIP enrollment. An enforcement date for this ACA requirement hasn't been set since its 2010 enactment. However, organizations have had ample time to prepare, with resources like the 2014 CMS/OIG joint presentation available.  

Payer Requirements and State-Specific Rules: Beyond the ACA, the Medicare Managed Care Manual mandates MA organizations demonstrate a commitment to compliance. Many state Medicaid units and commercial payers also require compliance programs, and some states have their own specific requirements. Regardless of specific enforcement dates or payer details, organizations must comply with applicable rules. Submitting accurate healthcare claims is not optional.

Laws Governing Healthcare Compliance

Healthcare compliance exists primarily to prevent erroneous claims submission to healthcare insurance carriers across federal, state, and commercial sectors. The ultimate objective focuses on preventing fraud, waste, and abuse through adherence to several key statutes:

Civil and Criminal Laws

False Claims Act (FCA): This civil statute imposes liability on individuals who knowingly submit false or fraudulent claims to the federal government. The law defines "knowing" and "knowingly" as having actual knowledge, acting in deliberate ignorance, or showing reckless disregard for information about truth or falsity. Violations can occur without specific intent to defraud.

Anti-Kickback Statute (AKS): This criminal statute prohibits knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce or reward patient referrals for business involving federal healthcare program reimbursable items or services.

Referral and Privacy Laws

Physician Self-Referral Law (Stark Law): This regulation prohibits physicians from referring patients for "designated health services" payable by Medicare or Medicaid to entities with which the physician or immediate family members have financial relationships, unless specific exceptions apply.

HIPAA Privacy and Security Rules: The Health Insurance Portability and Accountability Act of 1996 required HHS to develop regulations protecting health information privacy and security, led to the Privacy Rule (national standards for protecting certain health information) and the Security Rule (security standards for electronic protected health information).

Benefits of Healthcare Compliance Programs

Healthcare compliance programs provide multiple advantages beyond regulatory adherence:

• Financial protection for federal, state, and commercial insurance funds from misuse and fraudulent activities

• Early issue detection enabling organizations to identify and address medical coding and billing problems before escalation

• Positive organizational culture demonstrating leadership and employee commitment to ethical behavior and regulatory compliance

• Risk mitigation through proactive identification and resolution of potential compliance violations

• Operational efficiency by establishing clear procedures and accountability measures across all organizational levels

However, organizations must actively implement their compliance programs to realize these benefits. "Window dressing" programs designed for appearance rather than genuine implementation create significant problems during investigations, especially when identified issues were specifically addressed in the organization's compliance plan.

Healthcare Settings Benefiting from Compliance Programs

Numerous healthcare entities benefit from effective compliance programs, with the OIG providing free resources and guidance for program design across various settings:

• Hospitals and health systems  

• Nursing facilities and skilled nursing facilities  

• Physicians and physician groups  

• Durable medical equipment (DME) suppliers  

• Clinical laboratories  

• Home health providers  

• Hospice providers  

• Third-party billing companies  

• Medicare Advantage organizations  

• Ambulance suppliers  

• Pharmaceutical manufacturers  

• Public Health Service research award recipients

The OIG recognizes that certain organizations face higher compliance risks based on their operational characteristics. For example, DME representatives may feel pressured to engage in questionable activities to meet sales targets, making compliance culture foundational for ethical and legal organizational behavior.

Organizational Size and Compliance Considerations

Small Healthcare Organizations: Need compliance programs but may not require dedicated committees or personnel. Office managers often assume compliance responsibilities.

Large Healthcare Organizations: Face increased compliance risks requiring more comprehensive checks and balances. Teaching facilities have additional complexity due to medical residency programs and unique coding modifiers.

Compliance Tools

These tools help establish effective compliance programs by identifying problem areas.

Comprehensive Error Rate Testing (CERT): CMS conducts annual Comprehensive Error Rate Testing (CERT) to assess provider performance in billing, coding, and documenting services for Medicare beneficiaries. CERT reports (since 2011) review sampled claims to identify nationwide issues. These reports help organizations conduct risk analysis and ensure compliance.

OIG Work Plan: The OIG Work Plan outlines identified risks (fraud, waste, and abuse) and planned investigations. It's updated as needed (e.g., including telehealth during COVID-19) and is a crucial resource for updating compliance plans to address emerging risks. Visit the OIG Work Plan frequently.

Choosing a Compliance Point of Contact

The compliance professional (POC) is vital to a program's success, overseeing duties outlined in the plan. A POC should know:

• The seven (or eight) core compliance elements.

• Key regulations forming compliance.

• Where to find compliance resources.

• The purpose of the OIG Work Plan.

• Top medical codes to audit for their organization.

• How to communicate updates to all employees.

• How often to train new staff and provide ongoing education.

A good compliance professional needs strong listening skills, a thirst for compliance guidelines, understanding of medical coding/billing, and the ability to assess organizational culture objectively.

Healthcare Compliance as a Career

The demand for qualified healthcare compliance professionals is growing globally due to increasing regulations.

Certification and Continuing Education: While not government-mandated, certification and credentials demonstrate a foundational understanding of compliance complexities and boost confidence. Continuing education is crucial to stay updated on laws and regulations.

Personality and Professional Conduct: Compliance professionals must hold staff accountable (including supervisors and the board), requiring good communication and relationships. They must uphold laws, organizational codes, and professional guidelines. As role models, they must demonstrate ethical behavior and confidence, embodying "what we permit, we promote" to protect the organization, payer funds, and patients.

Crafting a Healthcare Compliance Program

Designing a compliance program doesn't require a huge budget. The OIG and CMS offer free resources like checklists and videos.

Starting Your Plan: Begin by researching free compliance plans from similar reputable organizations. Customize the plan to suit your unique circumstances.

Addressing Core Elements and Non-Retaliation: All seven core compliance elements should be addressed. Many states add an eighth: non-retaliation. Even if not required, it's wise to include it to protect those who report issues in good faith.

Practicality and Review: An average plan can cover all eight elements in 3-4 pages. It must be something your organization can implement and oversee, as you'll be held accountable for stated compliance items. Review the plan at least annually with the compliance point of contact, senior management, and the board (if applicable). Date and sign the document after each review, usually just amending the existing plan.

Fostering a Culture of Compliance: Effort and drive are key. Everyone must understand compliance is part of the culture, led by senior management. The plan should be easy for all employees to understand, including annual updates. Making compliance fun (e.g., games) can boost engagement.

Key Takeaways
Staying compliant in healthcare isn’t just about rules—it’s about protecting lives and earning trust. With clear programs and ongoing education, healthcare providers can build a strong culture of compliance and reduce risks.

Pivto supports the healthcare industry's commitment to compliance by developing expertly crafted, up-to-date training programs that align with regulatory standards. By translating complex laws and guidelines into clear, engaging educational content, Pivto empowers healthcare professionals and organizations to confidently implement, maintain, and evolve their compliance initiatives.

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