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Prevent fraud in your medical practice

Insight Article - October 13, 2016

Compliance Regulations

Pamela Ballou-Nelson RN, MSPH, PhD, CMPE

According to the National Health Care Anti-Fraud Association, fraud accounts for $70 to $234 billion a year – about $190 to $640 million per day. (per LexisNexis)

Fraud, waste and abuse are prominent topics of discussion as well as significant sources of confusion among individual physician or small group practices. However, complying with the Office of the Inspector General’s (OIG’s) voluntary fraud, waste and abuse guidance should not require expensive advice or overly burdensome documentation.

The benefits of doing so can be significant. By implementing a well-designed compliance program, a practice can:
  • Speed and optimize proper payment of claims
  • Minimize billing mistakes
  • Reduce the chances of a Health Care Financing Administration (HCFA) or OIG audit
  • Avoid conflicts with self-referral and anti-kickback statutes
The approach to detecting, identifying and preventing fraud, waste and abuse is shifting and has become a priority not just to Medicare and Medicaid, but to all health insurance companies.


The federal registry has stated that “the creation of compliance program guidance is a major initiative of the OIG in its effort to engage the private [healthcare] community in preventing the submission of erroneous claims and in combating fraudulent conduct.” The development of this type of compliance program guidance is based on the belief that a healthcare provider can use internal controls to more efficiently monitor adherence to applicable statutes, regulations and program requirements.

OIG guidance for physicians does not suggest that physician practices implement all seven components of a full-scale compliance program as identified below. Instead, the guidance emphasizes a step-by-step approach to developing and implementing a voluntary compliance program. This change recognizes the financial and staffing resource constraints faced by physician practices. (Federal Register / Vol. 65, No. 194 / Thursday, Oct. 5, 2000 / Notices 59435)

The guidance should not be viewed as mandatory or as an all-inclusive discussion of the advisable components of a compliance program. Rather, the document is intended to present guidance to assist physician practices that voluntarily choose to develop a compliance program.

A compliance plan should include these components:
  • Written policies, procedures and standards of conduct
  • Compliance program oversight
  • Training and education
  • Open lines of communication regarding compliance issues, education and concerns
  • Auditing and monitoring, including reporting any misconduct within 30 days to the OIG and the Centers for Medicare & Medicaid Services (CMS)
  • Implementing consistent discipline
  • Taking corrective action
Improper payment and the anti-kickback statute are two examples of compliance concerns for practices.

Improper payments

Anti-kickback statute

The anti-kickback statute (AKS) makes it a criminal offense to knowingly and willfully offer, pay, solicit or receive any remuneration directly or indirectly to induce or reward referrals of items or services reimbursable by a federal healthcare program. An example would be a provider who receives cash or below-fair-market-value rent for medical offices in exchange for referrals. (Medicare Fraud & Abuse, Department of Health and Human Services Centers for Medicare & Medicaid Services, Medicare Learning Network)

Even the smallest practices should take fraud, waste and abuse seriously. Several sources offer tools and examples on this subject:
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About the Author

Pamela Ballou-Nelson
Pamela Ballou-Nelson RN, MSPH, PhD, CMPE
Consultant MGMA Consulting

Pamela Ballou-Nelson, RN, MSPH, PhD, has more than 30 years of experience in healthcare management, focusing on practice process transformation, patient-centered medical homes (PCMH), workflow analysis, quality measures, care management, population health and patient activation across the continuum of care. Nelson has worked with both provider and payer organizations to help them work toward alternative care and payment models. As clinical quality director for Adventist Health Network in Chicago, Nelson was responsible for leading physicians and hospital directors in their clinical integration process. Nelson has also worked with numerous commercial payers on quality outcomes and effectiveness measures, including compliance with Medicaid care management programs, along with Medicaid insurance contracts and high-risk and dual-eligible patient programs. She has also trained, advised and mentored more than 80 practices in various levels of readiness, preparing them for value-based payment reform, process improvement, improved quality outcomes and increased efficiency through PCMH recognition with 2011 and 2014 standards. She has a BSN from the University of Utah, an MA from Wheaton College, and an MS and PhD in Public Health from Walden University. In addition, she is an NCQA 2014 PCMH certified content expert and frequently speaks on PCMH transformation for accountable care organizations and population health initiatives.


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