[Congressional Record Volume 143, Number 135 (Thursday, October 2, 1997)]
[Extensions of Remarks]
[Pages E1930-E1931]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 THE MEDICARE AND MEDICAID PROVIDER REVIEW ACT OF 1997: IT'S ABOUT TIME

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                       Thursday, October 2, 1997

  Mr. STARK. Mr. Speaker, I rise today to talk about the hot new job in 
health care: compliance. I refer my colleagues to a September 18 Wall 
Street Journal article which describes how hospitals and other 
providers are hiring and promoting professionals to ensure their 
compliance with laws and regulations. It's about time; $23 billion per 
year in Medicare fraud, waste, and abuse reported by the HHS inspector 
general is proof positive that we need to take compliance more 
seriously.
  Together with Mr. Dellums and Mr. Miller of California, I have 
introduced legislation that would require certain health care providers 
to fund independent, Federal compliance and financial audits as a 
condition of participation in the Medicare and Medicaid programs. If 
providers are willing to foot the bill to fly-in compliance consultants 
from high profile firms like Coopers & Lybrand, they can surely afford 
Government audits. The last thing we need is for providers to only 
retain private sector professionals who can show them how to be 
sneakier. We've already given the health care industry the benefit of 
the doubt far too long.
  The administration also recognizes that audits are needed to ensure 
financial and regulatory compliance. Health and Human Services [HHS] 
Secretary Donna Shalala recently announced that home health agencies 
will have to submit an independent audit of their records and practices 
every 3 years to receive Medicare funds. In addition, HHS will double 
the number of home health agency audits it conducts from 900 to 1,800 
per year.
  While home health agencies may be the system's most blatant abusers, 
they are by no means the only ones worthy of our best efforts to fight 
fraud. My bill would require audits of hospitals, nursing facilities, 
hospices, clinical laboratories, and ambulance companies in addition to 
home health agencies. Yet HHS doesn't have the funding to audit all 
categories of providers that have abusive track records. Even if it 
did, taxpayers shouldn't have to foot the bill. The sum of $23 billion 
says it's time to make Federal audits a cost of doing business with the 
Nation's largest health care payer, the Federal Government.

             [From the Wall Street Journal, Sept. 18, 1997]

                Hot New Job In Health Care: In-House Cop

                           (By George Anders)

       The hottest new job category in health care doesn't require 
     a medical license or a nursing degree. It's compliance 
     officer, a job borrowed from the defense industry and other 
     businesses under fire from regulators.
       Now hospitals and medical schools across the country are 
     rushing to hire their own in-house cops, hoping they'll keep 
     them from running afoul of the government's widening 
     crackdown on health-care fraud--or help minimize penalties 
     when infractions are found.
       Consultants estimate that only 5% of the nation's 5,400 
     hospitals and medical schools have comprehensive compliance 
     departments now. But they suggest the total could double in 
     the next year.
       Securities firms in the late 1980s shored up their 
     compliance departments in hopes of averting insider-trading 
     scandals. Defense contractors, thrift institutions and 
     companies worried about pollution regulations have all taken 
     similar steps in the face of greater government scrutiny.
       The health-care compliance movement got a boost Monday when 
     President Clinton announced wide-ranging initiatives to 
     combat fraud in home health care. Many hospitals operate 
     home-health units that have been financially lucrative.
       Before the President's speech, hospitals had already been 
     galvanized by the government's massive investigation of 
     Columbia/HCFA Healthcare Corp. This year, in which federal 
     agents with search warrants have swooped into dozens of 
     Columbia-owned hospitals. People familiar with the 
     investigation say the government is looking into a wide range 
     of potential billing abuses. Columbia has said it isn't aware 
     of any systemic wrongdoing.
       ``I've gotten a lot more respect since the Columbia 
     situation hit the media,'' says Elizabeth Ryan, a compliance 
     consultant who until recently was head of compliance at 
     Valley Baptist Medical Center in Harlington, Texas. ``A year 
     or two ago, when I called on people within the hospital, they 
     said: `What's this all about?' But once they've seen pictures 
     of FBI agents carting away boxes of documents at Columbia, 
     their attitude is: `Fine. No problem. Come talk to us about 
     whatever you want.' ''
       In Nashville, Tenn., Columbia itself wants to expand its 
     roster of top executives to include a senior vice president, 
     compliance. Until recently, a mid-level aide to the general 
     counsel was in charge of Columbia's compliance program.
       But as Columbia spokesman Jeff Prescott puts it: 
     ``Compliance issues are, and will continue to be, very 
     important for our company.'' The best way to underscore that 
     message to employees, he says, is to make compliance a much 
     more prominent part of Columbia's management structure.

[[Page E1931]]

       It's unclear how much whistle-blowing the hospital industry 
     really wants from its compliance chiefs. After all, ultra-
     strict compliance programs can mean higher costs and 
     irritating bureaucracy. Some plump revenue sources could 
     wither away, too, if compliance officers declare them to be 
     off-limits.
       But most federal fraud-fighters welcome the effort. ``What 
     we're talking about is ensuring that organizations bill 
     appropriately, that they train their staff appropriately, and 
     that they follow good business practices,'' says Eileen Boyd, 
     deputy inspector general at the Department of Health and 
     Human Services.
       When problems do exist, federal sentencing guidelines treat 
     the existence of a compliance program as a mitigating factor 
     that can reduce civil or criminal penalties. Conversely, 
     hospitals without a compliance program may be told to form 
     one as part of settling a federal fraud investigation. For 
     that reason, Ms. Boyd tells the industry: ``You can pay for 
     compliance now, or you can pay for it later.''
       Traditionally, hospitals have counted on low-level internal 
     auditors to catch problems, and report them to senior 
     management. But the new, high-profile compliance chiefs are 
     expected to get involved in potential trouble spots much 
     earlier. They are also expected to flag hospital boards and 
     the government right away if infractions are found.
       Paul Flanagan got into compliance work 2\1/2\ years ago, 
     after finishing his studies at Creighton Law School in Omaha, 
     Neb. When he asked a local attorney for career tips in health 
     care, the answer amounted to a single word: ``Compliance.''
       He soon because chief compliance officer at Alegent Health 
     in Omaha. Six weeks ago, the 31-year-old Mr. Flanagan jumped 
     to a fast-track job at Coopers & Lybrand, where he will 
     travel around the country, helping as many as 60 hospitals 
     set up compliance departments.
       Currently, the HHS inspector general's office and the 
     American Hospital Association are drafting guidelines for a 
     model compliance program for hospitals. Those standards are 
     expected to be issued this fall. They are likely to be 
     welcomed by a hospital industry fearful that the government's 
     anti-fraud campaign could sweep up not just outright rascals 
     but also people who have been trying to obey laws that they 
     don't understand very well.
       ``The regulations are so complex that organizations can 
     make errors just because of the complexity,'' says Sister Pat 
     Eck, chairperson of the Bon Secours Health System Inc. chain 
     of Hospitals and nursing homes in Marriottsville, Md.
       Sister Pat says that Bon Secours has traditionally relied 
     on its internal audit department to catch problems, adding 
     that she is ``comfortable'' with its work to date. But she 
     says her board is encouraging her to consider creating a more 
     formal compliance department, something that could happen as 
     soon as next year.
       While the most dramatic part of compliance programs may be 
     the detection of wrongdoing, their most important function 
     may be training employees how to follow the rules in the 
     first place, says Ms. Boyd, the deputy inspector general at 
     HHS.
       ``I'm a big believer in hands-on training, where people 
     have a chance to ask questions and get tested on what they 
     were supposed to learn,'' she says. ``Putting a manual on a 
     shelf--or herding people into an auditorium to watch a 
     video--doesn't do it for me. If the health-care industry is 
     foolish enough to put in compliance programs that aren't 
     viable, they're making a serious mistake.''

     

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