[Federal Register Volume 64, Number 139 (Wednesday, July 21, 1999)]
[Notices]
[Pages 39150-39168]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-18590]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General


Draft OIG Compliance Program Guidance for Hospices

AGENCY: Office of Inspector General (OIG), HHS.

ACTION: Notice and comment period.

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SUMMARY: This Federal Register notice seeks the comments of interested 
parties on draft compliance guidance developed by the Office of 
Inspector General (OIG) for the hospice industry. Through this notice, 
the OIG is setting forth its general views on the value and fundamental 
principles of hospice compliance programs, and the specific elements 
that the hospice industry should consider when developing and 
implementing an effective compliance program.

DATES: To assure consideration, comments must be delivered to the 
address provided below by no later than 5 p.m. on August 20, 1999.

ADDRESSES: Please mail or deliver written comments to the following 
address: Office of Inspector General, Department of Health and Human 
Services, Attention: OIG-6P-CPG, Room 5246, Cohen Building, 330 
Independence Avenue, SW, Washington, DC 20201.
    We do not accept comments by facsimile (FAX) transmission. In 
commenting, please refer to file code OIG-6P-CPG. Comments received 
timely will be available for public inspection as they are received, 
generally beginning approximately 2 weeks after publication of a 
document, in Room 5541 of the Office of Inspector General at 330 
Independence Avenue, SW, Washington, DC 20201 on Monday through Friday 
of each week from 8:00 a.m. to 4:30 p.m.

FOR FURTHER INFORMATION CONTACT: Michael Shaw, Office of Counsel to the 
Inspector General, (202) 619-2078.

SUPPLEMENTARY INFORMATION:

Background

    The creation of compliance program guidance is a major initiative 
of the OIG in its effort to engage the private health care community in 
addressing and fighting fraud and abuse. In the last several years, the 
OIG has developed and issued compliance program guidance directed at 
the following segments of the health care industry:
     Clinical Laboratories (62 FR 9435; March 3, 1997, as 
amended in 63 FR 45076; August 24, 1998),
     Hospitals (63 FR 8987; February 23, 1998),
     Home Health Agencies (63 FR 42410; August 7, 1998),
     Third-Party Medical Billing Companies (63 FR 70138; 
December 18, 1998), and
     Durable Medical Equipment, Prosthetics, Orthotics and 
Supply Industry (64 FR 36368; July 6, 1999).
    Copies of these compliance program guidances can also be found on 
the OIG web site at http://www.os.dhhs.gov/oig.

Developing Draft Compliance Program Guidance for the Hospice 
Industry

    On January 13, 1999, the OIG published a solicitation notice 
seeking information and recommendations for developing formal guidance 
for the hospice industry (64 FR 2228). In response to that solicitation 
notice, the OIG received 11 comments from various outside sources. In 
developing this notice for formal public comment, we have considered 
those comments, as well as previous OIG publications, such as other 
compliance program guidances and Special Fraud Alerts. We have also 
taken into account past and recent fraud investigations conducted by 
the OIG's Office of Investigations and the Department of Justice, and 
have consulted with the Health Care Financing Administration.
    This draft guidance for the hospice industry contains seven 
elements that the OIG has determined are fundamental to an effective 
compliance program:
     Implementing written policies;
     Designating a compliance officer and compliance committee;
     Conducting effective training and education;
     Developing effective lines of communication;
     Conducting internal monitoring and auditing;
     Enforcing standards through well-publicized disciplinary 
guidelines; and
     Responding promptly to detected offenses and developing 
corrective action.
    These elements are contained in the other guidance issued by the 
OIG, indicated above. As with the previously-issued guidances, this 
draft compliance program guidance represents the OIG's

[[Page 39151]]

suggestions on how the hospice industry can best establish internal 
controls and prevent fraudulent activities. The contents of this 
guidance should not be viewed as mandatory or as an exclusive 
discussion of the advisable elements of a compliance program; the 
guidance is intended to present voluntary guidance to the industry and 
not represent binding standards for hospices.

Public Input and Comment in Developing Final Guidance

    In an effort to ensure that all parties have an opportunity to 
provide input into the OIG's guidance, we are publishing this guidance 
in draft form. We welcome any comments from interested parties 
regarding this guidance. We will consider all comments that are 
received within the above-cited time frame, incorporate any specific 
recommendations as appropriate, and prepare a final version of the 
guidance thereafter for publication in the Federal Register.

Draft Compliance Program Guidance for the Hospice Industry (July 
1999)

I. Introduction

    The Office of Inspector General (OIG) of the Department of Health 
and Human Services (HHS) continues to promote voluntarily developed and 
implemented compliance programs for the health care industry. The 
following compliance program guidance is intended to assist hospices 
1 and their agents and subproviders (referred to 
collectively in this document as ``hospices'') develop effective 
internal controls that promote adherence to applicable Federal and 
State law, and the program requirements of Federal, State, and private 
health plans. The adoption and implementation of voluntary compliance 
programs significantly advance the prevention of fraud, abuse, and 
waste in these health care plans while at the same time further the 
fundamental mission of all hospices, which is to provide palliative 
care 2 to patients.
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    \1\ The term ``hospice'' is applied in this document as the term 
``hospice program'' is defined in 42 U.S.C. 1395x(dd).
    \2\ Palliative care is an intensive program of care that focuses 
on the relief of pain and suffering associated with a terminal 
illness. Through this emphasis on palliative rather than curative 
services, individuals have a choice whenever conventional approaches 
for medical treatment may no longer be appropriate. Hospice 
addresses the needs of terminally ill individuals by including the 
patient and family, specially trained volunteers, caregivers from 
the community, and representatives from medicine, nursing, social 
work, and spiritual counseling in the caregiving team.
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    Within this document, the OIG first provides its general views on 
the value and fundamental principles of hospice compliance programs, 
and then provides the specific elements that each hospice should 
consider when developing and implementing an effective compliance 
program. While this document presents basic procedural and structural 
guidance for designing a compliance program, it is not in itself a 
compliance program. Rather, it is a set of guidelines to be considered 
by a hospice interested in implementing a compliance program.
    The OIG recognizes the size-differential that exists between 
operations of the different hospices and organizations that compose the 
hospice industry. Appropriately, this guidance is pertinent for all 
hospices, whether for-profit or non-profit, hospital-based or free-
standing, community-based or volunteer-based, large or small, urban or 
rural. The applicability of the recommendations and guidelines provided 
in this document depends on the circumstances of each particular 
hospice. However, regardless of a hospice's size and structure, the OIG 
believes that every hospice can and should strive to accomplish the 
objectives and principles underlying all of the compliance policies and 
procedures recommended within this guidance.
    Fundamentally, compliance efforts are designed to establish a 
culture within a hospice that promotes prevention, detection, and 
resolution of instances of conduct that do not conform to Federal and 
State law, and Federal, State, and private payor health care program 
requirements, as well as the hospice's business policies. In practice, 
the compliance program should effectively articulate and demonstrate 
the organization's commitment to ethical conduct. Compliance programs 
guide a hospice's governing body (e.g., board of directors or 
trustees), chief executive officer (CEO), managers, physicians, 
clinicians, billing personnel, and other employees in the efficient 
management and operation of a hospice. Eventually, a compliance program 
should become part of the fabric of routine hospice operations.
    It is incumbent upon a hospice's corporate officers and managers to 
provide ethical leadership to the organization and to assure that 
adequate systems are in place to facilitate ethical and legal conduct. 
Employees, managers, and the Government will focus on the words and 
actions of a hospice's leadership as a measure of the organization's 
commitment to compliance. Indeed, many hospices have adopted mission 
statements articulating their commitment to high ethical standards. A 
formal compliance program, as an additional element in this process, 
offers a hospice a further concrete method that may improve the 
appropriateness and quality of care and reduce waste. Compliance 
programs also provide a central coordinating mechanism for furnishing 
and disseminating information and guidance on applicable Federal and 
State statutes, regulations, and other requirements.
    Implementing an effective compliance program requires a substantial 
commitment of time, energy, and resources by senior management and the 
hospice's governing body.3 Superficial programs that simply 
purport to comply with the elements discussed and described in this 
guidance or programs that are hastily constructed and implemented 
without appropriate ongoing monitoring will likely be ineffective and 
could expose the hospice to greater liability than no program at all. 
While it may require significant additional resources or reallocation 
of existing resources to implement an effective compliance program, the 
OIG believes that the long term benefits of implementing the program 
outweigh the costs.4
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    \3\ Recent case law suggests that the failure of a corporate 
director to attempt in good faith to institute a compliance program 
in certain situations may be a breach of a director's fiduciary 
obligation. See, e.g., In re Caremark International Inc. Derivative 
Litigation, 698 A.2d 959 (Ct. Chanc. Del. 1996).
    \4\ The conclusion of a recent report by the United States 
General Accounting Office (GAO) to Congress stated that ``despite 
the investment of time and resources that compliance programs 
entail, many hosptials believe the benefits of these programs * * * 
outweigh their costs * * * and providers themselves believe that 
compliance programs can reduce improper Medicare payments.'' See GAO 
report GAO/HEHS-99-59 (April 1999).
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A. Benefits of a Compliance Program

    The OIG believes an effective compliance program provides a 
mechanism that brings the public and private sectors together to reach 
mutual goals of reducing fraud and abuse, strengthening operational 
quality, improving the quality of health care services, and reducing 
the cost of health care. Attaining these goals provides positive 
results to hospices, the Government, and individual citizens alike. In 
addition to fulfilling its legal duty to ensure that it is not 
submitting false or inaccurate claims to Government and private payors, 
a hospice may gain numerous additional benefits by voluntarily 
implementing an effective compliance program. These benefits may 
include the ability to:

[[Page 39152]]

     Formulate effective controls to assure compliance with 
Federal and State statutes, rules, and regulations, and Federal, State 
and private payor health care program requirements, and internal 
guidelines;
     Concretely demonstrate to employees and the community at 
large the hospice's strong commitment to honest and responsible 
provider and corporate conduct;
     Identify and prevent illegal and unethical conduct;
     Improve internal communication;
     More quickly and accurately react to employees' 
operational compliance concerns and target resources to address those 
concerns;
     Improve the quality, efficiency, and consistency of 
patient care;
     Create a centralized source for distributing information 
on health care statutes, regulations, and other program directives 
regarding fraud, waste, and abuse, and related issues;
     Formulate a methodology that encourages employees to 
report potential problems;
     Develop procedures that allow the prompt, thorough 
investigation of alleged misconduct by corporate officers, managers, 
employees, independent contractors, consultants, volunteers, 
physicians, nurses, and other health care professionals;
     Initiate immediate, appropriate, and decisive corrective 
action; and
     Minimize, through early detection and reporting, the loss 
to the Government from false claims, and thereby reduce the hospice's 
exposure to civil damages and penalties, criminal sanctions, and 
administrative remedies, such as program exclusion. 5
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    \5\ The OIG, for example, will consider the existence of an 
effective compliance program that pre-dated any governmental 
investigation when addressing the appropriateness of administrative 
sanctions. See 62 FR 67392 (December 24, 1997). The burden is on the 
provider to demonstrate the operational effectiveness of a 
compliance program. Further, the False Claims Act, 31 U.S.C. 3729-
3733, provides that a person who has violated the Act, but who 
voluntarily discloses the violation to the Government, in certain 
circumstances will be subject to not less than double, as opposed to 
treble, damages. See 31 U.S.C. 3729(a).
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    Overall, the OIG believes that an effective compliance program is a 
sound investment on the part of a hospice.
    The OIG recognizes that the implementation of a compliance program 
may not entirely eliminate fraud, abuse, and waste from the hospice 
system. However, a sincere effort by hospices to comply with applicable 
Federal and State standards, as well as the requirements of private 
health care programs, through the establishment of an effective 
compliance program, significantly reduces the risk of unlawful or 
improper conduct.

B. Application of Compliance Program Guidance

    Given the diversity within the industry, there is no single 
``best'' hospice compliance program. The OIG understands the variances 
and complexities within the hospice industry and is sensitive to the 
differences among large national and regional multi-hospice 
organizations, small independent hospices, and other types of hospice 
organizations and systems. However, elements of this guidance can be 
used by all hospices, regardless of size, location, or corporate 
structure, to establish an effective compliance program. Similarly, a 
hospital or corporation that owns a hospice or provides hospice 
services may incorporate these elements into its system-wide compliance 
or managerial structure. We recognize that some hospices may not be 
able to adopt certain elements to the same comprehensive degree that 
others with more extensive resources may achieve. This guidance 
represents the OIG's suggestions on how a hospice can best establish 
internal controls and monitoring to correct and prevent fraudulent 
activities. By no means should the contents of this guidance be viewed 
as an exclusive discussion of the advisable elements of a compliance 
program. On the contrary, the OIG strongly encourages a hospice to 
develop and implement compliance elements that uniquely address its own 
particular risk areas.
    The OIG believes that input and support by the individuals and 
organizations that will use the tools set forth in this document are 
critical to the development and success of this compliance program 
guidance. In a continuing effort to collaborate closely with the 
private sector, the OIG placed a notice in the Federal Register 
soliciting recommendations and suggestions on what should be included 
in this Compliance Program Guidance. 6 Further, we took into 
consideration previous OIG publications, such as Special Fraud Alerts, 
the recent findings and recommendations in reports issued by OIG's 
Office of Audit Services and Office of Evaluation and Inspections, as 
well as the experience of past and recent fraud investigations related 
to hospices conducted by OIG's Office of Investigations and the 
Department of Justice. As appropriate, this guidance may be modified 
and expanded as more information and knowledge is obtained by the OIG, 
and as changes in the law, rules, policies, and procedures of the 
Federal, State, and private health plans occur.
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    \6\ See 64 FR 2228 (January 13, 1999), Notice for Solicitation 
of Information Recommendations for Developing OIG Compliance Program 
Guidance for the Hospice Industry.
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    The OIG recognizes that the development and implementation of 
compliance programs in hospices often raise sensitive and complex legal 
and managerial issues. 7 However, the OIG wishes to offer 
what it believes is critical guidance for providers who are sincerely 
attempting to comply with the relevant health care statutes and 
regulations.
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    \7\ Nothing stated within this document should be substituted 
for, or used in lieu of, competent legal advice from counsel.
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II. Compliance Program Elements

    The elements proposed by these guidelines are similar to those of 
other compliance program guidances 8 and the OIG's corporate 
integrity agreements. 9 The elements represent a guide that 
can be tailored to fit the needs and financial realities of a 
particular hospice. The OIG is cognizant that, with regard to 
compliance programs, one model is not suitable to every hospice.
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    \8\ See 63 FR 70138 (December 18, 1998) for the Compliance 
Program Guidance for Third Party Medical Billing Companies; 63 FR 
42410 (August 7, 1998) for the Compliance Program Guidance for Home 
Health Agencies; 63 FR 45076 (August 24, 1998) for the Compliance 
Program Guidance for Clinical Laboratories, as revised; 63 FR 8987 
(1998) for the Compliance Program Guidance for Hospitals. These 
documents are also located on the Internet at http://www.dhhs.gov/
progorg/oig.
    \9\ Corporate integrity agreements are executed as part of a 
civil settlement between the health care provider and the Government 
to resolve a case based on allegations of health care fraud or 
abuse. These OIG-imposed programs are in effect for a period of 
three to five years and require many of the elements included in 
this compliance program guidance.
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    The OIG believes that every effective compliance program must begin 
with a formal commitment 10 by the hospice's governing body 
to include all of the applicable elements listed below. These elements 
are based on the seven steps of the Federal Sentencing Guidelines. 
11 Further, we believe that every hospice can implement most 
of our recommended elements that expand upon these seven steps. We 
recognize that full implementation of all elements

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may not be immediately feasible for all hospices. However, as a first 
step, a good faith and meaningful commitment on the part of the hospice 
administration, especially the governing body and the CEO, will 
substantially contribute to a program's successful implementation. As 
the compliance program is implemented, that commitment should cascade 
down through the management of the hospice to every employee at all 
levels in the organization.
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    \10\ E.g., a resolution by the board of directors, owner(s) or 
president, where applicable, and the allocation of adequate 
resources to ensure that each of the elements is addressed.
    \11\ See United States Sentencing Commission Guidelines, 
Guidelines Manual, 8A1.2, Application Note 3(k). The Federal 
Sentencing Guidelines are detailed policies and practices for the 
Federal criminal justice system that prescribe the appropriate 
sanctions for offenders convicted of Federal crimes.
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    At a minimum, comprehensive compliance programs should include the 
following seven elements:
    (1) The development and distribution of written standards of 
conduct, as well as written policies and procedures, which promote the 
hospice's commitment to compliance and address specific areas of 
potential fraud, such as assessment of Medicare eligibility, quality 
assurance, and financial relationships with nursing facilities and 
other health care professionals and entities.
    (2) The designation of a compliance officer and other appropriate 
bodies, e.g., a corporate compliance committee, charged with the 
responsibility for operating and monitoring the compliance program, and 
who report directly to the CEO and the governing body.12
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    \12\ The integral functions of a compliance officer and a 
corporate compliance committee in implementing an effective 
compliance program are discussed throughout this compliance program 
guidance. However, the OIG recognizes that a hospice may tailor the 
structure of those positions in consideration of the size and design 
of the hospice, while endeavoring to address and accomplish all of 
the underlying objectives of a compliance officer and a corporate 
compliance committee. See section II.B. and accompanying notes.
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    (3) The development and implementation of regular, effective 
education and training programs for all affected employees.
    (4) The creation and maintenance of a process, such as a hotline or 
other reporting system, to receive complaints and ensure effective 
lines of communication between the compliance officer and all 
employees, and the adoption of procedures to protect the anonymity of 
complainants and to protect whistleblowers from retaliation.
    (5) The use of audits and/or other evaluation techniques to monitor 
compliance, identify problem areas, and assist in the reduction of 
identified problem areas.
    (6) The development of appropriate disciplinary mechanisms to 
enforce standards and the development of policies to address (i) 
employees who have violated internal compliance policies, applicable 
statutes, regulations, or Federal health care program requirements 
13 and (ii) the employment of sanctioned and other specified 
individuals.
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    \13\ The term ``Federal health care programs'' is applied in 
this document as defined in 42 U.S.C. 1320a-7b(f), which includes 
any plan or program that provides health benefits, whether directly, 
through insurance, or otherwise, which is funded directly, in whole 
or in part, by the United States Government i.e., via programs such 
as Medicare, Federal Employees' Compensation Act, Black Lung, or the 
Longshore and Harbor Worker's Compensation Act) or any State health 
plan (e.g., Medicaid, or a program receiving funds from block grants 
for social services or child health services). Also, for the purpose 
of this document, the term``Federal health care program 
requirements'' refers to the statutes, regulations, rules, 
requirements, directives, and instructions governing Medicare, 
Medicaid, and all other Federal health care programs.
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    (7) The development of policies that direct prompt and proper 
responses to detected offenses, including the initiation of appropriate 
corrective action and preventative measures.

A. Written Policies and Procedures

    Every compliance program should require the development and 
distribution of written compliance policies, standards, and practices 
that identify specific areas of risk and vulnerability to the hospice. 
These policies, standards, and practices should be developed under the 
direction and supervision of, or subject to review by, the compliance 
officer and compliance committee and, at a minimum, should be provided 
to all individuals who are affected by the particular policy at issue, 
including the hospice's agents and independent 
contractors.14
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    \14\ According to the Federal Sentencing Guidelines, an 
organization must have established compliance standards and 
procedures to be followed by its employees and other agents in order 
to receive sentencing credit for an ``effective'' compliance 
program. The Federal Sentencing Guidelines define ``agent'' as ``any 
individual, including a director, an officer, an employee, or an 
independent contractor, authorized to act on behalf of the 
organization.'' See United States Sentencing Commission Guidelines, 
Guidelines Manual, 8A1.2, Application Note 3.
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1. Standards of Conduct
    Hospices should develop standards of conduct for all affected 
employees that include a clearly delineated commitment to compliance by 
the hospice's senior management 15 and its divisions, 
including affiliated providers operating under the hospice's control 
16 and other health care professionals (e.g., hospice 
physicians,17 nurses, physical therapists, occupational 
therapists, social workers, spiritual counselors, bereavement 
counselors, and volunteers). Standards should articulate the hospice's 
commitment to comply with all Federal, State, and private insurer 
standards, with an emphasis on preventing fraud and abuse. They should 
explicitly state the organization's mission, goals, and ethical 
requirements of compliance and reflect a carefully crafted, clear 
expression of expectations for all hospice governing body members, 
officers, managers, employees, physicians, clinicians, and, where 
appropriate, volunteers, contractors and other agents. These standards 
should promote integrity, support objectivity, and foster trust. 
Standards should not only address compliance with statutes and 
regulations, but should also set forth broad principles that guide 
employees in conducting business professionally and properly.
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    \15\ The OIG strongly encourages high-level involvement by the 
hospice's governing body, CEO, chief operating officer, general 
counsel, and chief financial officer, as well as other medical or 
clinical personnel, as appropriate, in the development of standards 
of conduct. Such involvement should help communicate a strong and 
explicit statement of compliance goals and standards.
    \16\ E.g., attending physicians, pharmacies, durable medical 
equipment suppliers, hospitals, nursing homes, home health agencies, 
and supplemental staffing entities.
    \17\ When the term ``hospice physician'' is applied in this 
document, it refers to the hospice's medical director or the 
physician member of a hospice's Interdisciplinary Group. The 
``Interdisciplinary Group,'' which is composed of at least a doctor 
of medicne or osteopathy, registered nurse, medical social worker, 
and pastoral or other counselor, is responsible for: (1) 
participation in the establishment of the plan of care; (2) 
provision of supervision of hospice care and services; (3) periodic 
review and updating of the plan of care for each individual 
receiving hospice care; (4) establishment of policies governing the 
day-to-day provision of hospice care and services. See 42 CFR 
418.68.
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    The standards should be distributed to, and comprehensible by, all 
affected employees (e.g., translated into other languages when 
necessary and written at appropriate reading levels). Standards should 
not only address compliance with statutes and regulations, but should 
also set forth broad principles that guide employees in conducting 
business professionally and properly. Further, to assist in ensuring 
that employees continuously meet the expected high standards set forth 
in the code of conduct, any employee handbook delineating or expanding 
upon these standards of conduct should be regularly updated as 
applicable statutes, regulations, and Federal health care program 
requirements are modified and/or clarified.18
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    \18\ The OIG recognizes that not all standards, policies, and 
procedures need to be communicated to all employees. However, the 
OIG believes that the bulk of the standards that relate to complying 
with fraud and abuse laws and other ethical areas should be 
addressed and made part of all affected employees' training. The 
hospice must decide which additional educational programs should be 
limited to the different levels of employees, based on job functions 
and areas of responsibility.

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    When they first begin working for the hospice, and each time new 
standards of conduct are issued, employees should be asked to sign a 
statement certifying that they have received, read, and understood the 
standards of conduct. An employee's certification should be retained by 
the hospice in the employee's personnel file, and available for review 
by the compliance officer.
2. Risk Areas
    The OIG believes that a hospice's written policies and procedures 
should take into consideration the particular statutes, rules, and 
program instructions that apply to each function or department of the 
hospice.19 In contrast to the standards of conduct, which 
are designed to be a clear and concise collection of fundamental 
standards, the written policies should articulate specific procedures 
that hospice staff should follow.
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    \19\ A hospice can conduct focus groups composed of managers 
from various departments to solicit their concerns and ideas about 
compliance risks that may be then addresses by the hospice's 
policies and procedures. Such employee participation in the 
development of the hospice's compliance program can promote its 
credibility and foster employee acceptance of the program.
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    Consequently, we recommend that these policies and procedures be 
coordinated with the appropriate training and educational programs, 
with an emphasis on areas of special concern that have been identified 
by the OIG through its investigative and audit functions.20 
Some of the special areas of OIG concern include: 21
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    \20\ The OIG periodically issues Special Fraud Alerts setting 
forth activities believed to raise legal and enforcement issues. For 
example, see OIG Special Fraud Alert--``Fraud and Abuse in Nursing 
Home Arrangements with Hospices'' (March 1998); see also OIG 
Medicare Advisory Bulletin on Hospice Benefits (November 1995). 
Hospice compliance programs should require that the legal staff, 
compliance officer, or other appropriate personnel carefully 
consider any and all Special Fraud Alerts issued by the OIG that 
relate to hospices. Moreover, the compliance programs should address 
the ramifications of failing to cease and correct any conduct 
criticized in a Special Fraud Alert, if applicable to hospices, or 
to take reasonable action to prevent such conduct from reoccurring 
in the future. If appropriate, a hospice should take the steps 
described in section II.G. regarding investigations, reporting, and 
correction of identified problems.
    \21\ Hospices may also want to consult the OIG's Work Plan when 
conducting the risk assessment. The OIG Work Plan details the 
various projects the OIG intends to address in the applicable fiscal 
year. It should be noted that the priorities in the Work Plan are 
subject to modification and revision as the year progresses and it 
does not represent a complete or final list of areas of concern to 
the OIG. The Work Plan is currently available on the Internet at 
http://www.os.dhhs.gov/oig.
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     Uninformed consent to elect the Medicare Hospice Benefit; 
22
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    \22\ A hospice must ensure that an individual (or authorized 
representative) is informed about the palliative nature of the care 
and services that may be provided if the individual desires to elect 
the Medicare Hospice Benefit. 42 CFR 418.62. The decision to elect 
the Medicare Hospice Benefit has significant consequences because 
the patient waives the right to receive standard Medicare benefits 
related to the terminal illness, including all treatment for the 
purposes of curing the terminal illness. See 42 U.S.C. 1395d(d). A 
patient's hospice election statement must include the following 
items of information: (1) identification of the particular hospice 
that will provide care to the individual; (2) the individual's or 
representative's acknowledgment that he or she has been given a full 
understanding of hospice care; (3) the individual's or 
representative's acknowledgment that he or she understands that 
certain Medicare services are waived by the election; (4) the 
effective date of the election; and (5) the signature of the 
individual or representative. See Medicare Hospice Manual Sec. 210.
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     Discriminatory admission; 23
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    \23\ Hospices should offer palliative care to all terminally ill 
individuals and their families who are eligible, regardless of age, 
gender, nationally, race, creed, sexual orientation, or disability.
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     Admitting patients to hospice care who are not terminally 
ill; 24
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    \24\ For a hospice patient to receive reimbursement for hospice 
services under Medicare, the patient must be ``terminally ill.'' See 
42 U.S.C. 1395d(a). An individual is considered to be ``terminally 
ill'' if the individual has a medical prognosis that the 
individual's life expectancy is six months or less if the illness 
runs its normal course. 42 CFR 418.3. In March 1995, Operation 
Restore Trust (ORT), a joint initiative, was established between the 
OIG, HCFA, and Administration on Aging. Among its projects, ORT 
assessed the medical eligibility for hospice services in the five 
largest States in terms of Medicare spending (New York, Florida, 
Illinois, Texas, and California). Through ORT activities, it was 
discovered that many beneficiaries receiving Medicare hospice 
benefits did not have a terminal illness as defined by Medicare. See 
OIG report A-05-96-00023--``Enhanced Controls Needed to Assure 
Validity of Medicare Hospice Enrollments.'' In addition, OIG 
investigators have encountered hospices that asked nurse employees 
to alter notes in patients' records or to otherwise misrepresent 
patients' medical conditions, in order to falsify the existence of a 
terminal condition. See also section II.A.3.a. and accompanying 
notes.
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     Arrangement with another health care provider who a 
hospice knows is submitting claims for services already covered by the 
Medicare Hospice Benefit; 25
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    \25\ When an individual makes an election to receive services 
covered by the Medicare Hospice Benefit, that individual waives the 
right to receive Medicare reimbursement for any treatment related to 
his or her terminal illness. Accordingly, a hospice should ensure it 
is not involved with a health care provider who the hospice knows 
submits claims for the following services that are unallowable for 
reimbursement under the Medicare Hospice Benefit: (1) standard 
Medicare benefits for treatment of the terminal illness; (2) 
treatment by another hospice not arranged for by the patient's 
hospice; and (3) care from another provider that duplicates care the 
hospice is required to furnish. See 42 U.S.C. 1395d(d). It is 
expected that the hospice provider will work with other providers to 
coordinate care and ensure appropriate billing if these situations 
occur.
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     Under-utilization; 26
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    \26\ In other words, knowing denial of needed care in order to 
keep costs low. A hospice is accountable for the appropriate 
allocation and utilization of its resources in order to provide 
optimal care consistent with the needs of a patient, family, and/or 
lawful representative. When a patient is receiving hospice care, the 
hospice is paid a predetermined fee for a each day during the length 
of care, no matter how much care the hospice actually provides. This 
means that a hospice may have a financial incentive to reduce the 
number of services provided to each patient, because the hospice 
will get paid the same amount regardless of the number of services 
provided. The OIG has received complaints about hospices neglecting 
patient needs and ignoring reasonable requests for treatment, 
including complaints about limited availability of durable medical 
equipment for patients as their medical condition decreases and 
failure to provide continuous care for periods of crisis due to 
staff shortages. The OIG has also been alerted to improper 
utilization of services that occurs when a hospice encourages a 
patient to revoke the Medicare Hospice Benefit for the purpose of 
obtaining expensive care under the standard Medicare benefits, only 
to re-elect the Medicare Hospice Benefit when expensive care is no 
longer necessary.
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     Falsified medical records or plans of care; 27
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    \27\ OIG investigations have revealed that certain hospices have 
falsified or ``re-created'' patient medical records and plans of 
care to exaggerate the negative aspects regarding a hospice 
patient's condition to justify reimbursement. See section II.A.3.b. 
and accompanying notes.
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     Untimely and/or forged physician certifications on plans 
of care;
     Inadequate or incomplete services rendered by the 
Interdisciplinary Group; 28
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    \28\ Each hospice is required to have an ``Interdisciplinary 
Group'' of personnel. See 42 U.S.C. 1395x(dd)(2)(B). See note 17. 
Failure of the Interdisciplinary Group to meet its responsibilities 
may result in substandard care. In addition, inadequate review of a 
hospice patient may result in improper reimbursement for services 
provided to a patient who fails to continue to be eligible for the 
Medicare Hospice Benefit.
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     Insufficient oversight of patients receiving more than six 
consecutive months of hospice care; 29
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    \29\ Since the enactment of the Balanced Budget Act of 1997, the 
Medicare Hospice Benefit is divided into the following benefit 
periods: (1) initial 90-day; (2) subsequent 90-day; and (3) 
unlimited number of 60-day benefit periods as long as the patient 
continues to meet program eligibility requirements. See 42 U.S.C. 
1395d. At the beginning of each subsequent 60-day benefit period, 
either the attending physician or hospice physician must recertify 
that the patient is terminally ill. See 42 U.S.C. 1395f(a)(7). If 
the necessary oversight is not performed during the unlimited 
periods of care, a hospice may receive improper reimbursement for 
services provided to a patient who fails to continue to be eligible 
for the Medicare Hospice Benefit.
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     Hospice incentives to actual or potential referral sources 
(e.g., physicians, nursing homes, hospitals, patients, etc.) that may 
violate the anti-kickback statute or other similar Federal or State 
statute or regulation, 30

[[Page 39155]]

including improper arrangements with nursing homes; 31
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    \30\ Examples of arrangements that may run afoul of the anti-
kickback statute include practices in which a hospice pays a fee to 
a physician for each plan of care certified, and provides nursing or 
administrative services for free or below fair market value to 
physicians, nursing homes, hospitals and other potential referral 
sources. See 42 U.S.C. 1320a-7b; 60 FR 40847 (1995). See also 
discussion in section II.A.4. and accompanying notes. In addition, a 
hospice that offers an incentive to an individual that such hospice 
knows or should know is likely to influence the individual to use a 
particular hospice may be subject to civil monetary penalties. See 
42 U.S.C. 1320a-7a(a)(5).
    \31\ The OIG has observed instances of potential kickbacks 
between hospices and nursing homes to unlawfully influence the 
referral of patients. In general, payments by a hospice to a nursing 
home for ``room and board'' provided to a Medicaid hospice patient 
should not exceed what the nursing home otherwise would have 
received if the patient had not been enrolled in hospice. (If a 
patient receiving Medicare hospice benefits in a nursing home is 
also eligible for Medicaid, Medicaid will pay the hospice at least 
95 percent of the State's daily nursing home rate, and the hospice 
is then responsible for paying the nursing home for the patient's 
room and board.) Any additional payment must represent the fair 
market value of additional services actually provided to that 
patient that are not included in the Medicaid daily rate. See 
Hospice Medicare Manual Sec. 204.2. See also section II.A.4. and 
accompanying notes.
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     Overlap in the services that a nursing home provides, 
which results in insufficient care provided by a hospice to a nursing 
home resident; 32
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    \32\ There may be some overlap in the services that the nursing 
homes and hospices provide, thereby providing one or the other the 
opportunity to reduce services and costs. Recent OIG reports found 
that residents of certain nursing homes receive fewer services from 
their hospice than patients who receive hospice services in their 
own homes. Upon review, it was found that many nursing home hospice 
patients were receiving only basic nursing and aide visits that were 
provided by nursing home staff as part of room and board when 
hospice staff were not present. Other additional treatments provided 
by hospice staff, such as nursing and aide visits, were often 
clearly within the professional skills possessed by nursing home 
staff. The reports found that the nature of services provided by 
hospice staff, while appropriate and efficacious, appeared to differ 
little from services a nursing home would have provided if the 
patient was not enrolled in hospice. See OEI report OEI-05-95-
00250--``Hospice Patients in Nursing Homes;'' see also OIG report A-
05-96-00023--``Enhanced Controls Needed to Assure Validity of 
Medicare Hospice Enrollments.'' Since hospices receive a fixed daily 
payment regardless of the number of services provided or the 
location of the patient, fewer services may result in higher profits 
per patient. See also section II.A.3.e. and accompanying notes.
---------------------------------------------------------------------------

     Improper relinquishment of core services and professional 
management responsibilities to nursing homes, volunteers, and 
privately-paid professionals; 33
---------------------------------------------------------------------------

    \33\ Certain of the hospice services, (i.e., ``core services'' 
such as nursing, medical, social, and counseling services) must be 
provided directly to the patient by employees of the hospice, while 
other non-core hospice services may be provided in accordance with 
contracts with other providers. However, the hospice must retain 
professional management for all contacted services. See 42 CFR 
418.80.
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     Providing hospice services in a nursing home before a 
written agreement has been finalized, if required; 34
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    \34\ A patient who resides in a skilled nursing facility or 
nursing facility may elect the Medicare Hospice Benefit if: (1) the 
residential care is paid for by (a) the beneficiary or private 
insurance, or (b) Medicaid (if the beneficiary is dual eligible); 
and (2) the hospice and facility have a written agreement under 
which the hospice takes full responsibility for the professional 
management of the individual's hospice care and the facility agrees 
to provide room and board. Hospice Medicare Manual Sec. 204.2.
---------------------------------------------------------------------------

     Billing for a higher level of services than was necessary; 
35
---------------------------------------------------------------------------

    \35\ Billing for unnecessary services involves knowingly seeking 
reimbursement for services that ``are not reasonable and necessary 
for the palliation or management of terminal illness.'' See 42 
U.S.C. 1395y(a)(1)(C). Because HCFA establishes different payment 
amounts for specific categories of covered hospice care, a hospice 
must ensure that it provides services to hospice patients that are 
reasonable and necessary. Otherwise, the hospice may be reimbursed 
for a higher level of services than was necessary, e.g., a hospice 
that provides and bills for continuous care where only routine home 
care is necessary. See also section II.A.3.d. and accompanying 
notes.
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     Knowingly billing for inadequate or substandard care;
     Inadequate justification in the medical record when a 
patient revokes the Medicare Hospice Benefit; 36
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    \36\ Fiscal intermediaries have informed the OIG that hospices 
rarely offer the reasons supporting the revocation of a patient's 
Medicare Hospice Benefit. Although a hospice may discharge a patient 
if it discovers that the patient is not terminally ill, hospices 
should not encourage a patient to revoke the benefit merely to avoid 
the obligation to pay for hospice services that have become too 
costly. See Hospice Medicare Manual Sec. 210.
---------------------------------------------------------------------------

     Billing for hospice care provided by unqualified or 
unlicensed clinical personnel; 37
---------------------------------------------------------------------------

    \37\ Medicare conditions of participation require that hospices 
and all hospice employees must be licensed in accordance with 
applicable Federal, State, and local laws and regulations. 42 CFR 
418.72.
---------------------------------------------------------------------------

     False dating of amendments to medical records; 
38
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    \38\ If additions or corrections need to be made to medical 
records, hospices should make such entries appropriately. For 
example, hospices might correct a medical record by drawing a single 
line through the erroneous entry, writing ``error'' next to the 
entry, initialing and dating the correction, and writing the correct 
information near the entry or writing where the correct information 
could be found.
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     High-pressure marketing of hospice care to ineligible 
beneficiaries; 39
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    \39\ Hospices should not utilize prohibited or inappropriate 
conduct (e.g., offer free gifts or services to patients), designed 
to maximize business growth and patient retention, to carry out 
their initiatives and activities. Also, any marketing information 
offered by hospices should be clear, correct, non-deceptive, and 
fully informative. Through ORT, it was discovered that hospice 
marketing materials had placed considerable emphasis on the 
availability of hospice benefits for long term care patients, while 
downplaying or ignoring the terminal illness eligibility 
requirement. See OIG report A-05-96-00023--``Enhanced Controls 
Needed To Assure Validity of Medicare Hospice Enrollments.'' 
Hospices should not engage in marketing and sales strategies that 
offer incomplete or inadequate information about Medicare 
entitlement under the Medicare Hospice Benefit to induce 
beneficiaries to elect hospice and thereby waive aggressive 
treatment options that Medicare would otherwise cover. Marketing 
statements should not create the perception that the initial 
terminal prognosis is of limited importance and that hospice 
benefits may almost routinely be provided over an indefinite time 
period. Marketing materials should prominently feature the 
eligibility requirements for the Medicare Hospice Benefit.
---------------------------------------------------------------------------

     Improper patient solicitation activities, such as 
``patient charting;'' 40
---------------------------------------------------------------------------

    \40\ Hospices should not review medical records of nursing home 
patients in an attempt to recruit patients for hospice services 
based on their diagnoses. For instance, see OIG report A-05-96-
00023--``Enhanced Controls Needed To Assure Validity of Medicare 
Hospice Enrollments.''
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     Inadequate management and oversight of subcontracted 
services, which results in improper billing; 41
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    \41\ The Balanced Budget Act of 1997, Pub. L. No. 105-33, 
amended the Social Security Act so that hospices will no longer be 
required to routinely provide all physician services directly by 
employing a physician. See 42 U.S.C. 1395x(dd)(2). Because the OIG 
has received reports of limited involvement displayed by contracted 
physicians, as opposed to hospice-employed physicians, hospices 
should consider having oversight mechanisms in place to ensure that 
hospice physicians are thoroughly reviewing re-certification 
documentation.
---------------------------------------------------------------------------

     Sales commissions based upon length of stay in hospice; 
42
---------------------------------------------------------------------------

    \42\ Through ORT activities, it was discovered that hospice 
sales staff often were paid on commission based on the length of a 
patient's stay in hospice. For example, commission amounts were 
determined by multiplying the total number of days of hospice 
patient care (patient days) within a sales representative's 
territory by a factor that reflected the level of achievement of 
assigned sales performance objectives. Such marketing tactics are 
encouraged the recruitment of long-term patients, many of whom the 
review found ineligible for the Medicare Hospice Benefit. The OIG 
recommends that hospices monitor sales commissions for potential 
vulnerabilities associated with improper patient recruiting. See OIG 
report A-05-96-00023--``Enhanced Controls Needed to Assure Validity 
of Medicare Hospice Enrollments.''
---------------------------------------------------------------------------

     Deficient coordination of volunteers; 43
---------------------------------------------------------------------------

    \43\ Hospices rely heavily on volunteer support. In fact, the 
Medicare Hospice Benefit is the only federally funded program that 
mandates the provision of volunteer services. Appropriately, 
hospices need to recognize and attend to compliance issues 
associated with volunteers (i.e., screening, training, disciplining, 
monitoring, etc.).
---------------------------------------------------------------------------

     Improper indication of the location where hospice services 
were delivered; 44
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    \44\ Medicare payments for hospice services are made on a 
prospective basis and adjusted by an area wage index. Hospices must 
submit claims based on the geographic location at which the service 
is furnished and not the location of the hospice. Incorrect 
designation of the place of service for revenue codes 651 and 652 of 
the hospice claim may significantly alter reimbursement and result 
in overpayment for services performed (e.g., hospice office in a 
metropolitan area may be reimbursed more than a rural home where the 
services were performed).

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[[Page 39156]]

     Failure to comply with applicable requirements for verbal 
orders for hospice services; 45
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    \45\ Hospice staff must make an appropriate entry in the 
patient's medical record as soon as they receive a verbal 
certification of terminal illness and file written certifications in 
the medical record. See 42 CFR 418.22(d). State regulations may 
require that verbal and telephone orders from physicians should only 
be accepted by individuals authorized by State law to accept such 
orders. The OIG recommends that those authorized individuals 
accepting verbal and telephone orders should record, date, and sign 
these orders and the physician(s) who ordered the service or 
treatment should countersign them no later than the time period 
required by State regulations.
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     Non-response to late hospice referrals by physicians; 
46
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    \46\ We have received comments expressing concern over late 
hospice referrals by physicians. While the onus of a timely hospice 
referral may be on a physician, a hospice should not allow untimely 
referrals to go unrecognized with inadequate follow-up to the 
physicians. When hospice referrals are late, terminally ill patients 
may be unnecessarily denied access to the Medicare Hospice Benefit, 
hospices may have to admit a patient at the costliest stage of 
terminal illness, and quality of care may be affected because of 
patients being too far along to receive the optimum benefits of 
hospice care. Hospices need to work closely with physicians to 
educate and remind them as to the sensitivities and risks associated 
with untimely referrals.
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     Knowing misuse of provider certification numbers, which 
results in improper billing; 47
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    \47\ E.g., transfer of a patient from one hospice to another 
hospice owned by the same company to circumvent applicable 
reimbursement caps.
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     Failure to adhere to hospice licensing requirements and 
Medicare conditions of participation; 48 and
---------------------------------------------------------------------------

    \48\ See 42 CFR 418.50-418.100 for the Medicare conditions of 
participation that apply to hospices.
---------------------------------------------------------------------------

     Knowing failure to return overpayments made by Federal 
health care programs.49
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    \49\ An overpayment is the amount of money a hospice may have 
received in excess of the amount due and payable under a health care 
program. Examples of overpayments include, but are not limited to, 
instances where a hospice is: (1) paid twice for the same service 
either by Medicare or by Medicare and another insurer; or (2) paid 
for care rendered to patients who are not terminally ill or are 
otherwise ineligible for the Medicare Hospice Benefit. For instance, 
see Hospice Medicare Manual Sec. 307. The OIG strongly recommends 
that the hospice institute procedures to detect overpayments and to 
promptly remit such overpayments to the affected payor. See 42 
U.S.C. 1320a-7b(a)(3), which provides criminal penalties for failure 
to disclose an overpayment. See also 18 U.S.C. 669.
---------------------------------------------------------------------------

    A hospice's prior history of noncompliance with applicable 
statutes, regulations, and Federal health care program requirements may 
indicate additional types of risk areas where the hospice may be 
vulnerable and that may require policies and procedures to prevent 
recurrence.50 Additional risk areas should be assessed by 
hospices as well and incorporated into the written policies and 
procedures and training elements developed as part of their compliance 
programs.
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    \50\ Recurrence of misconduct similar to that which an 
organization has previously committed casts doubt on whether it took 
all reasonable steps to prevent such misconduct'' and is a 
significant factor in the assessment of whether a compliance program 
is effective. See United States Sentencing Commission Guidelines, 
Guidelines Manual, 8A1.2, Application Note 3(k)(iii).
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3. Eligibility Requirements
    Of the risk areas identified above, those pertaining to the 
Medicare eligibility requirements have been the frequent subject of 
investigations and audits. With respect to the reimbursement process, a 
hospice's written policies and procedures should reflect and reinforce 
current Federal health care requirements regarding the eligibility for 
Medicare reimbursement. The policies must create a mechanism for the 
billing or reimbursement staff to communicate effectively and 
accurately with the clinical staff. Policies and procedures should:
     Provide for complete and timely documentation of the 
specific clinical factors that qualify a patient for the Medicare 
Hospice Benefit; 51
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    \51\ Each patient's clinical record must contain: (1) the 
initial and subsequent assessments (including hospice admission 
history, certification, and recertification); (2) the plan of care; 
(3) identification data; (4) consent and authorization and election 
forms; (5) pertinent medical history; and (6) complete documentation 
of all services and events (including evaluations, treatments, 
progress notes, etc.) See 42 CFR 418.74.
---------------------------------------------------------------------------

     Delineate who has authority to make entries in the patient 
record;
     Emphasize that patients should be admitted to hospice care 
only when appropriate documentation supports the applicable 
reimbursement eligibility criteria and only when such documentation is 
maintained, appropriately organized in a legible form, and available 
for audit and review. The documentation should record the activity 
leading to the record entry and the identity of the individual 
providing the service. Documentation should be consistent and any 
discrepancies discussed and reconciled. The hospice should consult with 
its physicians, clinical staff, and/or governing body to establish 
other appropriate documentation guidelines;
     Indicate that the diagnosis and procedure codes for 
hospice services reported on the reimbursement claim should be based on 
the patient's clinical condition as reflected in the medical record and 
other documentation, and should comply with all applicable official 
coding rules and guidelines. Any Health Care Financing Administration 
Common Procedure Coding System (HCPCS), International Classification of 
Disease (ICD), or revenue code (or successor codes) used by the billing 
staff should accurately describe the service that was ordered by the 
physician and performed by the hospice. The documentation necessary for 
accurate billing should be available to billing staff; and
     Provide that the compensation for hospice admission 
personnel, billing department personnel and billing consultants should 
not offer any financial incentive to bill for hospice care regardless 
of whether applicable eligibility criteria for reimbursement is met.
    The written policies and procedures concerning proper billing 
should reflect the current reimbursement principles set forth in 
applicable regulations and should be developed in tandem with private 
payor and organizational standards. Particular attention should be paid 
to issues associated with patient election of the Medicare Hospice 
Benefit, certification of terminal illness of a patient, development 
and certification of a patient's interdisciplinary plan of care, and 
reasonableness and necessity of the level of hospice care 
provided.52
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    \52\ The OIG has undertaken numerous audits, investigations, 
inspections, and national enforcement initiatives aimed at reducing 
potential and actual fraud, abuse, and waste. For example, see OIG 
report A-05-96-00023--``Enhanced Controls Needed to Assure Validity 
of Medicare Hospice Enrollments;'' see also OIG Special Fraud 
Alert--``Fraud and Abuse in Nursing Home Arrangements with 
Hospices'' (March 1998); OIG Medicare Advisory Bulletin on Hospice 
Benefits (November 1995).
---------------------------------------------------------------------------

a. Terminal Illness as an Eligibility Requirement
    For a hospice patient to receive reimbursement for hospice services 
under Medicare,53 the patient must be ``terminally ill.'' 
54 Hospices should create oversight mechanisms to ensure 
that the terminal illness of a Medicare beneficiary is verified 
55 and the specific

[[Page 39157]]

factors qualifying the patient as terminally ill are properly 
documented.56 Any determinative assessment of the terminal 
illness of a Medicare beneficiary should be completed prior to billing 
Medicare for hospice care. Physicians must certify that the beneficiary 
was terminally ill at the time when a patient was admitted for hospice 
services as well as at the beginning of subsequent hospice benefit 
periods.57
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    \53\ 42 U.S.C. 1395d(a) authorizes the reimbursement of hospice 
care.
    \54\ An individual is considered to be ``terminally ill'' if the 
individual has a medical prognosis that the individual's life 
expectancy is six months or less if the illness runs its normal 
course. 42 CFR 418.3. However, the fact that a hospice patient lives 
beyond this six month period, in and of itself, does not constitute 
grounds for a determination that the patient was never eligible for 
hospice care, or that the services provided to the patient were not 
reimbursable by Medicare.
    \55\ Medical reviews, audits, inspections, and investigations of 
hospices have concluded that hospices have billed Medicare for 
hospice services provided to patients who are not terminally ill, 
with diagnoses including arthritis, anorexia, debility, and failure 
to thrive. For instance, see OIG report OEI-04-93-00270--``Medicare 
Hospice Beneficiaries: Services and Eligibility.'' Through Operation 
Restore Trust activities and the increased program integrity actions 
by the Regional Home Health Intermediaries (RHHIs), it was 
discovered that many beneficiaries receiving Medicare hospice 
benefits did not have a terminal illness. In the review of hospice 
cases between 1992 and 1996, patients did not demonstrate 
significant clinical symptoms of their disease nor notable 
functional limitations one would expect to see in a person who has a 
terminal illness as defined by Medicare. See OIG report A-05-96-
00023--``Enhanced Controls Needed to Assure Validity of Medicare 
Hospice Enrollments.'' Findings such as these have prompted a 
concern that some hospices may intentionally misrepresent a 
condition as terminal in order to secure Medicare reimbursement. See 
also note 24.
    \56\ See 42 CFR 418.22(d). If a question is raised as to whether 
a patient is terminally ill, the hospice will be requested to 
furnish its Medicare fiscal intermediary with the information 
necessary to establish that the patient is terminally ill.
    \57\ See 42 U.S.C. 1395f(a)(7). See also note 29.
---------------------------------------------------------------------------

    The hospice's written policies and procedures should require, at a 
minimum, that:
     Before a patient is admitted for hospice services, the 
hospice physician and attending physician thoroughly review and certify 
the admitting diagnosis and prognosis;
     A patient's medical record contain complete and measurable 
documentation to support the certification made by the hospice 
physician or attending physician; 58
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    \58\ In order to verify a patient's terminal illness, Medicare 
fiscal intermediaries need to review physician input and rationale 
beyond a signature on the certification form (e.g., a recent medical 
history and physical if the physician does not actually examine the 
patient prior to admission to hospice; summary of physician review 
of the history and physical taken by hospice personnel; or physician 
documentation of his or her contribution to the Interdisciplinary 
Group meetings).
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     The patient or lawful representative is informed of the 
determination of the patient's life limiting condition;
     The patient or lawful representative is aware that the 
goal of hospice is directed toward relief of symptoms, rather than the 
cure of the underlying disease;
     A patient's medical condition and status is completely 
reviewed during Interdisciplinary Group meetings; and
     The clinical progression/status of a patient's disease and 
medical condition are properly documented.
    Hospices can further ensure compliance with the terminal illness 
requirement through discussions with Medicare beneficiaries and their 
families, reminding them that they must satisfy the regulatory 
requirements for terminal illness status to be eligible for Medicare 
coverage. These discussions can take place at the beginning of hospice 
election and during appropriate times throughout a patient's hospice 
care, e.g., at time of recertification. Because the Medicare conditions 
of participation require hospices to give all beneficiaries an informed 
consent form that outlines their legal rights before furnishing them 
with hospice care,59 providers can include reminders of 
terminal illness requirements in these forms.
---------------------------------------------------------------------------

    \59\ See 42 CFR 418.62.
---------------------------------------------------------------------------

    The OIG recognizes that decisions to admit patients to hospices are 
often not based on medical factors alone. Such decisions are routinely 
influenced by non-medical factors that would generally be reflected in 
the plan of care. However, it is important to make a distinction 
between admitting a patient to a hospice program and certifying a 
patient for the Medicare Hospice Benefit. Based on an individual 
hospice's admission criteria, some patients may be admitted to hospice 
care prior to an estimated six months before death, as long as the 
hospice is paid fair market value for its services. Regardless, 
patients can be certified for the Medicare Hospice Benefit only when it 
is reasonable to conclude that a patient's life expectancy is six 
months or less if the illness runs its normal course. In other cases, 
alternative modes of reimbursement, often provided through community 
support, should be sought outside the Medicare Hospice Benefit.
b. Plan of Care
    A hospice should take all reasonable steps to ensure that a written 
plan of care is established and maintained for each individual who 
receives hospice services, and that the care provided to that 
individual is in accordance with the plan.60 The plan must 
be established by the patient's attending physician, the hospice 
physician, and the Interdisciplinary Group.61 Each patient's 
needs should be continuously assessed and all treatment options 
explored and evaluated in the context of the patient's 
symptoms.62 The hospice's written policies and procedures 
should require, at a minimum, that:
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    \60\ See 42 U.S.C. 1395f(a)(7); 42 CFR 418.58.
    \61\ Id.
    \62\ Some ORT audits found that hospice physicians, at times, 
rely partly on referring, attending physicians. Although the 
referring physician's opinion can and should be considered as part 
of the decision making process, the final determination of hospice 
eligibility is the responsibility of the hospice physician. For 
instance, see OIG report A-04-95-02111. If employees of a hospice 
believe that services ordered by a physician are excessive or 
otherwise inappropriate, the hospice cannot avoid liability for 
filing improper claims simply because a physician has certified the 
need for hospice care.
---------------------------------------------------------------------------

     Before the hospice bills for hospice care provided to a 
patient, the plan of care must be established by the hospice patient's 
attending physician,63 the hospice physician, and the 
Interdisciplinary Group;
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    \63\ For Medicare reimbursement purposes, a plan for furnishing 
hospice services must be certified by a physician who is a doctor of 
medicine, osteopathy, or podiatric medicine. See 42 CFR 410.20. The 
services of the hospice medical director(s) or the physician member 
of the Hospice Interdisciplinary Group must be performed by a doctor 
of medicine or osteopathy. See 42 CFR 418.202. The hospice should 
employ reasonable measures to verify that physicians who certify 
hospice services are appropriately licensed and no adverse actions, 
such as criminal conviction, debarment, or an exclusion, have been 
taken against them.
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     The plan of care includes (i) An assessment of the hospice 
patient's needs and identification of services, including the 
management of discomfort and symptom relief, and (ii) the scope and 
frequency of services, in detail, needed to meet the patient's and 
family's needs; 64
---------------------------------------------------------------------------

    \64\ 42 CFR 418.58(c).
---------------------------------------------------------------------------

     The plan of care must be reviewed and updated, at 
intervals specified in the plan, by the attending physician, hospice 
physician, and the Interdisciplinary Group; 65
---------------------------------------------------------------------------

    \65\ See 42 U.S.C. 1395f(a)(7)(B); 42 U.S.C. 1395x(dd)(2)(B).
---------------------------------------------------------------------------

     The hospice properly documents any review or update of a 
hospice patient's plan of care by the attending physician, the hospice 
physician and Interdisciplinary Group; and 66
---------------------------------------------------------------------------

    \66\ 42 CFR 418.58(b).
---------------------------------------------------------------------------

     The hospice regularly reviews the appropriateness of 
Interdisciplinary Group services and level of services being provided, 
patient admission to hospice, patient length of stay, delays, and 
specific treatment modalities.
c. Utilization of Hospice Services
    A hospice is accountable for the appropriate allocation and 
utilization of its resources in order to provide optimal care 
consistent with patient and family needs.67 Accordingly, a 
hospice should monitor and evaluate its resource allocation regularly 
to identify and

[[Page 39158]]

resolve problems with the utilization of services, facilities, and 
personnel. To achieve such monitoring, a hospice should schedule 
Interdisciplinary Group case reviews and conferences,68 
review specific problems that may arise with services provided, and use 
objective written criteria or treatment protocols to guide decisions 
about the utilization of hospice services provided. Utilization 
concerns may be an indication of a problem with the quality or quantity 
of services provided to a hospice patient or demonstrate a more 
fundamental concern as to the patient's eligibility for the Medicare 
Hospice Benefit in the first place. Therefore, a hospice should 
implement policies and procedures to identify, assess, and rectify any 
problems associated with:
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    \66\ Once a Medicare beneficiary elects hospice care, the 
hospice is responsible for furnishing directly, or arranging for, 
all supplies and services that relate to the beneficiary's terminal 
condition, except the services of an attending physician. Hospice 
beneficiaries have the right to receive covered medical, social, and 
emotional support services from the hospice directly, or through 
arrangements made by the hospice, and should not be forced to seek 
or pay for such care from non-hospice providers.
    \68\ Interdisciplinary Group conferences are regularly scheduled 
periodic meetings of the Interdisciplinary Group to review the most 
current patient/family assessment, evaluate needs, and update the 
plan of care.
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     Appropriateness of Interdisciplinary Group services and 
level of services being provided;
     Appropriateness of patient admission to hospice;
     Regular review of patient length of stay;
     Delays in admission or in the provision of 
Interdisciplinary Group services; and
     Specific treatment modalities.
    When utilization problems are identified, a hospice should 
implement corrective actions and preventative measures that may include 
ongoing monitoring, changes in the provision of services, and revisions 
of policies and procedures.
d. Levels of Hospice Care
    A hospice's compliance program should provide that it should only 
seek reimbursement for services that the hospice has reason to believe 
are reasonable and necessary 69 for the palliation or 
management of terminal illness and were ordered by a physician or other 
appropriately licensed individual. The OIG recommends the hospice's 
compliance program communicate to physicians authorized to certify 
patients for hospice care and hospice personnel authorized to admit 
patients for hospice care that services will only be paid if ordered, 
certified, covered, reasonable, and necessary for the patient, given 
his or her clinical condition.
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    \69\ See note 35.
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    Although hospice services are reimbursed on a per diem basis and 
not per individual component of the services performed, the payment is 
based upon the level of care provided.70 Because HCFA 
establishes different payment amounts for specific categories of 
covered hospice care, a hospice must ensure that it provides for 
services to hospice patients that are reasonable and necessary. 
Otherwise, the hospice may be reimbursed for a higher level of services 
than was necessary, e.g., a hospice that provides and bills for 
continuous care where only routine home care is necessary.
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    \70\ Payment amounts are determined within each of the following 
categories: (1) Routine home care day; (2) continuous home care day 
(patient who receives hospice care that consists predominantly of 
nursing care on a continuous basis at home, is furnished only during 
brief periods of crisis and only as necessary to maintain the 
terminally ill patient at home); (3) inpatient respite care day 
(hospice patient receives care in an approved facility on a short-
term basis for respite--not more than five consecutive days at a 
time); and (4) general inpatient care day (hospice patient receives 
general inpatient care in an inpatient facility for pain control or 
acute or chronic symptom management that cannot be managed in other 
settings). See 42 CFR 418.302.
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    As a preliminary matter, the OIG recognizes that licensed health 
care professionals must be able to order any services that are 
appropriate for the care of their patients. However, Medicare and other 
Government and private health care plans will only pay for those 
services otherwise covered that meet appropriate standards (i.e., in 
the case of Medicare, ``reasonable and necessary'' services). Providers 
may not bill for services that do not meet the applicable 
standards.71 The hospice is in a unique position to deliver 
this information to the health care professionals on its staff and to 
the physicians who certify hospice services. Upon request, a hospice 
must be able to provide documentation, such as physician orders and 
other patient medical records, to support the level of services 
provided to a hospice patient.72 The compliance officer 
should ensure that a clear, comprehensive summary of the definitions 
for the different levels of hospice care 73 and applicable 
rules of the various Government and private plans is prepared, 
disseminated, and explained to appropriate hospice personnel.
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    \71\ Administrative civil monetary penalties, assessments, and 
exclusion, as well as remedies available under criminal and civil 
law, including the civil False Claims Act, may be imposed against 
any person who submits a claim for services ``that [the] person 
knows or should know are not medically necessary.'' See, e.g., 42 
U.S.C. 1320a-7a(a).
    \72\ Medicare fiscal intermediaries have the authority to 
require hospices that furnish items or services under the program to 
submit documentation that substantiates services were actually 
provided and medically necessary. See Medicare Intermediary Manual 
Sec. 3116.1.B.
    \73\ See note 70.
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    We recommend that hospices formulate policies and procedures that 
include periodic clinical reviews, both prior and subsequent to billing 
for services, as a means of verifying that patients are receiving only 
reasonable and necessary services. As part of such reviews, hospices 
should examine the level, frequency, and duration of the services they 
perform to determine, in consultation with a physician, whether 
patients' medical conditions justify the level of services provided and 
billed. A hospice may choose to incorporate this clinical review 
function into pre-existing quality assurance mechanisms or any other 
quality assurance processes that are part of its conditions of 
participation.74
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    \74\ See 42 CFR 418.66.
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e. Services Provided to Hospice Patients in Nursing Homes
    Hospice services may be appropriate and beneficial to terminally 
ill nursing home residents who wish to receive palliative 
care.75 However, the OIG has found hospices that enroll 
nursing home patients in hospice care are particularly vulnerable to 
fraud and abuse.76 Appropriately, a hospice should set 
sufficient oversight controls in place to ensure that care it provides 
to nursing home residents is appropriate, complete, and in accordance 
with applicable laws and Federal health care program requirements.
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    \75\ See note 34.
    \76\ In some cases reviewed in nursing homes, records have shown 
that patients did have a terminal condition, but were stable with 
little sign of deterioration or decline. OIG medical reviewers have 
found that while the hospice benefit may eventually have been 
appropriate, at the time of election, patients were stable and the 
election of hospice was premature. See OEI report OEI-05-95-00250: 
``Hospice Patients in Nursing Homes;'' see also OIG report A-05-96-
00023--``Enhanced Controls Needed to Assure Validity of Medicare 
Hospice Enrollments.'' For other examples of potential fraud and 
abuse in the hospice/nursing home context, see notes 31-34.
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    When a resident of a nursing home elects the Medicare Hospice 
Benefit, the hospice and the nursing home should jointly establish a 
coordinated plan of care that reflects the hospice philosophy, and is 
based on an assessment of the individual's needs and unique living 
situation in the nursing home. The coordinated plan should identify the 
care and services that the nursing home will provide to be responsive 
to the unique needs of the patient/resident and his or her expressed 
desire for hospice care.
    In general, a hospice should involve nursing home personnel in 
assisting with the administration of a patient's prescribed therapies 
included in the plan of care only to the extent that the

[[Page 39159]]

hospice would routinely utilize the services of a hospice patient's 
family/caregiver in implementing the plan of care.77 To 
satisfy the applicable Medicare conditions of participation in the 
nursing home context, hospices should implement policies and procedures 
to ensure that:
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    \77\ Hospice Certification Manual Sec. 2082.B.
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     The hospice makes all covered services available to meet 
the needs of a patient and does not routinely discharge patients in 
need of costly inpatient care; 78
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    \78\ See 42 CFR 418.50.
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     The hospice retains professional responsibility for 
services (e.g., personal care, nursing, medication for relieving pain 
control) furnished by nursing home staff; 79
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    \79\ See 42 CFR 418.56.
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     All the care furnished by a nursing home is in accordance 
with the plan of care; 80
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    \80\ See 42 CFR 418.58.
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     The hospice and the nursing home must communicate with 
each other when any changes are indicated to the plan of care, and each 
provider must be aware of the other's responsibilities in implementing 
the plan of care and complete those respective functions; 81
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    \81\ Hospice Certification Manual Sec. 2082.A.
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     Evidence of the coordinated plan of care must be present 
in the clinical records of both providers; 82
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    \82\ Hospice Certification Manual Sec. 2082.A.
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     Substantially all the core services are routinely provided 
directly by hospice employees 83 and the hospice does not 
rely on employees of the inpatient facility to furnish needed nursing, 
physician, counseling, or medical social services; 84 and
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    \83\ See 42 CFR 418.80.
    \84\ In limited circumstances, HCFA may approve a waiver of the 
requirement for core nursing services to be provided by a hospice 
that is located in a non-urbanized area. See 42 CFR 418.83.
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     The hospice keeps its forms and documentation of services 
separate from the nursing home's forms and documentation.85
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    \85\ A hospice may consider creating some type of payroll 
tracking or time study in an effort to properly differentiate 
services between the hospice and the nursing home.
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4. Anti-Kickback and Self-Referral Concerns
    The hospice should have policies and procedures in place with 
respect to compliance with Federal and State anti-kickback 
statutes.86 Such policies should provide that:
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    \86\ The hospice's in-house counsel or compliance officer 
should, among other things, obtain copies of all relevant OIG 
regulations, Special Fraud Alerts, and advisory opinions (these 
documents are located on the Internet at http://www.os.dhhs.gov/
oig), and ensure that the hospice's policies reflect the guidance 
provided by the OIG.
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     All of the hospices's contracts and arrangements with 
actual or potential referral sources are reviewed by counsel and comply 
with all applicable statutes and regulations; 87
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    \87\ Although hospices may contract with physicians, see note 
41, hospices and physicians must still tailor such agreements to 
avoid violation of the anti-kickback statute or similar Federal or 
State statute or regulation and to comply with applicable Medicare 
conditions of participation. See 42 CFR 418.56 and 418.86.
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     The hospice does not submit or cause to be submitted to 
the Federal health care programs claims for patients who were referred 
to the hospice pursuant to contracts or financial arrangements that 
were designed to induce such referrals in violation of the anti-
kickback statute or similar Federal or State statute or regulation; and
     The hospice does not offer or provide gifts, free 
services, or other incentives to patients, relatives of patients, 
physicians, nursing facilities, hospitals, contractors, or other 
potential referral sources for the purpose of inducing referrals in 
violation of the anti-kickback statute or similar Federal or State 
statute or regulation.88
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    \88\ See 42 U.S.C. 1320a-7b(b); 60 FR 40847 (1995).
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    In particular, arrangements between nursing homes and hospices are 
vulnerable to fraud and abuse because nursing home operators have 
control over the specific hospice or hospices they will permit to 
provide hospice services to their residents.89 Moreover, 
hospice patients residing in nursing homes may be particularly 
desirable from a hospice's financial standpoint.90 
Therefore, with respect to arrangements with nursing homes, a hospice 
should develop policies and procedures to prevent the following 
practices from occurring, which may constitute potential kickbacks:
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    \89\ While an exclusive or semi-exclusive arrangement with a 
nursing home to provide hospice services to residents can promote 
efficiency and safety by permitting the nursing home operator to 
coordinate care, screen hospice caregivers, and maintain control of 
the premises, such an arrangement may have substantial monetary 
value to a hospice. In these circumstances, some nursing home 
operators and/or hospices may request or offer illegal remuneration 
to influence a nursing home's decision to do business with a 
particular hospice.
    \90\ First, a nursing home's population represents a sizable 
pool of potential hospice patients. Second, nursing home hospice 
patients may generate higher gross revenues per patient than 
patients residing in their own homes, because nursing home residents 
receiving hospice care have, on average, longer lengths of stay than 
hospice patients residing in their own homes.
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     Hospice offering free or below fair market value goods to 
induce a nursing home to refer patients to the hospice;
     Hospice paying ``room and board'' payments to the nursing 
home in amounts in excess of what the nursing home would have received 
directly from Medicaid had the patient not been enrolled in hospice; 
91
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    \91\ See note 31.
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     Hospice referring its patients to a nursing home to induce 
the nursing home to refer its patients to the hospice;
     Hospice providing free (or below fair market value) care 
to nursing home patients, for whom the nursing home is receiving 
Medicare payment under the Medicare Skilled Nursing Facility Benefit, 
with the expectation that after the patient exhausts the skilled 
nursing facility benefit, the patient will receive hospice services 
from that hospice; and
     Hospice providing staff at its expense to the nursing home 
to perform duties that otherwise would be performed by the nursing 
home.
    Further, the policies and procedures should specifically reference 
and take into account the OIG's safe harbor regulations, which clarify 
those payment practices that would be immune from prosecution under the 
anti-kickback statute, as well as the OIG's civil monetary penalty and 
exclusion authorities.92
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    \92\ See 42 CFR 1001.952.
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5. Retention of Records
    Hospice compliance programs should provide for the implementation 
of a records system. This system should establish policies and 
procedures regarding the creation, distribution, retention, storage, 
retrieval, and destruction of documents.93 The two 
categories of documents developed under this system should include: (1) 
All records and documentation (e.g., medical records, and billing and 
claims documentation) required either by Federal or State law for 
participation in Federal health care programs 94 or any 
other applicable Federal and State laws and regulations (e.g., document 
retention requirements to maintain State licensure); and (2) all 
records necessary to protect the integrity of the hospice's compliance 
process and confirm the effectiveness of the program. The second 
category includes: (a) Documentation that employees were adequately 
trained; (b) reports from the hospice's hotline, including the nature 
and results of any investigation that was conducted; (c) documentation 
of

[[Page 39160]]

corrective action, including disciplinary action taken and policy 
improvements introduced, in response to any internal investigation or 
audit; (d) modifications to the compliance program; (e) self-
disclosures; and (f) the results of the hospice's auditing and 
monitoring efforts.95
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    \93\ This records system should be tailored to fit the 
individual needs and financial resources of the hospice.
    \94\ For example, Medicare requires that hospices must establish 
and maintain a clinical record for every individual receiving care 
and services. The record must be complete, promptly and accurately 
documented, readily accessible and systematically organized to 
facilitate retrieval. Any entries are to be made and signed by the 
person providing the services. See 42 CFR 418.74.
    \95\ The creation and retention of such documents and reports 
may raise a variety of legal issues, such as patient privacy and 
confidentiality. These issues are best discussed with legal counsel.
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6. Compliance as an Element of a Performance Plan
    Compliance programs should require that the promotion of, and 
adherence to, the elements of the compliance program be a factor in 
evaluating the performance of all employees, who should be periodically 
trained in new compliance policies and procedures. In addition, all 
managers and supervisors should:
     Discuss with all supervised employees and relevant 
contractors the compliance policies and legal requirements pertinent to 
their function;
     Inform all supervised personnel that strict compliance 
with these policies and requirements is a condition of employment; and
     Disclose to all supervised personnel that the hospice will 
take disciplinary action up to and including termination for violation 
of these policies or requirements.
    In addition to making performance of these duties an element in 
evaluations, a compliance program should include a policy for 
sanctioning managers and supervisors who fail to adequately instruct 
their subordinates or fail to detect noncompliance with applicable 
policies and legal requirements, where reasonable diligence on the part 
of the manager or supervisor would have led to the discovery of any 
problems or violations and given the hospice the opportunity to correct 
them earlier.
    The OIG believes all hospices should ensure that its employees 
understand the importance of compliance. If a small hospice does not 
have a formal performance evaluation structure, it should informally 
convey the employee's compliance responsibilities and the importance of 
these responsibilities in a written job description or orientation 
checklist. The applicable documentation should include a dated 
signature, with an indication that the employee has received it and 
will be responsible for adherence to the responsibilities expressed.

B. Designation of a Compliance Officer and a Compliance Committee

1. Compliance Officer
    Every hospice should designate a compliance officer to serve as the 
focal point for compliance activities. This responsibility may be the 
individual's sole duty or added to other management responsibilities, 
depending upon the size and resources of the hospice and the complexity 
of the task. Designating a compliance officer with the appropriate 
authority is critical to the success of the program, necessitating the 
appointment of a high-level official in the hospice with direct access 
to the hospice's president or CEO, governing body, all other senior 
management, and legal counsel.96 The officer should have 
sufficient funding and staff to perform his or her responsibilities 
fully. Coordination and communication are the key functions of the 
compliance officer with regard to planning, implementing, and 
monitoring the compliance program.
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    \96\ The OIG believes that it is not advisable for the 
compliance function to be subordinate to the hospice's general 
counsel, or comptroller or similar hospice financial officer. Free 
standing compliance functions help to ensure independent and 
objective legal reviews and financial analyses of the institution's 
compliance efforts and activities. By separating the compliance 
function from the key management positions of general counsel or 
chief financial officer (where the size and structure of the hospice 
make this a feasible option), a system of checks and balances is 
established to more effectively achieve the goals of the compliance 
program.
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    The compliance officer's primary responsibilities should include:
     Overseeing and monitoring the implementation of the 
compliance program; 97
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    \97\ For multi-hospice organizations or hospital-owned hospices, 
the OIG encourages coordination with each hospice owned by the 
corporation or hospital through the use of a headquarter's 
compliance officer, communicating with parallel positions in each 
facility, regional office, or business line, as appropriate.
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     Reporting on a regular basis to the hospice's governing 
body, CEO, and compliance committee (if applicable) on the progress of 
implementation, and assisting these components in establishing methods 
to improve the hospice's efficiency and quality of services, and to 
reduce the hospice's vulnerability to fraud, abuse, and waste;
     Periodically revising the program in light of changes in 
the organization's needs, and in the law and policies and procedures of 
Government and private payor health plans;
     Reviewing employees' certifications that they have 
received, read, and understood the standards of conduct;
     Developing, coordinating, and participating in a 
multifaceted educational and training program that focuses on the 
elements of the compliance program, and seeks to ensure that all 
relevant employees and management are knowledgeable of, and comply 
with, pertinent Federal and State standards;
     Ensuring that independent contractors and agents who 
furnish physician, nursing, or other health care services to the 
clients of the hospice, or billing services to the hospice, are aware 
of the requirements of the hospice's compliance program with respect to 
eligibility, billing, and marketing, among other things;
     Coordinating personnel issues with the hospice's Human 
Resources/Personnel office (or its equivalent) to ensure that (i) the 
National Practitioner Data Bank 98 has been checked with 
respect to all medical staff and independent contractors (as 
appropriate) and (ii) the List of Excluded Individuals/Entities 
99 has been checked with respect to all employees, medical 
staff, and independent contractors (as appropriate); 100
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    \98\ The National Practitioner Data Bank is a data base that 
contains information about medical malpractice payments, sanctions 
by boards of medical examiners or State licensing boards, adverse 
clinical privilege actions, and adverse professional society 
membership actions. Health care entities can have access to this 
data base to seek information about their own medical or clinical 
staff, as well as prospective employees or physician contractors.
    \99\ The List of Excluded Individuals/Entities is an OIG-
produced report available on the Internet at http://www.os.dhhs.gov/
oig. It is updated on a regular basis to reflect the status of 
health care providers who have been excluded from participation in 
the Medicare and Medicaid programs. In addition, the General 
Services Administration maintains a monthly listing of debarred 
contractors on the Internet at http://www.arnet.gov/epls.
    \100\ The compliance officer may also have to ensure that the 
criminal backgrounds of employees have been checked depending upon 
State requirements or hospice policy. See note 132.
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     Assisting the hospice's financial management in 
coordinating internal compliance review and monitoring activities, 
including annual or periodic reviews of departments;
     Independently investigating and acting on matters related 
to compliance, including the flexibility to design and coordinate 
internal investigations (e.g., responding to reports of problems or 
suspected violations) and any resulting corrective action (e.g., making 
necessary improvements to hospice policies and practices, taking 
appropriate disciplinary action, etc.) with all hospice departments, 
subcontracted providers, and health care professionals

[[Page 39161]]

under the hospice's control,101 and any other agents if 
appropriate; and
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    \101\ E.g., attending physicians, pharmacies, durable medical 
equipment suppliers, hospitals, nursing homes, home health agencies, 
and supplemental staffing entities.
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     Continuing the momentum of the compliance program and the 
accomplishment of its objectives long after the initial years of 
implementation.102
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    \102\ Periodic on-site visits of hospice operations, bulletins 
with compliance updates and reminders, distribution of audiotapes or 
videotapes on different risk areas, lectures at management and 
employee meetings, circulation of recent health care articles 
covering fraud and abuse, and innovative changes to compliance 
training are various examples of approaches and techniques the 
compliance officer can employ for the purpose of ensuring continued 
interest in the compliance program and the hospice's commitment to 
its policies and principles.
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    The compliance officer must have the authority to review all 
documents and other information that are relevant to compliance 
activities, including, but not limited to, patient medical records, 
billing records, and records concerning the marketing efforts of the 
facility and the hospice's arrangements with other parties, including 
employees, physicians, professionals on staff, relevant independent 
contractors, suppliers, agents, and supplemental staffing entities. 
This policy enables the compliance officer to review contracts and 
obligations (seeking the advice of legal counsel, where appropriate) 
that may contain referral and payment provisions that could violate the 
anti-kickback statute and other legal or regulatory requirements.
    A small hospice may not have the need or the resources to hire or 
appoint a full time compliance officer. However, each hospice should 
have a person in its organization (this person may have other 
functional responsibilities) who can oversee the hospice's compliance 
with applicable statutes, rules, regulations, and policies. The 
structure and comprehensiveness of the hospice's compliance program 
will help determine the responsibilities of each individual compliance 
officer.
2. Compliance Committee
    The OIG recommends that a compliance committee be established to 
advise the compliance officer and assist in the implementation of the 
compliance program.103 When developing an appropriate team 
of people to serve as the hospice's compliance committee, including the 
compliance officer, a hospice should consider a variety of skills and 
personality traits that are expected from those in such 
positions.104 Once a hospice chooses the people that will 
accept the responsibilities vested in members of the compliance 
committee, the hospice needs to train these individuals on the policies 
and procedures of the compliance program, as well as how to discharge 
their duties.
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    \103\ The compliance committee benefits from having the 
perspectives of individuals with varying responsibilities in the 
organization, such as operations, finance, audit, human resources, 
and clinical management (e.g., hospice physician), as well as 
employees and managers of key operating units. These individuals 
should have the requisite seniority and comprehensive experience 
within their respective departments to implement any necessary 
changes to hospice policies and procedures as recommended by the 
committee.
    \104\ A health care provider should expect its compliance 
committee members and compliance officer to demonstrate high 
integrity, good judgment, assertiveness, and an approachable 
demeanor, while eliciting the respect and trust of employees of the 
hospice and having significant professional experience working with 
billing, clinical records, documentation, and auditing principles.
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    The committee's functions should include:
     Analyzing the legal requirements with which it must 
comply, and specific risk areas;
     Assessing existing policies and procedures that address 
these risk areas for possible incorporation into the compliance 
program;
     Working with appropriate hospice departments to develop 
standards of conduct and policies and procedures to promote compliance 
with legal and ethical requirements;
     Recommending and monitoring, in conjunction with the 
relevant departments, the development of internal systems and controls 
to carry out the organization's standards, policies, and procedures as 
part of its daily operations;
     Determining the appropriate strategy/approach to promote 
compliance with the program and detection of any potential violations, 
such as through hotlines and other fraud reporting mechanisms;
     Developing a system to solicit, evaluate, and respond to 
complaints and problems; and
     Monitoring internal and external audits and investigations 
for the purpose of identifying troublesome issues and deficient areas 
experienced by the hospice, and implementing corrective and preventive 
action.
    The committee may also address other functions as the compliance 
concept becomes part of the overall hospice operating structure and 
daily routine.

C. Conducting Effective Training and Education

    The proper education and training of corporate officers, managers, 
employees, volunteers, nurses, physicians, and other health care 
professionals, and the continual retraining of current personnel at all 
levels, are significant elements of an effective compliance program. As 
part of their compliance programs, hospices should require personnel to 
attend specific training on a periodic basis, including appropriate 
training in Federal and State statutes, regulations, and guidelines, 
and the policies of private payors, and training in corporate ethics, 
which emphasizes the organization's commitment to compliance with these 
legal requirements and policies.105
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    \105\ Specific compliance training should complement any 
``inservice'' training sessions that a hospice may regularly 
schedule to provide an ongoing program for the training of employees 
as required by its conditions of participation. 42 CFR 418.64.
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    These training programs should include sessions highlighting the 
organization's compliance program, summarizing fraud and abuse laws, 
Federal health care program requirements, claim development and 
submission processes, patient rights, and marketing practices that 
reflect current legal and program standards. The organization must take 
steps to communicate effectively its standards and procedures to all 
affected employees, physicians, independent contractors, and other 
significant agents, e.g., by requiring participation in training 
programs and disseminating publications that explain specific 
requirements in a practical manner.106 Managers of specific 
departments or groups can assist in identifying areas that require 
training and in carrying out such training.107 Training 
instructors may come from outside or inside the organization, but must 
be qualified to present the subject matter involved and experienced 
enough in the issues presented to adequately field questions and 
coordinate discussions among those being trained. New employees should 
be trained early in their employment.108 Training programs 
and materials should be designed to take into account the skills, 
experience, and knowledge of the individual trainees. The compliance

[[Page 39162]]

officer should document any formal training undertaken by the hospice 
as part of the compliance program.
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    \106\ Some publications, such as OIG's Special Fraud Alerts, 
audit and inspection reports, and advisory opinions, as well as the 
annual OIG work plan, are readily available from the OIG and could 
be the basis for standards, educational courses, and programs for 
appropriate hospice employees.
    \107\ Significant variations in the functions and 
responsibilities of different departments or groups may create the 
need for training materials that are tailored to compliance concerns 
associated with particular operations and duties.
    \108\ Certain positions, such as those that involve the billing 
of hospice services or patient admission to hospice care, create a 
greater organizational legal exposure, and therefore require 
specialized training.
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    A variety of teaching methods, such as interactive training, and 
training in several different languages, particularly where a hospice 
has a culturally diverse staff, should be implemented so that all 
affected employees are knowledgeable of the institution's standards of 
conduct and procedures for alerting senior management to problems and 
concerns.109 In addition to specific training in the risk 
areas identified in section II.A.2, above, primary training for 
appropriate corporate officers, managers, and other hospice staff 
should include such topics as:
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    \109\ Post-training tests can be used to assess the success of 
training provided and employee comprehension of the hospice's 
policies and procedures.
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     Government and private payor reimbursement principles;
     General prohibitions on paying or receiving remuneration 
to induce referrals;
     Improper alterations to clinical records; 110
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    \110\ This practice involves the hospice altering the attending 
physician's or other authorized physician's diagnosis in order to 
receive reimbursement for hospice care. A hospice should not claim 
the patient has a particular medical condition in order to qualify 
for reimbursement for which it would not otherwise qualify.
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     Providing hospice services with proper authorization;
     Patient rights and patient education;
     Compliance with Medicare conditions of participation; and
     Duty to report misconduct.
    Clarifying and emphasizing these areas of concern through training 
and educational programs are particularly relevant to a hospice's 
marketing and financial personnel, in that the pressure to meet 
business goals may render these employees vulnerable to engaging in 
prohibited practices.
    The OIG suggests that all relevant levels of personnel be made part 
of various educational and training programs of the 
hospice.111 Employees should be required to have a minimum 
number of educational hours per year, as appropriate, as part of their 
employment responsibilities.112 For example, for certain 
employees involved in the hospice admission functions, periodic 
training in applicable reimbursement coverage and eligibility 
requirements should be required. In hospices with high employee 
turnover, periodic training updates are critical.
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    \111\ In addition, where feasible, the OIG recommends that a 
hospice afford outside contractors the opportunity to participate in 
the hospice's compliance training and educational programs, or 
develop their own programs that complement the hospice's standards 
of conduct, compliance requirements, and other rules and practices.
    \112\ Currently, the OIG is monitoring a significant number of 
corporate integrity agreements that require many of these training 
elements. The OIG usually requires a minimum of one to three hours 
annually for basic training in compliance areas. Additional training 
is required for specialty fields such as billing and marketing.
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    The OIG recognizes that the format of the training program will 
vary depending upon the resources of the hospice. For example, a small 
hospice may want to create a video for each type of training session so 
new employees can receive training in a timely manner.113
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    \113\ If videos are utilized for compliance training, the OIG 
suggests that a hospice make an individual available to field 
questions from video trainees. In addition, those hospices that use 
video training should strongly consider requiring trainees to 
complete post training comprehension tests to ensure that trainees 
actively paid attention to the video.
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    The OIG recommends that attendance and participation in training 
programs be made a condition of continued employment and that failure 
to comply with training requirements should result in disciplinary 
action, including possible termination, when such failure is serious. 
Adherence to the provisions of the compliance program, such as training 
requirements, should be a factor in the annual evaluation of each 
employee. The hospice should retain adequate records of its training of 
employees, including attendance logs and material distributed at 
training sessions.

D. Developing Effective Lines of Communication

1. Access to the Compliance Officer
    An open line of communication between the compliance officer and 
hospice employees is equally important to the successful implementation 
of a compliance program and the reduction of any potential for fraud, 
abuse, and waste. Written confidentiality and non-retaliation policies 
should be developed and distributed to all employees to encourage 
communication and the reporting of incidents of potential 
fraud.114 The compliance committee should also develop 
independent reporting paths for an employee to report fraud, waste, or 
abuse so that employees can feel comfortable reporting outside the 
normal chain of command and supervisors or other personnel cannot 
divert such reports.115
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    \114\ The OIG believes that whistleblowers should be protected 
against retaliation, a concept embodied in the provisions of the 
False Claims Act. See 31 U.S.C. 3730(h). In many cases, employees 
sue their employers under the False Claims Act's qui tam provisions 
out of frustration because of the company's failure to take action 
when a questionable, fraudulent, or abusive situation was brought to 
the attention of senior corporate officials.
    \115\ Hospices can also consider rewarding employees for 
appropriate use of established reporting systems.
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    The OIG encourages the establishment of a procedure so that hospice 
personnel may seek clarification from the compliance officer or members 
of the compliance committee in the event of any confusion or question 
with regard to a hospice policy, practice, or procedure. Questions and 
responses should be documented and dated and, if appropriate, shared 
with other staff so that standards, policies, practices, and procedures 
can be updated and improved to reflect any necessary changes or 
clarifications. The compliance officer may want to solicit employee 
input in developing these communication and reporting systems.
2. Hotlines and Other Forms of Communication
    The OIG encourages the use of hotlines,116 e-mails, 
written memoranda, newsletters, suggestion boxes, and other forms of 
information exchange to maintain these open lines of 
communication.117 If the hospice establishes a hotline, the 
telephone number should be made readily available to all employees and 
independent contractors, possibly by circulating the number on wallet 
cards or conspicuously posting the telephone number in common work 
areas.118 Employees should be permitted to report matters on 
an anonymous basis. Matters reported through the hotline or other 
communication sources that suggest substantial violations of compliance 
policies, Federal health care program requirements, regulations, or 
statutes should be documented and investigated promptly to determine 
their veracity. A log should be maintained by the compliance officer 
that records such calls, including the nature of any investigation and 
its results.119 Such

[[Page 39163]]

information should be included in reports to the governing body, the 
CEO, and compliance committee.120 Further, while the hospice 
should always strive to maintain the confidentiality of an employee's 
identity, it should also explicitly communicate that there may be a 
point where the individual's identity may become known or may have to 
be revealed in certain instances.
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    \116\ The OIG recognizes that it may not be financially feasible 
for a smaller hospice to maintain a telephone hotline dedicated to 
receiving calls about compliance issues. These companies may want to 
explore alternative methods, e.g., outsourcing the hotline or 
establishing a written method of confidential disclosure.
    \117\ In addition to methods of communication used by current 
employees, an effective employee exit interview program could be 
designed to solicit information from departing employees regarding 
potential misconduct and suspected violations of hospice policy and 
procedures.
    \118\ Hospices should also post in a prominent, available area 
the HHS-OIG Hotline telephone number, 1-800-447-8477 (1-800-HHS-
TIPS), in addition to any company hotline number that may be posted.
    \119\ To efficiently and accurately fulfill such an obligation, 
the hospice should create an intake form for all compliance issues 
identified through reporting mechanisms. The form could include 
information concerning the date that the potential problem was 
reported, the internal investigative methods utilized, the results 
of the investigation, the corrective action implemented, the 
disciplinary measures imposed, and any identified overpayments and 
monies returned.
    \120\ Information obtained over the hotline may provide valuable 
insight into management practices and operations, whether reported 
problems are actual or perceived.
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    The OIG recognizes that assertions of fraud and abuse by employees 
who may have participated in illegal conduct or committed other 
malfeasance raise numerous complex legal and management issues that 
should be examined on a case-by-case basis. The compliance officer 
should work closely with legal counsel, who can provide guidance 
regarding such issues.
    The OIG recognizes that protecting anonymity may be infeasible for 
small hospices. However, the OIG believes all hospice employees, when 
seeking answers to questions or reporting potential instances of fraud 
and abuse, should know to whom to turn to for attention and should be 
able to do so without fear of retribution.

E. Auditing and Monitoring

    An ongoing evaluation process is critical to a successful 
compliance program. The OIG believes that an effective program should 
incorporate thorough monitoring of its implementation and regular 
reporting to senior hospice or corporate officers.121 
Compliance reports created by this ongoing monitoring, including 
reports of suspected noncompliance, should be maintained by the 
compliance officer and shared with the hospice's senior management and 
the compliance committee. The extent and frequency of the audit 
function may vary depending on factors such as the size and available 
resources, prior history of noncompliance, and the risk factors that a 
particular hospice confronts.
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    \121\ Even when a hospice or group of hospices is owned by a 
larger corporate entity, the regular auditing and monitoring of the 
compliance activities of an individual hospice must be a key feature 
in any annual review. Appropriate reports on audit findings should 
be periodically provided and explained to a parent organization's 
senior staff and officers.
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    Although many monitoring techniques are available, one effective 
tool to promote and ensure compliance is the performance of regular, 
periodic compliance audits by internal or external auditors who have 
expertise in Federal and State health care statutes, regulations, and 
Federal health care program requirements. The audits should focus on 
the hospice's programs or divisions, including external relationships 
with third-party contractors, specifically those with substantive 
exposure to Government enforcement actions. At a minimum, these audits 
should be designed to address the hospice's compliance with laws 
governing kickback arrangements, claim development and submission, 
reimbursement, eligibility, and marketing. The audits and reviews 
should inquire into the hospice's compliance with the Medicare 
conditions of participation and the specific rules and policies that 
have been the focus of particular attention on the part of the Medicare 
fiscal intermediaries or carriers, and law enforcement, as evidenced by 
educational and other communications from OIG Special Fraud Alerts, OIG 
audits and evaluations, and law enforcement's 
initiatives.122 In addition, the hospice should focus on any 
areas of concern that are specific to the individual hospice and have 
been identified by any entity, whether Federal, State, or internal.
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    \122\ See also section II.A.2.
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    Monitoring techniques may include sampling protocols that permit 
the compliance officer to identify and review variations from an 
established baseline.123 Significant variations from the 
baseline should trigger a reasonable inquiry to determine the cause of 
the deviation. If the inquiry determines that the deviation occurred 
for legitimate, explainable reasons, the compliance officer and hospice 
management may want to limit any corrective action or take no action. 
If it is determined that the deviation was caused by improper 
procedures, misunderstanding of rules, including fraud and systemic 
problems, the hospice should take prompt steps to correct the problem. 
Any overpayments discovered as a result of such deviations should be 
returned promptly to the affected payor, with appropriate documentation 
and a sufficiently detailed explanation of the reason for the 
refund.124
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    \123\ The OIG recommends that when a compliance program is 
established in a hospice, the compliance officer, with the 
assistance of department managers, should take a ``snapshot'' of 
their operations from a compliance perspective. This assessment can 
be undertaken by outside consultants, law or accounting firms, or 
internal staff, with authoritative knowledge of health care 
compliance requirements. This ``snapshot,'' often used as part of 
benchmarking analyses, becomes a baseline for the compliance officer 
and other managers to judge the hospice's progress in reducing or 
eliminating potential areas of vulnerability.
    \124\ In addition, when appropriate, as referenced in section 
G.2, below, reports of fraud or systemic problems should also be 
made to the appropriate governmental authority.
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    An effective compliance program should also incorporate periodic 
(at least annual) reviews of whether the program's compliance elements 
have been satisfied, e.g., whether there has been appropriate 
dissemination of the program's standards, training, ongoing educational 
programs, and disciplinary actions, among other elements.125 
This process will verify actual conformance by all departments with the 
compliance program and may identify the necessity for improvements to 
be made to the compliance program, as well as the hospice's operations. 
Such reviews could support a determination that appropriate records 
have been created and maintained to document the implementation of an 
effective program.126 However, when monitoring discloses 
that deviations were not detected in a timely manner due to program 
deficiencies, proper modifications must be implemented. Such 
evaluations, when developed with the support of management, can help 
ensure compliance with the hospice's policies and procedures.
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    \125\ One way to assess the knowledge, awareness, and 
perceptions of the hospice's employees is through the use of a 
validated survey instrument (e.g., employees questionnaires, 
interviews, of focus groups).
    \126\ Such records should include, but not be limited to, logs 
of hotline calls, logs of training attendees, training agenda 
materials, and summaries of corrective action taken and improvements 
made to hospice policies as a result of compliance activities.
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    As part of the review process, the compliance officer or reviewers 
should consider techniques such as:
     Visits and interviews of patients at their residences;
     Analysis of utilization patterns;
     Testing clinical and hospice admission staff on their 
knowledge of reimbursement coverage criteria (e.g., present 
hypothetical scenarios of situations experienced in daily practice and 
assess responses);
     Assessment of existing relationships with physicians, 
nursing homes,127 hospitals, and other potential referral 
sources;
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    \127\ See section II.A.3.e.
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     Unannounced mock audits and investigations;
     Reevaluation of deficiencies cited in past surveys for 
Medicare conditions of participation;
     Examination of hospice complaint logs;

[[Page 39164]]

     Checking personnel records to determine whether any 
individuals who have been reprimanded for compliance issues in the past 
are among those currently engaged in improper conduct;
     Questionnaires developed to solicit impressions of a broad 
cross-section of the hospice's employees and staff;
     Evaluation of the timeliness of physician referrals and 
physician signatures for hospice certifications;
     Reviews of clinical documentation (e.g., terminal illness 
certification, plan of care, nursing notes, etc.), financial records, 
and other source documents that support claims for reimbursement;
     Validation of qualifications of hospice physicians and 
other hospice staff, including verification of applicable state license 
renewals;
     Evaluation of written materials and documentation 
outlining the hospice's policies and procedures; and
     Trend analyses, or longitudinal studies, that uncover 
deviations, positive or negative, in specific areas over a given 
period.
    The reviewers should:
     Have the qualifications and experience necessary to 
adequately identify potential issues with the subject matter that is 
reviewed;
     Be objective and independent of line management to the 
extent reasonably possible; 128
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    \28\ The OIG recognizes the hospices that ar small in size and 
have limited resources may not be able to use internal reviewers who 
are not part of line management or hire outside reviewers.
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     Have access to existing audit and health care resources, 
relevant personnel, and all relevant areas of operation;
     Present written evaluative reports on compliance 
activities to the CEO, governing body, and members of the compliance 
committee on a regular basis, but no less often than annually; and
     Specifically identify areas where corrective actions are 
needed.
    Just as a hospice is required by its conditions of participation to 
conduct ``an ongoing, comprehensive, integrated, self-assessment of the 
quality and appropriateness of care provided,'' 129 the OIG 
believes that a hospice should monitor its compliance with the Federal 
health care program requirements in the same fashion. Furthermore, just 
as a hospice is required by its conditions of participation to use its 
quality assurance findings to correct identified problems and revise 
hospice policies if necessary to improve patient care, 130 
the OIG believes that a hospice's management should take whatever steps 
are necessary to correct identified compliance problems and prevent 
them from recurring. In certain cases, subsequent reviews or studies 
would be advisable to ensure that the recommended corrective actions 
have been implemented successfully.
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    \129\ 42 CFR 418.66.
    \130\ Id.
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    While conducting its monitoring and auditing efforts, as well as 
its daily operations, a hospice should document its efforts to comply 
with applicable statutes, regulations, and Federal health care program 
requirements. For example, where a hospice, in its efforts to comply 
with a particular statute, regulation or program requirement, requests 
advice from a Government agency (including a Medicare fiscal 
intermediary or carrier) charged with administering a Federal health 
care program, the hospice should document and retain a record of the 
request and any written or oral response. This step is extremely 
important if the hospice intends to rely on that response to guide it 
in future decisions, actions, or claim reimbursement requests or 
appeals. A log of oral inquiries between the hospice and third parties 
will help the organization document its attempts at compliance. In 
addition, the hospice agency should maintain records relevant to the 
issue of whether its reliance was ``reasonable'' and whether it 
exercised due diligence in developing procedures and practices to 
implement the advice.
    The extent of a hospice's audit should depend on the hospice's 
identified risk areas and resources. If the hospice comes under 
Government scrutiny in the future, the Government will assess whether 
or not the hospice developed a comprehensive audit based upon 
identified risk areas and resources. If the Government determines the 
hospice failed to develop an adequate audit program, given its 
resources, the Government will be less likely to afford the hospice 
favorable treatment under the Federal Sentencing Guidelines.

F. Enforcing Standards Through Well-Publicized Disciplinary Guidelines

1. Discipline Policy and Actions
    An effective compliance program should include guidance regarding 
disciplinary action for corporate officers, managers, employees, and 
other health care professionals who have failed to comply with the 
hospice's standards of conduct, policies and procedures, Federal health 
care program requirements, or Federal and State laws, or those who have 
otherwise engaged in wrongdoing, which have the potential to impair the 
hospice's status as a reliable, honest, and trustworthy health care 
provider.
    The OIG believes that the compliance program should include a 
written policy statement setting forth the degrees of disciplinary 
actions that may be imposed upon corporate officers, managers, 
employees, physicians, and other health care professionals for failing 
to comply with the hospice's standards and policies and applicable 
statutes and regulations. Intentional or reckless noncompliance should 
subject transgressors to significant sanctions. Such sanctions could 
range from oral warnings to suspension, termination, or financial 
penalties, as appropriate. Each situation must be considered on a case-
by-case basis to determine the appropriate sanction. The written 
standards of conduct should elaborate on the procedures for handling 
disciplinary problems and those who will be responsible for taking 
appropriate action. Some disciplinary actions can be handled by 
department or agency managers, while others may have to be resolved by 
a senior hospice administrator. Disciplinary action may be appropriate 
where a responsible employee's failure to detect a violation is 
attributable to his or her negligence or reckless conduct. Personnel 
should be advised by the hospice that disciplinary action will be taken 
on a fair and equitable basis. Managers and supervisors should be made 
aware that they have a responsibility to discipline employees in an 
appropriate and consistent manner.
    It is vital to publish and disseminate the range of disciplinary 
standards for improper conduct and to educate officers and other 
hospice employees regarding these standards. The consequences of 
noncompliance should be consistently applied and enforced, in order for 
the disciplinary policy to have the required deterrent effect. All 
levels of employees should be potentially subject to the same types of 
disciplinary action for the commission of similar offenses. The 
commitment to compliance applies to all personnel levels within a 
hospice. The OIG believes that corporate officers, managers, 
supervisors, clinical staff, and other health care professionals should 
be held accountable for failing to comply with, or for the foreseeable 
failure of their subordinates to adhere to, the applicable standards, 
laws, and procedures.
2. New Employee Policy
    For all new employees who have discretionary authority to make 
decisions that may involve compliance with the law or compliance 
oversight, hospices should conduct a reasonable and prudent background 
investigation,

[[Page 39165]]

including a reference check,131 as part of every such 
employment application. The application should specifically require the 
applicant to disclose any criminal conviction,132 as defined 
by 42 U.S.C. 1320a-7(i), or exclusion action. Pursuant to the 
compliance program, hospice policies should prohibit the employment of 
individuals who have been recently convicted of a criminal offense 
related to health care 133 or who are listed as debarred, 
excluded, or otherwise ineligible for participation in Federal health 
care programs.134 In addition, pending the resolution of any 
criminal charges or proposed debarment or exclusion, the OIG recommends 
that an individual who is the subject of such actions should be removed 
from direct responsibility for or involvement in any Federal health 
care program. That individual's salary should not be paid in whole or 
part, directly or indirectly, by Federal health care programs or 
otherwise with Federal funds. 135 With regard to current 
employees or independent contractors, if resolution of the matter 
results in conviction, debarment, or exclusion, the hospice should 
terminate its employment or other contract arrangement with the 
individual or contractor.
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    \131\ See note 99.
    \132\ States may mandate, and many hospices voluntarily conduct, 
criminal background checks for prospective employees of hospices. 
Identification of a criminal background of an applicant, who may 
have been recently convicted of serious crimes that relate to the 
proposed employment duties, could be grounds for denying employment. 
Further, criminal background screening may deter those individuals 
with criminal intent from entering the field of hospice.
    \133\ Because providers of hospice care have frequent, 
relatively unsupervised access to potentially vulnerable people and 
their property, a hospice should also strictly scrutinize whether it 
should employ individuals who have been convicted of crimes of 
neglect, violence, or financial misconduct.
    \134\ Likewise, hospice compliance programs should establish 
standards prohibiting the execution of contracts with companies that 
have been recently convicted of a criminal offense related to health 
care or that are listed by a Federal agency as debarred, excluded, 
or otherwise ineligible for participation in Federal health care 
programs. See note 99.
    \135\ Prospective employees who have been officially reinstated 
into the Medicare and Medicaid programs by the OIG may be considered 
for employment upon proof of such reinstatement.
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G. Responding to Detected Offenses and Developing Corrective Action 
Initiatives

1. Violations and Investigations
    Violations of a hospice's compliance program, failures to comply 
with applicable Federal or State law, and other types of misconduct 
threaten a hospice's status as a reliable, honest and trustworthy 
provider capable of participating in Federal health care programs. 
Detected but uncorrected misconduct can seriously endanger the mission, 
reputation, and legal status of the hospice. Consequently, upon reports 
or reasonable indications of suspected noncompliance, it is important 
that the compliance officer or other management officials immediately 
investigate the conduct in question to determine whether a material 
violation of applicable law or the requirements of the compliance 
program has occurred, and if so, take decisive steps to correct the 
problem. 136 As appropriate, such steps may include an 
immediate referral to criminal and/or civil law enforcement 
authorities, a corrective action plan, 137 a report to the 
Government, 138 and the return of any overpayments, if 
applicable.
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    \136\ Instances of noncompliance must be determined on a case-
by-case basis. The existence, or amount, of a monetary loss to a 
health care program is not solely determinative of whether or not 
the conduct should be investigated and reported to governmental 
authorities. In fact, there may be instances where there is no 
readily identifiable monetary loss at all, but corrective action and 
reporting are still necessary to protect the integrity of the 
applicable program and its beneficiaries, e.g., where services 
required by a plan of care were not provided.
    \137\ Advice from the hospice's in-house counsel or an outside 
law firm may be sought to determine the extent of the hospice's 
liability and to plan the appropriate course of action.
    \138\ The OIG currently maintains a provider self-disclosure 
protocol that encourages providers to report suspected fraud. The 
concept of voluntary self-disclosure is premised on a recognition 
that the Government alone cannot protect the integrity of the 
Medicare and other Federal health care programs. Health care 
providers must be willing to police themselves, correct underlying 
problems, and work with the Government to resolve these matters. The 
self-disclosure protocol can be located on the OIG's website at: 
http://www.os.dhhs.gov/oig.
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    Where potential fraud or False Claims Act liability is not 
involved, the OIG recommends that normal repayment channels should be 
used for returning overpayments to the Government as they are 
discovered. However, even if the overpayment detection and return 
process is working and is being monitored by the hospice's audit or 
billing divisions, the OIG still believes that the compliance officer 
needs to be made aware of these overpayments, violations, or deviations 
that may reveal trends or patterns indicative of a systemic problem.
    Depending upon the nature of the alleged violations, an internal 
investigation will probably include interviews and a review of relevant 
documents. Some hospices should consider engaging outside counsel, 
auditors, or health care experts to assist in an investigation. Records 
of the investigation should contain documentation of the alleged 
violation, a description of the investigative process (including the 
objectivity of the investigators and methodologies utilized), copies of 
interview notes and key documents, a log of the witnesses interviewed 
and the documents reviewed, the results of the investigation, e.g., any 
disciplinary action taken, and the corrective action implemented. While 
any action taken as the result of an investigation will necessarily 
vary depending upon the hospice and the situation, hospices should 
strive for some consistency by utilizing sound practices and 
disciplinary protocols. 139 Further, after a reasonable 
period, the compliance officer should review the circumstances that 
formed the basis for the investigation to determine whether similar 
problems have been uncovered or modifications of the compliance program 
are necessary to prevent and detect other inappropriate conduct or 
violations.
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    \139\ The parameters of a claim review subject to an internal 
investigation will depend on the circumstances surrounding the 
issues(s) identified. By limiting the scope of an internal audit to 
current billing, a hospice may fail to discover major problems and 
deficiencies in operations, as well as be subject to certain 
liability.
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    If an investigation of an alleged violation is undertaken and the 
compliance officer believes the integrity of the investigation may be 
at stake because of the presence of employees under investigation, 
those subjects should be removed from their current work activity until 
the investigation is completed (unless an internal or Government-led 
undercover operation known to the hospice is in effect). In addition, 
the compliance officer should take appropriate steps to secure or 
prevent the destruction of documents or other evidence relevant to the 
investigation. If the hospice determines that disciplinary action is 
warranted, it should be prompt and imposed in accordance with the 
hospice's written standards of disciplinary action.
2. Reporting
    If the compliance officer, compliance committee, or management 
official discovers credible evidence of misconduct from any source and, 
after a reasonable inquiry, has reason to believe that the misconduct 
may violate criminal, civil, or administrative law, then the hospice 
should promptly report the existence of misconduct to the appropriate 
Federal and State authorities 140 within a reasonable

[[Page 39166]]

period, but not more than sixty (60) days 141 after 
determining that there is credible evidence of a violation. 
142 Prompt reporting will demonstrate the hospice's good 
faith and willingness to work with governmental authorities to correct 
and remedy the problem. In addition, reporting such conduct will be 
considered a mitigating factor by the OIG in determining administrative 
sanctions (e.g., penalties, assessments, and exclusion), if the 
reporting provider becomes the target of an OIG 
investigation.143
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    \140\ Appropriate Federal and State authorities include the 
Office of Inspector General of the Department of Health and Human 
Services, the Criminal and Civil Divisions of the Department of 
Justice, the U.S. Attorney in relevant districts, and the other 
investigative arms for the agencies administering the affected 
Federal or State health care programs, such as the State Medicaid 
Fraud Control Unit, the Defense Criminal Investigative Service, the 
Department of Veterans Affairs, and the Office of Personnel 
Management (which administers the Federal Employee Health Benefits 
Program).
    \141\ In contrast, to qualify for the ``not less than double 
damages'' provision of the False Claims Act, the report must be 
provided to the Government within thirty (30) days after the date 
when the hospice first obtained the information. 31 U.S.C. 3729(a).
    \142\ The OIG believes that some violations may be so serious 
that they warrant immediate notification to governmental 
authorities, prior to, or simultaneous with, commencing an internal 
investigation, e.g., if the conduct: (1) is a clear violation of 
criminal law; (2) has a significant adverse effect on the quality of 
care provided to program beneficiaries (in addition to any other 
legal obligations regarding quality of care); or (3) indicates 
evidence of a systemic failure to comply with applicable laws or an 
existing corporate integrity agreement, regardless of the financial 
impact on Federal health care programs.
    \143\ The OIG has published criteria setting forth those factors 
that the OIG takes into consideration in determining whether it is 
appropriate to exclude a health care provider from program 
participation pursuant to 42 U.S.C. 1320a-7(b)(7) for violations of 
various fraud and abuse laws. See 62 FR 67392 (December 24, 1997).
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    When reporting misconduct to the Government, a hospice should 
provide all evidence relevant to the alleged violation of applicable 
Federal or State law(s) and potential cost impact. The compliance 
officer, under advice of counsel, and with guidance from the 
governmental authorities, could be requested to continue to investigate 
the reported violation. Once the investigation is completed, the 
compliance officer should be required to notify the appropriate 
governmental authority of the outcome of the investigation, including a 
description of the impact of the alleged violation on the operation of 
the applicable health care programs or their beneficiaries. If the 
investigation ultimately reveals that criminal, civil, or 
administrative violations have occurred, the appropriate Federal and 
State authorities 144 should be notified immediately.
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    \144\ See note 140.
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    As previously stated, the hospice should take appropriate 
corrective action, including prompt identification of any overpayment 
to the affected payor and the imposition of proper disciplinary action. 
If potential fraud or violations of the False Claims Act are involved, 
any repayment of the overpayment should be made as part of the 
discussion with the Government following a report of the matter to law 
enforcement authorities. Otherwise, normal repayment channels should be 
used for repaying identified overpayments. 145 Failure to 
disclose overpayments within a reasonable period of time could be 
interpreted as an intentional attempt to conceal the overpayment from 
the Government, thereby establishing an independent basis for a 
criminal violation with respect to the hospice, as well as any 
individuals who may have been involved. 146 For this reason, 
hospice compliance programs should emphasize that overpayments obtained 
from Medicare or other Federal health care programs should be promptly 
disclosed and returned to the payor that made the erroneous payment.
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    \145\ A hospice should consult with its Medicare fiscal 
intermediary or HCFA for any further guidance regarding normal 
repayment channels. The hospice's Medicare fiscal intermediary or 
HCFA may require certain information (e.g., alleged violation or 
issue causing overpayment, description of the internal investigative 
process with methodologies used to determine any overpayments, 
disciplinary actions taken, and corrective actions taken, etc.) to 
be submitted with return of any overpayments, and that such 
repayment information be submitted to a specific department or 
individual. Interest will be assessed, when appropriate. See 42 CFR 
405.376.
    \146\ See 42 U.S.C. 1320a-7b(a)(3).
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    The OIG believes all hospices, regardless of size, should ensure 
they are reporting the results of any overpayments or violations to the 
appropriate entity and taking the appropriate corrective action to 
remedy the identified deficiency.

III. Assessing the Effectiveness of a Compliance Program

    Because the Government views the existence of a compliance program 
as a mitigating factor when determining culpability regarding 
allegations of fraud and abuse only if the compliance program is 
``effective,'' how a hospice may assess its compliance program becomes 
quite significant. A hospice, as well as any other type of health care 
provider, should consider the attributes of each individual element of 
its compliance program to assess the program's ``effectiveness'' as a 
whole. Examining the comprehensiveness of policies and procedures 
implemented to satisfy these elements is merely the first step. 
Evaluating how a compliance program performs during a provider's day-
to-day operations becomes the critical indicator. 147
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    \147\ Evaluation may be accomplished through techniques such as 
employee surveys, management assessments, and periodic review of 
benchmarks established for audits, investigations, disciplinary 
action, overpayments, and employee feedback. All elements of an 
organization's compliance program can be evaluated, including 
policies, training, practices, and compliance personnel.
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    As previously stated, a compliance program should require the 
development and distribution of written compliance policies, standards, 
and practices that identify specific areas of risk and vulnerability to 
a hospice. One way to judge whether these policies, standards, and 
practices measure up is to observe how an organization's employees 
react to them. Do employees consistently experience recurring pitfalls 
because they lack guidance on certain issues not adequately covered in 
company policies? Are employees flagrantly disobeying an organization's 
standards of conduct because they observe no sincere buy-in from senior 
management? Do employees have trouble understanding policies and 
procedures because they are written in legalese or at difficult reading 
levels? Does an organization routinely experience systematic billing 
failures because employees are ill-instructed how to implement written 
policies and practices? Written compliance policies, standards, and 
practices are only as good as an organization's commitment to apply 
them in practice.
    Every hospice should designate a compliance officer or contact to 
serve as the focal point of compliance activities, and, if appropriate, 
a compliance committee to advise and assist the compliance officer. An 
organization needs to seriously consider whoever fills such integral 
roles and periodically monitor how the individuals chosen satisfy their 
responsibilities. Does a compliance officer have sufficient 
professional experience working with billing, clinical records, 
documentation, and auditing principles to perform assigned 
responsibilities fully? Has a compliance officer or compliance 
committee been negligent in ensuring an organization's compliance due 
to inadequate funding, staff, and authority necessary to carry out 
their jobs? Did adding the compliance officer function to a key 
management position with other significant duties compromise the goals 
of the compliance program (e.g., chief financial officer who discounts 
certain overpayments identified to improve the company's bottom line 
profits)? Since a compliance officer and

[[Page 39167]]

a compliance committee can potentially have a significant impact on how 
effectively a compliance program is implemented, those functions should 
not be taken for granted.
    As evidenced throughout this guidance, the proper education and 
training of corporate officers, managers, health care professionals, 
and other applicable employees of a provider, and the continual 
retraining of current personnel at all levels, are significant elements 
of an effective compliance program. Accordingly, such efforts should be 
routinely evaluated. Are employees trained frequently enough? Do 
employees fail post-training tests that evaluate knowledge of 
compliance? Do training sessions and materials adequately summarize 
important aspects of the organization's compliance program, such as 
fraud and abuse laws, Federal health care program requirements, and 
claim development and submission processes? Are training instructors 
qualified to present the subject matter and experienced enough to duly 
field questions? When thorough compliance training is periodically 
conducted, employees receive the reinforcement they need to ensure an 
effective compliance program.
    An open line of communication between the compliance officer and a 
provider's employees is equally important to the success of a 
compliance program. In today's intensive regulatory environment, the 
OIG believes that a provider cannot possibly have an effective 
compliance program if it receives minimal or no feedback from its 
employees regarding compliance matters. For instance, if a compliance 
officer does not receive appropriate inquiries from employees: Do 
policies and procedures fail to adequately guide employees to whom and 
when they should be communicating compliance matters? Do employees fear 
retaliation if they report misconduct? Are employees reporting issues 
not related to compliance through the wrong channels? Do employees have 
bad-faith, ulterior motives for reporting? Regardless of the means that 
a provider employs, whether it be telephone hotline, email, or 
suggestion boxes, employees should seek clarification from compliance 
staff in the event of any confusion or question dealing with compliance 
policies, practices, or procedures.
    An effective compliance program should include guidance regarding 
disciplinary action for corporate officers, managers, health care 
professionals, and other employees who have failed to adhere to an 
organization's standards of conduct, Federal health care program 
requirements, or Federal or State laws. The number and caliber of 
disciplinary actions taken by an organization can be insightful. Have 
appropriate sanctions been applied to compliance misconduct? Are 
sanctions applied to all employees consistently, regardless of an 
employee's level in the corporate hierarchy? Have double-standards in 
discipline bred cynicism among employees? When disciplinary action is 
not taken seriously or applied haphazardly, such practices reflect 
poorly on senior management's commitment to foster compliance as well 
as the effectiveness of an organization's compliance program in 
general.
    Another critical component of a successful compliance program is an 
ongoing monitoring and auditing process. The extent and frequency of 
the audit function may vary depending on factors such as the size and 
available resources, prior history of noncompliance, and risk factors 
of a particular hospice. The hallmark of effective monitoring and 
auditing efforts is how an organization determines the parameters of 
its reviews. Do audits focus on all pertinent departments of an 
organization? Does an audit cover compliance with all applicable laws 
and Federal health care program requirements? Are results of past 
audits, pre-established baselines, or prior deficiencies reevaluated? 
Are the elements of the compliance program monitored? Are auditing 
techniques valid and conducted by objective reviewers? The extent and 
sincerity of an organization's efforts to confirm its compliance often 
proves to be a revealing determinant of a compliance program's 
effectiveness.
    As was expressed in the last section of this guidance, it is 
essential that the compliance officer or other management officials 
immediately investigate reports or reasonable indications of suspected 
noncompliance. If a material violation of applicable law or compliance 
program requirements has occurred, a provider must take decisive steps 
to correct the problem. Providers who do not thoroughly investigate 
misconduct leave themselves open to undiscovered fraud, waste, and 
abuse. When a provider learns of certain issues, does it knowingly 
disregard associated legal exposure? Is there a consistent and 
methodical approach to the correlation between compliance issues 
identified and the corrective action necessary to remedy? Are isolated 
overpayment matters properly resolved through normal repayment 
channels? Is credible evidence of misconduct that may violate criminal, 
civil, or administrative law promptly reported to the appropriate 
Federal and State authorities? If any step in this process of 
responding to detected offenses is circumvented or improperly handled, 
such conduct would most likely demonstrate an ineffective compliance 
program, as well as potentially result in criminal, civil, or 
administrative liability.
    Documentation is the key to demonstrating the effectiveness of a 
provider's compliance program. For example, documentation of the 
following should be maintained: audit results; logs of hotline calls 
and their resolution; corrective actions plans; due diligence efforts 
regarding business transactions; records of employee training, 
including the number of training hours; disciplinary action; and 
modification and distribution of policies and procedures. Given that 
the OIG is encouraging self-disclosure of overpayments and billing 
irregularities, maintaining a record of disclosures and refunds to the 
health care programs is strongly endorsed. A documented practice of 
refunding of overpayments and self-disclosing incidents of non-
compliance with Federal health care program requirements can serve as 
evidence of a meaningful compliance effort by a hospice.
    Hospices, as well as all health care providers, should acknowledge 
that it is their responsibility to formulate policies, procedures, and 
practices that are tailored to their own operations, and that are 
comprehensive enough to ensure compliance with all applicable Federal 
health care program requirements. An organization is in the best 
position to validate the suitability of its compliance efforts based 
upon its own particular circumstances.

IV. Conclusion

    Through this document, the OIG has attempted to provide a 
foundation to the process necessary to develop an effective and cost-
efficient hospice compliance program. As previously stated, however, 
each program must be tailored to fit the needs and resources of an 
individual hospice, depending upon its particular corporate structure, 
mission, and employee composition. The statutes, regulations, and 
guidelines of the Federal and State health insurance programs, as well 
as the policies and procedures of the private health plans, should be 
integrated into every hospice's compliance program.
    The OIG recognizes that the health care industry in this country, 
which reaches millions of beneficiaries and expends about a trillion 
dollars annually, is constantly evolving. The

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time is right for hospices to implement a strong voluntary health care 
compliance program. As stated throughout this guidance, compliance is a 
dynamic process that helps to ensure that hospices and other health 
care providers are better able to fulfill their commitment to ethical 
behavior, as well as meet the changes and challenges being imposed upon 
them by Congress and private insurers. Ultimately, it is OIG's hope 
that a voluntarily created compliance program will enable hospices to 
meet their goals, improve the quality of patient care, and 
substantially reduce fraud, waste, and abuse, as well as the cost of 
health care to Federal, State, and private health insurers.

    Dated: July 14, 1999.
June Gibbs Brown,
Inspector General.
[FR Doc. 99-18590 Filed 7-20-99; 8:45 am]
BILLING CODE: 4150-04-P