Responding to Detected Offenses

The following is an excerpt from the Human & Health Services – Guidelines for 3rd Part Medical Billing Companies


Program Guidance for Third Party Medical Billing Companies
1. Introduction
A. Benefits of a Compliance Program
B. Application of Compliance Program Guidance
II. Compliance Program Elements
A. Written Policies and Procedures – Part I | Part II
B. Designation of a Compliance Officer and a Compliance Committee
C. Conducting Effective Training and Education
D. Developing Effective Lines of Communication
E. Enforcing Standards Through Well-Publicized Disciplinary Guidelines
F. Auditing and Monitoring
G. Responding to Detected Offenses and Developing Corrective Action Initiatives
III. Conclusion

G. Responding to Detected Offenses & Developing Corrective Action Initiatives

1. Violations and Investigations
Violations of the billing company’s compliance program, failures to comply with applicable Federal or State law, rules and program instructions and other types of misconduct threaten a billing company’s status as a reliable, honest and trustworthy company. Detected but uncorrected misconduct can seriously endanger the mission, reputation and legal status of the billing company. Consequently, upon reports or reasonable indications of suspected noncompliance, it is important that the chief compliance officer or other management officials promptly investigate the conduct in question to determine whether a material violation of applicable law, rule or program instruction or the requirements of the compliance program has occurred, and if so, take steps to correct the problem.93 As appropriate, such steps may include an immediate referral to criminal and/or civil law enforcement authorities, a corrective action plan,94 a report to the Government,95 and the notification to the provider of any discrepancies or overpayments, if applicable.

Even if the overpayment detection and return process is working and is being monitored by the billing company’s audit or coding divisions, the OIG still believes that the compliance officer needs to be made aware of these significant 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 billing companies 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 any corrective action implemented. Although any action taken as the result of an investigation will necessarily vary depending upon the billing company and the situation, billing companies should strive for some consistency by utilizing sound practices and disciplinary protocols.96 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.

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 billing company 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 billing company determines disciplinary action is warranted, it should be prompt and imposed in accordance with the billing company’s written standards of disciplinary action.

2. Reporting

a. Obligations Based on Billing Company Misconduct
If the compliance officer, compliance committee or a management official discovers credible evidence of misconduct by the billing company from any source and, after reasonable inquiry, has reason to believe that the misconduct may violate criminal, civil or administrative law,97 then the billing company should report the existence of misconduct promptly to the appropriate Government authority 98 within a reasonable period, but not more than sixty (60) days after determining that there is credible evidence of a violation.

Prompt reporting will demonstrate the billing company’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 company becomes the target of an OIG investigation.99

b. Obligations Based on Provider Misconduct
Billing companies are in a unique position to discover various types of fraud, waste, abuse and mistakes on the part of the provider for which they furnish services. This unique access to information may place the billing company in a precarious position. On the one hand, the billing company’s allegiance is to the provider client. On the other, the billing company maintains a commitment to compliance with the applicable Federal and State laws, and the program requirements of Federal, State and private health plans. The OIG recognizes the importance of maintaining a positive and interactive communication between billing companies and the providers they service. It is with this understanding that the OIG has addressed the issue of obligations on the part of third-party medical billing companies with regard to provider misconduct.

If the billing company finds evidence of misconduct 100 (e.g., inaccurate claim submission) on the part of the provider that they service, the billing company should refrain from the submission of questionable claims and notify the provider in writing within thirty (30) days of such a determination. This notification should include all claim specific information and the rationale for such a determination.

If the billing company discovers credible evidence of the provider’s continued misconduct or flagrant fraudulent or abusive conduct,101 the billing company should: (1) Refrain from submitting any false or inappropriate claims; (2) terminate the contract; and/or (3) report the misconduct to the appropriate Federal and State authorities within a reasonable time, but not more than sixty (60) days after determining that there is credible evidence of a violation.

c. Reporting Procedure
When reporting misconduct to the Government, a billing company should provide all evidence relevant to the alleged violation of applicable Federal or State law(s) and the potential cost impact. The compliance officer, 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 criminal, civil or administrative violations have occurred, the appropriate Federal and State officials 102 should be notified immediately.

3. Corrective Actions
Billing companies play a critical role in the restitution of overpayments to appropriate payors.103 As previously stated, billing companies should take appropriate corrective action, including prompt identification of any overpayment to the provider and the affected payer and the imposition of proper disciplinary action, if applicable. Failure to notify authorities of an overpayment 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 billing company, as well as any individuals who may have been involved.104 For this reason, billing company compliance programs should ensure that overpayments are identified quickly and encourage their providers to promptly return overpayments obtained from Medicare or other Federal health care programs.105