Steps to a Practical Program for Your POL
Dr. Sheila Dunn
with Permission from Washington G-2 Reports, Physician Office Testing
today's federal enforcement climate, compliance is the "hot"
topic for all laboratories doing business with Medicare/Medicaid. Key
elements of a compliance program were unveiled earlier this year in
a model plan from the HHS Office of Inspector General (POT, Mar.
'97, p. 1). The model highlights at least a dozen potentially fraudulent
practices which expose a lab to stiff penalties and possible exclusion
effective compliance program, the government emphasizes, should be customized
to each lab. But the OIG's model is based on probes of independent labs
which operate apart from the ordering physician. Physician office labs
(POLs) and other point-of-care testing labs, however, are in direct
contact with the ordering physician, who often personally specifies
which tests to perform. To complicate matters, the ordering physician
may even own or direct the lab.
how extensive should your POL compliance plan be? Are all components
of the OIG's model needed? Which are overkill? This article examines
which components make sense for the unique circumstances of point-of-care
Your POL's Risk
Sam expects any lab compliance program to have written policies and
procedures. This also makes good business sense for managing all lab
issues, especially methods of billing and pricing. Regardless of whether
the Feds ever get involved, it's prudent to standardize, for risk management
and efficiency purposes, billing practices for both lab and non-lab
extensive your written compliance plan becomes will depend on your calculated
risk (Figure 1).
1: Designate Chief Compliance Officer
This individual not only helps develop compliance policies, but also
administers and enforces them. In a POL, the most likely candidate is
the lab director. But this depends on how involved he/she is. If minimally,
then another person, like the practice administrator, is probably more
2: Write Compliance Policies
Start with a simple mission statement that includes your commitment
to compliance. Emphasize your "zero tolerance" for fraud and
abuse. Encourage employees to report potential problems, and specify
how they can do so in confidence and without fear of retribution. Spell
out how you will follow-up to investigate a complaint and resolve any
down how lab tests are ordered and billed, with attention to these issues:
necessity: Stipulate that only medically necessary tests are
ordered and billed to Medicare, that ordering physicians assign
ICD-9 diagnosis codes which accurately reflect the patient's condition,
and that lab personnel are forbidden to substitute codes from previous
dates of service (except under verified standing orders) or from
requisitions: Include a copy of all these forms. Specify which
tests are included in panels/profiles and the Medicare payment for
code review: State how often CPT and HCPCS procedure codes are
verified for accuracy. Make code review part of your quality assurance
pricing: Indicate that tests are priced to reflect the cost
of performing them and that none are provided free (or at or below
cost) as a professional courtesy to referring doctors. Include a
copy of your price list showing that the maximum discounted charge
for any test is above that test's cost. Also, state that you don't
bill for calculations or for tests ordered but not performed. Finally,
explain how your practice bills for tests performed by reference
panels/profiles: Show that your POL gives ordering physicians
the option of selecting panel/profile tests individually. If tests
are added to panels, the panel price must increase to reflect the
additions, and the overall price must never be below cost.
orders: Get these in writing and confirm them every six months
at a minimum.
3: Make Compliance Part of the Job
Compliance should be part of your written code of conduct for all employees,
along with disciplinary action that will be taken, appropriate to the
violation. There should be no doubt that adherence to compliance is
a condition of being employed and promoted. State this clearly in job
descriptions, reiterate it in performance reviews. Have a form employees
can sign, attesting that they will adhere to your POL's compliance code.
4: Train Employees
POLs in small, low-risk facilities should, at a minimum, discuss the
compliance program at staff meetings and be sure all employees know
how to identify and report compliance problems. Larger facilities may
require more comprehensive classroom-type sessions. For new hires, compliance
training should be part of orientation; for all staff, it should be
conducted periodically during the year, but especially when major changes
occur (billing codes are updated; Medicare revises lab payment policies;
new laws impact lab operations, etc.)
the training provided. This can be done via minutes of the meetings,
attendance rosters, and having employees sign a form attesting that
they have participated.
5: Conduct a Compliance Audit
checklist like the one in Figure 2 is a good format
for documenting your compliance review. Alternatively, these items may
be incorporated in your routine quality assurance procedures.
your POL accepts specimens on referral, provide clients with annual
written notices that state your Medicare medical necessity policies,
the individual components of every test profile (including CPT codes
and Medicare fee caps), how you bill Medicare for each profile, and
the availability of a clinical consultant to assist in ordering tests.
Ask referring physicians to return a signed copy of the notice acknowledging
they received it.
light of CPT and Medicare changes coming next year, now is an ideal
time to do a compliance audit. Include from Figure 2 audit suggestions
that apply to your POL. Some can be inserted in your current monthly
quality assurance activities, but some are more appropriately performed
2. Sample Audit Checklist Items
(Return To Text)
Yes, No, or Not Applicable. If you answer "No" to any item,
explain how the problem was investigated and corrected.
Advance beneficiary notices were appropriate and used correctly (check
a representative #).
Denied claims were submitted properly (check # denied because of incorrect
coding/billing or on medical
No increases occurred in lab claim denials (check with billing department
for any trend of increasing denials:
# checked_____; #,
Billing errors were discussed with appropriate staff.
Tests ordered but not performed were not billed (check "Specimen
Rejection Log" against actual claims).
No lab tests were double-billed (check sample of claims to verify).
All standing orders were confirmed in writing within the last 6 months.
OIG fraud notices were included in the compliance manual and retained
for at least 5 years.
OIG fraud notices were communicated to applicable employees.
All current employees have documented compliance training.
(#) lab chargemasters/superbills/test requisitions:
Tests priced correctly
Correct CPT codes assigned
Each test in a panel accurately identified
Individual ordering of tests available
ICD-9 codes included
(#) patient charts:
Tests ordered were relevant to the patient's condition
Tests ordered were necessary for patient care
Results are documented for all tests ordered
Caregiver acted appropriately on the lab test results
All tests were coded, billed properly
No business relationships include inducements in return for Medicare/Medicaid
tests (see Figure 3)
Any reported compliance issue has been investigated and remedied; written
evidence of this is kept for at
least 5 years.