POL Medicare Compliance:
Five Steps To A Practical Program For Your POL
by Dr. Sheila Dunn
Reprinted with Permission from Washington G-2 Reports,
Physician Office Testing November 1997
In 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 from Medicare/Medicaid.
An 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.
So, 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 testing labs.
Rating Your POL's Risk
Uncle 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 procedures.
How extensive your written compliance
plan becomes will depend on your calculated risk (Figure
Step 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 suitable.
Step 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 problems.
Write down how lab tests are ordered and billed, with
attention to these issues:
- Medical 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 "cheat sheets."
- Test requisitions: Include
a copy of all these forms. Specify which tests are included in panels/profiles
and the Medicare payment for these tests.
- CPT code review: State how
often CPT and HCPCS procedure codes are verified for accuracy. Make code
review part of your quality assurance program.
- Test 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 labs.
- Chemistry 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
- Standing orders: Get these
in writing and confirm them every six months at a minimum.
Step 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.
Step 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,
Document 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.
Step 5: Conduct A Compliance Audit
A 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.
If 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.
In 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
Figure 2. Sample Audit Checklist
(Return To Text)
Mark 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 necessity grounds).
_____ No increases occurred in lab claim denials (check
with billing department for any trend of increasing denials: # checked_____;
#, % denied_____).
_____ 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
_____ All current employees have documented compliance
Examine (#) 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
Examine (#) 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.