GAO denies compliance programs cut fraud
GAO denies compliance programs cut fraud
Hospitals struggle to get a handle on the direct and indirect costs of compliance, study finds
Based on a survey of 25 hospitals, researchers at the General Accounting Office (GAO) have concluded there’s no evidence to suggest that compliance programs have helped to cut the incidence of Medicare fraud.
In its report, the agency did qualify its conclusion by pointing out that Medicare providers generally aren’t required to report on these programs and even if they were there is no generally-accepted definition of what constitutes such a program. Even so, the Health and Human Services Office of the Inspector General (OIG) responded critically to the GAO’s findings, claiming that compliance plans have "significantly advanced" corporate compliance with federal health care requirements.
As evidence, OIG cited a drop in improper Medicare payments from $23.2 billion in 1996 to $12.6 billion in 1998. The agency conceded that there is no "empirical evidence" that ties this decline to the growing number of compliance programs but argued it is "a significant contributing factor."
"We do believe that compliance plans are an appropriate tool to use," says OIG spokeswoman Judy Holtz. "That’s why we’re devoting so much time and energy into developing them for all of the various health care entities."
Congress recently asked the agency to answer three questions about these programs: How prevalent are they? How much do they cost? And how effective are they?
There’s no question that compliance plans are becoming standard in the industry. Indeed, a recent survey by the Chicago-based American Hospital Association shows 96% of all hospitals either have a plan in place or one in the works. And roughly 2,000 hospitals have agreed to implement certain compliance procedures to settle billing disputes under the False Claims Act, according to the GAO.
Only five of the 25 hospitals examined by the GAO had fully implemented their compliance program. But most of the hospitals also reported that they felt compelled to implement "more extensive compliance procedures" than those that are required by the Federal government.
In the study, the ability of hospitals to gauge the costs of these programs varied dramatically. In fact, 60% of the hospitals surveyed do not yet budget for compliance activities and most reported some difficulty distinguishing between direct and indirect costs. One direct cost many hospitals pointed to was annual salaries. But that figure ranged from $15,000 (10% of an executive’s annual salary at a mid-sized hospital) to $2.5 million (four attorneys and staff at a large hospital system). The direct cost most frequently cited was audits. And that figure ranged from $17,000 to $3.8 million a year.
Evidence about the effectiveness of compliance programs was equally tough to come by, according to the GAO. The most direct measure of success is the prevention of improper Medicare payments. But lack of baseline data makes this difficult. Instead, the agency says the OIG will continue to rely on a variety of indirect measures such as refunds of provider-identified overpayments and self-disclosures as measures of success.
But even data for those two measures are anecdotal at best, according to the GAO. And if compliance programs are truly effective in preventing misconduct, the use of these measures will decrease over time rather than increase. In addition, the GAO reported that most of the hospitals surveyed do not view formal disclosure as a viable option.
According to the GAO, the "major intangible indicator" cited by hospitals is "an increased corporate awareness" of compliance. This awareness is reflected by frequent calls to compliance staff and hotlines for guidance. Likewise, almost all of the hospitals surveyed told the GAO they believe these programs will reduce their liability under fraud and abuse statutes.
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