Government red tape has laid out a new red carpet of opportunity in healthcare, and everyone is reaping the riches.
Providers have used what they consider confusing billing rules to maximize reimbursements. Now the government is using those same rules to nail providers for fraud. And legions of lawyers, consultants and accountants are pulling in the big bucks helping providers stay on the right side of government regulations.
It's about playing by the rules. In the lingo of business and government, that's called compliance, a fancy word for something most people learn in childhood.
Compliance is the trendiest buzzword in healthcare today, and it's creating lucrative business opportunities for some.
The market is booming with people and products offering advice, and some of them have six-figure price tags.
"Every Tom, Dick and Harry that can put this together is putting this together," says attorney Gregory Miller, a partner at Miller, Alfano & Raspanti in Philadelphia.
But like other services, when the demand for them explodes, pitfalls are inherent. Some say healthcare providers are in panic-buying mode and are willing to latch on to anything peddled as compliance.
"There is a potential for snake oil to be sold," says Dick Clarke, president of the Westchester, Ill.-based Healthcare Financial Management Association, which represents more than 35,000 healthcare finance executives. "They're almost willing to spend anything that is asked of them."
Government spark. The government's unprecedented attention to halting healthcare fraud is behind this compliance frenzy.
Driving the point deeper are recent news clippings and photographs of federal agents hauling away documents from Columbia/HCA Healthcare Corp. facilities.
Healthcare fraud is called the crime of the '90s, and agencies at all levels of government are tapped to stomp it out. The public, too, is clamoring for a tighter rein because of estimates that more than $100 billion annually is lost to healthcare fraud, waste and abuse.
New legislation gives federal regulators a beefed-up arsenal of anti-fraud weapons, and HHS' inspector general has unleashed audits at slews of hospitals to ferret out false claims. Teaching hospitals and faculty practice plans are under the microscope, as are clinical laboratories. Hospitals are under scrutiny in the "72-hour window investigation," which looks at billings for outpatient diagnostic tests. Under Medicare billing rules, tests done within 72 hours of an admission are considered part of an inpatient stay and reimbursed under the hospital's DRG payment. But hospitals have billed separately for these tests, resulting in double payments.
The FBI, too, is involved, and its healthcare fraud investigations have increased by more than 500% in five years.
The government already has recovered hundreds of millions of dollars in fines and settlements, and that is bolstering resolve to keep the industry under the gun.
Although criticized by some for overzealous investigations, the government isn't backing down.
Incentives. But forewarned is forearmed, and HHS' inspector general's office has told providers they might receive leniency in investigations if they have effective compliance programs in place.
The agency also has required providers to install compliance programs when they wish to settle fraud charges with the government. In recent years, big-ticket settlements involving the former National Medical Enterprises and the University of Pennsylvania have been wake-up calls to the industry.
This has left some providers scurrying, lest they be slapped with whopping fines, possible imprisonment or the financial deathblow-exclusion from federal healthcare programs.
A recent survey by the Englewood, Colo.-based Medical Group Management Association found only 10% of 348 groups had developed compliance plans for Medicare regulations covering teaching physicians or fraud and abuse.
All this means the cup runneth over for people who make a living helping providers follow the rules.
For 18 years, Bill Tillett has been a partner with Ernst & Young, working in the national accounting firm's healthcare practice.
But last year the company launched a new service line to help healthcare firms build corporatewide compliance programs, and Tillett was tapped to head the nationwide effort from Atlanta.
So far, Ernst & Young has trained 130 employees-with 15 more recruits on the way-to help clients build these individual programs.
Tillett says Ernst & Young got into the compliance business because the changing regulatory environment created an opportunity that couldn't be missed.
"That's the way we make our money," he says. "We said this is something our clients are going to have to deal with."
Association action. Professional associations aren't missing the chance to launch new products, either, when their members are under fire. For example:
Through a for-profit subsidiary, Insurance Resource, the American Hospital Association is developing a line of videos and other teaching tools, including a World Wide Web site and telephone help line.
Last year the HFMA put out a $495 training kit to help hospital financial managers stay on the right side of Medicare billing rules.
The MGMA has two November seminars planned (it costs $525 to attend both), and a $50 video packet comes complete with a handout on creating an effective billing compliance plan.
Richard Wade, the AHA's senior vice president for communications, says the association isn't cashing in on the misery of its members. Instead, it's offering low-cost alternatives to pricey advice from consultants.
"There were some folks out there trying to sell our members six-figure compliance systems," Wade says. "Our members were frightened. There's nothing worse that can happen to a community hospital from the public's perception than to be accused of fraud."
Wade says the AHA's compliance kit will be a subscription service. While a price isn't set yet, "we don't want to price any of our members away from this," he adds.
A survey last year of some AHA members showed they wanted help from the association in tackling compliance, Wade says.
Providers these days can't afford not to have a program, says Scott Becker, a Chicago healthcare attorney with Ross & Hardies. If they don't, the government is sure to take notice.
"The inference is going to be that you've been reckless," Becker says.
Spelling it out. The government is responding to the industry's pleas for help in developing satisfactory compliance programs.
HHS' inspector general's office spelled out some of what an effective program entails in a model plan it released earlier this year for clinical laboratories. A similar model for hospitals is due out soon, and the inspector general's office is working with healthcare leaders, such as the AHA, to draft it. MODERN HEALTHCARE recently obtained a draft of the report (Sept. 22, p. 2).
"The model suggests that the lumps you take will be much smaller than the lumps you will take if you don't have a program in place or (if you have) a sham program," says Fredric Entin, general counsel for the AHA.
Compliance programs encompass policies and procedures that companies should have in place to make sure they are following all the applicable rules, regulations and laws.
Grousing by providers, who claim the billing rules are too confusing, isn't acceptable, says Eileen Boyd, HHS' deputy inspector general for the office of enforcement and compliance.
"This is a very nice, convenient excuse sometimes for people who get caught with their hands in the cookie jar," she says.
The latest thing. Compliance has replaced quality as the issue of the moment in healthcare.
Like compliance is doing now, total quality management created lucrative business opportunities in the early 1990s, when consultants flocked to the field.
The defense industry witnessed a similar boom in compliance programs more than a decade ago. It's no coincidence that before becoming HHS' inspector general in 1993, June Gibbs Brown was inspector general at the Department of Defense from 1987 to 1989.
Mark Pastin, president of the Council of Ethical Organizations, says compliance programs are Brown's modus operandi: She wants people to govern themselves but is tough on them when they don't.
Compliance programs are being driven into the healthcare industry much like they were in defense: The government smelled fraud and cracked down.
"The need for compliance programs in healthcare is considerably stronger than it was in the defense industry . . . because the idea that the government tentacles could reach out and make order isn't sensible," Pastin says. His not-for-profit Council of Ethical Organizations, based in Alexandria, Va., has about 100 corporate members active in compliance, half of them in a healthcare subsidiary.
A soon-to-be released survey by a healthcare subsidiary of the council found 31% of larger providers had compliance programs in place.
While compliance can be big-ticket work for lawyers, jumping on the bandwagon is a double-edged sword. The bad part comes when an attorney signs off on a compliance program but the client gets in trouble anyway.
"Then, you have to check your malpractice policy," attorney Becker says.
Expensive item. Compliance isn't cheap, and that's why many providers have gone without, until now.
"Businesspeople don't engage in activities like compliance plans unless they feel there's a significant need for them because they view them as costly and not directly adding to the bottom line," says Joel Stocker, an attorney with Greenberg Traurig in Miami.
Costs for compliance programs vary widely depending on an organization's size and location.
Estimates range from a few thousand dollars to build a compliance program at a small hospital to more than $100,000 at a large one and well into six figures, or more, for a large integrated delivery system. No one knows how much the industry as a whole is spending.
One estimate is it costs about $30 per employee per year to keep a compliance program going.
For Santa Barbara, Calif.-based Tenet Healthcare Corp., running expansive compliance and ethics programs is a multimillion-dollar endeavor. The nation's second-largest hospital chain estimates conservatively that it spends $3.6 million annually on its compliance and ethics programs, although that figure doesn't include expenses incurred by other departments in support of the programs.
Tenet's corporate integrity programs date back to its former life as NME.
The predecessor company unveiled an employee ethics program in 1993 after it was hit with federal and state investigations into its psychiatric operations. In 1994 the federal government made NME's compliance programs mandatory as part of a record $379 million settlement of criminal and civil charges stemming from its psychiatric operations.
As part of a total corporate overhaul, NME changed its name to Tenet in 1995 after acquiring the Dallas-based, investor-owned hospital chain American Medical International.
Since the run-in with the government, Tenet's integrity programs have grown and evolved far beyond what was required, company officials say.
"People have suggested that Jeff Barbakow (Tenet's chairman and chief executive officer) should drop us down into a subsidiary and spin us off," jokes Christi Sulzbach, Tenet's compliance officer and associate general counsel.
No small thing. Compliance is more than just following billing rules.
Former HHS Inspector General Richard Kusserow says compliance should be business as usual for an entire organization and cover all facets, including personnel matters, tax issues, medical waste and occupational safety.
Putting in piecemeal compliance programs isn't good enough.
"I submit that's stupid," Kusserow says. "You're spending a lot of money putting out fires."
Kusserow says he got into the compliance business by default.
After retiring from the government in 1992, Kusserow joined Alexandria-based Strategic Management Systems to do financial management consulting in the healthcare industry. But an increasing number of companies, including the embattled former NME, sought his advice on corporate compliance. Not long after he entered private practice, Kusserow was hired as a consultant to help NME develop its ethics program and restore its tarnished image.
Kusserow's former government job has given him a mighty advantage in today's market.
"People really see value in somebody who can understand the minds of the regulators and who can understand what their concerns are," says Kusserow, who became president of Strategic Management Systems in 1995.
Career opportunities. As compliance programs become more commonplace, new jobs have emerged within healthcare companies: compliance officers.
That's someone who rides herd over an organization to make sure it stays within the lines. Salaries for these new corporate officers can range from $50,000 to $200,000, says Lori Walters, administrator of the Alexandria-based American Compliance Institute. The new not-for-profit startup aims to help compliance officers and others in the field keep abreast of the topic.
No figures are available on the number of hospital and health system compliance officers, but industry experts estimate that about 5% of hospitals now have such officers. Demand is growing for people to fill these positions, and head-hunting agencies are on the prowl.
For two years, Roy Snell has been the compliance officer at the Madison-based University of Wisconsin Medical Foundation, a 600-physician group of the University of Wisconsin Medical School.
The physician group has about 40 people, primarily billing coders, dedicated to ensuring it follows the government's regulations.
For example, billing coders in the group practice are each assigned to handle specific specialties. That way, they master the intricate rules of billing for specific procedures, such as cardiac care.
"There's something to be said for getting it right and getting it right the first time," Snell says.
Various associations and newsletters are springing up to help people get a handle on this latest rage.
Besides Snell's work at the group practice, he is president of the Health Care Compliance Association, a new group formed earlier this year. So far, it has about 230 members, including compliance officers, lawyers, billing coders, administrators and physicians.
Besides educating its members, one of its major functions is "to provide a forum for understanding the complicated environment we find ourselves working in."
Shop around. Boyd of HHS' inspector general's office says providers should work with well-known organizations when they look for help in developing compliance programs. She also suggests smaller providers use their professional associations as resources to get information on compliance.
But when you're seeking help with a compliance program, Boyd offers this nugget of advice: caveat emptor, let the buyer beware.
"If you buy something and spend a lot of money for it, and it has all the bells and whistles on it and you put it on the shelf . . . then you're in worse trouble than if you had nothing," she says.