Explorers sailed around the known world to determine whether it was flat.
Scientists in laboratories test new theories with empirical evidence every day.
But how does one objectively measure the effectiveness of an intangible concept like healthcare compliance?
The CMS is about to try. Last week it announced the creation of a pilot program to answer a question hospital boards frequently ask: Do compliance programs work? The 18-month study of 10 to 12 hospital compliance programs aims to assess their effectiveness and gather best-practices data to share nationally with other hospitals and healthcare organizations. On May 19, CMS Administrator Mark McClellan said in a news release that the CMS would seek hospital volunteers from 13 Eastern and Southeastern states and Washington to participate in the program.
"We intend to get the maximum compliance possible by hospitals in preventing waste, fraud and abuse," McClellan said. "Most hospitals want to comply, and our goal is to help as broad a range as possible of hospitals implement successful compliance practices. We will encourage applications from rural hospitals, as well as large medical centers in urban centers, and from hospitals with either basic or advanced compliance programs."
Kimberly Brandt, the CMS' acting director of program integrity, said improving compliance and compliance programs has been a priority under both former CMS Administrator Tom Scully and McClellan.
"They wanted to know what hospitals are doing right to help them get claims paid accurately and efficiently," Brandt explained. "And if those effective programs exist, how can we incentivize hospitals to spread those practices? Ultimately the goal is to reward providers for doing the right thing."
According to the CMS, about 5.8% of Medicare claims, or $11.6 billion, was improperly paid in the fiscal year ended Sept. 30, 2003; that amount includes fraud and payment errors.
Fraud reform efforts
Healthcare compliance programs grew out of fraud reform efforts in the defense industry in the mid-1980s. The voluntary programs received a boost when the U.S. Sentencing Commission set up guidelines for organizations that developed compliance programs to qualify for sentencing leniency in criminal cases.
When June Gibbs Brown, former Defense Department inspector general, was named HHS' inspector general, that agency stepped up its efforts to encourage compliance in healthcare. The trend took off after there were several large fraud settlements in the early 1990s, including ones by National Health Laboratories and one by National Medical Enterprises. But to date, there has been little study of what constitutes an effective compliance program.
CMS Health Insurance Specialist Lisa Eggleston, the program's project manager, said it's been long known that some compliance programs work better than others.
"We wanted to get to the bottom of that," Eggleston said. "And also we wanted to see how to boost the use of compliance programs among other types of healthcare providers and see how they can realize the benefits."
To qualify for the program, Brandt said, hospital revenue must account for at least 30% of an institution's total revenue, one-quarter of which must be derived from Medicare. The demonstration project is limited to hospitals and academic medical centers with more than 100 beds and compliance programs at least a year old in Connecticut, Delaware, the District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia and West Virginia. Hospitals must express an interest in applying for the program by June 25. After a two-month application review process, the selected hospitals will begin the program in September with a projected completion report and recommendations expected in late 2006.
The 3,200-member Health Care Compliance Association will contact members to solicit volunteers.
Brandt said CMS staff from three regional offices will work on the project with its contractors, the HHS' inspector general and hospital compliance officers to craft indicators to measure compliance effectiveness. She said the team would focus on auditing, monitoring, education, training and corrective measures for resolving problems. The CMS will gather data and pay site visits to the hospitals at the beginning and end of the pilot project. While there are no financial incentives, the CMS will share enhanced claims data with participating hospitals in a report card format, information not currently available to them that shows how they stack up against competitors and other providers in different regions.
"It will give them a road map of where potential problems are and how to correct them from a compliance perspective," she said. "We think it will show them where to prioritize their compliance efforts and provide an invaluable benefit. We also think the participating hospitals will learn from each other in colloquial exchanges and have a chance to share and adopt improvements."
What happens if a hospital agrees to participate and the CMS finds real problems?
Eggleston said it's unlikely that the data the CMS peruses would detect that level of problem. "But if we do, it will still be treated like any other kind of administrative audit," she said. Brandt said the applications and screening process would likely weed out problem compliance programs early. "We want providers with good programs and that's why we intend to be selective upfront," she said.
Brandt said there was not any political motivation behind the timing of the pilot program announcement just months before a presidential election. "Absolutely not," she said. "CMS has been trying to get this off the ground for almost a year spanning two administrators now. There's no political agenda here at all."
Lewis Morris, chief counsel to HHS' inspector general and a compliance evangelist for nearly a decade, said his office played a technical, advisory role in forming the pilot program.
"We're not taking an active role but will be available as a sounding board on a number of integrity and compliance issues," Morris said. "We at CMS and the inspector general's office share a common interest with the compliance industry in developing ways to measure compliance effectiveness."
A shot in the arm
Compliance officers are viewing the pilot as a shot in the arm for their mission. Roy Snell, a former corporate compliance officer at the University of Wisconsin Medical Foundation and now the chief executive officer of the Health Care Compliance Association, said the effectiveness study has been discussed for years. "It's an ongoing effort to establish best practices and learn and share more specifically what works," Snell said. "It's pretty obvious that compliance is better than nothing, because `nothing' is producing big settlements. ... But the burning question is which components of compliance programs are the most effective, what are the essential elements? Finding that out is like finding the holy grail of compliance."
Lori Pelliccioni, chief compliance officer and legal counsel for dialysis provider DaVita, said most providers need more guidance.
"And there's been very little out there to address the effectiveness of compliance programs, although the inspector general's guidance has been helpful," said Pelliccioni, who conducted her doctoral dissertation in 2001 on compliance program effectiveness and was a member of the CMS-sponsored industry task force that launched the new pilot project.
"I think the effectiveness study will be a living, breathing exercise that will test and retest theories and from which we will continue to learn over time," she said.
Pelliccioni said she could not explain or defend fraud or improper payment problems that arise in a few organizations operating compliance programs or working within corporate integrity agreements.
"There will always be cases like that," she said. "The zero-tolerance goal of the inspector general is laudable, but I think it's unrealistic. Things can and will always go wrong; these are complex organizations."
Lisa Murtha, a lawyer with the Philadelphia office of consulting firm Parente Randolph, said she was asked to sit on the pilot program's steering committee because of her years as a compliance officer for the University of Pennsylvania Health System, Pennsylvania Blue Shield and the Children's Hospital of Philadelphia. She said the committee of about 12 people met three times from September to December 2003 and included attorneys, CMS contractors, hospital compliance officers, and CMS and HHS staff.
By identifying best practices, she said, hospitals and other healthcare organizations can focus their energy and resources in areas of proven worth and avoid spending on components of questionable value.
Murtha noted that the existence of a compliance program alone doesn't inoculate organizations against fraud.
At least one compliance officer is embracing the pilot program with cautious enthusiasm. Michael Hemsley, general counsel and vice president of corporate compliance for Newtown Square, Pa.-based Catholic Health East, said it will be up to the system's 25 hospitals to decide whether they want to apply for the pilot program. "We're leaving it up to their boards and management teams," Hemsley said. "Right now we need to know more information about the project, but participating doesn't pose an immediate concern to me."
Maureen Mudron, Washington counsel for the American Hospital Association, said hospitals have been engaged in compliance for years. "We're at the beginning stage of this demonstration project and we're very interested in seeing what the CMS is trying to accomplish," Mudron said. "We're hoping to sit and talk with the agency to see what this means."
Hospital compliance officers interested in participating can contact the CMS at [email protected]
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