Why should a hospital voluntarily invite federal investigators into its offices to peruse its dirty laundry?
That's the question Alice Polley, vice president of clinical services for Sturdy Memorial Hospital in Attleboro, Mass., was asked last year by her hospital's chief financial officer when she recommended that Sturdy participate in the first healthcare compliance-program effectiveness study piloted by the CMS.
"We didn't have any dirty laundry and had nothing to hide," said Polley, who told her bosses that the CMS staffers weren't there to audit the hospital, but to interview executives and department heads and gather information for the CMS study.
To convince doubters at Sturdy Memorial, Polley said she asked as many questions as she answered. "How do I know if I'm doing a good job without any standard compliance-program measures?" she asked. "I had lots of consultants trying to take our money to find out how good we are. But when CMS expressed an interest in actually trying to figure it out, of course I wanted to be a part of it. My CFO asked, `Are you kidding?' But my CEO was quickly willing."
As a result of the project, the CMS has suggested a few general areas of improvement for hospitals, with contractor compliance and identity theft identified as two potential weak spots. The CMS also will soon release some preliminary results, and in the spring of 2006, it will produce a final report.
As part of the release of preliminary results, the CMS will name the 16 hospitals in 11 health systems in six states participating in the pilot, which in and of itself was a benefit for at least one of the hospitals involved. "I've already learned more from talking with other participants than from CMS, just because we've all compared notes on how we do things," Polley said, though she eagerly awaits the final report from the CMS due next year.
Ralph Traylor, compliance officer at the University of Virginia Health System in Charlottesville, Va., said his system saw the pilot as a chance to improve its compliance program. "It was really helpful for us to learn their (the CMS') process and for them to learn more about the programs they're evaluating. So far it's been the only official process evaluating the effectiveness of hospital compliance programs, and we're able to use that information to develop our own program." The 18-month pilot program explored whether compliance programs work and aims to offer some "lessons learned" guidance for hospitals. The study was announced in May 2004 after CMS Administrator Mark McClellan publicly sought volunteers from hospitals in 13 eastern and southeastern states. More than 80 hospitals inquired about the program, and about 20 actually applied.
The CMS hopes to correlate compliance- program goals and functions with verifiable results, such as overall hospital denial and error rates. As an incentive for participating, hospitals will receive enhanced claims data from Medicare contractors. That allows them previously unavailable access to report card data that could inform them of potential problems and vulnerabilities.
The project results come as fraud was on the downswing, at least by the CMS' calculations. On Nov. 10, the CMS released its annual payment error rate study estimating that fraud, abuse and errors in Medicare fee-for-service bills dropped to 5.2% of billings, or $12.1 billion, in fiscal 2005, which ended Sept. 30, from 10.1%, or $21.7 billion, in fiscal 2004.
CMS Health Insurance Specialist Lisa Eggleston, the pilot program's project manager, said CMS staff began the site visits in November 2004 and continued through March 2005. Eggleston said all of the hospitals are not-for-profit operations in Northeast and central Atlantic states.
Eggleston said the CMS found no billing discrepancies or reportable events, while she conceded that the CMS was working with a group of 16 hospital compliance programs that volunteered for the study. "The people who volunteered may have done so because they thought they had a good program, but mostly because they were open and willing to learn."
One area worth examining concerns contracting, she said. Eggleston said while all of the hospitals regularly consulted the HHS' inspector general's list of providers excluded from Medicare and Medicaid, she found some did not also check to see if any of their contractors had been excluded under the General Services Administration listing. "Anecdotally, we've heard this may be a trend in the hospital industry. Some folks don't know it's (the GSA list) there or know it, but haven't been checking it."
She said the CMS also would advise hospitals to address the growing potential for identity theft. The CMS has also suggested hospitals exert human oversight over computerized data entry and billing systems. "There are many good software programs, but you need real people watching to validate the data," Eggleston said. Caroline Rader, a corporate compliance officer with the Anne Arundel Medical Center in Annapolis, Md., said the CMS and the hospitals had differing interpretations of compliance functions. She said one CMS staffer had an unrealistic idea of what compliance officers do. "He thought we monitored compliance with every single policy and procedure in the hospital. But let's get real," she said, "I'm a one-person shop."
Rader said one of her biggest challenges is demonstrating the value of compliance programs to the board and administration. "I get asked all the time: `Why commit resources to something that isn't bringing in revenue?' One of the things we learned was how to develop a database to track trends, hotline calls and occasions when we offer advice or guidance to staff. And that's something we can measure. When you can show people the value of the program, it's much better. "