Mandatory Healthcare Compliance and Ethics Programs

REUTERS/Christian Hartmann

Under section 6102 of the Affordable Care Act, on March 23, 2013, skilled nursing facilities (SNFs) and nursing facilities (NFs) are required to have “in operation” compliance and ethics programs that are effective in preventing and detecting criminal, civil and administrative violations.

The ACA identifies eight required elements for compliance and ethics programs.  They must:

  • Establish compliance standards and procedures to be followed by employees and agents;
  • Designate “high-level personnel” to oversee compliance and give them sufficient resources and authority to assure compliance;
  • Avoid giving discretionary authority to individuals the organization knows or should know have a “propensity to engage in criminal, civil, and administrative violations”;
  • Provide effective communication of the standards and procedures to all employees and agents;
  • Establish monitoring and auditing systems as well as reporting systems that include anti-retaliation protections for employees who report suspected offenses;
  • Consistently enforce standards through disciplinary action;
  • If an offense is detected, report the offense and take steps to prevent further similar offenses; and
  • Undertake periodic reviews of the compliance program to identify necessary changes. 

Although the ACA required the Department of Health and Human Services (HHS) to promulgate regulations for the SNF/NF compliance and ethics programs by March 23, 2012, HHS has not released these regulations.

However, that does not relieve SNFs and NFs from complying with the requirements of section 6102.

Additionally, section 6401 of the ACA requires healthcare providers and suppliers participating in federal healthcare programs – including Medicare, Medicaid and the Children’s Health Insurance Program (CHIP) — to establish compliance and ethics programs that contain certain “core elements” as a condition of participation.

Although the ACA required HHS to promulgate rules providing guidance for providers and suppliers under section 6401, so far, HHS has not defined these “core elements” or established a timeline for this requirement either.

However, even though HHS has yet to define the core elements or issue its overdue guidance for SNFs and NFs, all providers and suppliers can look to earlier compliance guidance from the Office of Inspector General (OIG) for insight.

For nearly 15 years, the OIG has been encouraging Medicare and Medicaid providers to adopt voluntary compliance programs and has issued compliance guidance to 11 healthcare sectors, including:

  • Nursing Facilities;
  • Hospitals;
  • Hospices;
  • Durable Medical Equipment, Prosthetics, Orthotics, and Supply (DMEPOS) businesses;
  • Third-Party Medical Billers; and
  • Home Healthcare.

Generally, the core and required elements follow the seven steps of the federal Sentencing Guidelines at §8B2.1, which sets out what will be considered an effective compliance and ethics program for sentencing purposes.  A compliance program that meets the requirements of the Sentencing Guidelines can result in a reduced criminal sentence.

Although many providers and suppliers have developed compliance and ethics programs, many others do not have programs at all, have programs that fall short of the ACA requirements or fail to follow through on their program requirements.

Every provider or supplier that accepts Medicare, Medicaid or CHIP should have a compliance and ethics program – certainly every SNF or NF must have one – in place now.