Physical Therapists and Compliance Programs: Do You Need One?

Physical therapists are among the targets of the federal government’s enforcement scrutiny within the healthcare sector. But does that mean that they’re mandated to maintain compliance programs?

MacBook laptop on a table with a notepad and cup of coffee.

The Affordable Care Act of 2010 gave the Secretary of the U.S. Department of Health and Human Services (HHS) authority to require certain healthcare providers to have a compliance program as a condition of participating in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). Although the HHS Secretary has not yet mandated compliance programs for physical therapists (PT), PTs are still well advised to incorporate a compliance program into their practice.

Across the healthcare spectrum, compliance is a necessary cost of doing business. One need look no further than the U.S. Department of Justice’s (DOJ) recent announcement of its 2018 False Claims Act recoveries to confirm this. Of the more than $2.8 billion that the DOJ recouped in settlements and judgments from civil cases involving fraud and false claims against the federal government in the fiscal year ending September 30, 2018, $2.5 billion – nearly 90% – involved the health care industry alone.

Physical therapists (PTs) are among the targets of the federal government’s enforcement scrutiny within the healthcare sector. Consider, for example, the case from 2018 of the CEO of Team Work Ready, a physical therapy clinic in Texas, whom the DOJ accused of heading a scheme to defraud more than $18 million from the government for PT services never provided to injured federal workers. Following a jury conviction of healthcare fraud and several other offenses, the court ordered the CEO to serve nearly 20 years in prison and pay $14.5 million in restitution. In another case from 2018, the DOJ obtained a $1.5 million settlement from Scripps Health to resolve claims that the San Diego-based health system billed Medicare and TRICARE for PT services provided by therapists without billing privileges and without appropriate supervision by a physician. 

How can a law-abiding PT practice avoid becoming the subject of stories like these? A good place to start is with a compliance program. In this post, we walk through some of the common questions you might have as you consider how to build a compliance program into your PT practice.    

What is a compliance program?

For healthcare providers, a compliance program is a dedicated initiative to ensure compliance with the myriad laws and regulations that govern the healthcare industry, particularly those intended to prevent and detect fraud, waste, and abuse in government-funded programs, such as Medicare and Medicaid. A compliance program is the sum of many parts, including a written compliance plan, compliance-related policies and procedures, and compliance-focused education and training. If implemented properly, a compliance program is the embodiment of a culture of legal and ethical conduct within a practice. In the event of an audit, investigation, or litigation, moreover, a compliance program can serve as evidence of a practice’s “good faith” attempts to comply with the law and potentially mitigate one’s exposure to liability.

Are physical therapists legally required to maintain a compliance program?

The Affordable Care Act of 2010 authorized the HHS Secretary to mandate, as a condition of participation in Medicare, Medicaid, and CHIP, that healthcare providers within a particular industry sector or category have a compliance program (see 42 U.S.C. § 1395cc(j)(9)). In September of 2010, the Centers for Medicare and Medicaid (CMS) within HHS published a proposed rule wherein it requested comments from industry about mandatory compliance programs. In February of 2011, CMS issued a final rule in which it acknowledged receiving “numerous comments” in response to its prior request for feedback. But rather than respond to the comments, CMS indicated the comments would be “considered for further rulemaking on compliance plan requirements.”

Since then, CMS has not released any compliance program requirements specific to PTs. Thus, for the time being, PTs are not required by federal law to maintain a compliance program.

Depending on the state, however, PTs may still be subject to compliance program requirements under state law. Likewise, some private insurers may require that PTs demonstrate what their practices are doing to ensure compliance as a condition of being credentialed or re-credentialed for that particular insurance.

Even if not required, should physical therapists have a compliance program?

Generally, yes. Even if not legally required, having a compliance program is a best practice in much of the healthcare sector. To the extent a compliance program can deter and discover improper conduct, it can foster an environment of trust and accountability, protect against the risks of liability, and limit disruptions in a PT practice’s billings and collections.

Even PT practices that are cash-pay only may benefit from having a compliance program. As we have previously discussed, the Medicare Mandatory Claims Submission Rule is widely understood to preclude PTs from billing Medicare beneficiaries on a cash basis for services that Medicare covers, except in limited situations. [GH1] A compliance program could help to facilitate compliance with this rule.

What should a compliance program include?

Until CMS issues any mandatory compliance program regulations applicable to PTs, the most authoritative guidance on the components of a compliance program remains a set of voluntary compliance program guidelines that the HHS Office of Inspector General (OIG) released in 2000. Although the OIG designed the guidelines to encourage compliance programs among individual and small group physician practices, the OIG noted that they could also apply to “other independent practitioners, such as psychologists, physical therapists, speech language pathologists, and occupational therapists.”

The following are the seven “fundamental components” of a compliance program that the OIG outlined in the guidelines:

  • Auditing and monitoring – Having an ongoing evaluation process, which may include reviewing a practice’s standards and procedures and conducting a claims submission audit.
  • Practice standards and procedures – Maintaining uniform written standards and procedures, which identify applicable laws and regulations, provide guidance relating to potential risk areas (e.g., coding and billing, reasonable and necessary services, documentation, and improper inducements, kickbacks, and self-referrals), and address record retention.
  • Designation of a compliance officer or contacts – Appointing an individual or individuals who oversee the implementation and day-to-day operations of the compliance program.
  •  Appropriate training and education – Conducting compliance-related training and education, which is tailored to the needs of the practice and its staff and provided on a recurring basis.
  • Response mechanisms and corrective action initiatives – Investigating allegations or suspicions of violations of the compliance program or applicable law and taking appropriate action to respond to and correct any such violations (e.g., returning an overpayment or reporting to law enforcement).
  • Open lines of communication – Creating an atmosphere of openness and transparency through mechanisms that a practice’s staff can use (ideally on an anonymous basis) to report and discuss compliance concerns (e.g., telephone hotline or email).
  • Disciplinary standards – Incorporating disciplinary measures into the practice’s policies to show the consequences of non-compliance.

How does a compliance program impact small physical therapy practices?

Compliance can often seem daunting, but it need not be. As the OIG itself acknowledged in the 2000 guidelines, a compliance program can be an important tool for “practices of all sizes and does not have to be costly, resource-intensive or time-intensive.” The particular approach that a PT practice takes to compliance will depend on the facts and circumstances of the particular practice, including the size of the practice, the scope of services that it offers, participation in any third-party payor programs, and the availability of resources to dedicate to compliance tasks. Small PT practices, in particular, may find helpful the wealth of compliance materials that the OIG has made available on its online “Compliance Resource Portal.”

Stay compliant. Contact one of Jackson LLP’s experienced healthcare attorneys today.

While you focus on providing patient care and building your business, let one of Jackson LLP’s healthcare attorneys assist you in developing your compliance program and ensuring you are legally protected. To schedule a complimentary phone consultation with a Jackson LLP attorney, click the button below.

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