OIG Issues Supplemental Compliance Program Guidance For Nursing Facilities: Quality Of Care Is Top Risk Area

On September 30, 2008, the United States Department of Health

and Human Services (HHS) Office of Inspector General (OIG)

published OIG Supplemental Compliance Program Guidance for

Nursing Facilities.1 With quality of care the first

risk area identified, the supplemental guidance is part of a series

of recent government efforts focused on improving quality of care

at skilled nursing and long-term care facilities. The OIG also

released a September 18, 2008 report, Trends in Nursing Home

Deficiencies and Complaints, which revealed that, between 2005

and 2007, over 90 percent if nursing homes were cited for

deficiencies in quality of care, resident assessment, and quality

of life. On April 24, 2008, the Centers for Medicare and Medicaid

Services (CMS) began identifying the poorest performing nursing

facilities nationwide, dubbed Special Focus Facilities, on its

Nursing Home Compare Web site.2 The supplemental

guidance also follows the joint OIG-Health Care Compliance

Association (HCCA) roundtable report, Driving for Quality in

Long-Term Care: A Board of Directors Dashboard, released

January 31, 2008.3


The OIG first published a compliance program guidance for

nursing facilities on March 16, 2000.4 The original

guidance addressed the fundamentals of establishing an effective

compliance program in the nursing industry. Since the publication

of the original guidance, there have been significant changes in

the way nursing facilities deliver, and are reimbursed for, health

care services. Although the original guidance included quality of

care as a risk area, recent changes to the regulatory enforcement

environment and increased concern on quality of care in nursing

facilities prompted a greater emphasis on quality in the

supplemental guidance.

The guidance contains new compliance recommendations and an

expanded discussion of risk areas. When drafting the supplemental

guidance, the OIG considered "Medicare and Medicaid nursing

facility payment systems and regulations, evolving industry

practices, current enforcement priorities (including the

Government's heightened focus on quality of care), and lessons

learned in the area of nursing facility

compliance."5 The supplemental guidance provides

"voluntary guidelines to assist nursing facilities in

identifying significant risk areas and in evaluating and, as

necessary, refining ongoing compliance


Because the guidance supplements, rather than replaces, the

original guidance, the two documents "collectively offer a set

of guidelines that nursing facilities should consider when

developing and implementing a new compliance program or evaluating

an existing one."7

The supplemental guidance is partitioned into five sections. The

first two offer a background overview of the compliance program

guidance process and the Medicare/Medicaid reimbursement system.

The third section covers several fraud and abuse risk areas

relevant to nursing facilities. In the fourth section, the OIG

offers recommendations for establishing an ethical culture and

assessing and improving existing compliance programs. The fifth

section addresses self-reporting and lists steps a nursing facility

should take if it discovers credible evidence of misconduct.

Fraud and Abuse Risk Areas

By identifying current, relevant risk areas, the supplemental

guidance should assist nursing facilities in their efforts to

"identify operational areas that present potential liability

risks under several key Federal fraud and abuse statutes and

regulations."8 The OIG stresses each facility

should carefully examine these risk areas and identify those that

potentially affect it.

  1. Quality of Care

    Although it is a priority for nursing facilities, a significant

    number fail to deliver quality health care. Whether this failure is

    the result of inadequate staffing, insufficient training and

    education, or lack of oversight, the result is often the same:

    residents risk harm. In cases where the care failure is systemic

    and widespread, a facility may be liable for submitting false

    claims for reimbursement under the False Claims Act, the Civil

    Monetary Penalties Law, a variety of additional federal authorities

    that address false and fraudulent claims or statements made to the

    government, and similar state laws, including criminal, civil, and

    administrative sanctions.9 As a starting point on

    quality of care issues, facilities should familiarize themselves

    with the principal nursing facility Medicare Conditions of

    Participation.10 The OIG states "it is essential

    that key members of the organization understand these requirements

    and support their facility's commitment to compliance with

    these regulations."11 The five sub-areas on quality

    of care identified in the supplemental guidance are addressed


    Sufficient staffing: A critical factor in

    quality care is to provide enough trained, competent staff to care

    for residents. Federal law requires a facility provide sufficient

    staffing necessary to attain or maintain the highest practicable

    physical, mental, and psychosocial well-being of its

    residents.12 Many state laws, including California,

    require specific, higher nursing staff ratios. The OIG strongly

    encourages facilities assess their staffing patterns regularly to

    evaluate staff skill levels, resident case-mix, staff-to-resident

    ratios, staff turnover, staffing schedules, disciplinary records,

    payroll, timesheets, adverse event reports, interviews, and

    resident and family feedback.13

    Comprehensive resident care plans: Medicare

    and Medicaid regulations require facilities develop a comprehensive

    care plan for each resident.14 The OIG states that a

    comprehensive care plan is "essential to reducing

    risk."15 Facilities should ensure that care

    planning includes all disciplines involved in the resident's

    care, designing an interdisciplinary and comprehensive approach to

    developing care plans.16 The attending physician should

    participate in the development of the care plan and facilities

    should ensure the physician actually supervises each resident's


    Medication management: Facilities must provide

    pharmaceutical services to meet the needs of each resident and

    should be mindful of potential quality of care problems when

    implementing policies and procedures on proper medication

    management.18 Facilities can reduce risk by educating

    staff on medication management and improper pharmacy kickbacks for

    consultant pharmacists. Facilities should review the total

    compensation paid to consultant pharmacists to ensure it is not

    structured in a way that reflects the volume or value of particular

    drugs prescribed or administered to residents.

    Appropriate use of psychotropic medications:

    The OIG identified this risk area as a violation of the prohibition

    against inappropriate use of chemical restraints19 and a

    violation of the requirement to avoid unnecessary drug

    usage.20 Facilities should ensure there is adequate

    indication for the use of medications and should carefully monitor,

    document, and review resident use of psychotropic drugs. Educating

    caregivers and auditing drug regimen reviews is an important part

    of reducing risk in this area.21

    Resident safety: The OIG suggests several

    steps facilities may take to protect residents from abuse and

    neglect, a right protected by federal (and often state)

    law.22 Facilities can promote resident safety through

    internal, confidential reporting systems, hotlines, posters, and by

    communicating a clear commitment to protecting from retaliation

    those people who make reports. Because residents also suffer harm

    at the hands of other residents, a heightened awareness and

    monitoring of resident interaction is crucial. Facilities should

    perform comprehensive staff screening for criminal records,

    exclusions, and other information on staff both prior to employment

    and periodically for current staff.

  2. Submission of Accurate Claims

    Accurate claim submission is another risk area identified in the

    supplemental guidance. The OIG identified four sub-areas, each of

    which is...

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