Medicare

In general, a compliance program consists of a Medicare provider organization's internal policies, processes, and procedures that help it prevent and detect violations of Medicare law. According to recent surveys, most hospitals either had or planned to soon implement a compliance program, but no readily available data exist on program prevalence. Direct program costs appear to account for less than one percent of total patient revenues; indirect costs may be larger. Lacking compliance budgets, hospitals cannot always distinguish between compliance program and normal operations costs. Comprehensive baseline data with which to measure programs' effectiveness are lacking. The costs associated with gathering baseline data on the amount of improper payments made to providers--or comparison data for providers without compliance programs--have precluded the use of this effectiveness measure. Although hospital officials reported that program benefits outweigh costs, Medicare contractors reported receiving refunds of provider overpayments with more frequency, and formal provider self-disclosures have increased in recent years. This preliminary evidence, however, does not demonstrate that compliance programs have reduced improper Medicare payments. According to hospitals, the major intangible indicator of effectiveness is an increased corporate awareness of compliance as shown by frequent calls to compliance staff or hotlines for guidance. Some hospitals plan to measure improved employee knowledge of compliance issues, risk areas, and procedures in conjunction with compliance training.

GAO noted that: (1) although there is no comprehensive data on the number of providers with compliance programs, many hospitals are implementing them; (2) two recent hospital surveys, one focusing on academic health centers and the other including a broad range of hospital types, found that most hospitals responding either had or planned to soon implement a compliance program; (3) the hospitals in GAO's study said they felt compelled to implement a compliance program for a variety of reasons, including the heightened enforcement environment, suggestions from the Department of Health and Human Services' Office of the Inspector General, and expectations that the Health Care Financing Administration and accrediting bodies would soon require compliance programs; (4) although compliance programs are apparently becoming widely accepted, most of the hospitals in GAO's study have only recently begun implementation; (5) hospitals report that compliance programs require an investment of considerable time and money; (6) however, measuring the cost of compliance programs is difficult; (7) hospitals could not always distinguish costs attributable to their compliance programs from those of their normal operations, in part because the hospitals often had existing compliance-oriented activities that were subsumed by the compliance program; (8) hospitals reported a variety of significant direct costs, such as salaries for compliance staff and professional fees for consultants and attorneys; (9) according to the information GAO was able to obtain, direct compliance program costs appear to account for a very small percentage of total patient revenues--less than 1 percent in all but one of the hospitals studied; (10) the hospitals also reported indirect costs, such as time spent by employees in compliance-related training and away from their regular duties; (11) these indirect costs are more difficult to measure and may be larger than the direct costs reported; (12) the principal measure of a compliance program's effectiveness is its ability to prevent improper Medicare payments; (13) it is difficult to measure effectiveness in this way because of the lack of comprehensive baseline data and the existence of many other factors that could affect measurement results; (14) other measures have been suggested as a proxy for measuring compliance program effectiveness; (15) Medicare contractors reported that they have received refunds of provider overpayments with more frequency; (16) GAO has also noted an increase in formal provider self-disclosures during the last few years; and (17) however, this preliminary evidence does not demonstrate that compliance programs have reduced improper Medicare payments.