OIG recognizes that implementation of a compliance program may not entirely eliminate improper or unethical conduct from nursing facility operations. However, an effective compliance program demonstrates a nursing facility's good faith effort to comply with applicable statutes, regulations, and other Federal health care program requirements, and may significantly reduce the risk of unlawful conduct and corresponding sanctions.

B. Application of Compliance Program Guidance

Given the diversity of the nursing facility industry, there is no single ''best'' nursing facility compliance program. OIG recognizes the complexities of the nursing facility industry and the differences among facilities. Some nursing facilities are small and may have limited resources to devote to compliance measures; others are affiliated with wellestablished, large, multifacility organizations with a widely dispersed work force and significant resources to devote to compliance.

Accordingly, OIG does not intend this supplemental CPG to be a ``onesizefitsall'' guidance. OIG strongly encourages nursing facilities to identify and focus their compliance efforts on those areas of potential concern or risk that are most relevant to their organizations. Compliance measures adopted by a nursing facility to address identified risk areas should be tailored to fit the unique environment of the facility (including its structure, operations, resources, the needs of its resident population, and prior enforcement experience). In short, OIG recommends that each nursing facility adapt the objectives and principles underlying this guidance to its own particular circumstances.

In section II below, for contextual purposes, we provide a brief overview of the reimbursement system. In section III, entitled ``Fraud and Abuse Risk Areas,'' we present several fraud and abuse risk areas that are particularly relevant to the nursing facility industry. Each nursing facility should carefully examine these risk areas and identify those that potentially affect it. Next, in section IV, ``Other Compliance Considerations,'' we offer recommendations for establishing an ethical culture and for assessing and improving an existing compliance program. Finally, in section V, ``SelfReporting,'' we set forth the actions nursing facilities should take if they discover credible evidence of misconduct.

II. Reimbursement Overview

We begin with a brief overview of Medicare and Medicaid reimbursement for nursing facilities as context for the subsequent risk areas section. This overview is intended to be a summary only. It does not establish or interpret any program rules or regulations. Nursing facilities are advised to consult the relevant program's payment, coverage, and participation rules, regulations, and guidance, which change frequently. Any questions regarding payment, coverage, or participation in the Medicare or Medicaid programs should be directed to the relevant contractor, carrier, CMS office, or State Medicaid agency.

A. Medicare

Medicare reimbursement to SNFs and NFs depends on several factors, including the character of the facility, the beneficiary's circumstances, and the type of items and services provided. Generally speaking, SNFs are Medicarecertified facilities that provide extended skillednursing or rehabilitative care under Medicare Part A. They are typically reimbursed under Part A for the costs of most items and services, including room, board, and ancillary items and services. In some circumstances (discussed further below), SNFs may receive payment under Medicare Part B. Facilities that are not SNFs are not reimbursed under Part A. They may be reimbursed for some items and services under Part B.

Medicare pays SNFs under a prospective payment system (PPS) for beneficiaries covered by the Part A extended care benefit.\8\ Covered beneficiaries are those who require skillednursing or rehabilitation services and receive the services from a Medicare certified SNF after a qualifying hospital stay of at least three days.\9\ The PPS rate is a fixed, per diem rate.\10\ The maximum benefit is 100 days per ``spell of illness.'' \11\
\8\ Section 1888(e) of the Act (42 U.S.C. 1395yy(e)) (noting the PPS rate applied to services provided on or after July 1, 1998). See also CMS, ``Consolidated Billing,'' available on CMS's Web site at http://www.cms.hhs.gov/SNFPPS/05_ConsolidatedBilling.asp. \9\ Sections 1812(a)(2) and 1861(i) of the Act (42 U.S.C. 1395d(a)(2), 1395x(i)).
\10\ Section 1888(e) of the Act (42 U.S.C. 1395yy(e)).
\11\ Section 1812(a)(2)(A) of the Act (42 U.S.C.

1395d(a)(2)(A)).

The PPS per diem rate is adjusted per resident to ensure that the level of payment made for a particular resident reflects the resource intensity that would typically be associated with that resident's clinical condition.\12\ This methodology, referred to as the Resource Utilization Group (RUG) classification system, currently in version RUGIII, uses beneficiary assessment data extrapolated from the Minimum Data Set (MDS) to assign beneficiaries to one of the RUGIII groups.\13\ The MDS is composed of data variables for each resident, including diagnoses, treatments, and an evaluation of the resident's functional status, which are collected via a Resident Assessment Instrument (RAI).\14\ Such assessments are conducted at established intervals throughout a resident's stay. The resident's RUG assignment and payment rate are then adjusted accordingly for each interval.\15\ \12\ Section 1888(e)(4)(G)(i) of the Act (42 U.S.C.
1395yy(e)(4)(G)(i)).
\13\ Id.
\14\ Sections 1819(b)(3) and 1919(b)(3) of the Act (42 U.S.C. 1395i3(b)(3), 1396r(b)(3)), and their implementing regulation, 42 CFR 483.20, require nursing facilities participating in the Medicare or Medicaid programs to use a standardized RAI to assess each nursing facility resident's strengths and needs.

\15\ See id.

The PPS payments cover virtually all of the SNF's costs for furnishing services to Medicare beneficiaries covered under Part A. Under the ``consolidated billing'' rules, SNFs bill Medicare for most of the services provided to Medicare beneficiaries in SNF stays covered under Part A, including items and services that outside practitioners and suppliers provide under arrangement with the SNF.\16\ The SNF is responsible for paying the outside practitioners and suppliers for these services.\17\ Services covered by this consolidated billing [[Page 20683]]
requirement include, by way of example, physical therapy, occupational therapy, and speech therapy services; certain nonselfadministered drugs and supplies furnished ``incident to'' a physician's services (e.g., ointments, bandages, and oxygen); braces and orthotics; and the technical component of most diagnostic tests.\18\ These items and services must be billed to Medicare by the SNF.\19\
\16\ Sections 1842(b)(6)(E) and 1862(a)(18) of the Act (42 U.S.C. 1395u, 1395aa); Consolidated Billing, supra note 8.
\17\ See id.
\18\ Section 1888(e) of the Act (42 U.S.C. 1395yy); Consolidated Billing, supra note 8.

\19\ Id.

The consolidated billing requirement does not apply to a small number of excluded services, such as physician professional fees and certain ambulance services.\20\ These excluded services are separately billable to Part B, by the individual or entity furnishing the service. For example, professional services furnished personally by a physician to a Part A SNF resident are excluded from consolidated billing, and are billed by the physician to the Part B carrier.\21\
\20\ Id.

\21\ Id.

Some Medicare beneficiaries reside in a Medicarecertified SNF, but are not eligible for Part A extended care benefits (e.g., a beneficiary who did not have a qualifying hospital stay of at least three days or a beneficiary who has exhausted his or her Part A benefit). These beneficiariessometimes described as being in ``noncovered Part A stays''may still be eligible for Part B coverage of certain individual services. Consolidated billing would not apply to such individual services, with the exception of therapy services.\22\ Physical therapy, occupational therapy, and speech language pathology services furnished to SNF residents are always subject to consolidated billing.\23\ Claims for therapy services furnished during a noncovered Part A stay must be submitted to Medicare by the SNF itself.\24\ Thus, according to CMS guidance, the SNF is reimbursed under the Medicare fee schedule for the therapy services, and is responsible for reimbursing the therapy provider.\25\
\22\ Section 1888(e)(2)(A) of the Act (42 U.S.C.
1395yy(e)(2)(A)); CMS, ``MLN Matter SE0518,'' available on CMS's Web site at http://www.cms.hhs.gov/MLNMattersArticles/downloads/ SE0518.pdf.
\23\ Id.
\24\ MLN Matter SE0518, supra note 22.

\25\ Id.

When a beneficiary resides in a nursing facility (or part thereof) that is not certified as an SNF by Medicare, the beneficiary is not considered an SNF resident for Medicare billing purposes.\26\ Accordingly, ancillary services, including therapy services, are not subject to consolidated billing.\27\ Either the supplier of the ancillary service or the facility may bill the Medicare carrier for the Part B items and services directly.\28\ In these circumstances, it is the joint responsibility of the facility and the supplier to ensure that only one of them bills Medicare.
\26\ Id.
\27\ Id.

\28\ Id.

Part B coverage for durable medical equipment (DME) presents special circumstances because the benefit extends only to items furnished for use in a patient's home.\29\ DME furnished for use in an SNF or in certain other facilities providing skilled care is not covered by Part B. Instead, such DME is covered by the Part A PPS payment or applicable inpatient payment.\30\ In some cases, NFs that are not SNFs can be considered a ``home'' for purposes of DME coverage under Part B.\31\
\29\ Section 1861(n) of the Act (42 U.S.C. 1395x(n)).
\30\ Section 1861(h)(5) of the Act (42 U.S.C. 1395x(h)(5)). \31\ Section 1861(n) of the Act (42 U.S.C. 1395x(n)).

B. Medicaid

Medicaid provides another means for nursing facility residents to pay for skillednursing care, as well as room and board in a nursing facility certified by the Government to provide services to Medicaid beneficiaries. Medicaid is a State and Federal program that covers certain groups of lowincome and medicallyneedy people. Medicaid also helps residents dually eligible for Medicare and Medicaid pay their Medicare premiums and costsharing amounts. Because Medicaid eligibility criteria, coverage limitations, and reimbursement rates are established at the State level, there is significant variation across the nation. Many States, however, offer a flat daily rate that covers room, board, and routine care for Medicaid beneficiaries.

III. Fraud and Abuse Risk Areas

This section should assist nursing facilities in their efforts to identify areas of their operations that present potential risks of liability under several key Federal fraud and abuse statutes and regulations. This section focuses on areas that are currently of concern to the enforcement community and is not intended to address all potential risk areas for nursing facilities. The identification of a particular practice or activity in this section is not intended to imply that the practice or activity is necessarily illegal in all circumstances or that it may not have a valid or lawful purpose. This section addresses the following areas of significant concern for nursing facilities: quality of care; submission of accurate claims; Federal antikickback statute; other risk areas; and Health Insurance Portability and Accountability Act of 1996 (HIPAA) privacy and security rules.

This guidance does not create any new law or legal obligations, and the discussions in this guidance are not intended to present detailed or comprehensive summaries of lawful or unlawful activity. This guidance is not intended as a substitute for consultation with CMS, a facility's fiscal intermediary or Program Safeguard Contractor, a State Medicaid agency, or other relevant State agencies with respect to the application and interpretation of payment, coverage, licensure, or other provisions that are subject to change. Rather, this guidance should be used as a starting point for a nursing facility's legal review of its particular practices and for development or refinement of policies and procedures to reduce or eliminate potential risk. A. Quality of Care

By 2030, the number of older Americans is estimated to rise to 71 million,\32\ making the aging of the U.S. population ``one of the major public health challenges we face in the 21st century.'' \33\ In addressing this challenge, a national focus on the quality of health care is emerging.
\32\ Centers for Disease Control and Prevention (CDC), ``The State of Aging and Health in America 2007,'' available on CDC's Web site at http://www.cdc.gov/aging/pdf/saha_2007.pdf. \33\ Id. (quoting Julie Louise Gerberding, M.D., MPH, Director, Centers for Disease Control and Prevention, U.S. Department of Health and Human Services).

In cases that involve failure of care on a systemic and widespread basis, the nursing facility may be liable for submitting false claims for reimbursement to the Government under the Federal False Claims Act, the Civil Monetary Penalties Law (CMPL), or other authorities that address false and fraudulent claims or statements made to the Government.\34\ Thus,
[[Page 20684]]
compliance with applicable quality of care standards and regulations is essential for the lawful behavior and success of nursing facilities. \34\ ``Listening Session: Abuse of Our Elders: How We Can Stop It: Hearing Before the Senate Special Committee on Aging,'' 110th Congress (2007) (testimony of Gregory Demske, Assistant Inspector General for Legal Affairs, Office of Inspector General, U.S. Department of Health and Human Services ), available at http:// aging.senate.gov/events/hr178gd.pdf; see also 18 U.S.C. 287 (concerning false, fictitious or fraudulent claims); 18 U.S.C. 1001 (concerning statements or entries generally); 18 U.S.C. 1035 (concerning false statements relating to health care matters); 18 U.S.C. 1347 (concerning health care fraud); 18 U.S.C. 1516 (concerning obstruction of a Federal audit); the Federal False Claims Act (31 U.S.C. 37293733); section 1128A of the Act (42 U.S.C. 1320a7a) (concerning civil monetary penalties); section 1128B(c) of the Act (42 U.S.C. 1320a7b(c)) (concerning false statements or representations with respect to condition or operation of institutions). In addition to the Federal criminal, civil, and administrative liability for false claims and kickback violations outlined in this CPG, nursing facilities also face exposure under State laws, including criminal, civil, and administrative sanctions.

Although many nursing facilities make quality a priority, facilities that fail to do so, and consequently fail to deliver quality health care, risk becoming the target of governmental investigations. Highlighted below are common risk areas associated with the delivery of quality health care to nursing facility residents that frequently arise in enforcement cases.

These include sufficient staffing, comprehensive care plans, appropriate use of psychotropic medications, medication management, and resident safety. This list is not exhaustive. Moreover, nursing facilities should recognize that these issues are often interrelated. Nursing facilities that attempt to address one issue will often find that they must address other areas as well. The risk areas identified in sections III.B. (Submission of Accurate Claims), III.C. (Anti Kickback), and III.D. (Other Risk Areas) below are also intertwined with quality of care risk areas and should be considered as well.

As a starting point, nursing facilities should familiarize themselves with 42 CFR part 483 (part 483), which sets forth the principal requirements for nursing facility participation in the Medicare and Medicaid programs. It is essential that key members of the organization understand these requirements and support their facility's commitment to compliance with these regulations. Targeted training for care providers, managers, administrative staff, officers, and directors on the requirements of part 483 will enable nursing facilities to ensure that they are fulfilling their obligation to provide quality health care.\35\
\35\ The requirement to deliver quality health care is a continuing obligation for nursing facilities. As regulations change, so too should the training. Therefore, this recommendation envisions more than an initial employee ``orientation'' training on the nursing facility's obligations to provide quality health care. CMS has multiple resources available to assist nursing facilities in developing training programs. See CMS, ``Sharing Innovations in Quality, Resources for Long Term Care,'' available on CMS's Web site at http://siq.air.org/default.aspx; CMS, ``Skilled Nursing Facilities/LongTerm Care Open Door Forum,'' available on CMS's Web site at http://www.cms.hhs.gov/OpenDoorForums/25_ODF_SNFLTC.asp; CMS, State Operations Manual, available on CMS's Web site at http:// www.cms.hhs.gov/Manuals/IOM/list.asp; see also Medicare Quality Improvement Community, ``Medicare Quality Improvement,'' available at http://www.medqic.org. Nursing facilities may also find it useful to review the CMS Quality Improvement Organizations Statement of Work, available at http://www.cms.hhs.gov/QualityImprovementOrgs/ 04_9thsow.asp.

1. Sufficient Staffing

OIG is aware of facilities that have systematically failed to provide staff in sufficient numbers and with appropriate clinical expertise to serve their residents. Although most facilities strive to provide sufficient staff, nursing facilities must be mindful that Federal law requires sufficient staffing necessary to attain or maintain the highest practicable physical, mental, and psychosocial wellbeing of residents.\36\ Thus, staffing numbers and staff competency are critical.
\36\ Sections 1819(b)(4)(A) and 1919(b)(4)(A) of the Act (42 U.S.C. 1395i3(b)(4)(A), 1396r(b)(4)(A)); 42 CFR 483.30.

The relationship between staff ratios, staff competency, and quality of care is complex.\37\ No single staffing model will suit every facility. A staffing model that works in a nursing facility today may not meet the facility's needs in the future. Nursing facilities, therefore, are strongly encouraged to assess their staffing patterns regularly to evaluate whether they have sufficient staff who are competent to care for the unique acuity levels of their residents. \37\ For example, State nursing facility staffing standards, which exist for the majority of States, vary in types of regulated staff, the ratios of staff, and the facilities to which the regulations apply. See Jane Tilly, et al., ``State Experiences with Minimum Nursing Staff Ratios for Nursing Facilities: Findings from Case Studies of Eight States'' (November 2003) (joint paper by The Urban Institute and the Department), available at http:// aspe.hhs.gov/daltcp/reports/8statees.htm.

Important considerations for assessing staffing models include, among others, staff skill levels, stafftoresident ratios, staff turnover,\38\ staffing schedules, disciplinary records, payroll records, timesheets, and adverse event reports (e.g., falls or adverse drug events), as well as interviews with staff, residents, and residents' family or legal guardians. Facilities should ensure that the methods used to assess staffing accurately measure actual ``onthe floor'' staff rather than theoretical ``onpaper'' staff. For example, payroll records that reflect actual hours and days worked may be more useful than prospectively generated staff schedules.
\38\ Nursing facilities operate in an environment of high staff turnover where it is difficult to attract, train, and retain an adequate workforce. Turnover among nurse aides, who provide most of the handson care in nursing facilities, means that residents are constantly receiving care from new staff who often lack experience and knowledge of individual residents. Furthermore, research correlates staff shortages and insufficient training with
substandard care. See OIG, OEI Report OEI010400070, ``Emerging Practices in Nursing Homes,'' March 2005, available on our Web site at http://oig.hhs.gov/oei/reports/oei010400070.pdf (reviewing emerging practices that nursing facility administrators believe reduce their staff turnover).

2. Comprehensive Resident Care Plans

Development of comprehensive resident care plans is essential to reducing risk. Prior OIG reports revealed that a significant percentage of resident care plans did not reflect residents' actual care needs.\39\ Through its enforcement and compliance monitoring activities, OIG continues to see insufficient care plans and their impact on residents as a risk area for nursing facilities.
\39\ See, e.g., OIG, OEI Report OEI029900040, ``Nursing Home Resident Assessment Quality of Care,'' January 2001, available on our Web site at http://oig.hhs.gov/oei/reports/oei029900040.pdf.

Medicare and Medicaid regulations require nursing facilities to develop a comprehensive care plan for each resident that addresses the medical, nursing, and mental and psychosocial needs for each resident and includes reasonable objectives and timetables.\40\ Nursing facilities should ensure that care planning includes all disciplines involved in the resident's care.\41\ Perfunctory meetings or plans developed without the full clinical team may create less than comprehensive residentcentered care plans. Inadequately prepared plans make it less likely that residents will receive coordinated, multidisciplinary care. Insufficient plans jeopardize residents' well being and risk the provision of inadequate care, medically unnecessary care services, or medically inappropriate services.
\40\ 42 CFR 483.20(k).
\41\ 42 CFR 483.20(k)(2)(ii) (requiring an interdisciplinary team, including the physician, a registered nurse with
responsibility for the resident, and other disciplines involved in the resident's care).

To reduce these risks, nursing facilities should design measures to ensure an interdisciplinary and comprehensive approach to developing care plans. Basic steps, such as appropriately scheduling meetings to accommodate the full interdisciplinary team, completing all clinical assessments before the meeting is convened,\42\ opening lines of [[Page 20685]]
communication between direct care providers and interdisciplinary team members, involving the resident and the residents' family members or legal guardian,\43\ and documenting the length and content of each meeting, may assist facilities with meeting this requirement. \42\ Nursing facilities with residents with mental illness or mental retardation should ensure that they have the Preadmission Screening and Resident Review (PASRR) screens for their residents. See 42 CFR 483.20(m). In addition, for residents who do not require specialized services, facilities should ensure that they are providing the ``services of lesser intensity'' as set forth in CMS regulations. See 42 CFR 483.120(c). Care plan meetings can provide nursing facilities with an ideal opportunity to ensure that these obligations are met.
\43\ Where possible, residents and their family members or legal guardians should be included in the development of care and treatment plans. Unless the resident has been declared incompetent or otherwise found to be incapacitated under State law, the resident has a right to participate in his or her care planning and treatment, as well as in the changes in care or treatment. 42 CFR 483.10(d)(3).

Another risk area related to care plans includes the involvement of attending physicians in resident care. Although the role and responsibilities of attending physicians are governed by specific regulations,\44\ the nursing facility also has a critical role ensuring that a physician supervises each resident's care.\45\ Facilities must also include the attending physician in the development of the resident's care plan.\46\ To fulfill these requirements, facilities should develop processes to ensure physician involvement in resident care, including regular resident visits that involve a meaningful evaluation of the resident.\47\ In addition, facilities should develop systems to ensure that irregularities noted during drug regimen reviews are reported to attending physicians.\48\
\44\ See, e.g., 42 CFR 483.40(b), (c), (e).
\45\ 42 CFR 483.40(a).
\46\ 42 CFR 483.20(k)(2)(ii).
\47\ 42 CFR 483.40 (detailing physician services); 42 CFR 483.20 (detailing facility's role in resident assessments and care plan coordination). Although physicians may delegate some tasks to physician assistants, nurse practitioners, or clinical nurse specialists, as permitted by regulations, facilities must still ensure that physicians supervise the care of residents. 42 CFR 483.40.
\48\ See 42 CFR 483.60(c).

3. Appropriate Use of Psychotropic Medications

Based on our enforcement and compliance monitoring activities, OIG has identified inappropriate use of psychotropic medications for residents as a risk area in at least two waysthe prohibition against inappropriate use of chemical restraints and the requirement to avoid unnecessary drug usage.

Facilities have affirmative obligations to ensure appropriate use of psychotropic medications. Specifically, nursing facilities must ensure that psychopharmacological practices comport with Federal regulations and generally accepted professional standards.\49\ The facility is responsible for the quality of drug therapy provided in the facility. Facilities are prohibited from using any medication as a means of chemical restraint for ``purposes of discipline or convenience, and not required to treat the resident's medical symptoms.'' \50\ In addition, resident drug regimens must be free from unnecessary drugs.\51\ For residents who specifically require antipsychotic medications, CMS regulations also require, unless contraindicated, that residents receive gradual dose reductions and behavioral interventions aimed at reducing medication use.\52\ \49\ See, e.g., 42 CFR 483.20(k)(3) (requiring services that are ``provided or arranged by the facility'' to comport with
professional standards of quality); 42 CFR 483.25 (requiring facilities to provide necessary care and services, including the resident's right to be free of unnecessary drugs); 42 CFR 483.75(b) (requiring facilities to provide services in compliance ``with all applicable Federal, State, and local laws, regulations, and codes, and with accepted professional standards and principles * * *''). \50\ 42 CFR 483.13(a).
\51\ 42 CFR 483.25(l)(1). An unnecessary drug includes any medication, including psychotropic medications, that is excessive in dose, used excessively in duration, used without adequate
monitoring, used without adequate indications for its use, used in the presence of adverse consequences, or any combination thereof. Id.

\52\ 42 CFR 483.25(l)(2).

In light of these requirements, nursing facilities should ensure that there is an adequate indication for the use of the medication and should carefully monitor, document, and review the use of each resident's psychotropic drugs. Compliance measures could include educating care providers regarding appropriate monitoring and documentation practices and auditing drug regimen reviews \53\ and resident care plans to determine if they incorporate an assessment of the resident's ``medical, nursing, and mental and psychosocial needs,'' \54\ including the need for psychotropic medications for a specific medical condition.\55\ The care providers should analyze the outcomes of the provision of care with the results of the drug regimen reviews, progress notes, and monitoring of the resident's behaviors. \53\ 42 CFR 483.60(c).
\54\ 42 CFR 483.20(k).
\55\ 42 CFR 483.25(l)(2).

4. Medication Management

The Act requires nursing facilities to provide ``pharmaceutical services (including procedures that assure accurate acquiring, receiving, dispensing, and administering of all drugs and biologicals) to meet the needs of each resident.'' \56\ Nursing facilities should be mindful of potential quality of care problems when adopting and implementing policies and procedures to provide these services. A failure to manage pharmaceutical services properly can seriously jeopardize resident safety, and even result in resident deaths. \56\ Sections 1819(b)(4)(A)(iii) and 1919(b)(4)(A)(iii) of the Act (42 U.S.C. 1395i3(b)(4)(A)(iii) and 1396r(b)(4)(A)(iii)). In addition, under 42 CFR 483.60, SNFs and NFs must ``provide routine and emergency drugs and biologicals to [their] residents, or obtain them under an agreement described in [section] 483.75(h) * * *.'' Nursing facilities must meet this obligation even if a pharmacy charges a Medicare Part D copayment to a dual eligible beneficiary who cannot afford to pay the copayment. See CMS, Question & Answer ID 7042, available on CMS's Web site at http:// questions.cms.hhs.gov.

Nursing facilities can promote compliance by having in place proper medication management processesincluding appropriate training of staff involved in all aspects of pharmaceutical care in the nursing facilitythat advance patient safety, minimize adverse drug interactions, and ensure that irregularities in a resident's drug regimen are promptly discovered and addressed. These kinds of policies and procedures may also safeguard against potential tainting of pharmaceutical decisions by improper kickbacks.\57\
\57\ For further discussion of the antikickback statute, see section III.C. below.

CMS regulations require that nursing facilities employ or obtain the services of a licensed pharmacist to ``provide consultation on all aspects of the provision of pharmacy services in the facility.'' \58\ The drug regimen of each resident must be reviewed at least once a month by a licensed pharmacist, who must report any irregularities discovered in a resident's drug regimen to the attending physician and the director of nursing.\59\ Consultant pharmacists are also required to: (1) ``[e]stablish a system of records of receipt and disposition of all controlled drugs * * *;'' and (2) ``[d]etermine that drug records are in order and that an account of all controlled drugs is maintained and periodically reconciled.'' \60\
\58\ 42 CFR 483.60(b)(1).
\59\ 42 CFR 483.60(c).

\60\ 42 CFR 483.60(b)(2), (3).

In many cases, the consultant pharmacists working in nursing facilities are provided by longterm care pharmacies in arrangements to furnish drugs and supplies to the nursing facility, often on an exclusive basis. Longterm care pharmacies have purchasing agreements with pharmaceutical manufacturers and contracts with health plans. As a result of these agreements and contracts, longterm care pharmacies may prefer that nursing facility customers use some drugs over others. A consultant pharmacist provided by a longterm care
[[Page 20686]]
pharmacy may be in a position to influence prescriptions in a manner that benefits the longterm care pharmacy. The consultant pharmacist may face a potential conflict of interest if a drug prescribed for a resident is not one preferred by the longterm care pharmacy.

To minimize these risks and improve compliance with CMS regulations, nursing facilities should commit to robust training and monitoring on a regular basis of all staff involved in prescribing, administering, and managing pharmaceuticals, including all consultant pharmacists. The training should familiarize staff with proper medication management techniques. It should also educate staff on the legal prohibition against accepting anything of value from a pharmacy or pharmaceutical manufacturer to influence the choice of a drug for a resident or to switch a resident from one drug to another. Nursing facilities should implement policies and procedures for maintaining accurate drug records and tracking medications. In addition, nursing facilities should consider monitoring drug records for patterns that may indicate inappropriate drug switching or steering.

Nursing facilities should also review the total compensation paid to consultant pharmacists (whether under contract with a longterm care pharmacy or employed directly by the nursing facility) to ensure that the compensation is not structured in any manner that reflects the volume or value of particular drugs prescribed for, or administered to, patients. Nursing facilities should establish policies that make clear that all prescribing must be based principally on clinical efficacy and appropriateness \61\ and that drug switches should not be made by a pharmacist without authorization from the attending physician, medical director, or other licensed prescriber (except for generic substitutions where permitted by State law).
\61\ The determination of clinical efficacy and appropriateness of the particular drugs should precede, and be paramount to, the consideration of costs.

5. Resident Safety

Nursing facility residents have a legal right to be free from abuse and neglect.\62\ Facilities should take steps to ensure that they are protecting their residents from these risks.\63\ Of particular concern is harm caused by staff and fellow residents.\64\
\62\ Sections 1819 and 1919 of the Act (42 U.S.C. 1351i3 and 1396r); 42 CFR 483.10; see also 42 CFR 483.15 and 483.25.
\63\ See id.
\64\ For an overview of research relating to resident abuse and neglect, see Catherine Hawes, Ph.D., ``Elder Abuse in Residential LongTerm Care Settings: What is Known and What Information is Needed?,'' in Elder Mistreatment: Abuse, Neglect, and Exploitation in an Aging America (National Research Council, 2003); U.S. Government Accountability Office (GAO), GAO Report GAO02312, ``Nursing Homes: More Can Be Done to Protect Residents from Abuse,'' March 2002, available on GAO's Web site at http://www.gao.gov/ new.items/d02312.pdf; Administration on Aging, Elder Abuse Web site, available at http://www.aoa.gov/eldfam/Elder_Rights/Elder_Abuse/ Elder_Abuse.asp.

(a) Promoting Resident Safety

Federal regulations mandate that nursing facilities develop and implement policies and procedures to prohibit mistreatment, neglect, and abuse of residents.\65\ Facilities must also thoroughly investigate and report incidents to law enforcement, as required by State laws.\66\ Although experts continue to debate the most effective systems for enhancing the reporting, investigation, and prosecution of nursing facility resident abuse, an effective compliance program recognizes the value of a demonstrated internal commitment to eliminating resident abuse.\67\ An effective compliance program will include policies, procedures, and practices to prevent, investigate, and respond to instances of potential resident abuse, neglect, or mistreatment, including injuries resulting from staffonresident abuse and neglect, residentonresident abuse, and abuse from unknown causes.
\65\ 42 CFR 483.13(c); see also 42 CFR 483.13(a).
\66\ Id.
\67\ Under State mandatory reporting statutes, persons such as health care professionals, human service professionals, clergy, law enforcement, and financial professionals may have a legal obligation to make a formal report to law enforcement officials or a central reporting agency if they suspect that a nursing facility resident is being abused or neglected. To ensure compliance with these statutes, nursing facilities should consider training relating to compliance with their relevant States' laws. Nursing facilities can also assist by providing ready access to law enforcement contact information.

Confidential reporting is a key component of an effective resident safety program. Such a mechanism enables staff, contractors, residents, family members, visitors, and others to report threats, abuse, mistreatment, and other safety concerns confidentially to senior staff empowered to take immediate action. Posters, brochures, and online resources that encourage readers to report suspected safety problems to senior facility staff are commonly used. Another commonly used compliance component for reporting violations is a dedicated hotline where staff, contractors, residents, family members, visitors, and others with concerns can report suspicions. Regardless of the reporting vehicle, ideally coverage for reporting and addressing resident safety issues would be on a constant basis (i.e., 24 hours per day/7 days per week). Moreover, nursing facilities should make clear to caregivers, facility staff, and residents that the facility is committed to protecting those who make reports from retaliation.

Facilities may also want to consider a program to engage everyone who comes in contact with nursing facility residentswhether health care professionals, administrative, and custodial staff, family and friends, visiting therapists, or community membersin the mission of protecting residents. Such a program could include specialized training for everyone who interacts on a regular basis with residents on recognizing warning signs of neglect or abuse and on effective methods to communicate with potentially fearful residents in a way likely to induce candid selfreporting of neglect or abuse.\68\
\68\ Facilities could explore partnering with the ombudsmen and other consumer advocates in sponsoring or participating in special training programs designed to prevent abuse. See ``Elder Justice: Protecting Seniors from Abuse and Neglect: Hearing Before the Senate Committee on Finance,'' 107th Congress (2002) (testimony of Catherine Hawes, Ph.D., titled ``Elder Abuse in Residential Long Term Care Facilities: What is Known About the Prevalence, Causes, and Prevention''), available at http://finance.senate.gov/hearings/ testimony/061802chtest.pdf.

(b) Resident Interactions

The nursing facility industry, resident advocacy groups, and law enforcement are becoming increasingly concerned about resident abuse committed by fellow residents. Abuse can occur as a result of the failure to properly screen and assess, or the failure of staff to monitor, residents at risk for aggressive behavior. Such failures can jeopardize both the resident with aggressive behaviors and the resident who may be victimized.

Heightened awareness and monitoring for abuse are crucial to eradicating residentonresident abuse. Nursing facilities can advance their mission to provide a safe environment for residents through targeted education relating to residentonresident abuse (particularly for staff with responsibilities for admission evaluations). Thorough resident assessments, comprehensive care plans, periodic resident assessments, and proper staffing assignments, would also assist nursing [[Page 20687]]
facilities in their mission to provide a safe environment for residents.

(c) Staff Screening

Nursing facilities cannot employ individuals ``[f]ound guilty of abusing, neglecting, or mistreating residents,'' or individuals with ``a finding entered into [a] State nurse aide registry concerning abuse, neglect, mistreatment of residents or misappropriation of their property.'' \69\ Effective recruitment, screening, and training of care providers are essential to ensure a viable workforce. Although no pre employment background screening can provide nursing facilities with absolute assurances that a job applicant will not commit a crime in the future, nursing facilities must make reasonable efforts to ensure that they have a workforce that will maintain the safety of their residents. \69\ 42 CFR 483.13(c)(1)(ii).

Commonly, nursing facilities screen potential employees against criminal record databases. OIG is aware that there is a ``great diversity in the way States systematically identify, report, and investigate suspected abuse.'' \70\ Nonetheless, a comprehensive examination of a prospective employee's criminal record in all States in which the person has worked or resided may provide a greater degree of protection for residents.\71\
\70\ OIG, Audit Report A1212970003, ``Safeguarding LongTerm Care Residents,'' September 1998, available on our Web site at http://oig.hhs.gov/oas/reports/aoa/d9700003.pdf. \71\ Because there is no one central repository for criminal records, there is a significant limitation to searching the criminal record databases only for the State in which the facility is located. A better practice may be to search databases for all States in which the applicant resided or was employed.

Verification of education, licensing, certifications, and training for care providers can also assist nursing facilities in their efforts to ensure patients are provided with qualified and skilled caregivers. Many States have requirements that nursing facilities conduct these checks for all professional care providers, such as therapists, medical directors, and nurses. Federal regulations require a nursing facility to check its State nurse aide registry to ensure that potential hires for nurse aide positions have met competency evaluation requirements or are otherwise excepted from registration requirements.\72\ In addition, the facility must also check every State nurse aide registry it ``believes will include information'' on the individual.\73\ To ensure compliance with this requirement, facilities should have mechanisms in place to identify which State registries they must examine. \72\ 42 CFR 483.75(e)(5).
\73\ 42 CFR 483.75(e)(6).

B. Submission of Accurate Claims

Nursing facilities must submit accurate claims to Federal health care programs. Examples of false or fraudulent claims include claims for items not provided or not provided as claimed, claims for services that are not medically necessary, and claims when there has been a failure of care. Submitting false claims, or causing false claims to be submitted, to Medicare or Medicaid may subject the individual, the entity, or both to criminal prosecution, civil penalties including treble damages, and exclusion from participation in Federal health care programs.

Common and longstanding risks associated with claims preparation and submission include duplicate billing, insufficient documentation, and false or fraudulent cost reports. While nursing facilities should continue to be vigilant with respect to these important risk areas, we believe these risk areas are relatively wellunderstood in the industry, and therefore they are not specifically addressed in this section.

As reimbursement systems have evolved, OIG has uncovered other types of fraudulent transactions related to the provision of health care services to residents of nursing facilities reimbursed by Medicare and Medicaid. In this section, we will discuss some of these risk areas. This list is not exhaustive. It is intended to assist facilities in evaluating their own risk areas. In addition, section III.A. above outlines other regulatory requirements that, if not met, may subject nursing facilities to potential liability for submission of false or fraudulent claims.

1. Proper Reporting of Resident CaseMix by SNFs

We are aware of instances in which SNFs have improperly upcoded resident RUG assignments.\74\ The method of classifying a resident into the correct RUG, through resident assessments, requires accurate and comprehensive reporting about a resident's conditions and needs. Inaccurate reporting of data could result in the misrepresentation of the resident's status, the submission of false claims, and potential enforcement actions. Therefore, we have identified the assessment, reporting, and evaluation of resident casemix data as a significant risk area for SNFs.\75\
\74\ A 2006 OIG report found that 22 percent of claims were upcoded, representing $542 million in potential overpayments for FY 2002. OIG, OEI Report OEI020200830, ``A Review of Nursing
Facility Resource Utilization Groups,'' February 2006, available on our Web site at http://oig.hhs.gov/oei/reports/oei020200830.pdf. \75\ To the extent a State Medicaid program relies upon RUG classification, or a variation of this system, to calculate its reimbursement rate, nursing facilities, as defined in section 1919 of the Act (42 U.S.C. 1396r), should be aware of this risk area as well.

Because of the critical role resident casemix data plays in resident care planning and reimbursement, training on the collection and use of casemix data is important. An effective compliance program will include training of responsible staff to ensure that persons collecting the data and those charged with analyzing and responding to the data are knowledgeable about the purpose and utility of the data. Facilities must also ensure that data reported to the Federal Government is accurate. Both internal and external periodic validation of data may prove useful. Moreover, as authorities continue to scrutinize qualityreporting data,\76\ nursing facilities are well advised to review such data regularly to ensure its accuracy and to identify and address potential quality of care issues.\77\
\76\ See, e.g., CMS, ``2007 Action Plan for (Further Improvement of) Nursing Home Quality,'' September 2006, available on CMS's Web site at http://www.cms.hhs.gov/SurveyCertificationGenInfo/downloads/ 2007ActionPlan.pdf.
\77\ In addition to assisting facilities with ensuring that claims data is accurate, monitoring MDS data may assist facilities in recognizing common warning signs of a systemic care problem (e.g., increase in or excessive pressure ulcers or falls).

2. Therapy Services

The provision of physical, occupational, and speech therapy services continues to be a risk area for nursing facilities. Potential problems include: (i) Improper utilization of therapy services to inflate the severity of RUG classifications and obtain additional reimbursement; (ii) overutilization of therapy services billed on a feeforservice basis to Part B under consolidated billing; and (iii) stinting on therapy services provided to patients covered by the Part A PPS payment.\78\ These practices may result in the submission of false claims.\79\
\78\ There may be additional risk areas for outside therapy suppliers.
\79\ Additional risks related to the antikickback statute are discussed below in section III.C.

In addition, unnecessary therapy services may place frail but otherwise functioning residents at risk for physical injury, such as muscle fatigue and broken bones, and may obscure a resident's true condition, leading to inadequate plans of care and inaccurate RUG classifications.\80\ Too few therapy
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services may expose residents to risk of physical injury or decline in condition, resulting in potential failure of care problems. \80\ See 42 CFR 483.20(b) and (k).

OIG strongly advises nursing facilities to develop policies, procedures, and measures to ensure that residents are receiving medically appropriate therapy services.\81\ Some practices that may be beneficial include: requirements that therapy contractors provide complete and contemporaneous documentation of each resident's services; regular and periodic reconciliation of the physician's orders and the services actually provided; interviews with the residents and family members to be sure services are delivered; and assessments of the continued medical necessity for services during resident care meetings at which the attending physician attends.
\81\ See OIG, OEI Report OEI099900563, ``Physical,
Occupational, and Speech Therapy for Medicare Nursing Home Patients: Medical Necessity and Quality of Care Based on Treatment
Diagnosis,'' August 2001, available on our Web site at http:// oig.hhs.gov/oei/reports/oei099900563.pdf.

3. Screening for Excluded Individuals and Entities

No Federal health care program payment may be made for items or services furnished by an excluded individual or entity.\82\ This payment ban applies to all methods of Federal health care program reimbursement. Civil monetary penalties (CMPs) may be imposed against any person who arranges or contracts (by employment or otherwise) with an individual or entity for the provision of items or services for which payment may be made under a Federal health care program,\83\ if the person knows or should know that the employee or contractor is excluded from participation in a Federal health care program.\84\ \82\ 42 CFR 1001.1901. Exclusions imposed prior to August 5, 1997, cover Medicare and all State health care programs (including Medicaid), but not other Federal health care programs. See The Balanced Budget Act of 1997 (Pub. L. 10533) (amending section 1128 of the Act (42 U.S.C. 1320a7) to expand the scope of exclusions imposed by OIG).
\83\ Such items or services could include administrative, clerical, and other activities that do not directly involve patient care. See section 1128A(a)(6) of the Act (42 U.S.C. 1320a7a(a)(6)). \84\ Id.

To prevent hiring or contracting with an excluded person, OIG strongly advises nursing facilities to screen all prospective owners, officers, directors, employees, contractors,\85\ and agents prior to engaging their services against OIG's List of Excluded Individuals/ Entities (LEIE) on OIG's Web site,\86\ as well as the U.S. General Services Administration's Excluded Parties List System.\87\ In addition, facilities should consider implementing a process that requires job applicants to disclose, during the preemployment process (or vendors during the request for proposal process), whether they are excluded. Facilities should strongly consider periodically screening their current owners, officers, directors, employees, contractors, and agents to ensure that they have not been excluded since the initial screening.
\85\ A nursing facility that relies upon thirdparty agencies to provide temporary or contract staffing should consider including provisions in its contracts that require the vendors to screen staff against OIG's List of Excluded Individuals/Entities before determining that they are eligible to work at the nursing facility. Although a nursing facility would not avoid liability for violating Medicare's prohibition on payment for services rendered by the excluded staff person merely by including such a provision, requiring the vendors to screen staff may help a nursing facility avoid engaging the services of excluded persons, and could be taken into account in the event of a Government enforcement action. \86\ Available on our Web site at http://oig.hhs.gov/fraud/ exclusions/listofexcluded.html.
\87\ Available at http://www.epls.gov/.

Providers should also take steps to ensure that they have policies and procedures that require removal of any owner, officer, director, employee, contractor, or agent from responsibility for, or involvement with, a provider's business operations related to the Federal health care programs if the provider has actual notice that such a person is excluded. Providers may also wis