Moving the HME Industry Forward

General Healthcare

Corporate Compliance Manual – Recommended Contents – Part 4

September 1, 2014

AMARILLO, TX – Federal law requires DME suppliers enrolled in Medicare to establish and implement a compliance program. Because the Department of Health and Human Services has not yet published regulations on such compliance programs, a Corporate Compliance Manual should be designed to follow guidance from the Office of Inspector General (OIG) and the Federal Sentencing Guidelines.

The Federal Sentencing Guidelines, published by the United States Sentencing Commission, while designed to help judges determine the degree of fault in sentencing decisions, set forth the elements that a compliance program should meet. Similarly, the OIG has published guidance for compliance programs implemented by DME suppliers.

This four part series discusses many of the important contents that should be included in Corporate Compliance Manuals. Part 1 discussed “Code of Conduct.” Part 2 discussed “Enforcement and Discipline” and “Compliance Program Operations.” Parts 3 and 4 discuss the multiple “Policies” that should be included in the manual.

The “Policies” section of the Corporate Compliance Manual should include the following (note that I am only providing brief descriptions of the policies; the actual policies are much longer):

1) Internal Reporting
All employees and agents are required to report any information that leads them to suspect any violation of company policy or applicable laws and any situations where proposed conduct may constitute such a violation (collectively, a “Compliance Incident”). Failure to report a Compliance Incident is a violation of company policy and will subject an employee or agent to disciplinary action, up to and including termination.

2) Investigations
All Compliance Incident reports received by any employee or agent will be forwarded to the Compliance Officer.  The Compliance Officer will prepare a Compliance Report Form to be submitted to the Executive Team.  The Compliance Officer will direct the initial investigation of the alleged problem or incident as soon as reasonably possible and in any event within ten days following the receipt of the complaint or report.

3) Marketing
A number of laws and regulations directly address marketing by Medicare providers and suppliers, including the Medicare anti-kickback statute, the Stark physician self-referral statute, the telephone solicitation statute, and the beneficiary inducement statute. Additionally, the OIG has published fraud alerts, advisory bulletins, and advisory opinions that address marketing. Vigilance with regard to marketing activities in all areas of the business is important to the company.

4) Medical Necessity
Payors will only pay for items and services that are: 1) medically necessary; 2) ordered by the patient’s treating physician or other authorized person; 3) covered items or services; 4) provided to the patient; and 5) meet criteria established by appropriate payor policy.

5) Medicare Assignment
For those items for which the company accepts Medicare assignment, Medicare patients will not be charged more than the amount allowed under the Medicare fee schedule, including patient coinsurance and deductibles.

6) Payment Likely to be Denied
If the company believes that payment for items or services will be denied by Medicare, the patient will be informed (prior to providing an item or service) that the item may be denied and that he/she may be responsible for the charges. The company will issue an Advance Beneficiary Notice (“ABN”) each time it makes the determination that Medicare payment will likely not be made because the item or service is not medically necessary.

7) Physician Orders
The company will not bill for any item or service unless it has been ordered by the patient’s physician or other authorized person.  Such physician orders must be in writing.  Verbal orders must be documented and confirmed in writing prior to billing for the item or service.

8) Purchase Contracts
The company actively pursues contracts with manufacturers and distributors that will enable it to meet its customers’ individual and collective needs in the most efficient and affordable manner. The fulfillment of any obligations that may be placed on the company requires a complete understanding of what is required. Therefore, the Corporate Compliance Committee, or its designee, will investigate and obtain a thorough understanding of all if its obligations under each such contact it enters into. In addition, the company will fully comply with the terms of the contract and will take reasonable actions to assure itself that the contract does not violate any law or regulation.

9) Record Retention
The Corporate Compliance Department will ensure that records are retained in accordance with the Record Retention Guidelines set forth in this policy. In addition to the designated period under the Record Retention Guidelines, all records will be retained until any pending federal or state audits are completed.

10) Training
The Human Resource Officer will document the training provided to each employee. The documentation will include the name and position of the employee and agent, the date and duration of the educational activity or program, and a brief description of the subject matter of the education. New employees will be required by the Human Resource Officer to sign a statement certifying that they have received, read, understood, and will abide by the standards of conduct.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato PC, a law firm based in Amarillo, Tex. He represents pharmacies, HME companies, and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization. He can be reached at (806) 345-6320 or