The Cost of Compliance – An impassioned plea to be proactive

By: Wayne H. van Halem

To start, when I say compliance I am speaking directly to being compliant with government laws and regulations when treating patients receiving services from government or private payors. This isn’t licensure or accreditation, but a reimbursement compliance program – where your greatest risk is. I know this is not a topic many folks like to talk about. We hear from clients all the time that, “We hope we never need you, but glad to know you’re there!”  The problem is most of our clients don’t know they need us until it’s too late!

To illustrate this point, we’ve done a cost-benefit analysis on three clients in unique sectors that we work with:  Home Medical Equipment; Home Health and Hospice; and Physical Therapy.  As you will see, the results are astounding. In each of these examples, these clients came to us after compliance issues had been identified by CMS or one of its’ contractors. In each of these examples, despite the absence of intention or malice, our client’s compliance issues resulted in one or more of the following actions being taken as a result:

  • Large extrapolated overpayment
  • Payment suspension
  • 100% prepayment review
  • Corporate Integrity Agreement with the Office of Inspector General

These are all very serious actions that can be debilitating to your business. Imagine if this happened to you?  Luckily, our staff is very good at managing these issues and we have successfully navigated the process for each of these clients, in some cases saving them millions of dollars. However, as you can imagine, dealing with these issues requires an expert’s detailed analysis. It takes hours of time and effort in developing responses and strategies to correct the issues identified and/or to counter the overpayments or denials. This costs money. While our services are not as expensive as what you would pay if you hired a law firm, our hourly rates can add up depending on how serious the issues are. In the chart below, you will see the costs associated with helping our clients. These fees range from just over $15,000 over a 1-year period for a sole physical therapy practitioner who had to enter into a Corporate Integrity Agreement, to over $180,000 over a 1½-year period for a large home health agency with hundreds of employees who experienced a large extrapolated overpayment as the result of the ZPIC audit. It is also important to note that these do not include other financial hits these companies had to take with claim denials, refunds, workload, or hiring legal counsel in addition to our services.

All of this got us thinking, what if these clients had signed up for our monthly proactive compliance packages and were paying that amount, instead of our hourly rates, over the same period of time we were working to fix their issues? Not surprisingly, it turns out the cost of our proactive compliance services are just 10% – 34% of what they actually paid. For example, as illustrated below, our HME client paid us fees totaling over $55,000 over a period of almost two years to manage their issues. During that same time, our monthly compliance package for a company their size would have been just $5,600! This company was pushed to the brink of bankruptcy by CMS and its contractors and is still on a repayment plan today. They have also lost significant revenue and had to lay off half of their workforce.

In three examples from different sectors, we looked at what our clients would have paid for one of our monthly compliance packages over the same period of time as what they actually paid for us to resolve the issues. Below is a chart that illustrates the difference:

Now, of course, there is no guarantee that a comprehensive compliance program is going to catch and resolve every issue; however, leaving a lot of the work up to compliance “experts” who are innately familiar with the requirements and can provide affordable expert advice is a lot better than waiting to see if something bad happens. The van Halem Group offers a range of options for our clients, such as:

  • Customized Monthly Compliance Package, which includes:
    • Online compliance training and education with management reporting and tracking
    • Compliance policies and procedures
    • Quarterly Audits with Corrective Action Plans by clinical and audit consultants
    • Compliance Web-based and Hotline reporting
    • Quarterly compliance newsletters
  • HIPAA Risk Assessment and Monthly Package, which includes:
    • Quarterly HIPAA compliance training with management reporting and tracking
    • HIPAA policies and procedures
    • On-going Security and Risk Assessments with Mitigation Plan by HIPAA consultants
    • Electronic Business Associate management
    • HIPAA Documentation management
    • Breach Reporting
    • Comprehensive and easily accessible HIPAA library

If you’re not sure you want to dive into a long-term agreement, we have one time audits and assessments similar to what is described above as a quick analysis of where you stand or a test of the services we offer. All of our proactive compliance services are reasonable, customizable, and comprehensive. Not to mention, these are all things the government expects that you are already doing. Have you seen the news reports lately of the fines being assessed by the government for HIPAA violations? Some of our monthly compliance packages cost as little as $165 per month per location.  You can’t hire compliance support staff on your own for that.

These services are not designed to replace your compliance officer or your compliance staff, but to augment the work they may be doing. We provide key expertise and assistance while they focus on the many other duties and tasks they are also responsible for.  We make sure that compliance is engrained within your organization and the program is an evolving one that protects your business. We understand that reduced reimbursement has impacted many providers, but even our clients with the most comprehensive internal compliance program are only spending 2-4% of their overall budget on compliance. Considering the risks in today’s environment, that is not an unreasonable spend. A good compliance program will mitigate the cost of itself and you’ll see a return on your investment through better processes, efficiencies, and quality of care. We invest in insurance for our business, why don’t we invest in compliance?

As Roy Snell, CEO of the Health Care Compliance Association – a national association of healthcare compliance experts, says “Organizations that have effective compliance and ethics programs attract and retain good staff and are more trusted by their communities and potential customers. Good compliance and ethics programs have an impact on revenue that must be considered when you calculate cost. Trusted companies get more revenue than companies that can’t be trusted.”

The van Halem Group is here for you when you need us…but you should understand that you may need us now. Since founding The van Halem Group in 2006, we have helped countless providers save over $75 million in overpayment and denials. I am so proud of that, but we could have avoided much of that from ever happening. That is our goal with our proactive services. We have fought and will continue to fight for fairness and reasonableness in the audit and appeal process, but wouldn’t it be nice to avoid it altogether?

It saddens me greatly to see family-owned companies that have been in business for over 20 years be brought to their knees due to avoidable compliance risks. While reactive work may be more lucrative, it also weighs heavily on our clients, and on us. It adds unnecessary stress and tension for everyone involved in the process. We have relieved that stress for a number of clients, but we have a lot more work to do.

Be proactive. Be prepared. Let us help you.