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Why Every Provider Must Establish and Maintain a Fraud and Abuse Compliance Program

Guest Article: Elizabeth E. Hogue, Esq.


Providers may have heard or read about the importance of Fraud and Abuse Compliance Programs in their organizations. Despite the wealth of available information about Compliance Programs, many providers continue to express uncertainty about their value. 

Here are some of the questions providers commonly ask about Compliance Programs:

Why should we have a Fraud and Abuse Compliance Program?

First, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services has clearly stated that all providers are now required to have current Compliance Programs that are fully implemented.

As a practical matter, when providers establish and maintain Compliance Programs, it clearly discourages regulators from pursuing allegations of fraud and abuse violations.

Technically speaking, the Federal Sentencing Guidelines make it clear that establishment and implementation of Compliance Programs is considered to be a mitigating factor. That is, if accusations of criminal conduct are made, the consequences may be substantially less severe as a result of a fully implemented Compliance Program.

In addition, providers with Compliance Programs are more likely to avoid fraud and abuse. This is because Programs routinely establish an obligation on the part of every employee to report possible instances of fraud and abuse and include training for all employees.

Compliance Programs may help to prevent qui tam or so-called “whistleblower” lawsuits by private individuals, rather than by government enforcers, who believe that they have identified instances of fraud and abuse. There are significant incentives to bring these legal actions since “whistleblowers” receive a share of monies recovered as a result of their efforts. Some “whistleblowers” have received millions of dollars.  Compliance Programs make it clear that employees have an obligation to bring any potential fraud and abuse issues to the attention of their employers first.

In addition, the federal Affordable Care Act (ACA) requires providers to have Compliance Programs. In short, it’s the law!

Finally, the Deficit Reduction Act (DRA) requires providers who receive more than $5 million in monies from state Medicaid Programs per year to implement policies and procedures, provide education to employees and put information in their employee handbooks about fraud and abuse compliance.  These requirements can be met through implementation of Fraud and Abuse Compliance Programs.

We don't receive reimbursement from the Medicare or Medicaid Programs. Do we still need a Compliance Program?

Statutes and regulations governing fraud and abuse also apply to providers who receive payments from any federal and state healthcare programs, including Medicaid, Medicaid waiver and other federal and state health care programs, such as Tri-Care. Many private insurers have followed the federal government’s “lead” in terms of fraud and abuse enforcement.  So private duty providers must have compliance programs, too.

We hear that the OIG has provided guidance for various segments of the healthcare industry regarding Compliance Programs. Specifically, the OIG has already published guidance for clinical laboratories, hospitals, home health agencies, hospices, physicians' practices, third-party billing companies and home medical equipment companies. Should we just use the model guidance that is applicable to us?

The answer is "No!" Guidance from the OIG is not a model Compliance Program.  Guidance from the OIG consists of general guidelines and does not constitute a valid Compliance Program. In addition, the OIG has made it clear that Programs must be customized for each organization. 

We have read that, before implementing Compliance Programs, providers must conduct expensive internal audits that can take many months to complete. Is this true?

While beginning the compliance process with an extensive internal audit is certainly one way to proceed, it is not the only viable way to work toward compliance. It is equally valid to begin with Compliance Programs that are customized for the organization that includes training for all employees about fraud and abuse and Compliance Programs. Then all staff members can subsequently participate in internal compliance activities, including audits, with a process in place to handle any issues that arise as a result of the audits.

We have all sorts of policies and procedures in our organization. Why do we need something else called a Compliance Program?

Compliance Programs are specific types of documents that routinely address issues that providers do not usually cover in internal policies and procedures. In addition, providers may not gain benefits under the Federal Sentencing Guidelines described in paragraph one (1) above if there is no formal document called a Compliance Program.

We just spent a lot of money to become accredited or reaccredited. Doesn't certification mean that we are in compliance?

On the contrary, Compliance Programs appropriately address potential fraud and abuse issues. They also include mechanisms for helping to ensure compliance such as processes for identification and correction of potential problems that are not addressed during the certification process. In other words, organizations may be accredited but fail to meet applicable compliance standards for fraud and abuse.

Will the fact that our organization has a Compliance Program make any difference with regard to the outcome of fraud and abuse investigations and the imposition of Corporate Integrity Agreements (CIA's)? 

Yes, it may make a considerable difference based on statements from the OIG. If providers have Compliance Programs in place that are current and fully implemented, the OIG may be less aggressive in pursuing potential violations. When the OIG actually discovers problems with fraud and abuse in organizations, providers are usually asked to develop and implement a Corporate Integrity Agreement (CIA). The OIG often requires CIA's to include a process for stringent monitoring by the OIG on a continuous basis. These monitoring activities can be extremely burdensome to providers in terms of both time and money. Providers with valid Compliance Programs are not necessarily asked to develop and implement CIA's.   

Now is the time for all providers to recognize and act upon the need to establish and maintain Compliance Programs. "Working on it" is no longer good enough.


©2023 Elizabeth E. Hogue, Esq. All rights reserved.

No portion of this material may be reproduced in any form without the advance written permission of the author.


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