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Corporate Compliance/Fraud and Abuse Policy

Corporate Compliance/Fraud and Abuse Policy

EFFECTIVE: 04/12/01


Lima Memorial Health System (Lima Memorial Hospital and Lima Memorial Professional Corporation) Compliance Plan was developed in May of 1998. It's purpose is to detect and prevent violations of the law and promote a culture that encourages a commitment to compliance.


  • Demonstrates a commitment to honest and responsible corporate conduct.
  • Provides an accurate view of Associate and contract behavior related to fraud and abuse.
  • Identification and prevention of criminal and unethical conduct.
  • Tailors compliance to the system's specific needs.
  • Improves the quality of patient care.
  • Creates a centralized source for distribution of information.
  • Develops a methodology that encourages Associates to promptly report potential problems.
  • Develops procedures for investigating alleged misconduct, and initiating immediate and appropriate corrective action.
  • Reduces the hospital's exposure to damage, penalties, and sanctions by early detection and reporting.


  1. Organization must issue "standards of conduct and internal control systems that are reasonably capable of reducing the prospect of criminal activity."
  2. Written standards of conduct -- language has been added to include the failure to report a suspected fraud and abuse problem as grounds for disciplinary action.
  3. Designation of a Chief Compliance Officer (CCO) - Lima Memorial Health System's Director, Kyle Erford, as well as high-level management. The CCO has the authority to communicate personally with the board promptly on any matter involving criminal or potential criminal conduct.
  4. Education and training programs -- Computer Based Training, Compliance policies and procedures, special education for coders, billers and those entering outpatient orders or answering the Compliance hotline. Compliance training is a required element of an effective compliance program for all Associates, leaders, and governance. The OIG requires annual Compliance Training.
  5. A process to for the workforce to anonymously or confidentially seek guidance regarding potential criminal conduct without fear of retaliation. A hospital Compliance hotline has been created. A call can be made to the hotline, 998-4499, which is a non-caller ID line, and the person making the call will remain anonymous. Self-reporting and seeking advice to do the right thing is encouraged. Reporting will not result in retaliation of any form.
  6. A system to respond to allegations -- Allegations are forwarded to the Compliance Officer for investigation, action and follow-up. The problem may be assigned to the department Director or to an outside reviewer.
  7. Monitoring and auditing to evaluate effectiveness evaluations of the compliance program and to detect any criminal conduct are required. --Each member of the Compliance Committee must turn in audits performed in his/her department to show that risk areas are being monitored and problems are being identified, reported and corrected. Corporate Compliance Committee Members include members of Administration and the senior management team.
  8. Perform on-going risk assessments of the likelihood of compliance violations occurring and the use of the results to: Modify other components of the effective plabe, and Prioritize compliance efforts and resource allocations.
  9. Investigation and remediation of problems -- There is investigation and remediation of problems through the monitoring process, as well a follow-up from Hotline calls and Opportunities for Improvement.
  10. Exclusion of sanctioned individuals -- Before hiring, a check is made to assure that the individual has not been sanctioned by the government.
  11. Reopen lines of communication and enforce discipline standards.
  12. Demonstrate appropriate incentives to comply and disciplinary action when violations occur.

III        Governance/Leadership Role

  1. Corporate Compliance Committee Members include members of Administration and the senior management team.
  2. Leadership must be knowledgeable about the content & operations of the program.
  3. Governance must be similarly knowledgeable and exercise oversight of implementation & effectiveness of the compliance program.
  4. High level responsible persons for compliance must report directly to governance re: effectiveness and operations of the compliance program on at least an annual basis.
  5. Knowledge to include: Major risks of unlawful conduct, Primary compliance program features to address those risks, and Types of compliance problems encountered.
  6. Exercise effective oversight by: Proactive information seeking in regard to compliance problems, Evaluating information received, Monitoring implementation & effectiveness of responses to problems.



Hospital Risk Areas:

  • Billing for items or services not actually rendered
  • Providing medically unnecessary services
  • Upcoding
  • "DRG creep"
  • Outpatient services rendered in connection with inpatient stays
  • Teaching physician and resident requirements for teaching hospitals
  • Duplicate billing
  • False cost reports
  • Unbundling
  • Billing for discharge in lieu of transfer
  • Patients' freedom of choice
  • Credit balances-failure to refund
  • Hospital incentives that violate the anti-kickback statute or other similar federal or state statute or regulation
  • Joint ventures
  • Financial arrangements between hospitals and hospital-based physicians
  • Stark physician self-referral law
  • Knowing failure to provide covered services or necessary care to members of a health maintenance organization
  • Patient dumping

OIG Supplemental guidelines outlining additional concerns:

  • Submission of accurate claims and information
    • Outpatinet Procedure Coding
    • Admissions and Discharges
    • Supplemental Payment Consideration
    • Use of Informational Technology
  • Referral Statute: Self referral (Stark) and Federal Anti-kickback
    • Physician self-referral relationship (Stark Law)
    • Federal anti-kickback statute
  • Hospital need to review obligations under EMTALA
  • Hospital must examine relationships with beneficiaries especially in areas of gifts & gratuities, cost-sharing waivers and free transportation
  • Hopital cannot bill Medicare or Medicaid substantially in excess of usual charges
  • Other areas which do not pose significant risk but need to be examined:
    • Discounts to uninsured patients
    • Preventative care services
    • Professional courtesy
  • Hospital compliance programs should determine effectiveness of program
  • Self report within 60 days any credible evidence of misconduct.

Physician Practice Risk Areas:

  • Coding and billing
  • Reasonable and necessary services



Failure to comply with federal and state regulations can result in severe penalties to the hospital. Financial penalties can reach $10,000 per false claim submitted, up to $290,000,000, and the hospital could lose it's certification to care for Medicare and Medicaid patients.

Individuals can have fines and prison sentences imposed.

Specific Laws Everyone Must Be Aware Of:

Stark I and II - A law which prohibits physicians from referring a patient to a provider of designated health services, if the physician has a financial relationship with the provider.

Medicare Anti-Kickback Statutes - Makes it a crime to solicit or accept payment or other compensation knowingly and willfully for referring the patient to another provider of health services for which payment may be made in whole or in part by the Medicare or Medicaid programs. Also makes it a crime to offer such a payment to induce such a referral.

Private Inurement - Prohibits all non-profit organizations from paying more than a "reasonable" compensation to a private individual or entity from which it purchases services or items. Also prohibits the provision of items or services for less than market value.

False Claims - Makes it a civil, as well as criminal offense, to knowingly present a false claim to the United States Government.

Ohio Fraud and Insurance Fraud - Knowingly making false statements involving the proceeds of an insurance policy, and presenting, or causing to be presented, to an insurer any known false statement in a claim for payment.


Everyone must first know about the Compliance program. This program directly relates to LMHS's mission and values in that it requires all Associates to adhere to the highest moral and ethical standards, as reflected to the Standards of Conduct.

We Must Also Be Sure That:

  • Coding accurately reflects the procedures performed and/or diagnosis as documented.
  • Billing must be consistent with Medicare/Medicaid rules
  • Documentation must reflect the patient's condition, as well as procedures performed and treatments received.
  • All charges must be substantiated with physician orders, medical necessity, and medical services provided.
  • Claim submission and cost reports must be completed according to Medicare/Medicaid rules.
  • Contracts must be at fair market value. Any remuneration to physicians must not be based upon referrals, or be used to induce referrals.

Report suspected violations immediately. Examples of activities which should be reported (not inclusive) are as follows:

  • Billing for services or items not provided or duplicate billing
  • Medically unnecessary services
  • Coding inaccuracies or DRG inaccuracies
  • False cost reports
  • Unbundling charges
  • Violations of anti-kickback statutes

To report a suspected violation:

  • Report to your unit manager or director, OR
  • Call the Compliance hotline at (419)998-4499, OR
  • Report to the Compliance Officer, at 226-5050, OR
  • Use the Opportunity for Improvement form

REMEMBER: The Hotline is confidential and the law prohibits retaliation.

Original: 04/01
Latest Rev: 09/13

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