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Phase III: Do SNFs need to conduct a compliance program annual review?

Posted by Margaret Scavotto, JD, CHC on 1/21/20 8:00 AM

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In a word: yes.

In July 2019, CMS published a proposed rule that would modify the Compliance and Ethics program aspects of the Phase III Long-Term Care Facilities Requirements for Participation.

One of the proposed modifications brought a sigh of relief from the nursing home industry: CMS wants to drop the requirement that nursing homes conduct an annual review of their compliance programs.

Instead, CMS proposes the following: “The operating organization for each facility must periodically review and revise its compliance program to identify necessary changes within the organization and its facilities.”

While CMS did not define “periodically” in the proposed rule, CMS refers to a “biennial” review in the proposed rule comments. Hopefully this will be clarified in the final rule.

Keep in mind that the Proposed Rule has not yet been made final, and, as of November 28, 2019, SNFs are expected to comply with the original Phase 3 compliance requirements at 42 CFR 483.85. But, what if the Proposed Rule becomes final?

Nursing homes get a break…

Going from an annual review to a periodic – perhaps biennial – review is indeed good news for nursing homes. For one thing, nursing homes would not have to face the scrutiny of state surveys on this requirement every single year. Notably, nursing homes are the first and only provider to be required by regulation to conduct a regular review of their compliance programs. To my knowledge, no other providers – not hospitals, not doctors, or anybody else – are required to conduct this review. So to require nursing homes, who often have more limited resources, to conduct this review on an annual basis and then be tested on it as part of state survey, did not quite seem fair.

…but the OIG still expects an annual review

While nursing homes should enjoy the reduction in regulation and the break on the survey, they should also keep in mind that the OIG still expects all providers – including nursing homes – to conduct an annual review of their compliance programs:

  • “In addition to evaluating the facility’s conformance with program rules, an effective compliance program also should incorporate periodic (at least annual) reviews of whether the program’s compliance elements have been satisfied, e.g., whether there has been appropriate dissemination of the program’s standards, ongoing educational programs, and internal investigations of alleged noncompliance.” (emphasis added)
  • "Nursing facilities should regularly review the implementation and execution of their compliance program systems and structures. This review should be conducted periodically, typically on annual basis." (emphasis added)

We know the OIG – the ultimate source of guidance and enforcement when it comes to health care compliance – believes an annual review is essential to an effective compliance program.  This process is key to moving compliance forward in your organization. It gives your board or CEO a yardstick by which to measure the compliance programs they oversee. It gives compliance officers a list of successes to celebrate, and challenges to overcome in the coming year.

Skipping the annual review might not land you any F-tags on your survey this year. But, your compliance program won’t be performing at OIG expectations, which exposes our organization to potentially higher false claims fines and penalties.

Pressed for time? Don’t know where to start? Want to make sure you get it right? MPA can help with your compliance program review. Email me today to learn more.

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Topics: annual review, compliance, Phase 3

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