OIG Updates Compliance Guidance for Nursing Facilities

In 1998, the Office of Inspector General (“OIG”) for the U.S. Department of Health and Human Services began issuing voluntary, compliance program guidance for various segments of the healthcare industry. Recently, the OIG has begun updating such compliance program guidance. On November 20, 2024, the OIG issued the first of its new, industry-specific, compliance program guidance (“ICPG”), in this case for nursing facilities (“Nursing Facility ICPG”). Among other things, this Nursing Facility ICPG focuses on risk areas associated with quality of care and related fraud and abuse.

Nursing Facility ICPG

The newly issued Nursing Facility ICPG is the first compliance program guidance for this segment of the healthcare industry since the OIG issued its initial guidance in 2000 and supplemental guidance in 2008 for nursing facilities. Among the OIG’s stated reasons for releasing the Nursing Facility ICPG at this time are issues this agency has observed regarding quality of care, as well as changes since 2008 in business practices of nursing facilities and how they are reimbursed.

Compliance Risk Areas

The Nursing Facility ICPG spotlights the following general categories for compliance risk:

• Quality of Care and Quality of Life
• Medicare and Medicaid Billing Requirements
• Federal Anti-Kickback Statute
• Other Risk Areas (related-party transactions; physician self-referral law; anti-supplementation; Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) Privacy, Security, and Breach Notification Rules; and civil rights)

With respect to quality of care and quality of life, the OIG cited potential deficiencies in staffing levels, infection control, emergency preparedness, employee background checks, reporting of adverse events, and use of medications. According to the OIG, certain of these vulnerabilities were exacerbated by the COVID-19 pandemic. The OIG noted that the failure of nursing facilities to provide quality of care and promote quality of life risks fraud and abuse because claims-submission forms contain certifications that claimed services were provided in compliance with all applicable statutes, rules, and regulations. The OIG cited the following as examples that can lead to false claims: providing medically unnecessary or grossly substandard services, housing residents in unacceptable or dangerous living conditions, failing to provide residents with activities, and failing to provide residents with psychiatric care when needed. The Nursing Facility ICPG lists various recommendations to mitigate these and related risk areas.

The Nursing Facility ICPG also contains recommendations for maintaining compliance with billing requirements under the prospective payment system (“PPS”) and cites as “common and longstanding” problems duplicate billing, insufficient documentation, and false or fraudulent cost reports. The OIG also advises that compliance plans for nursing facilities include auditing and training for data accuracy to reduce the risk of “gaming” data for performance-based payments under value-based payment models. Among its other recommendations, the OIG advises that nursing facilities avoid “stinting” on resident care covered by capitated payments under Medicare Advantage plans, billing Medicare Part D for prescriptions covered under Part A, and inappropriate steering of residents’ decisions when enrolling in Medicare health plans.

The OIG discussed and made recommendations concerning various referral arrangements that could pose compliance risks under the federal Anti-Kickback Statute and patient inducement provisions of civil monetary law, such as with physicians and other healthcare professionals, hospitals and hospital discharge planners, hospices, home health agencies, other nursing facilities, federal healthcare program enrollees who self-refer to a facility, suppliers of durable medical equipment, ambulance providers, diagnostic testing facilities, and long-term care pharmacies. The OIG also discussed and made recommendations concerning the other risk areas listed in the final bullet point above.

Conclusion

The OIG encourages nursing facilities “to use the Nursing Facility ICPG as a guide in identifying their own risk areas and in implementing, evaluating, and updating their compliance and quality programs” to mitigate the various risk areas identified in the compliance program guidance. Operators of nursing facilities would do well to consider as essential reading this new Nursing Facility ICPG.