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What is Regulatory Compliance in HealthCare

What is Regulatory Compliance in HealthCare

Regulatory compliance in healthcare involves a broad range of practices. However, patient safety, the privacy of patient information, and government reimbursement for healthcare expenditures make up the bulk of compliance issues in healthcare. 

Healthcare professionals access patients’ health records electronically on a routine basis. This makes maintaining patient privacy a vital component of the healthcare industry. Failure to protect all that data — that is, failure to meet compliance obligations — can result in costly monetary penalties from regulators. 

Why is it important?  

The purpose and primary benefit of healthcare compliance is to improve patient care. Patient care is improved when healthcare decisions are based upon appropriate and current clinical standards. Patient care decisions based upon improper motives obviously do not equate to quality care.

Healthcare compliance also aids healthcare organizations and providers in avoiding trouble with government authorities. An effective healthcare compliance program can identify problems and find solutions to those problems before a government agency finds the problem. An effective healthcare compliance program can also mitigate against the imposition of sanctions, or financial penalties that might otherwise be imposed on the healthcare organization or provider. Fines tend to be higher when healthcare providers have weak and or non-existing compliance process in place. 

Many healthcare organizations and providers have self-disclosed matters identified through their compliance programs to government agencies. The penalties imposed upon those self-disclosing organizations and providers were far less than the penalties and other sanctions imposed on organizations and providers that were prosecuted for their misconduct.

An effective compliance program can also help a healthcare organization or provider avoid liability for malpractice. A consistent theme in healthcare compliance is documentation that the organization or provider is following current clinical standards. A healthcare organization or provider that is following best clinical practices is less likely to be the subject of a malpractice claim.

What are some regulatory compliance challenges in the healthcare industry?  


  1. Impact of Stark Law on Physician-Hospital Relationships

The Stark law was created to prevent referral sources, primarily doctors, from profiting in an unethical manner from referrals. The law makes it, so doctors are not allowed to refer patients for services that are to be reimbursed by federal healthcare programs to any organization with which the doctor has any type of compensation arrangement or interest. Due to the complicated nature of this law, healthcare organizations must be extremely careful regarding the way in which compensation arrangements are made with physicians. Intent does not need to be proven for the statute to be violated, which means that violations are frequent. 

  1. HIPAA& Data Breaches 

Cybercrime has been on the rise in recent years and electronic data breaches have become a significant problem in all industries. These data breaches have severe consequences for the healthcare industry. As a result, many states have now developed their own individual laws to fight against data breaches. Laws vary among states regarding personal information, the way in which notice of breaches must take place, and the total amount of fines for organizations found to be non-compliant. 

  1. False Claims & Whistleblower Suits

The healthcare industry also now faces challenges related to false claims and whistleblower suits. The False Claims Act covers any type of fraud involving any federally funded program or contracts, such as Medicaid or Medicare. Under this act, healthcare providers may be prosecuted for acts that result in a fraudulent claim being submitted. One of the primary activities constituting a violation of this act is knowingly presenting a false claim for payment to the federal government, and knowingly using a false statement or record to get the federal government to pay a claim. Recent efforts at reform have also resulted in whistleblowers becoming empowered. For instance, whistleblowers may now initiate false claims actions based on publicly disclosed information made available through civil, criminal, and administrative proceedings. This means that whistleblowers no longer have to be the actual source of information in such a claim, making it easier for them to make claims against healthcare organizations. 

  1. Co-Management Arrangements

Co-management arrangements refer to agreements in which a hospital compensates physicians for fulfilling certain duties while meeting performance objectives. Such arrangements can result in legal issues related to anti-kickback, antitrust, physician self-referral prohibitions, civil monetary penalties, and Medicare regulations and laws. 

  1. Anti-Kickback & Physician-Hospital Issues

The federal Anti-Kickback Statute “is a criminal statute that prohibits the exchange (or offer to exchange), of anything of value, to induce (or reward) the referral of business reimbursable by federal health care programs. Examples of prohibited kickbacks include receiving financial incentives for referrals, free or very low rent for office space, or excessive compensation for medical directorships.” (ASA) Healthcare organizations can run into trouble with this law when they offer free services to a medical practice or when they provide discounts or pay for unnecessary services. 

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