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Compliance Program: Mistake Avoidance, Company Valuation, Audits, and 60 Day Rule

Implementation of a formal compliance program has a “real world” impact on DME suppliers. A compliance program is a blueprint (“roadmap”) for the supplier’s employees to follow as they fulfill their employment responsibilities. The program (i) anticipates the multiple daily decisions the supplier must make and (ii) erects guardrails to follow in making the decisions. In short, a functioning compliance program helps DME suppliers avoid mistakes. If a DME supplier decides to sell, the purchaser will conduct due diligence, meaning that it will examine the supplier’s operations to determine if they are legally compliant. A noncompliant operation (e.g., providing CPAPs in violation of the Medicare CPAP Payment Prohibition) will greatly reduce the selling supplier’s value to a prospective buyer. DME suppliers are audited by multiple sources. If the supplier operates within the compliance program’s guardrails, the risk of an audit leading to a bad outcome is greatly reduced. And then there is the 60 Day Rule and Six-Year Lookback. If a DME supplier determines that it has been improperly submitting claims to Medicare, the supplier is obligated to investigate the matter and then report and refund the claims to Medicare. Depending on the circumstances, the supplier may have to conduct a Six-Year Lookback. A functioning compliance plan will reduce the risk of improperly submitting claims that result in in applicability of the 60 Day Rule and Six-Year Lookback.

This program will examine (i) how a compliance program should be drafted and adopted by the DME supplier, (ii) how the program should be updated on a regular basis, and (iii) how following the guardrails contained in the program will reduce the number of mistakes, maintain the value of the supplier, reduce bad audit outcomes, and reduce the risk of having to conduct a Six-Year Lookback.