Compliance Department Aims to Train and Educate

It's Kathleen Merlo's responsibility to make sure that this law, the False Claims Act, and other federal and state regulations aren't being violated.

During the Civil War people were defrauding the government by selling the Union "horses" that were really mules. So enter the False Claims Act.

Violations of this law and other regulations, in terms of billing practices and Medicare and Medicaid reimbursements, can lead to stiff fines. A significant portion of the University's physician reimbursements for the University Medical Group comes from federal sources.

"The penalties are incredibly severe if the government finds you out of compliance," said Merlo, who became the University's director of compliance earlier this year. "The fines have been as high as $100 million."

Violating parties must pay back revenues received and a penalty of either $5,000 or $10,000 per incident. Fines then can be doubled or tripled.

The University of Pennsylvania, for example, paid a $30 million settlement in 1995. This year Georgetown University paid a $5.3 million fine.

"The financial penalties are enormous," Merlo said. "The physician or institution also can be excluded from the Medicare program."

Merlo said that ongoing education and training are the cornerstones of the University's compliance program. Another critical element of the program are the yearly physician audits.

"We don't try to catch the doctors making mistakes or wave our findings in their faces," she said. "But we want to provide enough information so they can make good decisions and then follow through with education and training."

Merlo said a key outcome of a compliance program should be a culture that promotes doing the right thing and supports those individuals who promote this. Compliance, then, becomes simply a means of "acting in accordance with our values."

This is especially important considering that fraud does not have to be an intentional act committed by a physician or researcher. Government regulators don't consider anything to be a simple mistake.

"They consider any mistake to be fraud," said Sally Freese, education specialist in the compliance department. "People think of the flagrant causes of fraud. But the government looks at these other things, honest mistakes, as fraud."

"Most of our doctors want to be compliant and participate actively in education programs," Merlo said. "We recently had 290 physicians, residents, medical students and staff attend our formal education programs in one month."

Nine people are part Merlo's office, which reports directly to the general counsel's office. Lynn Monahan serves as the University's compliance coordinator.

"We keep abreast of all these federal regulations," Monahan said, adding that the rules -- and their interpretations -- often change. "It's a full-time job not only to educate ourselves but all the physicians, the administrators and staff."

Federal rules involving Medicare can be very exact, requiring certain types of documentation in regard to patient billing. This is especially true for physicians in academic practices.

"There's an additional level of rules for physicians who involve residents in patient care (teaching physicians)," Merlo said.

New regulations for teaching physicians came out in July 1996, and the government started doing PATH (Physicians at Teaching Hospital) audits. Such audits led to the fines incurred this year by Georgetown University and last year by three other universities.

Merlo said that in addition to physician billing questions, the government also is trying to crack down on research fraud. This means this is a University-wide issue and not something just of concern on the Health Sciences campus.

"They're stepping up on penalties for research fraud as well," she said.

Investigations into legal violations are conducted by a number of federal agencies, including the FBI. This can lead to search warrants and seized files and computers.

Merlo said she appreciates the strong support from University President Lawrence Biondi, SJ, and the board of trustees. "He's very committed to this," she said.

If, at any time, any employee or student becomes aware of any apparent violations of compliance policies, he or she should report it to his or her supervisor, primary contact or to the compliance department. In addition, a hot line number is in place at 877-525-5669. Merlo can be reached at 268-5545.

The hot line is a 24-hour number supplied by an outside company. Merlo and her staff encourage employees who know about any fraudulent activities to call it.

"Our bottom line is to make compliance everybody's business," Freese said. "Our job is to get the message out. We're trying to do the right thing -- and for the right reasons."

"Saint Louis University is stepping up to the plate to be a responsible corporate citizen," said Bill Kauffman, vice president and general counsel. "SLU is taking this responsibility seriously and has a team in place. This is a critical element in minimizing our risk."

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