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OIG compliance guidance for nursing facilities

April 11, 2011
by Tom Ealey, MA and Marcy Gilstad
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These mandatory rules make good business sense

The importance of the long-term care (LTC) mission and this hyperintensive regulatory environment requires constant vigilance and hard work. As Congress moves compliance from recommended to mandatory, key management, financial, and clinical personnel need to begin upgrading compliance plans and activities. Since 1998, the Office of Inspector General (OIG) of the Department of Health and Human Services has issued a series of guidance statements for various types of healthcare providers. In 2000 and 2008, the OIG issued compliance recommendations for long-term care (copies can be downloaded at


In 2009, the Patient Protection and Affordable Care Act moved compliance to a new realm by making a compliance and ethics plan mandatory, by a date to be determined. Effective compliance requires a team approach by administration, clinical staff, and legal advisers.

A compliance plan can be considered evidence of “good faith” during audits, investigations, and in federal sentencing considerations. The goal, of course, is to avoid ever getting close to a federal criminal proceeding.

During the move from recommended to mandatory, facilities will have to commit more staff and money; however, compliance can be good business. Just as many facilities use self-survey to monitor quality and regulatory compliance, the self-audit features of a compliance and ethics plan can improve billing, documentation, and quality of care.


LTC facilities face complex tasks with limited resources, often caught between regulators and families. Quality-of-care problems quickly become front-page news. OIG guidance statements for other providers focus on billing integrity. For LTC, however, this emphasis has evolved into something broader. Quality of care is a big emphasis. As stated in the OIG guidance: “A successful compliance program addresses the public and private sectors' common goals of reducing fraud and abuse, enhancing healthcare providers' operations, improving the quality of healthcare services, and reducing their overall cost.”

The OIG guidance details the potential benefits including demonstrating the facility's commitment to honest corporate conduct, increasing the odds of detecting dishonest and unethical conduct, encouraging all stakeholders to report potential problems to enable investigations and reduce the risk of sanctions, minimizing risk of financial loss and financial penalties, enhancing resident care, and enhancing the facility's reputation.


The OIG lists several operational categories that present liability risks to the LTC provider. Quality of Care is the first category listed and the OIG lists and expands on five areas of concern. Providers should be familiar with relevant state and federal law on quality of care and neglect and abuse issues.

Sufficient staffing. Quality is often measured in terms of quantity of employees. While there is not always an exact correlation, staffing ratios are an important measure for regulators. The OIG also lists “appropriate clinic expertise” as a factor.

Comprehensive resident care plans. The OIG considers the resident care plan an essential element of reducing risk and it mentions the inadequacy of care plans reviewed during enforcement audits and proceedings. The OIG cites relevant Medicare and Medicaid statutory authority and lists “basic steps” in meeting those requirements, specifically:

  • Have appropriate scheduling to allow full team attendance

  • Complete clinical assessment before the meeting

  • Open the lines of communication among all team members

  • Involve the resident and family and any legal guardian or POA

  • Document the length and content of each meeting

The OIG emphasizes physician participation as a component and stresses the need to facilitate planning participation, including careful scheduling and use of technology.

Medication management. The OIG guidance minces no words: “A failure to manage pharmaceutical service properly can seriously jeopardize resident safety and even result in resident deaths.” It also emphasizes that management processes be put in place to advance resident safety, minimize drug interactions, and ensure discovery and correction of irregularities.

Appropriate use of psychotropic medications. These medications create risks of violating two standards of care: the inappropriate use of chemical restraints and a requirement to avoid unnecessary drug usage. These issues were brought to the forefront long ago and all facilities should have proper safeguards in place. Risks may accelerate with staff turnover, pharmacy changes, new physicians, physicians not sensitive to LTC regulations, or sloppy coordination among departments.

Resident safety: Mistreatment, neglect, abuse. The OIG wants an “effective compliance program” to prevent, investigate, and respond to incidences of staff-on-resident abuse and neglect, resident-on-resident abuse and neglect, and abuse from unknown causes or sources. Here the OIG defines an effective compliance program as: “[P]olicies, procedures, and practices to prevent, investigate, and respond to instances of potential resident abuse, neglect or mistreatment….”