5 Laws Impacting Healthcare Compliance You Should Know

Healthcare industry regulations exist to protect patient safety, privacy, and confidential information. They help to prevent misuse or abuse of payment and referrals—and much more. 

In an industry that must operate on the assumption of trust and safety, healthcare compliance is a critical component of every healthcare organization and the day-to-day role of healthcare administrators.

Here’s a closer look at healthcare compliance and some of the major laws healthcare administrators should know.

What is Healthcare Compliance?

Healthcare compliance is the effort by healthcare organizations to follow federal, state, and local laws—as well as their own system of rules, ethics, and standards—to help prevent fraud and abuse in the healthcare industry. 

Healthcare compliance is necessary for organizations ranging from hospitals, medical clinics, physician groups, home health services, and hospice providers to laboratories, pharmaceutical manufacturers, and medical equipment suppliers. 

To achieve and maintain healthcare compliance, organizations may develop codes of conduct, organizational ethics and values programs, written policies and procedures, communication plans, employee training and education, monitoring and auditing systems, enforcement plans, and disciplinary actions if laws, rules, or standards are broken. 

Importance of Compliance in Healthcare

Healthcare organizations that take compliance seriously have an array of policies, systems, and tools at their disposal that enable them to surface potential problems early and address them before they turn into a legal or financial liability. 

Organizations that are committed to healthcare compliance also create and actively maintain a culture in which all employees understand and care about the importance of compliance and their personal responsibility to follow the rules and behave ethically. 

Healthcare compliance is only as good as the organization’s ability to follow its own policies and standards and healthcare administrators’ ability to enforce them—which is why it’s important to emphasize to all stakeholders in the organization how critical compliance in healthcare is and to regularly update and communicate such policies and standards. 

5 Laws Related to Compliance in Healthcare

There are a variety of healthcare-related regulations that healthcare administrators should know. Here is an overview of five major healthcare compliance laws:

HIPAA

The Health Insurance Portability and Accountability Act (HIPAA) was originally intended to reform the health insurance industry but now includes key components intended to safeguard patient information and privacy. While HIPAA still aims to control health plan fraud and abuse, the law also covers patient privacy rights, the use and disclosure of protected health information (PHI), and data security. 

HIPAA applies to health plans and healthcare providers, business associates that provide services to healthcare providers and have access to or use PHI, teaching institutions that provide medical services, and clearinghouses (external entities that do healthcare billing). 

Violations of HIPAA can result in civil penalties of $137 to over $68,928 per violation as well as criminal penalties and possible imprisonment if the violations are intentional. Violators may also be required to correct and overhaul organizational policies to bring them up to HIPAA’s standards.  

The Stark Law

The Stark Law, also referred to as the Physician Self-Referral Law, is one of several federal fraud and abuse laws that also include the False Claims Act and Anti-Kickback Statute (discussed below). The Stark Law prohibits physicians from referring patients to receive designated health services from healthcare providers or entities with which the physician has a financial relationship—such as ownership, an investment, or a compensation arrangement. 

Examples of designated health services include inpatient and outpatient hospital services, physical therapy and occupational therapy services, laboratory services, and radiology and other imaging services.

Physicians who violate the law can be fined and excluded from federal healthcare programs. 

False Claims Act

The False Claims Act (FCA) makes it illegal to submit claims for payment to Medicare or Medicaid that are known—or should be known—to be false. 

Violations of the FCA can result in civil or criminal penalties. Under the civil FCA, violators can be fined up to three times the programs’ loss plus $11,000 per claim filed. Under the criminal FCA, violators can be given criminal fines and even face imprisonment.

Anti-Kickback Statute

The Anti-Kickback Statute (AKS) prohibits healthcare providers from paying for or accepting referrals for any services covered by the federal healthcare programs—including healthcare services for Medicare and Medicaid patients, drugs, and supplies.

Those who violate the statute face criminal penalties that can include fines, jail, and exclusion from participation in federal healthcare programs. 

Patient Safety and Quality Improvement Act

The Patient Safety and Quality Improvement Act (PSQIA) enhances patient safety and healthcare quality by establishing a voluntary system for healthcare providers to report medical errors and other issues for patient safety organizations (PSOs)—or external experts—to collect, review, and assess. 

Those who violate patient safety confidentiality in the course of complying with PSQIA can face civil penalties up to $10,000 per violation.  

How to Increase Your Healthcare Compliance Knowledge

For any organization, healthcare compliance is an ongoing effort. It’s critical for healthcare administrators to stay up to date on current and emerging laws to make the best decisions for their team and patients.

Expand your understanding of healthcare compliance regulations in the Healthcare Policy, Law, and Ethics course while completing an online Master of Health Administration from Wake Forest University’s School of Professional Studies.