Understanding and ensuring regulatory compliance is crucial for successfully opening a new healthcare practice. You will need to ensure your practice follows the many local, state and federal rules that govern healthcare facilities and businesses. Complying with various regulations related to your building, staffing, patient care, insurance billing, and more is required but can seem overwhelming without expertise in this area.
This article is designed to guide new practice owners through the major areas of regulatory compliance that must be addressed from the initial phase through ongoing operations. The following sections will outline the specific permits, licenses and other regulatory requirements practices need to abide by to avoid heavy penalties for non-compliance and operate successfully. We will also provide a checklist to help ensure you meet all necessary standards from the start.
Key Takeaways
- Understand that healthcare practices need to follow local, state, and federal rules to ensure patient safety and high-quality services
- Familiarize yourself with the key regulatory bodies such as CMS, HIPAA, FDA, FTC, DHHS, and State And Local Regulations that oversee adherence to regulatory standards within the US healthcare sector
- Develop clear policies and procedures, conduct regular employee training, and perform risk assessments to ensure effective compliance
- Obtain various permits and licenses required to operate a healthcare practice legally. These may include a state medical license, business registration, and more
- Recognize that getting credentialed with major health insurance plans is essential to receive timely reimbursement for the services provided to patients
- Utilize ONC Certified EMRs, Data Encryption And Security Measures, and Compliance Software to facilitate regulatory compliance
- Adhere to healthcare regulations to deliver high-quality care safely and ethically. Consult experts, assess risks proactively, and review compliance regularly to ensure all standards are met
What Is Regulatory Compliance In Healthcare?
Regulatory compliance in healthcare means that medical practices and providers need to follow the laws, rules, standards, and guidelines set by government agencies and regulatory bodies. These regulations ensure that healthcare services delivered to patients are safe and high-quality.
The main goal of regulatory compliance is to protect patients from harm and ensure they receive the best possible care. Compliance with regulations enables healthcare practitioners to improve various patient safety protocols, such as:
- Medication Management: Ensuring that medications are prescribed, dispensed, and administered correctly
- Infection Control: Implementing measures to prevent the spread of infections within healthcare facilities
- Equipment Sterilization: Making sure that all medical equipment is properly cleaned and sterilized to avoid infections
- Accurate Record-Keeping: Keeping detailed and accurate patient records to ensure continuity of care and compliance with legal requirements
Why Is Regulatory Compliance Important For New Practices?
New practices that adhere to all the necessary regulations can ensure the consistent delivery of high-quality care, protect patient rights and privacy, and uphold the integrity of the healthcare system. However, non-compliance can lead to severe consequences, including legal actions, fines, damage to reputation, loss of license, and compromised patient safety.
Ross Leo, a cybersecurity expert with over 30 years of experience in IT systems and management, also reinforces the importance of compliance for new practices in an exclusive webinar with Software Finder, stating:
Healthcare regulatory compliance covers a range of areas within the healthcare sector, such as:
- Patient Care Standards: Providers must follow the specific standards of care to ensure the well-being of patients
- Data Security And Privacy: Practices need to implement strict data security and privacy measures to comply with various laws such as HIPAA
- Workforce Compliance: New medical practices are required to adhere to regulations related to the qualifications, licensure, and training of healthcare professionals
- Medical Device And Pharmaceutical Regulations: Agencies like Food and Drug Administration (FDA) oversee the approval, marketing, and safety of medical devices and pharmaceutical products
- Ethical Practices: Compliance also ensures that providers adhere to ethical standards and conduct themselves with integrity in all aspects of patient care and professional conduct
The importance of regulatory compliance for new medical practices cannot be overstated. However, it's important to strike a balance in compliance efforts as a practice that is just starting out. Ross Leo explains this in his interview as:
Major Regulatory Bodies In The Healthcare Sector
Several prominent bodies oversee adherence to regulatory standards within the US healthcare sector, each with a specific focus on ensuring compliance and upholding industry standards. Here are a few of these major regulatory bodies:
1. Centers For Medicare & Medicaid Services (CMS)
CMS is a federal agency within that oversees Medicare and Medicaid programs. It manages reimbursement rates, monitors compliance with billing rules, and sets standards for healthcare providers participating in these programs, including hospitals, nursing homes, and home health agencies. Compliance with CMS regulations is essential for providers to receive reimbursement for services rendered to Medicare and Medicaid beneficiaries.
2. Health Insurance Portability and Accountability Act (HIPAA)
HIPAA is a federal law in the US that sets national standards for protecting sensitive patient health information. It establishes standards for the security and privacy of electronic health records. HIPAA requires healthcare providers and their business associates to safeguard patients' privacy rights and prevent unauthorized access to their health information.
3. Food And Drug Administration (FDA)
The FDA is another major regulatory agency in the US responsible for regulating the safety, efficacy, and quality of food, drugs, medical devices, biologics, and other cosmetic products. It oversees the approval, marketing, and post-market surveillance of new medications and medical technologies. Moreover, it ensures that healthcare products meet rigorous standards for safety and effectiveness before they are made available to the public.
4. Federal Trade Commission (FTC)
The FTC enforces federal laws concerning consumer protection and antitrust laws in the healthcare sector. It works to prevent unfair business practices and ensure competitive markets, which is crucial in the healthcare industry to avoid monopolistic practices and protect consumers. The FTC also plays a role in monitoring advertising and marketing practices within the healthcare sector to ensure they are truthful and not misleading.
5. Department of Health and Human Services (DHHS)
DHHS is a federal department responsible for protecting the health of all Americans and providing essential human services. It oversees various agencies and implements federal healthcare policies and programs. DHHS sets broad healthcare policies and ensures that healthcare providers comply with these policies to maintain high standards of care and public health.
6. State And Local Regulations
In addition to federal regulations, new healthcare facilities must also adhere to state and local regulations, which differ from one region to another. These regulations include rules on licensure, the scope of practice, and standards for healthcare facilities. Each state typically has its own health department or regulatory agency to enforce these local standards and ensure compliance.
Understanding the hierarchy of regulatory bodies is important for effective compliance. Ross Leo points out,
Key Components Of Regulatory Compliance In Healthcare
Regulatory compliance in healthcare involves different components that work together to maintain high standards of care, protect patient information, and meet legal requirements. Here are a few key components:
Policies And Procedures
Establishing clear policies and procedures is fundamental to regulatory compliance. These documents outline the standards and practices that healthcare providers must follow to ensure compliance with applicable laws and regulations. Policies and procedures can cover a wide range of areas, including patient care, data privacy, billing, and ethical conduct. They provide a framework for consistent and compliant operations within the healthcare practice.
It’s also important to properly document these policies and procedures to create a clear reference point for staff members.
Employee Training
Effective compliance depends on the knowledge and actions of the entire practice staff. Regular employee training ensures that all staff members understand the relevant regulations and know how to apply them in their daily tasks. Training programs should cover key topics such as good computing hygiene, infection control, proper documentation, and reporting procedures.
Ross Leo also emphasizes in the webinar,
“The more they know, the more effective they can be at preventing mistakes and protecting patient safety.”
Therefore, it is imperative for startup practices to conduct periodic trainings and refreshers to keep staff up-to-date and ensure consistent compliance.
Risk Assessment
Risk assessment is another vital component of an effective compliance program to ensure adherence to healthcare compliance requirements. Non-compliance and security vulnerabilities can expose patient information and organizations to serious risks. Recent data shows there were over 25 major healthcare data breaches in the U.S. just in 2022, compromising millions of patient records.
To mitigate these risks, healthcare providers should conduct regular assessments to evaluate areas of potential non-compliance, security weaknesses, and other threats.
Once compliance risks are identified, practices should focus on building mitigation strategies. This could include efforts like consulting with your compliance agent, implementing cyber insurance, upgrading outdated systems, and providing additional staff training. Cybersecurity expert Ross Leo also highlights the financial consequences of such breaches, noting, "A single breach can cost anywhere from half a million to more than 2.6 million dollars to resolve."
What Licenses And Permits Do You Need To Open A Healthcare Practice?
Opening a healthcare practice requires obtaining various permits and licenses to operate legally. These may include a state medical license, business registration, and more. Since specific requirements vary by state and medical specialty, it's important to thoroughly research the regulations in your jurisdiction to ensure compliance.
Here we will cover various types of licenses and business registrations your practice may need to operate legally and effectively.
Business Licenses
The healthcare industry requires adherence to specific legal and regulatory standards to ensure and prioritize patient well-being. That's why you may need to secure a variety of business licenses and permits at the local and state level.
- Business License: This is a fundamental requirement for operating any business, including medical practices. Obtain it from your city, municipality, or county
- State Sales Tax ID: You will need to register for a sales tax ID if your practice buys and sells medical equipment or products
- Pharmacy License (if applicable): This is required if you dispense medications directly to patients
- Laboratory Testing License: You may need to obtain a CLIA certificate or CLIA wavier depending on the type of laboratory services your practice offers
- Fire License: Issued by the fire marshal, it ensures your practice complies with fire safety codes
Remember, this list is not exhaustive. It's highly recommended to consult with your state's Department of Health or a healthcare attorney to determine the exact licensing and permitting requirements for your specific practice. They can also guide you about what documents your medical state license application may require.
Medical Licenses
A medical license is required for practicing medicine and providing telehealth services legally in any jurisdiction. Applicants in a new state or those who haven't obtained a license in their state of practice should conduct thorough research into the specific licensing requirements. This research should include application fees and renewal intervals.
The Federation of State Medical Boards (FSMB) provides comprehensive contact information for each state medical board and resources to streamline the process.
State Or Local Health Department Permits
Many areas require a permit or license from your local health department (or a similar agency) before your private practice can legally operate. These permits are designed to ensure compliance with local health and safety regulations. The requirements may vary by location but can typically include:
- Infection Control Plan: Establish a comprehensive infection control plan. This plan should outline detailed procedures for preventing and managing infections within your practice to ensure patient safety
- Clinical Protocols: Develop a clear and accessible set of clinical protocols for your practice. These protocols should document policies and procedures for patient care, medication management, and emergency response
- Training And Competency: Implement a comprehensive training and competency program to ensure your staff possesses the necessary skills and knowledge to perform their assigned duties effectively
- Credentials And Licenses: Submit up-to-date medical licenses and professional credentials for all medical practitioners at your healthcare facility
- Recordkeeping: Maintain a system for accurate and organized recordkeeping, including patient health records, medication logs, and other important documents
Building Permits
A building permit acts as formal authorization from your local government, granting permission for construction or alterations to the building structure. It ensures adherence to zoning regulations and building standards set by the local building department or relevant agencies
The process typically involves submitting detailed plans outlining the proposed changes, paying necessary fees, and undergoing inspections at different stages of the project to ensure compliance with regulations and standards. It's essential to adhere to these procedures to ensure the safety and legality of establishing your new healthcare practice.
Overall, these are just some of the most common licenses and permits required to open a healthcare practice and the specific requirements will vary depending on your location and practice type.
Business Tax Registration
Registering your medical practice with the appropriate tax authorities is required to fulfill employment and payroll tax obligations. This process involves obtaining an Employer Identification Number (EIN), also known as a Federal Tax Identification Number.
You can easily apply for an EIN for your practice online, free of charge. As a practice owner, you can follow the steps below to get started:
- Visit the IRS website at www.irs.gov
- Find the EIN application page
- Fill in all the necessary details in your application
- Review and submit the form electronically
- Receive the EIN for your practice
Occupational Safety And Health Administration (OSHA) Requirements
The Occupational Safety and Health Administration (OSHA) sets safety standards for many healthcare facilities. Compliance with OSHA regulations is essential to ensure the well-being of everyone within the practice.
It's important for your practice to designate staff members and providers to undergo recognized OSHA courses for certification. Moreover, many states require healthcare providers to complete ongoing continuing education courses in OSHA, fire safety, and other relevant areas. These courses ensure that providers stay up-to-date on the latest safety standards and maintain their licenses.
Remember, OSHA requirements can vary based on your practice's specialty, size, and services offered, so further research might be necessary.
Why Is Insurance Credentialing Important For New Practices?
Insurance credentialing is important for private practices that are just starting out because getting credentialed with major health insurance plans is essential to receiving timely reimbursement for the services provided to patients.
This process, while complex and requiring meticulous attention to detail, verifies a practice's legitimacy and qualifications. Credentialing errors or delays can lead to rejected claims and significant disruptions in a practice's cash flow. To ensure a smooth credentialing process, you should consider assigning a dedicated staff member or using specialized credentialing software.
Furthermore, some insurance companies, like Medicare, have stricter requirements and may request additional verified information, including details about malpractice claims, to ensure you meet their standards for patient safety and trust.
Regulatory Compliance Checklist
If you are still figuring out how to effectively meet regulatory compliance requirements for your new healthcare practice, use this checklist to get started.
What Are Some Technology-Driven Solutions For Regulatory Compliance?
Healthcare organizations now have access to several powerful technological tools to facilitate regulatory compliance. This section will explore some of the most valuable tech solutions that can help support compliance efforts for your new private practice.
1. ONC Certified EMRs
One of the most important technical solutions for ensuring regulatory compliance in healthcare is the use of an ONC-certified EMR software. ONC certification means the EMR system has been tested and proven to meet the technical standards and certification criteria established by the Office of the National Coordinator for Health Information Technology (ONC).
ONC-certified and cloud-based EMR software are essential for healthcare practices to ensure compliance with regulations such as HIPAA and other federal mandates regarding the use of electronic health records. Software systems with current ONC certification show regulators and auditors that the healthcare practice is committed to using secure technology that meets the latest industry requirements.
You can also contact us at (661) 384-7070 for personalized guidance on selecting the right ONC-certified software for your specific practice requirements.
2. Data Encryption And Security Measures
Data encryption and security measures are another critical line of defense in maintaining regulatory compliance within healthcare. However, it's important to remember that achieving absolute security is an ongoing challenge. As Ross Leo emphasizes in his interview with Software Finder, "These things cannot be absolutely, and I mean 100% defended against because hackers are smart people, and they will find a way around it eventually."
Therefore, practices should implement a layered approach to cybersecurity measures, utilizing data encryption alongside other best practices like access controls, staff training, and regular security assessments. This multi-faceted approach can significantly reduce the risk of data breaches.
3. Compliance Software
Healthcare compliance software provide a centralized platform to help organizations efficiently manage their regulatory compliance processes. These solutions can offer a range of valuable features, including:
- Audit and reporting
- Risk assessment and management
- Employee certification tracking
- Policy management
- Incident reporting
When properly utilized, these tools can help reduce administrative burdens and ensure adherence to a wide range of accreditation and industry requirements through unified oversight and monitoring.
Ensure Patient Safety And Operational Success With Proper Regulatory Compliance
Adhering to healthcare regulations can feel daunting for new practices, but it is a necessary step to delivering high-quality care safely and ethically. This guide covered the major areas of compliance that practices need to address, from licensure and permits to data security, employee training, and risk management.
We also shared valuable insights from cybersecurity expert Ross Leo, highlighting the importance of a strong compliance framework, as discussed in his exclusive interview with Software Finder.
Overall, a culture of compliance must become an integral part of a practice's operations and values from the very beginning. It is important to consult experts, assess risks proactively, and review compliance regularly to ensure that all standards are met.
