There has been a lot of ink spilled these days (well, digital ink anyway) about the benefits of outsourcing hospital compliance trends. You can read about the advantages here. You can also read about what to expect when you outsource your hospital compliance program. And you can read about best practices for an outsourced Compliance Officer.
Right now I would like to focus on what some hospital CEOs were facing when they were considering outsourcing their hospital compliance program. The benefits of hospital outsourcing compliance trends are demonstrated by 3 examples from The Fox Group’s consulting experience with clients.
Outsourcing Your Hospital Compliance Program at a rural hospital
A small rural hospital was facing a meltdown in its compliance program. The hospital had received a report from its legal counsel about technical violations of the Stark Law. Arrangements with physicians had not been executed timely, e.g., before the physician began receiving compensation for professional services. In some cases, the contract had not been signed by both parties for weeks or months after the services started and payments were being made. The Compliance Officer, who was also responsible for accreditation survey preparations, was not handling the effort necessary to assist legal counsel with analysis and response to the situation. The Hospital terminated the Compliance Officer.
The Fox Group responded onsite within 2 days, taking over responsibility for the compliance program. Our initial areas of focus:
- Revitalize the Compliance Committee and Compliance Program documentation.
- Rewrite the Code of Ethical Conduct and implementing an annual Compliance Work Plan.
- Coordinate the flow of information to outside counsel on payments to physicians. This was important to enable a timely self-disclosure of the technical Stark Law violations.
Other investigations revealed additional concerns about proper billing practices. The Board of Directors was extremely concerned about technical violations and other issues.
Timely investigation and analysis eliminated the risk of a large penalty for failing to investigate a serious Stark Law violation.
Several investigations, some based on employees coming forward, some based on periodic audits, took place over the next few years. Sustainable and successful maintenance of the corporate compliance program went a long way in the hospital to continue the outsourcing arrangement for five and a half years – and counting. The Board became increasingly confident that proper management of the compliance program was in place.
Outsourcing at a medium-sized hospital
A medium-sized hospital had drafted a compliance program in 2008. The program contained some, but not all, of the 7 elements of a hospital compliance plan. The Director of Business Services was the Compliance Officer. For the next several years, there were no committee meetings or other activities related to corporate compliance. In 2015, the hospital’s auditors recommended the hospital establish a functioning compliance program. The auditors gave the hospital a 21-page document with observations, recommendations, and management action plans. The document was thorough, but it was left to management to work through it. The Hospital appointed the Risk Manager as the Compliance Officer.
A few meetings were held, but an actual program never developed.
The Hospital contacted The Fox Group for a proposal on an outsourced hospital compliance program.
- Within a month, The Fox Group assessed the current situation and developed the necessary infrastructure for a corporate compliance program based on the OIG Compliance Guidance for hospitals.
- The Fox Group also completed and implemented all of the recommendations provided by the hospital auditors.
- The Compliance Committee now meets regularly, administering an annual work plan, including routine auditing of high-risk areas of compliance for the hospital.
- In addition, the Board of Directors receives routine reports on the activities of the Compliance Program.
Every year, the benefits of hospital outsourcing compliance trends continue and are demonstrated at this Hospital. Investigations are handled quickly, with the emphasis on doing the right thing. Reports to the Board are educational, making the Board better informed and confident that management is conducting an effective program.
Outsourcing at a small hospital
It should not be too surprising that small hospitals are often looking at the benefits of outsourcing compliance trends.
Small hospitals often have difficulty attracting or affording highly qualified compliance professionals.
Even when they do, the results can be mixed. The Hospital in this case had hired a gentleman who seemed to be an experienced compliance professional. It was somewhat of a surprise when he presented a 100 page draft of a compliance program. It was an even bigger shock when the Compliance Officer told the Board the Hospital was committing billing fraud every time it submitted a claim to the Medicare program.
The Hospital contacted The Fox Group about outsourcing its compliance program.
- The Fox Group responded immediately.
- In addition to re-developing all of the Compliance Program documentation, The Fox Group prepared and delivered training programs to managers, physicians, and Board Members on the compliance and privacy program of the Hospital.
Long term benefits of outsourcing hospital compliance trends
All of The Fox Group’s compliance engagements with hospital clients have stood the test of time. Recently, one client gave notice at the height of the Covid-19 pandemic period when hospitals were financially stressed. But they re-engaged The Fox Group after just 2 months, realizing they were not keeping up the program without the support of The Fox Group.
The benefits of hospital outsourcing compliance done right are readily demonstrated!
There is one other benefit of an outsourced compliance program that does not get too much attention. The OIG Compliance Guidance recommends the Compliance Officer have direct access to the Board of Directors when necessary. An outside consultant can be a valuable advisor to the Board when it has to grapple with the performance that has exposed the hospital to risks of penalties from outside regulators. Our feedback from Boards of Directors reinforces this at every meeting.
Can an outsourced compliance function compete with hiring a person for on-site services?
Like any management activity, success is often a matter of diligence, expertise, and support. Any Compliance Officer, in-house or outsourced, will be more successful if there is support by senior management for the position. And support comes in several forms.
Consulting with Compliance Officer on routine matters is as important as asking for help in a crisis or to start an investigation.
- For instance, at some clients, the Compliance Officer reviews all financial arrangements with referring physicians and supervises the fair market value analysis process.
- At others, the Compliance Officer may review routine vendor contracts, especially those involving vendors who are business associates.
- And a prompt response to such requests is a way for the Compliance Officer to encourage more consultations as time goes by.
In some settings, the hospital gives the Compliance Officer the authority to call a halt to certain activities.
- For instance, the OIG Compliance Guidance for Third-Party Billing Companies recommends the Compliance Officer be given the authority to stop the submission of claims if he or she detects problems, mistakes, or even fraudulent practices.
- But most of the time, the authority of the Compliance Officer rests on the reputation of that person as an agent of “doing the right thing”.
Over time, that means more contacts from employees asking about situations or processes that they have questions about. Compliance Officers can also be more visible in the organization by participating in on-going compliance education like drafting articles for employee newsletters.
If the Covid-19 pandemic has taught us anything, it’s that remote management activities can be successful, even when you don’t pass other staff members in the hallway or sit in a conference room with them every day. Outsourcing the compliance function has been successful long before the current pandemic, and can and will be into the future as well.