Guidance for Regulatory Reviews

HCCA Compliance Institute

April 2005 Jean Boord, JD, CHC

HCCA Payor/Managed Care Workgroup Tina Prassas, Senior

Consultant, Regulatory Affairs, Pacificare

Michael Lohnberg, VP Regulatory and Government Compliance, Wellpoint

Karen Carty, Senior Compliance Analyst, Anthem East Compliance Dept.

Janet Degnan, Esq., Director of Ethics and Compliance, Anthem

Bren Schwab, Compliance Administrator, Corporate Compliance and Ethics Dept., Premera Blue Cross

Monica Zachary, MS, CHC, Director of Compliance, Health Alliance Medical Plans, Inc.

Lucy Davis, Director, Health Plan Compliance, Cigna

Suzanne Michelson, Sr. Planning Analyst/Project Coordinator, Noridian Mutual Insurance Company

Discussion Topics

Background The Five Phases of Regulatory Reviews Why Organize For and Manage a

Regulatory Review? Basic Elements of Managing the Five

Phases of a Review Post Review Management

Background

Regulatory Reviews are a Part of Doing Business in a State or with the Federal Government

Regulatory Agencies include: DOI, DOH, Office of Patient Protection, DOL, Dept of Veterans Affairs, CMS, State Medicaid Agencies, etc.

Background Regulatory Agencies are often required by statute

to examine company business practices every few years

Review may be a full scope review, examining all aspects of the business over which the Regulatory Agency has jurisdiction

Can also conduct a targeted review outside of statutory timeframes based on a complaint; legislative mandate; or a compliance review of a particular law, regulation, or bulletin, etc.

Background

Many states are combining the Finance and Market Conduct Reviews into one review

More state DOIs are following NAIC guidelines for examinations

NAIC/NCOIL raising awareness/interest in multi-state reviews

Examiners may be Regulatory Agency employees or Independent Contractors

The Five Phases

Typical Regulatory Reviews can be broken down into five phases– Pre-Exam or “Off-Site” Phase: includes all activities

necessary to prepare for the review

– On-Site Review Phase: Coordination of all on-site activities including staff interviews, responses to auditor questions and criticisms, and updating company on status of review

• Note, if the auditor chooses to do a desk review, this phase would occur during the time span when the examiner is conducting the desk review of materials.

The Five Phases

– Finding Reports and Corrective Action Phase: includes all activities necessary to respond to the review report

– Legal Action Phase: (if applicable) includes coordinating fulfillment of any consent orders, hearings, etc.

– Monitoring Phase: includes oversight and documentation of the company’s implementation of any Corrective Action Plans (CAPS)

Why Organize for and Manage the Review? Disorganization leads to a more costly review:

– Additional findings

– States typically charge the company for at least partial cost of the review

– Damages relationship with the regulatory entity

– Increased fine

Effective management can lead to:– Reduction of re-work

– Reduction of internal and auditor costs

– Reduction of Financial Penalty

Basic Elements of Managing the Five Phases of Reviews

Centralized Coordination Point

– Ensures consistent responses to similar questions from multiple auditors within the review and multiple states across reviews

– Monitors / reviews information provided to auditors for accuracy and completeness

– Monitors auditor contact with other company employees

– Builds rapport with regulators and auditors

Centralized Coordination Point

Coordinator should have list of Company Operational Business Owners from all areas who will act as contacts

Use this list for each review to get consistent responses and documentation

Operational Business Owners provide data and documents to the Coordinator

Pre-Exam Phase: Create a Work Plan

Use the scope document, coordinator’s handbook, or other materials provided by regulatory agency– Consider NAIC standards if adopted by state

Each section and item should match the itemization and numbering in the scope document or coordinator’s handbook

Each requested item should have a company responsible party and a due date

Pre-Exam Phase: Create a Work Plan Coordinator should conduct meetings with the

company responsible parties to ensure they understand their responsibility and what is needed for the review

If responsible parties have questions on required documentation, Coordinator should consult with the auditors

It is strongly recommended that all correspondence with the auditors and regulatory agency be in writing

Pre-Exam Phase: Create a Work Plan Information should be provided to the

Coordinator several days before it is due Coordinator should be in regular contact

with responsible parties to evaluate progress

Pre-Exam and On-Site Phase: Review Documents Prior to Submission to Auditors Operational Business Owner should

ensure all documents are compliant with applicable law

Operational Business Owner should ensure data universes meet auditor specifications

Coordinator will do a final review Keep responses short and factual

Pre-Exam and On-Site Phase: Review Documents Prior to Submission to Auditors Documents should explain company

acronyms Coordinator should organize the

documentation in a manner that facilitates review

Pre-Exam and On-Site Phase: Review Documents Prior to Submission to Auditors Make a copy or otherwise track exactly

what is provided Track when all documentation and data is

provided to the auditors Meet deadlines if possible. If not, discuss

with auditor and come to agreement on extension.

Pre-Exam Phase: Prepare Operational Business Owners

It is recommended that the Coordinator conduct mock interviews with those company employees that may be interviewed

Employees should not answer questions that do not pertain to their job function

Coordinator should be present during interviews as witness

On-Site Review Phase

Consider an opening conference with the auditors to explain a complicated company or the company changes since the last review

If the auditor demands on-line access to claims and other company systems, consider having a subject matter expert train and walk the auditor through the samples

On-Site Review Phase Auditors should present questions, criticisms,

requests for additional information to the Coordinator

Coordinator should track the following for each of the above:– When the Coordinator receives the request – Which auditor requested the information– Which responsible party is responsible for providing the

information– When it is due– When the Coordinator provides the response to the

auditor

On-Site Review Phase It is strongly recommended that the Coordinator

have weekly meetings with the auditors to provide updates on outstanding items

Operational Business Owners should have a checklist for the file samples of all required documentation

Coordinator should be in regular contact with Operational Business Owners and Senior Management to update on compliance issues or other issues with the documentation

On-Site Review Phase

Coordinator should track fees and expenses in addition to fine amounts. Senior Management will be able to use these for budgeting purposes. Alert Senior Management when fines are imminent.

The Coordinator should review the auditor invoices for accuracy in hours billed, fee per hour, etc.

Finding Reports and CAP Phase Operational Business Owners should determine

CAPS for their processes It is recommended that your legal counsel review

the examination report from the Regulatory Agency

Legal counsel should also review the company response

Legal counsel will assist in determining next steps if disagreement with the report (informal meeting with Regulatory Agency, hearing, etc)

Monitoring Phase

Coordinator should track all CAPS, responsible parties, due dates

Coordinator should work with Operational Business Owner to ensure that all CAPS are implemented

Monitoring is recommended for CAPS

Monitoring Phase

Two questions must be answered in the affirmative in this phase:

1. Is the CAP working?

2. Does the CAP address the issue raised in the review report?

Post-Review Management

Consider auditing program of high risk areas to find and correct compliance issues well before a regulatory review

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