principles of good governance for hospital boardsprinciples of good governance for hospital boards...
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PRINCIPLES OF GOODGOVERNANCE FOR HOSPITALBOARDS
ISB Health Law Section
Thomas J. Mortell
June 4, 2015
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THE BOARD’S ROLE INCOMPLIANCE – A RENEWEDEMPHASIS
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BOARD ROLE IN COMPLIANCE OVERSIGHT
• Renewed OIG Emphasis for BoardInvolvement
• Practical Guidance for Health CareGoverning Boards on Compliance Oversight
• Published April 20, 2015
• Collaboration between OIG (HHS InspectorGeneral), AHIA (internal auditors), AHLA(attorneys) and HCCA (compliance).
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OIG Expectations
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BOARD ROLE IN COMPLIANCE OVERSIGHT– OIG EXPECTATIONS
• Board must act in good faith to ensure:
– Information and reporting system exists;
– Reporting system is adequate to ensureBoard receives appropriate information.
• Widely-available resources asbenchmarks including OIG’s ComplianceGuidance and sample compliance plan.
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BOARD ROLE IN COMPLIANCE OVERSIGHT– OIG EXPECTATIONS
• OIG recognizes that it not “one size fits all”
• But, a meaningful effort by Boards to reviewthe adequacy of existing compliance systemsand functions is very important
• Compliance program will depend on size andcomplexity of organization
• Smaller and less complex organizations mustbe equally committed to compliance
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BOARD ROLE IN COMPLIANCE OVERSIGHT– OIG EXPECTATIONS
• But, smaller organizations may meet theexpectations with “less formality and fewerresources”
• May use “available personnel” instead of“separate staff” to handle complianceprogram.
• In smaller organizations, Boards must be“more involved” in compliance
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BOARD ROLE IN COMPLIANCE OVERSIGHT– OIG EXPECTATIONS
• Board members may wish to utilize outsideeducational programs
• May require management to create a formaleducation calendar.
• Board should consult with “experiencedregulatory, compliance and legalprofessionals”
• Sends strong message to organization
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Roles and Relationships
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BOARD ROLE IN COMPLIANCE –ROLES AND RELATIONSHIPS
Compliance Functions
• Internal Audit
• Compliance
• Legal
• HR
• Quality Improvement
• Roles of each function should be defined
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BOARD ROLE IN COMPLIANCE –ROLES AND RELATIONSHIPS
Compliance Function
• Promotes prevention, detection andresolution of actions that do not conform tolegal, policy or business standards
• Policies and procedures for employeeguidance
• Incentives to promote compliance
• Plans to improve or sustain compliance
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BOARD ROLE IN COMPLIANCE –ROLES AND RELATIONSHIPS
Compliance Function (con’t.)
• Metrics to measure execution (bymanagement).
• Metrics to measure implementation ofcorrective actions
• Reports and dashboards for managementand Board to measure effectiveness
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BOARD ROLE IN COMPLIANCE –ROLES AND RELATIONSHIPS
Legal Function
• Advises of regulatory risks of businessstrategies
• Advice and counsel on laws and regulations
• Defend or initiate legal proceedings ifwarranted
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BOARD ROLE IN COMPLIANCE –ROLES AND RELATIONSHIPS
Internal Audit Function
• Objection evaluation of existing risk and internalcontrol systems
• Audits ensure monitoring functions are workingas intended and identify where managementmonitoring and additional oversight may beneeded
• Reduce risk to organization and promoteeffective and efficient use of resources
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BOARD ROLE IN COMPLIANCE –ROLES AND RELATIONSHIPS
• On a periodic basis, Boards should evaluateadequacy, independence and performance ofthese functions
• Compliance Officer should not be counsel forhospital nor be subordinate in function orposition to counsel or the legal department inany manner
• Must be independent, but can collaborate andwork together
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BOARD ROLE IN COMPLIANCE –ROLES AND RELATIONSHIPS
• Same for internal audit dept.
• All three functions should have access tohospital information and resources
• Policies should ensure access toinformation
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Reporting to the Board
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BOARD ROLE IN COMPLIANCE –REPORTING TO THE BOARD
• Board should set and enforce expectations
• Receive regular reports separately andindependently from variety of key playersincluding compliance, audit and legal
• Board should engage leadership team,including those deeper in the organization
• Establish clear expectations and holdmanagement accountable
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BOARD ROLE IN COMPLIANCE –REPORTING TO THE BOARD
• May use objective scorecards tomeasure how well management is:
–Executive compliance program
–Mitigating risks;
–Implementing corrective actions
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BOARD ROLE IN COMPLIANCE –REPORTING TO THE BOARD
Reports should include things like:
• Information regarding internal or externalinvestigations
• Serious issues raised in internal and externalaudits
• Hotline call activity
• Allegations of material fraud or misconduct
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BOARD ROLE IN COMPLIANCE –REPORTING TO THE BOARD
• Format of reports should be sufficient tosatisfy interests or concerns of Boardmembers
• Dashboards are widely used and shouldcontain compliance indicators to access risk
• Board should ensure that mechanisms are inplace to secure timely reporting of suspectedcompliance violations
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Identifying and Auditing RiskAreas
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BOARD ROLE IN COMPLIANCE –IDENTIFYING AND AUDITING RISK AREAS
Board should evaluate and discuss howmanagement works together to address riskincluding role of each in:
• Identifying compliance risk
• Investigating potential compliance risks
• Identifying and implementing appropriatecorrective actions
• Communicating between various functions
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BOARD ROLE IN COMPLIANCE –IDENTIFYING AND AUDITING RISK AREAS
Some risks common to all providers including:
• Referral relationships and arrangements(STARK and Anti-Kickback Statute)
• Billing problems– upcoding
– services not rendered
– medically unnecessary services
– lack of required documentation.
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BOARD ROLE IN COMPLIANCE –IDENTIFYING AND AUDITING RISK AREAS
• Board ensures that Board and managementhave strong processes for identifying riskareas
• Internal sources e.g. employee reports orinternal audits
• External sources e.g. professionalpublications, OIG guidance, consultants,competitors, failures in other organizations
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BOARD ROLE IN COMPLIANCE –IDENTIFYING AND AUDITING RISK AREAS
• Board should ensure that managementconsistently reviews and audits risk areas
• Board should ensure management develops,implements, and monitors corrective actionplans.
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BOARD ROLE IN COMPLIANCE –IDENTIFYING AND AUDITING RISK AREAS
Recent Trends – New Risks
• Increasing consolidation
• Emphasis on quality
• Changes in reimbursement/insurancecoverage
• New incentives
• New efforts at transparency
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Accountability and Compliance
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BOARD ROLE IN COMPLIANCE – ENCOURAGINGACCOUNTABILITY AND COMPLIANCE
• Compliance is an enterprise-wideresponsibility
• Audit, Compliance, and Legal functionsadvise, evaluate, identify and monitor, butentire organization is responsible forcompliance program
• Seeking a “culture of compliance”
• Or, “compliance as a way of life”
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BOARD ROLE IN COMPLIANCE – ENCOURAGINGACCOUNTABILITY AND COMPLIANCE
• Board can tie bonuses or managementcompensation to consistency oforganization’s compliance efforts
• Claw back (payback) provisions if metrics arenot met.
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BOARD ROLE IN COMPLIANCE – ENCOURAGINGACCOUNTABILITY AND COMPLIANCE
Many incentives for Board’s to ensure compliance
• Self-identification and voluntary repayment ismuch less painful than the False Claims Act
• 60-day repayment of overpayments rule
• Greater leniency in settling repayment or othercases
• Self-disclosure = faster resolution and lowerpayment