Class 10 – Compliance Plans: Potential Pitfalls
Northwestern Memorial Hospital in Chicago created a compliance plan and one of the attorneys who worked on it said there are hidden benefits to the compliance plan. For example, director and officers insurance do not typically cover fraud and abuse but if you have a compliance program in place you might be able to: (1) Push for a reduction in other professional liability insurance because you have this plan; and (2) Reputation can be enhanced. The downside is that this turns your otherwise voluntary program into a required program and the bondholders and shareholders will expect this to continue.
Some of the potential pitfalls of compliance plans learned by Northwestern Memorial Hospital are:
1. Be careful how broad the plan is – are you covering other issues like sexual discrimination, etc.
2. Costs – it costs a lot and it is easy to underestimate the necessary staff to implement compliance plans.
3. No guarantee the government will consider program effective.
4. Negative reaction of those covered – for example, unions; Northwestern had some rumblings, but no problem yet.
5. Find things that you need to report that you did not know about – you are training people to be potential qui tam relators.
6. Difficulty in amending agreements – concern with third parties.
From the physician’s perspective of a practice with 8 – 9 physicians, one of the problems with compliance plans deals with monitoring and auditing. Because this size of group does not have the money to bring in a large accounting firm.
Physicians need to take steps to make sure people are doing what you tell them to do, and to identify people who can get you into trouble. Monitoring is an ongoing process and can be done by people trained in your organization.
Physician rotating is an effective method to do this. For example, if your practice has 12 physicians in it then each physician can get one month to grab 20 random physician files and look for a checklist of issues. It is important to keep a comprehensive document system.
Some compliance program strategies include: Establishing Good Internal Controls, developing Mission and Ethics Statements that Support Good Business Practices, Assessing Companies’ Billing Procedures, and Identifying Trends that Might Suggest Fraud, whether Intentional or Unintentional. There are complicating factors for health care companies because Medicare and Medicaid laws change almost monthly.
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