Corporate compliance plan produces many benefits

A column examining the ins and outs of contract issues

By — Posted Nov. 5, 2007.

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Recently a client inquired as to whether his practice group could benefit from a corporate compliance plan. He had heard about compliance plans from another physician and was interested in learning how it could help his practice.

A corporate compliance plan is a set of procedures designed to ensure that a health care entity -- such as a physician practice -- complies with laws and regulations governing its activities. It also serves as a mechanism to detect and prevent improper behavior in the workplace.

While every corporate compliance plan will differ based upon the organization, certain elements are constant in every plan.

These elements originate from the federal sentencing guidelines, which set forth sentencing policies and practices for organizations found guilty of engaging in a federal felony or a Class A misdemeanor.

The federal sentencing guidelines adopt the principle that if an organization can exhibit that it has implemented an "effective program to prevent and detect violations of law," then the entity's culpability score will be lessened, thereby reducing the potential fines and penalties that may be imposed on the organization.

To mitigate penalties under the sentencing guidelines, the plan must be "effective." This does not mean that an error cannot occur if the plan is in place, but rather, practices only must make sure that the plan is implemented so that there is an environment for compliance.

This requires that employees are educated on the various requirements, and that the compliance plan is constantly updated and not simply put on a shelf.

The plan should:

  • Establish a framework for management to disseminate information regarding laws and regulations to the employees who need to be provided with the information.
  • Ensure that the appropriate employees receive all necessary rules and regulations, as the practice ultimately is responsible for any liability arising from noncompliance with laws and regulations.
  • Contain a mechanism for the medical practice to conduct a self-audit to ascertain compliance, and procedures for an employee to report activity that is inconsistent with the governing rules and regulations without fear of retribution.
  • Set forth the practice's specific goals so that each employee is aware of these goals and is empowered by the compliance plan to accomplish them.

The Health and Human Services' Office of the Inspector General has issued a number of model compliance plans. While these models might be helpful in designing a plan, they should not be substituted for a customized compliance plan.

As no customized plan should be allowed to languish on a shelf, a practice group should not use an "off-the-shelf" compliance plan.

How a plan helps

The following is a list of benefits that a practice, whether or not it gets put under scrutiny by the government, can gain by implementing an effective compliance plan:

  • Bolster its credibility with the government.
  • Reduce criminal fines and penalties by reducing the criminal "culpability score" under the federal sentencing guidelines by up to 50%.
  • Reduce the chance that an audit will be conducted by the Centers for Medicare & Medicaid Services or OIG.
  • Protect the practice from liability by reducing the frequency of improper acts or omissions, which should result because employees will be educated on the rules and regulations governing the area covered by the plan.
  • Create a proactive rather than reactive approach to problem-solving.
  • Demonstrate to employees and to the community that the practice is committed to acting honestly and responsibly.
  • Promote an ethical organizational culture.
  • Encourage employees to report potential problems.
  • Create a process by which the practice group can identify and prevent criminal and unethical conduct.
  • Avoid conflicts with the self-referral and anti-kickback statutes.
  • Protect a practice from an employee bringing an action against the practice on behalf of the federal government under the False Claims Act (also known as a qui tam action), because the employee should have been aware of the violation and reported it to the proper personnel.
  • Speed and optimize proper payment of claims.
  • Minimize billing mistakes.

If a practice that does not maintain a corporate compliance plan is investigated and either is found liable or wants to settle, implementation of a corporate compliance plan is almost certain to be a prerequisite to the settlement. In fact, the government likely will require a compliance plan that is much more stringent than the practice normally would impose upon itself.

Some settlements have resulted in the government actually designing the plan at the cost of the practice.

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