III. Assessing the Effectiveness of a Compliance Program

Considering the financial and human resources needed to establish an effective compliance program, sound business principles dictate that the nursing home’s management evaluate the return on that investment. In addition, a compliance program must be ‘‘effective’’ for the Government to view its existence as a mitigating factor when assessing culpability. How a nursing facility assesses its compliance program performance is therefore integral to its success. The attributes of each individual element of a compliance program must be evaluated in order to assess the program’s ‘‘effectiveness’’ as a whole. Examining the comprehensiveness of policies and procedures implemented to satisfy these elements is merely the first step. Evaluating how a compliance program performs during the provider’s day-to-day operations becomes the critical indicator.118

As previously stated, a compliance program should require the development and distribution of written compliance policies, standards, and practices that identify specific areas of risk and vulnerability. One way to judge whether these policies, standards, and practices measure up is to observe how an organization’s employees react to them. Do employees experience recurring pitfalls because the guidance on certain issues is not adequately covered in company policies? Do employees flagrantly disobey an organization’s standards of conduct because they observe no sincere buy-in from senior management? Do employees have trouble understanding policies and procedures because they are written in legalese or at difficult reading levels? Does an organization routinely experience systematic billing failures because of poor instructions to employees on how to implement written policies and practices? Written compliance policies, standards, and practices are only as good as an organization’s commitment to apply them in practice.

Every nursing facility needs to seriously consider whoever fills the integral roles of compliance officer and compliance committee members, and periodically monitor how the individuals chosen satisfy their responsibilities. Does a compliance officer have sufficient professional experience working with billing, clinical records, documentation, and auditing principles to perform assigned responsibilities fully? Has a compliance officer or compliance committee been unsuccessful in fulfilling their duties because of inadequate funding, staff, and authority necessary to carry out their jobs? Did the addition of the compliance officer function to a key management position with other significant duties compromise the goals of the compliance program (e.g., chief financial officer who discounts certain overpayments identified to improve the company’s bottom line profits)? Since a compliance officer and a compliance committee can have a significant impact on how effectively a compliance program is implemented, those functions should not be taken for granted.

As evidenced throughout this guidance, the proper education and training of corporate officers, managers, health care professionals, and other applicable employees of a provider, and the continual retraining of current personnel at all levels, are significant elements of an effective compliance program. Accordingly, such efforts should be routinely evaluated. How frequently are employees trained? Are employees tested after training? Do the training sessions and materials adequately summarize the important aspects of the organization’s compliance program? Are training instructors qualified to present the subject matter and field questions? When thorough compliance training is periodically conducted, employees receive the reinforcement they need to ensure an effective compliance program.

An open line of communication between the compliance officer and a provider’s employees is equally important to the success of a compliance program. In today’s intensive regulatory environment, the OIG believes that a provider cannot possibly have an effective compliance program if it does not receive feedback from its employees regarding compliance matters. For instance, if a compliance officer does not receive appropriate inquiries from employees: Do policies and procedures adequately guide employees to whom and when they should be communicating compliance matters? Are employees confident that they can report compliance matters to management without fear of retaliation? Are employees reporting issues through the proper channels? Do employees have the proper motives for reporting compliance matters? Regardless of the means that a provider uses, whether it is telephone hotline, email, or suggestion boxes, employees should seek clarification from compliance staff in the event of any confusion or question dealing with compliance policies, practices, or procedures.

An effective compliance program should include guidance regarding disciplinary action for corporate officers, managers, health care professionals, and other employees who have failed to adhere to an organization’s standards of conduct, Federal health care program requirements, or Federal or State laws. The number and caliber of disciplinary actions taken by an organization can be insightful. Have appropriate sanctions been applied to compliance misconduct? Are sanctions applied to all employees consistently, regardless of an employee’s level in the corporate hierarchy? Have double-standards in discipline bred cynicism among employees? When disciplinary action is not taken seriously or applied haphazardly, such practices reflect poorly on senior management’s commitment to foster compliance as well as the effectiveness of an organization’s compliance program in general.

Another critical component of a successful compliance program is an ongoing monitoring and auditing process. The extent and frequency of the audit function may vary depending on factors such as the size and available resources, prior history of noncompliance, and risk factors of a particular nursing facility. The hallmark of effective monitoring and auditing efforts is how an organization determines the parameters of its reviews. Do audits focus on all pertinent departments of an organization? Does an audit cover compliance with all applicable laws, as well as Federal and private payor requirements? Are results of past audits, pre-established baselines, or prior deficiencies reevaluated? Are the elements of the compliance program monitored? Are auditing techniques valid and conducted by objective reviewers? The extent and sincerity of an organization’s efforts to confirm its compliance often proves to be a revealing determinant of a compliance program’s effectiveness.

It is essential that the compliance officer or other management officials immediately investigate reports or reasonable indications of suspected noncompliance. If a material violation of applicable law or compliance program requirements has occurred, a provider must take decisive steps to correct the problem. Nursing facilities that do not thoroughly investigate misconduct leave themselves open to undiscovered problems. When a provider learns of certain issues, it should evaluate how it assesses its legal exposure. What is the correlation between the deficiency identified and the corrective action necessary to remedy? Are isolated overpayment matters properly resolved through normal repayment channels? Is credible evidence of misconduct that may violate criminal, civil or administrative law promptly reported to the appropriate Federal and State authorities? If the process of responding to detected offenses is circumvented, such conduct would indicate an ineffective compliance program.

Documentation is the key to demonstrating the effectiveness of a nursing facility’s compliance program. For example, documentation of the following should be maintained: audit results; logs of hotline calls and their resolution; corrective action plans; due diligence efforts regarding business transactions; records of employee training, including the number of training hours; disciplinary action; and modification and distribution of policies and procedures. Because the OIG encourages self-disclosure of overpayments and billing irregularities, maintaining a record of disclosures and refunds to the Federal health care programs and private insurers is strongly endorsed. A documented practice of refunding of overpayments and self-disclosing incidents of non-compliance with Federal and private payor health care program requirements is powerful evidence of a meaningful compliance effort.


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