New Guidance Issued for Health Care Boards Regarding Compliance Oversight

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Are hospital and health system boards aware of compliance within your organization?  On April 20th, the Office of Inspector General (“OIG”) of the U.S. Department of Health and Human Services (“HHS”), in collaboration with various healthcare and legal compliance organizations, published a report advising health care organizations that compliance needs to be an integral issue for health care boards.  Specifically, HHS published the report titled, Practical Guidance for Health Care Governing Boards on Compliance Oversight (the “Report”).  The Report addressed various issues relating to a board’s oversight and review of compliance program functions.

The Report states that one of the first areas boards should focus on relates to understanding the actual expectations the government has with respect to board oversight of compliance program functions.  Although the Report notes that a board must make inquiries to ensure information and reporting systems exist, the board must also confirm that the reporting system is adequate to ensure compliance issues are presented to the board.  Further, the Report explains that boards must develop a formal plan to keep informed of regulatory and compliance changes. 

One method to ensure the board is able to analyze and understand compliance related issues is to utilize the expertise of others to assist in fulfilling this duty.  Specifically, the Report advises that an expert to the board can assist the board in identification of risk areas, provide insight into best practices in governance, and provide consultations on other substantive or investigative matters.  While there is no one-size fits all standard for health care organization boards, the Report indicates that boards have a responsibility to ensure they understand compliance functions, are aware of compliance issues within the organization, and receive expert advice to ensure the board can act upon those issues.

The Report also discusses various issues of which boards should be aware.  This includes the roles and relationships between the audit, compliance, and legal functions.  With respect to each of these areas, HHS believes health care boards should be able to evaluate the adequacy and performance of such functions on a periodic basis.  Further, boards are expected to set and enforce expectations related to receiving compliance information from various functions within an organization.  One issue that is stressed within the Report is the need for regular reports from an independent perspective.  Finally, the Report addresses the need for boards to understand active monitoring of risk areas as well as encouraging accountability and compliance as an enterprise-wide responsibility.

Krieg DeVault has significant experience in this area as Partner and Health Care Practice Group Leader Bob Wade is currently the Compliance Expert to the Board of Halifax Health, a 678-bed hospital system based in Daytona Beach, Florida. In March 2014, Halifax Health signed a Corporate Integrity Agreement (“CIA”) with the OIG as part of an $85 million settlement with the U.S. Department of Justice over alleged illegal contracts with physicians, that violated the Stark Law as well submitting false Medicare claims to the federal government. This settlement is the largest Stark Law settlement involving a hospital system to date.  Under their CIA, the OIG mandated a Compliance Expert to the Board.  This Report, and Bob Wade’s recent appointment, highlight that the OIG and HHS are insisting on enterprise-wide compliance from the board level.

If you have any questions or concerns related to the health care organization board compliance, or the Report, please feel free to contact Robert A. Wade at (574) 485-2002 or Alex T. Krouse at (574) 485-2003.