principles of good governance for hospital boardsprinciples of good governance for hospital boards...

PRINCIPLES OF GOODGOVERNANCE FOR HOSPITALBOARDS

ISB Health Law Section

Thomas J. Mortell

June 4, 2015

THE BOARD’S ROLE INCOMPLIANCE – A RENEWEDEMPHASIS

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).

OIG Expectations

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.


• 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


• 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


• 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

Roles and Relationships

BOARD ROLE IN COMPLIANCE –ROLES AND RELATIONSHIPS

Compliance Functions

• Internal Audit

• Compliance

• Legal

• HR

• Quality Improvement

• Roles of each function should be defined


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


Compliance Function (con’t.)

• Metrics to measure execution (bymanagement).

• Metrics to measure implementation ofcorrective actions

• Reports and dashboards for managementand Board to measure effectiveness


Legal Function

• Advises of regulatory risks of businessstrategies

• Advice and counsel on laws and regulations

• Defend or initiate legal proceedings ifwarranted


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


• 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


• Same for internal audit dept.

• All three functions should have access tohospital information and resources

• Policies should ensure access toinformation

Reporting to the Board

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


• May use objective scorecards tomeasure how well management is:

–Executive compliance program

–Mitigating risks;

–Implementing corrective actions


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


• 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

Identifying and Auditing RiskAreas

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


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.


• 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


• Board should ensure that managementconsistently reviews and audits risk areas

• Board should ensure management develops,implements, and monitors corrective actionplans.


Recent Trends – New Risks

• Increasing consolidation

• Emphasis on quality

• Changes in reimbursement/insurancecoverage

• New incentives

• New efforts at transparency

Accountability and Compliance

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”


• Board can tie bonuses or managementcompensation to consistency oforganization’s compliance efforts

• Claw back (payback) provisions if metrics arenot met.


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

QUESTIONS?

THANK YOU

Thomas J. Mortell

[email protected]

www.hawleytroxell.com

June 4, 2015

principles of good governance for hospital boardsprinciples of good governance for hospital boards...

Documents