OIG Issues Additional Compliance Guidance Emphasizing Responsibility of Governing Boards.

by Michael Schulze

A Hospital’s commitment to effective statutory and regulatory compliance starts at the top with the Hospital’s Governing Board. On April 20, 2015, the Office of Inspector General, U.S. Department of Health and Human Services (“OIG”) issued Practical Guidance for Health Care Governing Boards on Compliance Oversight (“Guide”) in which it re-emphasized a Board’s critical need to actively oversee and be responsible for the entity’s compliance functions. The OIG’s overall message is that Boards are responsible for making inquiries and instituting a system to monitor and report information to the Board designed to ensure the Board timely receives appropriate information relating to compliance and quality improvement. In other words, the OIG is sending another strong message that it expects the Board to actively foster a culture of compliance throughout the facility by demonstrating its own commitment to compliance and by holding people within the facility accountable for performing their assigned compliance tasks.

I. Coordinating Facility Compliance Activities

The Board is expected to approve and oversee a compliance program that ensures the facility’s day-to-day compliance activities are conducted in an informed and coordinated manner by the facility’s administration and designated personnel. No one expects, nor probably wants, members of the Board to carry out the facility’s day-to-day compliance activities. Instead, the Board is expected to create a compliance program which defines the roles and functions of the facility’s compliance, legal, risk management, internal/external audit, human resources and quality improvement functions.

Additionally, the Board is expected to provide sufficient resources for the program to function; however, as the OIG acknowledged in the Guide and prior guidance, there is no “one size fits all” compliance program. Rather, the Board should facilitate the development of a compliance program tailored to the actual type and size of the facility’s operations. The Board should evaluate how the facility’s administration and designated personnel work together to:

  1. Identify compliance risks;
  2. Investigate possible compliance risks or complaints;
  3. Develop and implement appropriate corrective actions and decision-making; and
  4. Communicate throughout the process.

The OIG expects the Board to also ensure the facility administration and compliance officer have appropriate access to compliance resources. Such access should include access to experienced health care legal counsel, educational programs and additional personnel if necessary based on the facility’s operations.

The OIG recommended the facility stay abreast of recent industry trends, including taking into account the increased emphasis on quality of care and monitoring the changing nature of health care reimbursement. The OIG also recommended facilities review the various published corporate integrity agreements the OIG has entered into with similar facilities to see what specific compliance checks and procedures the OIG imposed as possible policies the facility could adopt.

II. Ensuring the Board has Timely and Applicable Information:

It is not enough for the Board to simply set up a compliance program. The Board must actively oversee that program. Consequently, the compliance program must include a system through which timely and relevant information is reported to the Governing Board so that the Board can evaluate the effectiveness of the compliance program and personnel and make the appropriate decisions based on that information. The OIG stated at the beginning of the Guide, “[a] critical element of effective oversight is the process of asking the right questions of management ….”

Asking the “right questions” means asking informed questions based on accurate information with a proper understanding of what the law requires. Boards are expected to have a general understanding of the overall statutory and regulatory requirements applicable to the facility, to be knowledgeable about the facility’s operations and to seek guidance from internal and external consultants and legal counsel. Being aware that Board members may not have extensive backgrounds in health care and recognizing that health care regulations are becoming increasingly complex, the OIG advised that Boards should develop a formal plan to ensure the facility remains up to date of the “ever-changing regulatory landscape and operating environment.” That process could include periodic updates from informed staff, periodic outside educational programs or a formal education calendar with scheduled sessions on identified subjects.

The OIG suggested that Boards could raise its level of substantive expertise by adding or regularly consulting with experienced health care regulatory counsel. In the OIG’s view,

“[t]he presence of a professional with health care compliance expertise on the Board sends a strong message about the organization’s commitment to compliance, provides a valuable resource to other Board members, and helps the Board better fulfill its oversight obligations.”

Having experienced regulatory counsel at a facility’s compliance committee or Board meetings or available to consult with Board members is a very helpful and cost effective demonstration of the Board’s commitment to compliance. As the OIG noted in the Guide, experienced regulatory counsel can help the Board by identifying risk areas, providing insight into best practices, updating the Board on relevant legal developments and consulting on substantive or investigative matters.

However, it would generally not be advisable to have the counsel be an actual member of the Governing Board as such formal membership begins to blur the lines between the counsel’s role as legal consultant and Board member and raises privilege concerns. Instead, if the Board simply invites legal counsel to attend the compliance committee or Board meetings as outside legal counsel, the facility can achieve all of the benefits the OIG identified in the Guide without undermining privilege and confidentiality protections. Such consultation with legal counsel also provides the Board with a cost effective resource to bolster the effectiveness of the facility’s compliance efforts.

III. Conclusion

The Guide, along with the other available guidance published by the OIG, emphasizes the OIG’s long-standing position that Governing Boards need to actively oversee the facility’s compliance program to ensure the day-to-day compliance activities performed by the administration or personnel is effective. The OIG’s position is consistent with recent court decisions which have increasingly held Governing Board’s accountable for the facility’s compliance activities by requiring good faith oversight by the Board.

Michael Schulze is a managing member of Sullivan Stolier Schulze & Grubb Knight, LC, dedicated to the regulatory, transactional and business needs of health care providers. He can be reached by phone at (337) 233.6210 or by email at mschulze@sullivanstolier.com