Health Law Blog - Healthcare Legal Issues

Archive for February, 2011

Compliance Officer and Legal Counsel Dual Role

Sunday, February 20th, 2011

Health Care Compliance Officer and Legal Counsel Relationships

Should Compliance and Counsel Functions Be Separated?

There is a current debate within the health care industry about the relative roles of the Chief Compliance Officer (CCO) and Legal Counsel.  More specifically, questions are raised regarding whether the Legal Counsel should serve the dual role of legal counsel and compliance officer and whether the primary compliance officer can report through legal counsel.  There are arguments on both sides.  This is an extremely important issue to many organizations.  As such, I will be devoting several articles to the various aspects of this issue over the next several weeks.

In all but the very smallest organizations that clearly cannot absorb the cost of two separate functions, it presents increased compliance risk to the organization for the legal counsel to also be the prime individual responsible for compliance within the organization.

Dividing the compliance and legal counsel functions is clearly the “best practice” when it comes to organizational compliance. This conclusion is supported by comments from the Office of Inspector General (OIG), a consistent reading the the Federal Sentencing Guidelines (FSG), the position taken by the government in Corporate Integrity Agreement fraud and abuse settlements, and by the general ethical standards that apply to the general counsel.

The case for dividing the functions of legal counsel and compliance officer and creating a separate Compliance Office with direct line of authority to the Board or a Committee of the Board is quite compelling.  In fact, many organizations who had previously run the compliance role through the office of general counsel are now reviewing that practice and are making changes to their organizational structure and compliance plans.

A study done by the American Health Lawyers Associations and the Office of Inspector General in 2004 found that at that time, only 20% of the health care organizations that were polled had their compliance function under the authority of the Legal Counsel’s office.  It is safe to say that in view of more recent pronouncements by the OIG and by comments made in the Compliance Guidance for Hospitals that was released in 2005, the percentage of “dual role” organizations is now less than that figure.

The first source to be examined when defining the role of the compliance officer within an organization is the Federal Sentencing Guidelines.  The FSG do not specifically mention a compliance officer per se, but require that the compliance and ethics program be assigned to “high-level” personel.  When organizations first began creating compliance programs in response to the Federal Sentencing Guidelines, oftentimes the responsibility was assigned to the legal counsel.  This seemed to be a natural outgrowth of the function of the office of legal counsel.  In that regard, it made organizational sense because the office of legal counsel had resources and personnel in place to implement the compliance program without creating an entire new organizational division.

Over time, the assignment of compliance functions to the legal counsel began to raise questions.  Concerns were raised as to whether the legal counsel was in fact a “high level” personnel.  Additionally, questions were raised as to the degree that giving the legal counsel the dual role of compliance officer and legal counsel sufficiently conveyed the appearance of the importance that the organization placed on compliance.  As a result, some lawyers and compliance experts began to question whether creating a “dual role” compliance officer put the organization at risk of not receiving the benefits afforded under the Federal Sentencing Guidelines if the organization was ever in a position to need these benefits.

The Office of Inspector General has made its position clear that legal counsel should not exercise a dual role.  An examination of many of the recent Corporate Integrity Agreements that have been entered between providers and the OIG clearly demonstrate the OIG’s position on this matter.  Most CIAs outline the role and position of the compliance officer in the organization.  The standard language being used by the OIG is as follows:

“The Compliance Officer shall be a member of senior management of [Provider], shall make periodic (at least quarterly) reports regarding compliance matters directly to the Board of Directors of [Provider], and shall be authorized to report on such matters to the Board of Directors at any time.  The Compliance Officer shall not be or be subordinate to the General Counsel or Chief Financial Officer. [Emphasis Added]

Although the Sentencing Guidelines do not affirmatively address dual role situations, Commentary to the Sentencing Guidelines state that “applicable industry practice or the standards called for by any applicable governmental regulations” are factors to be considered.  Failure to follow these standards “weighs against a finding of an effective compliance and ethics program.”

At the same time, both the Sentencing Guidelines and the OIG Compliance Guidance recognize that the size of the organizations a factor in judging the level of compliance.  This recognizes that in cases where the organization is small and fewer resources are available, the organization can meet its obligations without necessarily creating a structure that separates the roles between the legal counsel and the compliance office.  However, there is no precise definition as to whether an organization is a “small organization” that can fulfill its compliance functions in less formal ways or a “large organization” which will be expected to devote suitable resources to create a completely separate compliance function.

This uncertainty leave an organization’s board of directors without precise guidance concerning an appropriate structure given the size and nature of its organization.  At the same time, best practices, given available resources, is to separate the compliance and legal counsel functions.  The potential consequences of failing to use an appropriate structure for the size of the organization is increased penalties in the event of an event of organizational criminal misconduct; so the consequences can be quite serious.

OIG 2011 Work Plan Home Health Issues

Wednesday, February 16th, 2011

Home Health Care Issues In OIG 2011 Work Plan

We are a little late at reporting this, but a couple of months back, the OIG released its Work Plan for Fiscal Year 2011. This publication provides brief descriptions of activities that the Office of Inspector General (OIG) plans to initiate or continue with respect to the programs and operations of the Department of Health & Human Services (HHS) in fiscal year (FY) 2011.  I will be posting several smaller articles of interest as a continue my more detailed review of the OIG Work Plan for 2011.  You can access the entire 2011 OIG Work Plan at the following link:

This particular article will focus on some of the 2011 Work Plan issues that apply to home health providers.  The 2011 OIG Work Plan identified several key areas of focus for home health agencies.

Part B Payments for Home Health Beneficiaries

The OIG will be reviewing Part B payments for services and medical supplies provided to beneficiaries in home health episodes. Most services and non routine medical supplies furnished to Medicare beneficiaries during home health episodes are included in the home health agency (HHA) prospective payments. Normally payment for  home health services furnished under a plan of care of an HHA are made to the home health agency.  This includes payment for services and supplies provided under arrangements by outside suppliers. The OIG will be focusing on the identification of  Part B payments to outside suppliers for services and medical supplies that are included in the HHA prospective payment.  OIG will be conducting examinations concerning the adequacy of controls that the home health agency established to prevent inappropriate Part B payments for services and medical supplies.

Claims for Medicare Home Health Resource Groups

In order to receive home health services a patient must meet certain coverage requirements including:  (1) the patient must be homebound; (2) the patient must require intermittent skilled nursing care, physical or speech therapy, or occupational therapy; (3) the patient must be under the care of a physician; and (4) have a physician established and periodically reviewed plan of care.  The Work Plan states that the OIG will continue to perform reviews to assure compliance with these conditions of coverage.

Medicare reimburses for home health services on a prospective basis based on categories that are grouped based on the patient’s need for care and resources.  These categories are referred to as Home Health Resource Groups.   HHRGs are assigned based on an assessment of each patient.  The OIG  Work Plan will target the assignment of HHRG codes assigned to patients.

Home Health Agency Outcome and Assessment Information Set Data

Federal regulations require home health agencies to conduct  comprehensive patient assessments.  These examinations must include OASIS data items which must also be submitted to CMS.  The OASIS data is used by CMS in the home health prospective payment system. OASIS quality data is also used in CMS’ Home Health Compare web site.  The OASS data contains information on the performance of the home health agency in assisting patients to regain and maintain functioning and the activities involved with daily living.  The 2011 Work Plan states that the OIG will be reviewing CMS’s process to assure that the data being reported by home health agencies is complete and accurate.

PPS System Controls For Home Health Agencies

The OIG expresses concern with the rapid increase in home health expenditures since PPS was implemented in 2000. As a result of this concern, the OIG will be examining many aspects of the home health PPS.  Some of the areas specifically mentioned include whether the billing is for an the appropriate location, an analysis of trends in home health activities, visit frequency, ownership arrangements and arrangements with other providers and facilities.

Examination of Home Health Profit Margins

Again stating a concern over the growth in home health spending since PPS was implemented, the OIG states an intention to examine home health profitability. The OIG will examine cost report data to determine trends in profitability of home health providers since home health PPS was implemented.

Medicare Home Health Agency Enrollment

The OIG highlights DME suppliers, that it claims are often associated with home health agencies, who have been found to have provided innacurate information in their enrollment documentation.  The OIG states that it will be reviewed CMS and state agency program integrity efforts during the enrollment process to be certain that complete and accurate applications are provided.

John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
500 First Street, Suite 8000
P.O. Box 8050
Wausau, WI 54402-8050

Tel 715.845.4336
Fax 715.845.2718

Ruder Ware is a member of Meritas Law Firms Worldwide

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