engaging boards in improving quality, performance, and integrity

Adelman, Sheff & Smith, LLCAdelman, Sheff & Smith, LLC

Engaging Boards in Improving Quality, Performance, and

Integrity

Adelman, Sheff & Smith, LLC

Goals of the Presentation• Address the fiduciary obligations of officers and directors with

respect to quality of care matters

• Identify leading trends attributing liability to officers and directors for organizational misconduct

• Review enforcement activity related to quality of care-related violations of Medicare/Medicaid laws

• Examine the OIG’s permission exclusion authority guidelines

• Suggest a course of action for health care boards to consider with respect to quality and compliance plan enhancements


The Board’s Core Fiduciary Duties

• The Duty of Care– Acting in “good faith”– Prudent person standard– Reasonably acting in the best interest of the entity– Application

o The decision-making functions o The oversight functions

• The Duty of Loyalty/Obedience to Mission

In addition to the traditional duty of hospital board members to be responsible for granting, restricting, and revoking privileges of membership in the organized medical staff.


The Board’s Fiduciary Duty of Care• Director obligations with respect to:

– Supervising medical staff credentialing decisions arise

within the context of the Decision Marking Function– Supervising overall institutional quality of care arise in the

context of the Oversight Function: an ongoing task;

directors are expected to “keep their finger on the pulse” of

matters relating to quality of care and patient safety – Monitoring the corporate compliance implications of quality

of care arise in the context of the Oversight Function, in the

same manner as does more traditional compliance issues


The Board’s Fiduciary Duty of CareNote various board committees with quality of care responsibilities, e.g.,:

• Quality of Care/Patient Safety

• Medical Staff

• Finance/Audit

• Compliance

• Information Technology

• Strategic Planning

Key: Coordination of information amongst committees


Informational Support toGovernor Board

• Right to rely on management, committees, and advisors

• Use of “performance scorecards” or “dashboards” as a means for promoting and monitoring institutional quality of care

9 “High level” dashboard for full board

9 Topic-specific dashboards at committee levels


Informational Support toGovernor Board (cont’d)

• Focus on system-level improvement through data reflecting:

– Performance measures

– Targets for reducing patient safety risks

– Protocols for quality improvement

• Caution: appropriate balance of deference to medical staff representatives on governing board with the experience and background of “lay” directors


Duty of Care and Quality• Emerging quality of care issues

– Collaboration among providers of care

– Monitoring and reporting requirementso Data is central to the Quality Movement

– Payment policies

• Significant opportunities and risks – Quality linked to reimbursement

– Transparency

– Public/private collaboration

– Government enforcement


Quality Improvementand Measurement

• Quality must receive same attention as financial viability.

• Boards must:

9 Be sensitive to emerging quality of care issues.

9 Be attentive to quality of care measurement and reporting requirements.

9 Request periodic updates on quality of care initiatives.

9 Respond diligently when quality concerns are raised.


Quality Data and Transparency

• Data access and transparency key components of new payment models

• Data for informed consumers

• Data essential tool for whistleblowers and consumers

• Boards must:

– Have tools, data from which to oversee quality;

– Monitor relationship between public reporting of quality measures and hospital reputation.


Government Enforcement & Quality• Enforcement priority

– DOJ, OIG, and State Attorneys Generals

– Training and collaboration

– Federal and state “Whistleblower” statutes


Enforcement and Quality of Care• Linkage of payment to quality of care creates new

criminal, civil, and administrative exposure (“Failure of Care” constitutes FCA violation).

• Data transparency creates a new degree of provider accountability.

• New authorities create additional exposure:

– FCA overpayment reporting and return requirement.

– Expansion of Recovery Audit Contractors authority.

• New government resources and new use of old authorities.


Enforcement Sources• Whistleblowers, Ombudsman, Licensure Boards

• Mining of quality/reimbursement data


Enforcement Tools• False Claims Act

– Implied false certification

– Failure of care/worthless services

• Civil Money Penalties

– Misrepresentation of certification

– Pattern of medically unnecessary service

• Program Exclusion

– CMP violation

– Services in excess of need


More Enforcement Tools• Corporate Integrity Agreements

– Independent reviews and quality monitors

– Board certifications (e.g., Tenet Healthcare Corp.)

– Stipulated penalties


CIA Provisions Addressing Quality

• Unique CIA Provisions focused on oversight of medical staff– Appointment of a Medical Director for the Cardiac

Catheterization Lab and/or appointment of a Physician Executive

– Detailed policies and procedures regarding medical staff peer review/credentialing, and management of a cardiac cath lab

– Engagement of a Peer Review Consultant to conduct a Systems Review

– Cardiac Catheterization Procedures Review by IRO (in place of Claims Review)


Focus on Officer, Director Accountability

General Perspective:

– Enhanced governmental interest in “following the conduct” to identify individuals who can be held accountable for corporate wrongdoing – whether they are “in the field”, executive suite, or the board room.

Recent Examples:– IRS (withholding tax liability)

– SEC (executive compensation clawbacks)

– DOJ (application of the FCPA)

– SEC (focus on negligence, rather than scanter, based offenses)

– DOJ and FDA’s use of FDCA


Responsible CorporateOfficer Doctrine

• Supreme Court-based theory increasingly used by FDA and DOJ and other federal agencies to attribute responsibility to corporate officers for public welfare criminal misdemeanors, without any evidence that they may have been aware of, or participated in, the underlying problematic conduct.

• Recently used by DOJ in several high profile prosecutions involving officers of medical device and pharmaceutical companies; “Too Big to Fire” application.


OIG Permissive Exclusion Authority

• Entity sanction precondition

• Provides two different bases for exclusions

– Individuals with an ownership or control interest who knew or should have known of the prohibited conduct

– Officers and managing employees, even in the absence of evidence that they knew or should have known of the prohibited conduct (this is the strict liability/”RCOD” concept)

• Definition of “managing employee” excludes corporate director


OIG Permissive ExclusionAuthority (cont’d)

• Four factors OIG will consider in deciding whether to exclude an officer or managing employee in the absence of evidence that the person knew or should have known the misconduct:

1. Circumstances of misconduct; seriousness of offense

2. Individual’s role within sanctioned entity

3. Individual’s action in response to the misconduct

4. Certain information about the sanctioned entity


“Willful Blindness”• An aggressive doctrine of liability, applied in both civil

and criminal cases

• Seductive theory because it is subject to a highly subjective analysis, particularly when facts look bad and harm has occurred

• Core Concept: Willful blindness occurs when a person purposely turns away from learning something because he/she knows the chances were high that he/she would learn something bad that would make improper or illegal what they were doing.


What’s A Board to Do?• Key Concept: How do these issues relate to Quality?

• Possible Action Items:

– Educating Boards on connection between quality and compliance; making sure they are provided with examples of oversight questions they should ask and continuous flow of information; see, e.g., “Dashboards” to interpret mounds of data; quality resources.

– Advising management team regarding 1128(b)(15) exposure and how it may be implicated by quality of care issues.


What’s A Board to Do? (cont’d)– Adopting compliance protocols to guide officers,

executives, and management on appropriate response to take when they become aware of alleged quality of care concerns/misconduct

– Enhancing existing compliance plan provisions and requirements to reflect good faith “extraordinary care” by officers and executives

– Assuring the presence of the general counsel in all meetings of the board and of key committees to help support discussion regarding legal issues associated with quality of care matters


Duty of Care and Quality• The “bottom line”:

– Quality is an essential component of the mission of the health care providers

– Quality must receive the same level of Board attention as the corporation’s financial viability

– Quality and cost efficiency are complementary, not contradictory, elements of an effective health care system

– Unique opportunity for leadership and positive change


Lessons Learned fromPast Enforcement

• Redding Medical

9 Allegations: Billing for medically unnecessary cardiac procedures by two physicians

9 Red flags:o The CEO told concerned staff “to mind own business”

The two physicians were two of the top billers in the hospital o No conflict of interest protocol

Review of procedure volume showed a very high rate of cardiac procedures

9 Outcome: Tenet - $54 million; o Hospital sold o Physicians

Suspended practice; no malpractice insurance License revoked (stayed) and three years probation


Lessons Learned from Past Enforcement (cont’d)

• Our Lady of Lourdes (2006)9 Allegations: Billing for medically unnecessary cardiac procedures

between 1999 and 20039 Red flags:o Scrub techs and nurses complained to management of the unnecessary

nature of surgeries Failure to review or monitor practices A top revenue generator for the hospital

o Hospital stepped in only after two cardiologists complained

9 Resolution: Hospital paid $3,800,000 o Hospital entered a 5-year CIAo Doctor prosecuted and sentenced to 10 years



• Saint Joseph’s Medical Center (2010)– Allegations:

o Billing for medically unnecessary carotid artery stent procedures

o Kickbacks to cardiologists in exchange for the referral of cardiac procedures

– Red Flag: gross overutilization of health care services, standards of care violations, and the failure to keep adequate medical records.

– Outcome: Saint Joseph’s paid $22,000,000 and 5-year CIAo Doctor’s license revoked.

Unprofessional conduct, false reports, Board found that he unnecessarily inserted cardiac stents because of "pressure

to produce”



• Peninsula Regional Medical Center (2011) Allegations: Billing for medically unnecessary heart stent procedures

Red flags:o Prevalent sarcastic joking amongst catheterization lab employees about the

nature and percentage of surgeon’s stents o Responsibility to monitor the medical necessity of Cardiac Catheterization Lab

procedures assigned but never carried out o Hospital did not assess or compare utilization rates of its interventional

cardiologists during the relevant time period

Settlement: Peninsula paid $2,767,924; 5-year CIAo Surgeon convicted on one count of health care fraud and five counts of making

false statements relating to health care matters; eight years in federal prison



• Satilla Regional Medical Center/ Dr. Azmat (2011)9 Allegations: Billing for medically unnecessary and worthless endovascular

procedures preformed by surgeon9 Red flags:o Executives ignored complaints from employees that doctor was a danger to patients

One patient diedo Hospital knew or should have known through its credentialing and peer review

procedures that doctor was not competent to perform endovascular procedures by: Not adequately considering information of prior limitations placed on privileges at a different

facility Allowing doctor to perform endovascular procedures when:

He had never been granted privileges to perform such procedures at any prior facility He had not demonstrated competency to perform the procedures

9 Outcome: Satilla paid $840,000 to settle False Claims Act; Center purchased, resulting in a new Board of Directors, new administration, and new compliance programo Azmat excluded


Lessons To Be Learned • Don’t ignore the conduct of your top billers

• No physician is “too big” to challenge/review

• Have a conflict of interest protocol and follow it

• Review your data and understand what it means

• Listen to the concerns of all employees, not just other physicians or administrators


More Lessons To Be learned • Draft and follow appropriate policies and

procedures

• Enforce accountability across all employment levels

• Sometimes joking needs to be taken seriously

• Board needs to hold leadership accountable for fulfilling their job requirements

• Appropriately review and evaluate the skills and abilities of physicians


Suggested Questions for Directors• Quality goals and institutional leadership?

– Understanding structures & processes

– Linkage between quality, peer review, and compliance

• Board orientation and expertise?

– Dashboards and benchmarks

– Recruiting expertise


Suggested Questions for Directors

• Coordination with compliance program?

– Integration of regulatory compliance

– Quality and risk assessment/corrective actions

• Internal reporting and communications?

– “Whistleblower” protections

– Culture of candor


Suggested Questions for Directors• Adequate resources?

– Staffing levels

– Acquisition of new technologies and services

• Addressing specific quality concerns and adverse events?

– Quality and the peer review process

– Responding to incidents of deficient care


Tips for Boards forOverseeing Quality

• Create a comprehensive policy establishing a quality improvement program

– Ensure stakeholders share a common definition of quality

– Incorporate its objectives into employee performance and incentive compensation


More Tips for Boards• Use dashboards and benchmarks to measure progress

to improve outcomes and patient satisfaction

– “What gets measured gets done”

– Use PEPPER and other metrics to compare with peers


More Tips to Promote Oversight • Recruit sufficient clinical expertise to advise the Board

on quality review functions

• Perform self-assessments of the board and its committees

– Review board's response to systemic failures

• Implement conflict of interest policies to identify and manage financial conflict that may affect clinical judgment


Board Tips to Ensure an Effective Compliance Program

• Develop lists of questions for management that assess the compliance program

– See OIG website for suggestions

• Protect the independence of the compliance officer

– Separate the role from the legal department

• Understand how the compliance systems work and how information flows to the Board


My Patient vs. Our PatientMoving from a model that focuses on individual

performance to systems-based performance

Requires a shift in thought

MY PATIENTS

EVIDENCE-BASED OUTCOMES

OUR PATIENTS

INDIVIDUAL PERFORMANCE


Taking One for the Team

Patient

Physician

OP Rehab

Skilled Nursing

Home Health

• Acute Care• Emergency• Diagnostic

• PAC services• IP Surgery• IP Rehab

HOSPITAL


New healthcare era requires a structure in which all

stakeholders are responsible for quality of care and efficient

use of financial resources.

The New Medical Staff on the Block

The medical staff is a self-governing entity that is

responsible for the quality of care rendered at the hospital.

This autonomy in decision-making creates an

environment that makes systems-based change

difficult.

Creation of a quality oversight committee

facilitates communication and coordination of care.

Current Future

“The Joint Commission’s American Model of medical staff “self-governance” provides aninfrastructure which allows for, and perhaps fosters, the accentuation of material

conflicts among and between medical staff members, physician leadershipand physician committees, and the governing body relative to the definition,

adoption, implementation and enforcement of requisite Quality/Safety standards.”1

1 Peters, Brian M. and Nagele, Robin Locke. Promoting Quality Care and Patient Safety: The Case for Abandoning The Joint Commission’s “Self-Governing” Medical Staff Paradigm. MSU Journal of Medicine and Law. 2010. No. 313, p. 313-373.


Clinical Co-Management 1.0

Management Company/

LLC/Committee

Hospital Physicians

•Base management fees• Incentive Compensation (limited) Including:

- Quality

- Operational

Efficiency

Hospital Pays for: $

PhysiciansHospital

Service Contract to Manage Hospital’s

Service Line at Risk for Quality and Operational

Goals


Clinical Co-Management 2.0

Clinical Integration Council

• PMA Quality• PMA Operations

• PMA Quality• PMA Operations

• Other Medical Quality• Other Medical Operations

Contract In

tegration

Co

ntr

ac

t In

teg

rati

on

Contract Integration

PMA’s(Orthopedic, Cardiac,

Urology)

Other Medical Services

Other PMA’s (Service or Specialty Areas)

Management Services Agreement


Quality Counts…But Can You Prove It?

1. AMI-2 Aspirin Prescribed at Discharge2. AMI-7 a Fibrinolytic Therapy Received Within 30 Minutes

of Hospital Arrival3. AMI-8a Primary PCI Received Within 90 Minutes of

Hospital Arrival4. HF-1 Discharge Instructions5. HF-2 Evaluation of LVS Function6. HF-3 ACEI or ARB for LVSD7. PN-2 Pneumococcal Vaccination8. PN-3b Blood Cultures Performed in the Emergency

Department Prior to Initial Antibiotic Received in Hospital

9. PN-6 Initial Antibiotic Selection for CAP in Immunocompetent Patient

10. PN-7 Influenza Vaccination11. SCIP-Inf-1 Prophylactic Antibiotic Received Within One

Hour Prior to Surgical Incision12. SCIP-Inf-2 Prophylactic Antibiotic Selection for Surgical

Patients13. SCIP-Inf-3 Prophylactic Antibiotics Discontinued Within

24 Hours After Surgery End Time14. SCIP-Inf-4 Cardiac Surgery Patients with Controlled 6AM

Postoperative Serum Glucose15. SCIP-Card-2 Surgery Patients on a Beta Blocker Prior to

Arrival That Received a Beta Blocker During the Perioperative Period

16. SCIP-VTE-2 Surgery Patients with Recommended Venous Thromboembolism Prophylaxis Ordered

17. SCIP-VTE-2 Surgery Patients Who Received Appropriate Venous Thromboembolism Prophylaxis Within 24 Hours Prior to Surgery to 24 Hrs After Surgery

ClinicalProcess ofCareMeasures70%

HCAHPS30%

Source: CMS Special Open Door Forum: VBP 2/10/2011


One Matters


The Rubber Hitting the Road

5th %tile 10th %tile

25th %tile

50th %tile

Mean 75th %tile

90th %tile

95th %tile

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

0.551

0.661

0.822

1.0391.041

1.255

1.4201.499


Beyond the Four Walls• CMS Nursing Home Quality Initiative

– Nursing Home Compare website: past performance of every Medicare and Medicaid certified nursing home in the country

– Includes aspects of residents' health, physical functioning, mental status, and general well being

• LTACH Outcome Benchmark Project – Working to develop meaningful metrics– Crude mortality, ventilator weaning, pressure ulcers,

catheter-related infections, readmissions, unplanned transfers


Medicare ASC Quality Reporting Program

Measure Reporting PeriodPayments Affected

Beginning

1. Patient Burn Begins October 1, 2012 2014

2. Patient Fall Begins October 1, 2012 2014

3. Wrong Site, Side, Patient, Procedure, Implant

Begins October 1, 2012 2014

4. Hospital Admission/Transfer Begins October 1, 2012 2014

5. Prophylactic IV Antibiotic Timing Begins October 1, 2012 2014

July 1 thru August 15, 2013

(measures use 1/1/12-12/31/12)

July 1 thru August 15, 2013

(measures use 1/1/12-12/31/12)

8. Influenza Vaccination Coverage Among Health Care Personnel

October 1, 2014 thru March 31, 2015 2016

6. Safe Surgery Checklist Use in 2012

2015

7. 2012 Volume of Certain Procedures

2015


Beyond the Four Walls

Productivity Quality/Efficiency

Health Status Total

“The Secretary shall establish a payment modifier that provides for differential payment to a physician or a group of physicians under the fee schedule established under subsection (b) based upon the quality of care furnished compared to cost …”


Aligning Quality Measures

PQRS: 194 measures in 2012• Better care for individuals• Better health for populations• No HCAHPS

Meaningful Use: 49 measures for Stage 2 in 2014

• Partial overlap with VBP• Partial overlap with PQRS

ACO: 33 measures in 2012• Partial overlap with PQRS• HCAHPS

VBP: 13 measures in 2012• Subset of Hospital Inpatient

Quality Reporting Program• HCAHPS


Quality 2.0• Core Measures No Longer Enough

• At Risk vs. In Addition To

• Consider Degree of DifficultyThreshold Metrics

Change Management

• Composite Metrics on the Horizon

• Quality Replacing Productivity Measures Entirely

• Process to Outcomes to Systems


CMS is Not AloneWhat information should be shared and who is sharing it?

• Hospital Compare

• Physician Compare

9 Not there yet!

9 Challenges with reporting exist

• The Public Domain

9 Angie’s List

9 HealthGrades

9 US News

9 Thompson Reuters

9 Your local community


It’s Not Easy Being Green


Key Reference Material• The Health Care Director’s Compliance Duties: A

Continued Focus of Attention and Enforcement.

• Guidance for Implementing Permissive Exclusion Authority (Oct. 19, 2010).

• Peregrine and Buchman, “A ‘Responsible Corporate Officer’ Defense Plan” (AHLA Connections, March 2011).

• “Driving for Quality in Acute Care: A Board of Directors Dashboard”.


Case Study


Case StudySt. Elsewhere Hospital was overjoyed when Dr. Bones joined its staff in 2005 after leaving his post as head of sports medicine and orthopedics at Bigcity Medical Center. Located in a small town that sprung up around a paper clip manufacturing plant, St. Elsewhere has historically enjoyed a lucrative payor mix of plant employees and local retiree Medicare beneficiaries. Adding Dr. Bones to the medical staff as an independent physician was seen as a major win for St. Elsewhere, as the hospital desired to expand its orthopedics program into a “Center of Excellence”. Physicians of Dr. Bones’ reputation were rare to find in a small town – and the Board of Directors knew it. Bill Blowhard, a member of the Board, was instrumental in bringing Dr. Bones to town, using a combination of his strong opinions and negotiating skills and a stronger arm with his fellow Board members and hospital CEO, Maurice Meeks.


Case Study Cont’dAt the beginning of his practice in St. Elsewhere’s community, Dr. Bones saw patients of all ages and treated a variety of orthopedic injuries; however, his acknowledged specialty was orthopedic problems of the hip and knee. Over the first few years of his booming practice, Dr. Bones saw hundreds of patients and prescribed various treatment modalities to address their orthopedic concerns. Those treatments included surgical repair and replacement of joints in those patients with degenerative disease. From 2005 to 2008, Dr. Bones performed 150 hip and knee replacements at St. Elsewhere, with some patients coming from miles away to receive treatment from the “big city” doctor.

Anticipating the need to care for an increased patient volume, St. Elsewhere took out a significant line of credit to fund the build of an “Orthopedic Center of Excellence”, housed in the Blowhard Pavilion, so named for its main benefactor, the Blowhard family. The St. Elsewhere Board enthusiastically supported the project as necessary to support the financial stability and prestige of the institution. Mr. Blowhard and CEO Meeks described the proposal as a “slam dunk”, and it was approved with little analysis.


Case Study Cont’dNursing staff were trained by outside nursing consultants to ensure that they were skilled in caring for orthopedic patients – and in handling Dr. Bones, whose talent was only outweighed by his ego and abrasive manner. Dr. Bones is made the Medical Director of the soon- to- be- built Center, received a very generous stipend for assuming that role, and was given responsibility for overseeing the recruitment and credentialing of the team of surgeons who would practice at the Center.

By all accounts, St. Elsewhere and Dr. Bones were both doing well. Then, at the beginning of the recession in 2009, the paper clip plant closed (staples were just more economical), tossing 2,000 people out of work. St. Elsewhere saw a dramatic increase in its self-pay and charity care qualifying patients. The Orthopedic Center of Excellence and all other capital improvements were put on hold as St. Elsewhere saw its patient and procedure volumes decrease precipitously…but for Dr. Bones.


Case Study Cont’dIn direct contrast to the trend seen at St. Elsewhere, Dr. Bones’ practice remained booming. While his overall patient volume decreased, those he saw were, apparently, in more advanced states of degenerative disease. The total number of hip and knee replacements performed by Dr. Jones in 2009 and 2010 topped 150, and in 2011 he completed 100 joint replacement procedures. At the same time, Dr. Bones’ referrals for physical therapy or other care modalities decreased.

The Board was cheered by the rebound in Dr. Bones’ practice and the financial returns it was generating for the institution. Upon Mr. Meeks’ recommendation, the Board began to reconsider the Center for Excellence project.


Case Study Cont’dOne of St. Elsewhere’s long-time Ortho nurses, Cherry Ames, has complained to her manager that seemingly healthy young people are undergoing hip and knee replacements for minor sports injuries. Although she raises her concerns to her supervisor several times the other nursing staff are tight-lipped about the situation and nothing changes. After an angry confrontation with Ms. Ames in St. Elsewhere’s administrative offices, during which Cherry accused Dr. Bones in front of CEO Meeks of replacing what were probably perfectly healthy joints for profit, Dr. Bones suggested to Bill Blowhard that he could use some help getting “the nosy nurses off my back.” Mr. Blowhard, of course, agreed, and demanded that Mr. Meeks fire Ms. Ames for insubordination. Mr. Meeks complied.

To cover his back, Mr. Meeks referred Nurse Ames’ concerns to St. Elsewhere’s peer review panel. After meeting with Dr. Bones, the panel concluded that he has greater expertise than the members of the panel, he can articulate a reasonable justification for the surgeries and it closes the matter without taking any action. The panel does not review any of Dr. Bones’ records.

engaging boards in improving quality, performance, and integrity

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