meet edward g. longazel · associates, such as a medical transcription ser-vice organization...

Health Care Compliance Association • 888-580-8373 • www.hcca-info.orgAugust 2006

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Volume Eight Number Eight August 2006

Published Monthly

Meet Edward G. Longazel

Chief Compliance and Privacy OfficerDrexel University College of Medicine


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The Health Care Compliance Association has moved to its new headquarters, located at:

6500 Barrie Road, Suite 250 Minneapolis, MN 55435

While our address has changed, our telephone and fax numbers remain the same:

Toll-free phone: 888/580-8373

Local phone: 952/988-0141

Fax: 952/988-0146

And you can always reach us via e-mail at [email protected] or on our Web site at www.hcca-info.org

John asks the leadership

your questions

Editor’s note: This column is provided by John Falcetano, Chief Audit/Com-pliance Officer for University Health Systems of Eastern Carolina and a long-time member of HCCA. He knows

that members frequently have good questions that they would like to ask leadership. This column has been created to afford them that opportunity. Members may submit their questions to John by e-mail at [email protected] and he will contact members of HCCA leadership for their response.

Question: Is there anything I can use to compare the compli-

ance activities I am doing at my facility to what other compli-

ance officers are doing?

The answer is provided by John Falcetano, MA, CHC, CIA. He

may be reached by telephone at 252/847-0125.

Since I happen to have a copy of the Health Care Compliance Asso-ciation’s 8th Annual Survey 2006 Profile of Health Care Compliance Officers, I have decided to answer this question myself. The Health Care Compliance Association issues an annual report that provides the most up-to-date information concerning compliance training, budget, staff, staff education, and compensation.

This year’s report had 640 completed surveys. The information in the report allows you to see what others are doing at their organizations so you can compare your activities. Lets say for example, you wanted to look at compli-ance training. The report provides a wealth of information in this area. Some of the questions answered concerning compliance training include:1. On average, how much time does an employee spend in compliance

training each year?2. How frequently does the typical employee receive compliance

update training?3. What components does your compliance program include?4. What methods of training are used by your organization for compli-

ance awareness training?5. What methods of training are used by your organization for topic-

specific training?6. What is the estimated 2006 compliance-training budget for your

organization?

THE CALENDARLEADERSHIP

2006 Conferences (by state):

San Francisco, CA ■ Physician Practice Compliance

Conference October 1-3

Denver, CO ■ Mountain Area Meeting

August 25

Orlando, FL

■ Audit & Compliance Committee Academy September 20-22

■ Compliance Academy November 6-9

Honolulu, HI ■ Hawaii Area Meeting

October 19-20

Chicago, IL ■ North Central Area Meeting

October 6

Louisville, KY ■ Tri-State Area Compliance

Conference November 3

Baltimore, MD ■ Medicare Part D

September 10-12

■ Fraud & Compliance Forum September 25-27

Boston, MA ■ New England Area Meeting

September 8

Minneapolis, MN ■ Upper Midwest Area Meeting

September 15

Kansas City, MO ■ Midwest Area Meeting

August 4

Las Vegas, NV ■ 3rd Annual Research Conference

September 17-19

■ Advanced Academy October 23-26

Pittsburgh, PA ■ Mid Atlantic Area Meeting

September 29

Nashville, TN ■ South Central Area Meeting

November 10

2007

Chicago, IL ■ Compliance Institute

April 22-25

■ National Corporate Compliance Week May 20-26

ASKASK

INSIDEINSIDE 3 Ask Leadership

4 Supreme Court whistleblower decision

7 Reporting disclosures

10 OIG Scrutiny

14 Meet Edward G. Longazel

18 CEO Letter

20 Clinical trials primer

24 FYI

25 Going to the moon

36 Teach your people well

38 Risks under Medicare Part D

43 HCCA Staff

46 New MembersContinued on page 17

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�August 2006

Health Care Compliance Association • 888-580-8373 • www.hcca-info.org


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Editor’s note: John P. LeCrone and John

P. Krave are Partners in the law firm of

Davis Wright Tremaine LLP Los Angeles

office. Mr. LeCrone and Mr. Krave may be

reached by telephone at 213/633-6800.

In a retreat from decisions affording broad rights to whistleblowers and other employees who voice complaints

of workplace wrongdoing, the U.S. Supreme Court has ruled that statements made by public employees in the course of their job duties are not protected by the First Amendment right to “free speech” and do not immunize public employees from disci-plinary action. In a 5-4 decision, in which the Court’s newest justice, Samuel Alito, cast a tie-breaking vote to form a majority, the court refused to constitutionalize public employee grievances related to the employee’s public duties and threw out most of the case brought by a former Los Angeles County Deputy district attorney. This is good news for public employers, who are now assured much of the same freedom enjoyed by private employers to discipline employees for job-related misconduct. The case may also have positive implications for private employers affected by whistle blower statutes.

Giarcetti v. Ceballos

The case—Garcetti v. Ceballos (04-473)—in-volved a deputy district attorney who com-plained to his supervisor about an affidavit used to obtain a search warrant, which he believed contained numerous inaccuracies. He then submitted a “disposition memoran-dum” critical of the affidavit and the warrant obtained from it, and he recommended dis-missal of the case. In a heated meeting with

his supervisors, the person who had signed the affidavit and members of the Los Angeles County Sheriff’s Department, the deputy district attorney was sharply criticized for his handling of the case and told that the pros-ecution would proceed over his objections. At a later pretrial hearing challenging the warrant, the deputy district attorney testified as a defense witness about the inconsistencies he found in the affidavit. The court ultimately rejected the defense challenge to the warrant obtained from the affidavit and allowed the case to go to trial.

In the aftermath of these events, the deputy district attorney claimed that he was sub-jected to a variety of retaliatory job actions in-cluding a denial of promotion, reassignment to a less desirable position, and transfer to a different courthouse. He filed a civil rights lawsuit under 28. U.S.C. 1983, alleging that by taking these actions, his employer violated his First Amendment free speech rights as a public employee. The Ninth Circuit reversed the trial court’s grant of summary judgment and, ruling in his favor, found that the deputy district attorney’s “allegations of wrongdoing in the memorandum constituted protected ‘free speech’ under the First Amendment.” The Supreme Court granted review to determine the following specific question: Whether the “First Amendment protects a government employee from discipline based on speech made pursuant to the employee’s official duties.”

Public employers and “free speech”

The Supreme Court began its analysis by noting that in certain circumstances public employees —unlike those in the private sector—have a

constitutional right under the First Amendment to “speak as a citizens addressing matters of public concern” without fear of disciplinary action or reprisal by their employer. “The First Amend-ment limits the ability of a public employer to leverage the employment relationship to restrict . . . .the liberties employees enjoy in their capacities as private citizens.” The Court went on to recognize, however, that they do not have an unfettered right to speak on matters related to their public duties. “When a citizen enters government service, the citizen by necessity must accept certain limitation on his or her freedom;” said the Court.

The Court identified a two-pronged inquiry for determining whether a public employee’s speech is constitutionally protected. The first question to be answered is whether the employee “spoke as a citizen on a matter of public concern.” If not, no First Amendment considerations arise from the government employer’s actions. If the answer is yes, the question then turns to whether the employer had adequate justification for treating the employee differently than any other member of the public who speaks on a matter of public concern. In other words, public employees “must face only those speech restrictions that are neces-sary for their employers to operate efficiently and effectively.”

Applying these principles, the Supreme Court

By John P. LeCrone and John P. Krave

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found that the deputy dis-trict attorney’s statements in the memorandum were made not as a member of the public, but rather as part of his professional du-ties as a prosecutor similar to his duties in supervising other attorneys, investigat-ing charges, and preparing case filings. The fact that he “spoke as a prosecutor fulfilling a responsibil-

ity to advise his supervisor about how best to proceed with a pending case” demonstrated that he was not speaking as a citizen entitled to First Amendment protections. Said the Court: “When he went to work and performed the tasks he was paid to perform, Ceballos acted as a govern-ment employee. The fact that his duties sometimes required him to speak or write does not mean his supervisors were prohibited from evaluating his performance.”

Impact on private employers

Although limited to the context of public employment, the Ceballos decision has positive implications for private employers, as well. For example, the decision can be interpreted as support for a narrower view of “whistleblower” statutes that apply to private employers, such as Sarbanes Oxley. Under those statutes, employee whistle-blowers generally are entitled to protection from adverse job actions when reporting allegations of financial and other forms of misconduct. Em-ployees who voice such complaints in the course of performing their duties, such as financial auditors, would not be “whistleblowers” under the rationale in Ceballos, but simply doing their job.

A copy of the opinion is available at: http://www.supremecourtus.gov/opinions/05pdf/04-473.pdf ■

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e HCCA August Audio Conference Get the latest “how-to” information—tools and advice you can use daily without even leaving your office! Register on the HCCA Web site—www.hcca-info.org. You will receive an e-mail a few days before the conference with any conference handouts, and dial-in information and instructions.

➤ ➤ Displaying an Effective Process of Auditing and Monitoring Between Internal Audit and Compliance to the Board Committee Speaker: Debi Weatherford August 9, 2006

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� Health Care Compliance Association • 888-580-8373 • www.hcca-info.org


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Continued on page �

Editor’s note: Brenda J. Hurley, CMT, FAAMT, is Director of Industry Relations and Compliance with Medware, Inc. She may be reached by telephone at �00/��1-3131 ext 230.

Covered entities, such as hospitals and clinics, have many requirements mandated by the Health Insurance

Portability and Accountability Act (HIPAA). One example includes having a written busi-ness associate agreement with their business associates, such as a medical transcription ser-vice organization (MTSO). For the purpose of this article, the MTSO can be a medical tran-scription service of any size, or an individual medical transcriptionist (MT) who is the sole proprietor of his or her business that works directly for a covered entity. This business associate agreement (BAA) establishes specific requirements to assure that the business associ-ate understands and acknowledges his or her responsibilities related to HIPAA.

One commonly understood requirement is to apply appropriate safeguards to protect against unauthorized access of PHI (protected health information). MTSOs have worked diligently to do this with a myriad of security devices, alarms, tokens, and customized soft-ware. Confidentiality and security of patient information entrusted to MTSOs have been founding principles in the medical tran-scription industry long before HIPAA was enacted. Thus, protecting the information entrusted to them has truly been a fundamen-tal practice of MTSOs.

An important requirement of MTSOs under HIPAA, and one that is often misunderstood, is the reporting of disclosures. This require-ment is included within the written BAA

and is usually stated like this: Report to the covered entity any use or disclosure of PHI not permitted by this agreement.

The BAA and/or the general service agree-ment provided by the covered entity (the client) will specify for what purpose the MTSO can “use” the PHI provided to them. Likely that will include medical transcrip-tion of the provided dictation although more detail may be used or additional language included if other services are defined within their contract. The covered entity is required to include this clause in its BAA to document in writing the purpose for which the PHI is provided to the MTSO.

When PHI is used for treatment, payment or health care operations (TPO), it is not consid-ered a disclosure, it is considered a use. Medi-cal transcription is considered a component of health care operations, so when PHI is used for transcription, it is not considered a disclosure. This is an important distinction for both the patient and the MTSO. If medical transcrip-tion was deemed a disclosure, patients would have to sign an authorization for each of their reports to be transcribed or MTSOs would be required to provide a disclosure report on every report they produce. So when the MTSO re-ceives the dictation, transcribes the report, and returns that report to the appropriate covered entity, this is not a disclosure.

There are occasional incidents when inap-propriate or wrongful disclosures are made by MTSOs. When this occurs, procedures need to be followed in order to provide a disclo-sure report to the covered entity (the client). Given the dynamics of a busy MTSO—the human factor, the use of and reliance on sophisticated technology, and the workload

of health care providers—it is actually a testa-ment to the hard work and attentive behavior of the MTSO and its staff that more inappro-priate disclosures are prevented. To emphasize this point, consider that a busy MTSO will process thousands of health care reports each day as it operates 24 hours a day, seven days a week, even during major holidays.

An example of a wrongful disclosure by the MTSO could be when hospital client A called to have an operative report re-transmitted to their facility, but the staff member in the MTSO operations department sent it in error to hospital B, not hospital A. This constitutes a wrongful disclosure. Certainly no malicious behavior was intended in the mistaken deliv-ery, but individually identifiable information about that patient (defined as PHI by HIPAA) was exposed to people in a place where it should not have been, so it is a disclosure.

Disclosure reports are necessary because pa-tients have a right under HIPAA to hold cov-ered entities accountable for their disclosure. To fulfill their obligation, covered entities must receive reports for all disclosures made by their business associates so these reports can be included in the full disclosure record.

The accounting of disclosures has been cited as one of the most burdensome obligations of the covered entities under HIPAA. Modifica-tion of the rule has been requested and is currently under consideration but until this happens, MTSOs have an important role in satisfying this requirement.

So back to our example above, what should the MTSO do when notified that a report with PHI was received by a wrong client? The MTSO should have written policies and procedures (P&Ps) in place for this type of in-cident. Written P&Ps will help to assure that

By Brenda J. Hurley, CMT, FAAMT


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a standard process will be used each time and that steps will be executed in a well-planned and thoughtful manner, rather than reaction-ary for each individual occurrence.

The first step should be to contact the orga-nization that received the PHI went in error and confirm that it has destroyed the report, and no copy of it remains in its records. Next, be sure that the report is sent to its indended recipient (in this example it was intended for hospital A), to minimize the delay in receiv-ing it. After this has been accomplished, the MTSO will need to provide a report of the disclosure (see Figure 1 on this page) to the covered entity that initiated the PHI (not to the facility that received it in error).

When reporting disclosures, you should include the following information and main-tain this documentation for six years:■ Date of disclosure■ Name, address or identifying information

of the patient■ Brief description of information disclosed ■ Where the disclosed PHI went (i.e., wrong

hospital, wrong referring physician, etc.) and its location

■ Brief statement of cause for disclosure■ Actions taken■ Remedies implemented to avoid future

disclosures

This process will assist MTSOs in reviewing their training, procedures, and systems in order to improve and minimize their risks for any future disclosures.

Dutiful reporting of disclosures to the covered

entity by MTSOs is an obligation as a busi-ness associate and it is required to fulfill the rights of the patients we serve. As we are all consumers of health care services, compliance to HIPAA is important for us all! ■

Reporting of disclosures by business associates ...continued from page 7

ABC Transcription Service

REPORT OF DISCLOSURE

NOTE: ABC Transcription Service intends to protect the privacy and provide for the security of protected health information (PHI) in compliance with the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191 (HIPAA) and regulations promulgated by the U.S. Department of Health and Human Services.

DATE OF DISCLOSURE:

NAME OF PATIENT: MR#

REPORT IDENTIFICATION:

BRIEF DESCRIPTION OF INFORMATION DISCLOSED:

BRIEF STATEMENT FOR CAUSE OF DISCLOSURE:

ACTIONS TAKEN BY ABC TRANSCRIPTION SERVICE:

Report submitted by: _________________________ Date: ______________

HIPAA Compliance Officer ABC Transcription Service 123 Main Street Hometown, USA

Figure 1

Full Name:

Title:

Organization:

Address:

City/State/Zip:

Telephone:

Fax:

E-mail:

HCCA individual membership costs $295; corporate membership (includes 4 individual memberships, and more) costs $2,500. CT subscription is complimentary with membership. HCCA non-member subscription rate is $357/year.❑ Payment enclosed ❑ Pay by charge: ❑ AmEx ❑ MasterCard ❑ Visa

Card #: Exp. Date:

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HCCA, 6500 Barrie Road, Suite 250, Minneapolis, MN 55435

Complete this coupon to order Compliance Today (CT)


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By Anjana D. Patel and Gary W. Herschman

Editor’s note: Ms. Patel is a senior associate in the Health & Hospital Law Practice Group at Sills Cummis Epstein & Gross P.C. in Newark, New Jersey. She may be reached by e-mail at [email protected]. Mr. Her-schman is Chair of the Firm’s Health & Hos-pital Law Practice Group, and also practices in Newark, New Jersey. He may be reached by e-mail at [email protected]

The Office of Inspector General’s (OIG) focus on kickback issues with medical director agreements

continues to intensify, as most recently evi-denced by its $10 million settlement with Lincare in May 2006, and the “Medical Director Guidance” transmittal issued by the Centers for Medicare and Medicaid Services (CMS) late last year.

These developments over the last six months continue to highlight the need for hospitals and other health care facilities to be extremely cautious when entering into medical direc-tor agreements, and to institute compliance procedures to review existing medical director agreements on an ongoing basis.

Set forth below are brief summaries of the CMS transmittal regarding medical director agreements and the Lincare settlement, fol-lowed by a list of practical recommendations for hospitals and other health care facilities to reduce their risk of noncompliance in this growing area of federal enforcement.

CMS Transmittal

Towards the end of last year, CMS issued Transmittal 15, which sets forth in detail the

responsibilities of medical directors of long-term care facilities.

The primary objective of this transmittal is to ensure high quality patient care. But, the detailed list of responsibilities that CMS ex-pects medical directors to fulfill could be used by investigators as guidelines to differentiate between legitimate, bona fide medical director-ships, with bona fide duties and responsibilities which are actually performed and document-ed, and sham arrangements designed to reward referrals and pay kickbacks.

Although this transmittal specifically relates to nursing homes, it highlights an important com-pliance area that hospitals and other health care facilities should be focusing on in connection with their medical director arrangements.

In the transmittal, CMS lays out detailed guidance on the responsibilities of medical directors, which fall into two main categories. The first category entails working with the facility’s staff and leadership to create and implement patient care policies and proce-dures on topics such as: admissions; integrat-ed delivery of care within the facility; use and availability of ancillary services; availability, qualifications and clinical functions of staff; mechanisms for communicating and resolving medical care issues; and provision of adequate physician and other practitioner services.

The second category of responsibilities relates to the coordination of medical care in a man-ner that is consistent with current standards of practice and meets the requirements of applicable law, for example, helping the facility

to: ensure adequate availability of primary attending and back-up physician coverage; de-velop a process to review physician credentials; identify facility or practitioner educational needs; address and resolve issues between physicians and facility staff; and resolve issues related to continuity of care and transfer of medical information between the facility and other providers.

Lincare Settlement

More recently, in May 2006, the OIG entered into a settlement of alleged Anti-Kickback Statute and Stark Law violations with Lincare Holdings, Inc., in which Lincare agreed to enter into a corporate integrity agreement and pay a civil monetary penalty of $10 million—the largest settlement under the OIG’s civil monetary penalty authority to date.

The focus of the alleged violations was payments to physicians in return for referrals for durable medical equipment and supplies provided by Lincare. The payments were made to physicians via various alleged gifts, as well as payments pursuant to medical director agreements which the OIG claimed were disguised kickbacks.

The OIG’s press release included the follow-ing quote from Inspector General Daniel R. Levinson, which highlights the OIG’s focus on improper payments and sham medical director agreements:“This significant settlement is an impor-tant example of OIG’s continuing effort to eliminate illegal kickback practices and violations of the Self-Referral Law . . . . OIG will continue to pursue aggressively those who undermine the integrity of the Medicare program.”

Practical recommendations

The transmittal and the Lincare settlement highlight the importance for hospitals and

Continued on page 12


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SAVE THE DATE!

American Health Lawyers Associationand

Health Care Compliance Associationpresents

FRAUD AND COMPLIANCE FORUMSeptember 25-27, 2006

Renaissance Harborplace Hotel • Baltimore, MD

PLAN NOW TO ATTENDVisit: www.hcca-info.org for more information

Don't miss the Fraud and Compliance Forum!The program will provide legal analysis and practical compliance guid-ance on issues including:

• Fraud and Abuse Issues for Physicians, Long Term Care Facilities, Managed Care Organizations, Hospitals and Health Systems and Pharmaceutical Manufacturers

• Stark II Phase II Regulations and Fair Market Value• EMTALA• Legal Ethics• Research Compliance and Billing• Auditing and Monitoring Compliance Plans• Internal Investigations

To register visit us online at: www.hcca-info.org For questions call HCCA at: (888) 580-8373

Continuing EduCation CrEdits: aaPc • ache • ahIMa • hccB • naSBa • Mcle

has provided sponsorship in support of this program.


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other health care facilities to implement measures, on an ongoing basis, to ensure that their relationships with physicians do not run afoul of the Stark Law, the Anti-Kickback Statute and the False Claims Act. In this regard, hospital executives and compliance officers should implement the following prac-tical compliance recommendations:1. Document All Medical Director Ar-

rangements. All arrangements in which payments are made to physicians for medi-cal director duties should be reflected in a written agreement, and satisfy the other requirements of a relevant Stark Law excep-tion and Anti-Kickback Statute safe harbor.

2. Legitimate Services. All medical director services set forth in the agreement should be legitimate services that are important for the facility to carry out its clinical functions, and all of such services must be performed by the physician on an ongoing basis.

It is highly recommended that medical directors be required to complete a daily written log specifying each task performed and the amount of time spent in the performance of the task. As a convenience to the physician, this can be accomplished through the use of a dictaphone which is transcribed on a regular basis.

3. Fair Market Value Compensation. All payments under medical director agree-ments should be consistent with the fair market value of the services being provided by the physician. It is advisable to obtain a written analysis from an independent third-party consultant with expertise in the health care field to confirm that the payments are fair market value for the services being provided, or otherwise to document in your file comparable data that you relied upon to support the fair market value of the compensation.

4. Ongoing Monitoring. In some cases,

facilities have in place written medical direc-tor agreements that do not reflect the actual services being provided or the compensation being paid. Accordingly, periodic monitor-ing (preferably on an annual basis) of all medical director arrangements should be undertaken to ensure that in each case the medical director is actually providing the services required and is being paid the com-pensation set forth in his or her agreement.

Compliance officers should maintain a database of all arrangements with medical directors and implement a reliable tracking system (preferably automated) to ensure that each agreement is reviewed periodi-cally. Further, each such review should be fully documented. Some considerations in connection with such reviews are as follows:■ Determine whether the physician is

actually performing all of the medical director duties and services set forth in the agreement. If not, the pay-ments may not be fair market value, and for quality reasons, you may want to hire a new medical director.

■ Assess whether the payments to the medical director are being made as set forth under the agreement, and whether additional payments are being made, or other items of value are being provided, to the medical director. Extra compensation (direct or indirect) should be avoided.

■ Evaluate whether certain assump-tions or factors have changed since the onset of the medical director arrangement. For instance, did you agree to pay $2,000 per month based on the understanding that the physician would be spending on average 10 hours per month, but in fact he or she only spends 5 hours per month to perform the necessary services?

■ Depending on the situation, it may be advisable for the consultant who issued the initial fair market valuation report to re-evaluate the arrangement based on changed circumstances, to assess whether the arrangement is still consistent with fair market value and to issue a written report (or to supplement/update his/her initial report) setting forth his/her conclusions.

■ If changes in the level of services, hours needed or compensation have changed, prepare an amendment to the medical director agreement (or a new amended agreement) which is signed by both parties.

5. Due Diligence of “Inherited” Arrange-

ments. Pay close attention to medical director arrangements assumed from other facilities acquired in connection with purchase, merger or affiliation agreements (both in due diligence and after clos-ing), to avoid and/or minimize potential successor liability. Any issues identified should be remedied prior to, or as quickly as possible following, closing.

6. Whistleblowers Are on the Rise. In today’s healthcare environment, almost everyone is aware of the False Claims Act and the huge potential benefits of being a whistleblower. Thus, take the conserva-tive route—require that all dealings with physicians, including medical director arrangements, be compliant in all respects. Assume that all employees, whether senior officers and managers or otherwise, will be ex-employees at some time in the future and may “blow the whistle” on improper arrangements for purposes of their own financial gain. ■

Increasing OIG scrutiny ...continued from page 10

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Editor’s note: This interview with Edward G. Longazel, MHA, CHC, Chief Compli-ance and Privacy Officer, Drexel Univer-sity College of Medicine was conducted by HCCA Board Member Debbie Troklus in June, 2006. You may contact Mr. Longa-zel by telephone at 215/762-2023 or by e-mail at [email protected].

DT: Ed, Could you begin by telling me a little about your background?EL: My career in health care administration began 29 years ago. I am basically a “reimburse-ment guy” who became a “regulatory guy”. A Chief Compliance Officer for the past six years with the addition of Privacy Officer duties in 2003 my prior heath administration background includes military, heavy industry, and academic medicine positions with both Medicare carrier and Big Five accounting firm experience. A professional services role covering 16 counties for the Part B carrier after graduate school provided the technical knowl-edge base for the compliance career and thirty months of Big Five accounting firm health care forensic and litigation services consulting on a national level honed compliance benchmark-ing, program design and investigation skills. I moved from consulting to my local and largest client, Drexel Med, in April of 2000 as their first Chief Compliance Officer.

DT: What initially sparked your interest in the compliance field?EL: While in the Director of Reim-bursement role at the University of Penn-sylvania faculty practice plan, we faced the well-known initial Pre-PATH (Physician At Teaching Hospital) audit of teaching

physician documentation. The settlement agreement provided a need for a compli-ance presence. I was fortunate to have the compliance function added to my role and to be selected as the initial Director of Physician Reimbursement and Billing Compliance. We developed one of the first settlement agreement-driven large physician group compliance programs with auditing and monitoring requirements in the academic medicine setting. Our health care compli-ance team built internal inpatient fee-abstrac-tion and outpatient auditing and education departments. I found compliance program initiation and implementation challenging and rewarding and have been designing and installing compliance solutions since then.

DT: Tell me about the organization you work for.EL: Drexel University College of Medi-cine, a new name just a few years ago, is the consolidation of two venerable Philadelphia medical schools with rich and intertwined histories: Hahnemann Medical College and Woman’s Medical College of Pennsylvania. Established in 1848 and 1850, respectively, there were two of the earliest medical colleges in the United States, and Woman’s was the very fist medical school for women in the na-tion. We rose from the well-known AHERF health system bankruptcy and are a case study in the rescue and turnaround directed by a

private engineering university. Today, we train over 1,000 medical students; Drexel Univer-sity College of Medicine is the largest private medical school in the country. Biomedical graduate students number more than 500. There are some 550 residents, 585 clinical and basic science faculty and volunteer faculty meeting the educational, research and clinical missions common to all medical schools.

DT: How many staff support the Compliance function in your organization?EL: We have the support of 1,300 fac-ulty and staff (chuckle) but I know you are more interested in a compliance office staff-ing discussion than the gushing pride of a compliance officer. My direct report and key collaborator is

featureMeet Edward G. Longazel , MHA, CHC Chief Compliance and Privacy Officer, Drexel

University College of Medicine

article

��August 2006


Health Care Compliance Association • 888-580-8373 • www.hcca-info.org ��August 2006

the Director of Compliance Services who holds RN, MBA, and CPC credentials. She directs 2.6 FTE compliance analysts with either the CCS-P or CPC certification. One of the analyst/coders is also a trained health informa-tion management records professional and she assists me with Privacy Program functions and audits. Our administrative assistant controls report production and distribution. A total of 5.6 FTE’s, including me, staff the department.

DT: What is the scope of your compli-ance program currently, and has that scope changed over the years?EL: We are a medium-sized faculty prac-tice plan and have a number of academic affiliations. We do not own hospitals, so we continue to grow in geographic disper-sion and in the number of facilities where we provide care and training. A few of our for-profit hospital affiliates have closed, so we are ever changing as one would expect in the Philadelphia market. We are primarily a “Part B” physician services-focused activity with inpatient and outpatient components. The major change in scope, as for many compliance offices, has been the addition of the Privacy program and Privacy Officer role. We are also finding an increased role in research as our research program grows and research compliance becomes a national focus area. We faced a June 2006 Pennsylvania Breach Notification Act, as many states have or will, and so the HIPAA Privacy rules and breach notification act, converge for policy, training, and procedure development.

DT: If I remember correctly you were at the first compliance meeting in Minneapolis in 1996. What were your thoughts then related to compliance?EL: Yes, the Penn settlement sent academic medicine abuzz, and interest in compliance grew rapidly. As the written history on the HCCA Web-site notes, Roy

Snell thought that presentations from the Philadelphia medical schools with compli-ance settlements “would be a good draw” and both Brent Saunders and I presented our perspectives at that first MGMA compliance breakout session. Penn was both gracious and supportive in funding the trip and permitting me to outline our program and the cost of complying with the settlement agreement. I presented organizational staffing models and costs for outpatient monitoring and inpatient fee abstraction. These were important new considerations for many. Academic medicine needed to hear the story and understand the consequences. The pre-PATH and PATH audits elevated physician documentation to the top of the “to do” list and compliance programs were deemed to be the solution either voluntarily or via settlement. The AAMC also hosted a session on the topic and I remember lines forming in the hallway after the session to ask private questions. We somewhat luck-of-the-draw early adopters of prescribed compliance programs were a mix of father-confessor and missionary for a few years, until the reality of compliance was recognized by Boards and senior manage-ment across the country. The phones did not stop ringing for quite some time.

DT: What do you feel have been major chal-lenges for the health care compliance industry?EL: The compliance industry initially faced challenges of validity and necessity. Clearly the HCCA and HCCB have provided the compliance profession a firm foundation for meeting both of the initial challenges. Staffing challenges continue to be a major challenge. We tackled the issue by creating a coding program in the Drexel University College of Nursing and Health Professions and had expert trainers hired as adjunct faculty. We trained 22 employee and enjoyed 17 of them passing AAPC cer-tification. The employee students utilized

their tuition benefits and gained ground on degrees as they honed their coding skills. We then obtained a Central Philadelphia AAPC chapter to serve the continuing education requirements for their new careers and for those trained in our program and others working in center city. The electronic medical record has and will present constant challenges for all in both documentation and privacy areas of concern.

DT: You attended an HCCA Compliance Academy last fall. What do you feel were the benefits of attending this Academy since you had been in the field for some time?EL: The exposure to peers of all experience levels and the guaranteed opportunity to grow and measure my knowledge base concurrently provide unequalled synergies. I had spent 15 years building two compliance programs and a privacy program as an in-house officer and had advised countless clients across the country during consulting engagements. I attended many annual regulatory update sessions but I had not updated or measured my compliance officer skill set and knowledge base. I completed the Academy and exam with a renewed sense of the profession and confidence in my skill set while adding new and innovative concepts, methods, and tools to my arsenal as well.

DT: You have obtained your certification in health care compliance (CHC). What do you feel are the benefits of this certification?EL: Credibility, pure and simple. Senior management, Governance (Board and audit committee leadership) and prospective employees are looking for the credential. Pro-spective employees want to know the compli-ance team they are joining remains current. Employers are interested as well. The majority of Chief Compliance Officer openings cur-rently under recruitment require the CHC,


and it is often listed as a preferred credential. Considering every compliance officer sits in a vulnerable position, and most do not have an employment contract, the credential seems to be as important as an up-to-date resume for the savvy compliance officer

DT: Does your organization see value in your participation with the HCCA?EL: Yes! The organization respects the power of clarity the HCCA brings to any issue with its laser-point health care compli-ance focus and industry leadership role in representing health care on the issues. During goal setting a few years ago the person I reported to challenged me for impor-tant things I needed to do for myself. He was interested in what I needed to do for personal career growth. I explained the goals and value of the HCCA Compliance Academy and the CHC credential and how what was once “new” and “vogue” had become “standard”.

DT: What do you feel are our biggest challenges yet to come?EL: The compliance industry now must climb the twin peaks of program effectiveness and long-term professional autonomy. I sense daily on a national scale an erosion of the compliance professional’s autonomy. We face becoming subordinate to the internal audit function because we have not measured and packaged compliance program effectiveness very well as a profession. The erosion of our autonomy is fueled by a complex stream of institutional resource constraints and politi-cally well positioned auditors looking past Sarbanes-Oxley and onto the next bit of risk related turf acquisition. Quite frankly noth-ing scares me more than an audit generalist dabbling in the health care compliance arena, either on the consulting trail or in-house. Thankfully, I have not faced this issue for the past six years but I have given friendly advice to many who have faced the issue.

DT: We understand that having an “effec-tive” compliance program is critical. How would you define compliance effectiveness? EL: The effective compliance program leads the entire workforce to make good decisions and to recognize that when facing a challenging decision becomes difficult, there are resources available to ease the deci-sion making. We use the mantra “We never guess...We ask!” and an effective program empowers each member of the workforce to value proper decisions. Providing the resources, training, and good counsel to a workforce to recognize a “tough” decision and then having the staffing and support to assist in making the right deci-sion is the science of compliance. Applying the science in a politically charged, and often confidential area of concern represents the art of compliance management.

DT: Do you have any tips for measuring compliance effectiveness?EL: I utilize two measures—trend analysis and senior management support. The use of trend analysis that exhibits quantifiable improvement in objectively mea-sured standards is simply the language our senior management and governance speak. The trends from percentage of annual physician reviews completed to the number of physicians that require remedial education or concurrent coding attention are invaluable. Effectiveness is all about expectation management. Senior management support can and must be measured as well. The Compliance Officer knows and understands if that sup-port is evident. The “sleep at night” metrics are applied by all in the lead compliance role. If you have the tools for building and maintaining an effective program, the positive trends will follow and validate the support. If the sup-port is not evident to the compliance officer true effectiveness will be elusive, as are the

resources and support to do the job. I have found that if the board and senior management support a periodic review of the compliance program by a knowledgeable outside organization per the hospital supple-mental guidance, it will provide an unbiased measure of the compliance programs place on the road to effectiveness. The results enable resetting and updating expectations for the program and funding the resources required to attain effectiveness.

DT: If you could give new compliance professionals a few words of wisdom, what advice would you offer them? EL: Personal integrity, patient well-being, and peer relationships sum it up for me. If the compliance professional approaches each audit, phone call, e-mail, hot line call, drive-by compliance report, and hallway con-versation with personal integrity, the very dif-ficult issues become not only manageable prob-lems with solutions, but a continuing source of credibility for the compliance professional. Rules exist. Do your best to provide management with an accurate interpretation. Seek help if needed. Never guess. Some of the rules are grey. When facing the grey rules think of patient well-being when making a recommendation to management. Remember as well that compliance pro-fessionals report the facts and should not be making the management decisions. Be sure to network, develop peer and mentor relationships. Read and keep current. I look forward to the new “Compliance 101” column in Compliance Today as a great resource for the new compliance professional.

DT: If we think forward to the next ten years, how do you see the compliance field evolving?EL: The “next big thing” after medical errors will be the rebirth of compliance. It will be all consuming. I think that as the

��August 2006


Meet Edward G. Longazel ...continued from page 17

August 2006

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78 million baby boomers drift into that unavoidable tunnel of illness and face mortality, the explosion of Medicare fund expenditures and the required supporting electronic demographic and clinical data will set an ever accelerated pace in fraud and abuse. HIPAA, the prescription drug program, and the required training requirements of the Deficit Reduction Act of 2005 are just the lead challenges and early hints about the look of the future. The electronic medical record, patient international travel while ill, evidence-based medicine, research, interoperability, and technology will increase the challenges in areas of compliance and privacy not yet imagined. The health care industry has long lagged the manufacturing industry and banking in adopting basic electronic resources and financial system technologies. As we catch up we will face the identity theft and malfeasance that diminished public confidence in other trust based industries such as defense, public accounting, and energy. The health care compliance professional and an effective compliance program will be recognized as the first line of defense. ■


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Acronyms used in this interview

RN: Registered NurseMBA: Masters in Business AdministrationCPC: Certified Professional CoderFTE: Full-Time EquivalentCCS-P: Certified Coding Specialist – Physician-BasedHCCA: Health Care Compliance AssociationMGMA: Medical Group Management AssociationPATH: Physician at Teaching HospitalsAAMC: American Association of Medical CollegesAAPC: American Academy of Professional CodersHCCB: Healthcare Compliance Certification Board

Another good method of comparing your compliance activities to what other compliance officers are doing is by attending local, state, regional, or national compliance conferences and networking with your peers. This provides one of the best methods to compare your compliance activities. You not only get to hear first hand presentations on tested principles and best compliance practices, but the networking opportunities with other compliance officers provide valuable insight in developing and maintain-ing a compliance program in your organization.

Compliance officers who can successfully manage their compliance programs distinguish themselves in today’s health care industry. ■

Ask Leadership ...continued from page 3


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Roy Snell

Compliance is a tough job

We all work in a tough job. I say “we” because I still consider myself one of “us.” I was a compliance officer for three years prior to becoming CEO of HCCA. Some of you may have never had a problem or challenge in your job as a compliance officer; this article is more for those that have had some adversity.

As a compliance officer I received outstand-ing support from our

leadership. I couldn’t imagine any better support but even with the support the job was still tough. Some of you don’t even have that. Despite the support, I still experienced the verbal tongue-lashing dished out by the physicians who thought we were going too far. I was there for the endless and complex audits. I was there when the interpretation of a regulation came down to splitting hairs, and if we leaned just an inch to the left or right it would make a huge difference in the refund-ing of money or disclosing of the problem. I was there for the 60 physician training sessions at which, without fail, we would be told, “This is a waste of time. Why don’t you use this time to fly to DC and tell the regula-tors to jump in a lake.”

I once received an internal mailing envelope with a crumpled piece of paper. I unrolled it and discovered it was the compliance training session attestation form from one of our physicians. Now that I think about it, I should have written a “thank you” note to the physician who sent the attestation form, crumpled it up, and sent it back.

I would often try to lighten up the mood, while helping my staff understand how important our work was. From time to time I would tell my staff, “We are going to do what ever it takes to set up the best compliance program in the country even if we have to lie, cheat or steal—whatever it takes to get our job done. My sense of humor would some-times get me into trouble. I stopped making this statement after my staff told a visiting dignitary that “Roy says we can lie, cheat and steal.” Yes, they had a great sense of humor too. I changed my comment to, “Everything BUT lie, cheat or steal.”

There is a great deal of turnover and burnout in our profession. As CEO of the HCCA, I get calls each month from people who de-scribe really bad situations. I try to help with positive comments, but I often think they should just move on.

I used to worry about the next external investi-gation by the Department of Justice or Office of Inspector General—how I would be found incompetent or guilty of something and go down with the ship. I actually worried about being prosecuted for not having done enough. I worried that I’d lose all my savings defending myself. At one point I actually worried about retaliation from one of the physicians we in-vestigated. I share all this with you in the hope that it may help someone understand that they are not alone in facing this challenge. I want people to understand that they may be taking

their worrying a little too far (as I did).

I look back on this experience as one in which I learned and ma-tured. I learned and matured precisely because it was so hard. You could get an easier job but you would not learn as much. I also want to tell you that sleepless nights and constant worry are a waste of time and energy. In 10 years I have only seen the investigators point their finger at the compliance officer on one occasion. Worrying that you are going to be seen as a part of the problem is just not based on facts.

You are doing the right thing. You are fighting the good fight. You are maturing and learning. Please excuse me for going over the top here. Our society could not function without rules. Capitalism could not function without rules. Some countries’ economies are in shambles, in part, because they can lie, cheat, and steal. Effort is not rewarded. Entrepreneurial drive and hard work are not rewarded.

Rules are no good if they are not enforced. Our very livelihood is dependant, in part, on your effort. Yes, the job is hard. It just so hap-pens that reward and challenge go together— like apple pie and ice cream, or motherhood, or baseball. The work you do contributes to the reason that the United States is one of the most desirable countries in the world in which to live. You are an important con-tributor to our ethical culture and one of the reasons we, as a nation, enjoy such a high standard of living. Over the top? I don’t think so at all. You are to be commended and you should feel damn good about that. ■


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Editor’s note: Kathie McDonald-McClure joined the Health Care Practice Group at Wyatt Tarrant & Combs, LLP, after an ex-tensive legal career with Kindred Healthcare, a national, long-term care provider. She may be reached by telephone at 502/562-7526 or by e-mail at [email protected].

When an organization begins to participate in clinical trials, its compliance officer often faces the

arduous task of becoming familiar with a dis-tinct set of statutes and regulations. Compliance with clinical trial research laws encompasses a multitude of concerns including those related to Institutional Review Boards (IRBs), the ethi-cal and medical treatment of research subjects, and the research design. Although there are many clinical trial research issues with which a compliance officer must become proficient, this article will focus on three key areas that pose the easiest traps for organizations new to the area: informed consent; researcher compensa-tion and billing practices; and illegal referrals and kickbacks. It is essential for a compliance officer to become well versed in these key areas and to impart this knowledge to the rest of the clinical trial research team.

Informed consent process

The ethical treatment of the research subject is the most important aspect of any clinical trial, and the informed consent process serves as the guide to keep the study morally and legally sound. The function of the informed consent process is to confirm that the subject is giving consent freely, without coercion, and with full understanding of the purpose and procedures of the study. It is called a “process” because it involves more than the mere read-ing and signing of a consent document. A research subject must be given adequate infor-mation about the study through both written documentation and verbal conversation.

Conversations with the subject should be one of “give-and-take” between the subject and the researcher. At each step in the trial, the researcher should give the subject information and then follow-up with questions to ensure the subject fully grasps the trial’s implications and his or her options during the research as well as at the conclusion of the study.

Notwithstanding conversations with the subject, federal regulations require a signed consent containing certain basic elements, and a copy of the consent must be given to the research subject.1 However, the signing of the consent does not mean the consent process is over; it only signifies that a comprehensive dis-cussion took place. Open communication with the study subject about the study procedures and any new information the researcher learns about the study drug should continue with the research subject for the entirety of the study.

Specifically, compliance officers should make sure research subjects are given the following information:2

■ An explanation that the study is experi-mental and the duration of the subject’s participation

■ A description of the procedures which will be followed, including any that are experimental

■ Any and all alternative forms of treatment;■ Whether a placebo will be used■ No statements guaranteeing any result

from the study■ A statement that joining the study is

purely voluntary and that patients can and should feel comfortable with refusing to join the study or leaving the study at any time without any penalty

■ An explanation stating whether their re-cords will be confidential and the possibil-ity that the FDA may inspect the records

■ If the researchers are being paid by the

sponsor and who the sponsor is■ Any difference between the current stan-

dard of care and the experimental practice;■ Any risks and side effects that may possibly

occur as a result of the study■ Any possible benefits to be gained from

the study■ The type of medical treatment that is

available and whom to contact should complications arise

■ An explanation of whom to contact about questions related to the study and their rights;

■ If during the course of the study new findings arise that require a change to the study or might affect a subject’s willingness to continue the study, the subject must be informed of this new information

■ Whether the subject will be allowed con-tinued access to the study drug after the study is concluded. 3

All of these principles also should be applied to obtaining the informed consent from parents, legal guardians, or any other legally authorized representative of a subject. State and local laws determine who can act as this representative. If a child is old enough and has the intellectual and emotional ability to understand the informed consent process, the IRB may require that the child assent to participation.

When dealing with a research subject who does

By Kathie McDonald-McClure

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not understand English, federal regulations require the consent form to be in a language understandable to the subject. It is also advisable to have a translator available to facilitate conversation with the subject and further explain the study. For research subjects that speak English but are illiterate, their consent documents should be read to them. They only need to “make their mark,” if this is allowed under state law. However, such subjects may be vulnerable to undue influence and coercion and the compliance officer should consider whether additional safeguards in the study’s design are necessary.4

The process requires the person conducting the informed consent inter-view to be knowledgeable about the study. There are no requirements as to whom, specifically, should conduct the interview. Usually this responsi-bility rests with the research investigator. Nevertheless, the compliance of-ficer should confirm that this responsibility is being carried out according to the regulations and consistent with the study’s protocol.

Researcher compensation and billing practices

Those institutions that are recipients of research awards from the National Institutes of Health (NIH) are subject to the jurisdiction of the Office of Inspector General (OIG). As it became more apparent within the research community that the existing government policies and practices did not effectively deal with the wide variety of com-pensation arrangements many NIH grantees had in place, the OIG decided to publish draft compliance program guidance for recipients of U.S. Public Health Service grants.5 Even though the guidance has not been finalized, it offers direction and insight into primary risk areas involving the administration of research grant monies.

The following section summarizes the primary risks organizations face in their researcher compensation and billing practices, which includes time and effort reporting, research charge allocation, reporting financial support from other sources, and billing for the subject’s care. A failure to comply with any of these requirements could subject an organization to criminal or civil fraud investigations. The compliance officer should ensure effective financial reporting systems are in place to reduce the risk of misallocation of research money.

Time and effort reporting. Researchers often engage in multiple activi-ties during their workdays, such as teaching, research, and clinical work. The compliance officer must ensure that these researchers are accurately tracking and recording the amount of time they spend on each activity to ensure that the institution is charging the NIH grant for the correct proportion of time. This may be one of the easiest pitfalls to fall into



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as an organization. NIH policy generally only allows for research grantees to charge the NIH grant only for salary costs actually connected with time spent on the funded study.

NIH uses a researcher’s institutional base sal-ary (IBS), which is the total amount of salary a researcher earns from the organization, to determine the proportion of the researcher’s activity that is being used on the research grant. Consequently, it is critical for organizations to accurately and consistently calculate their researchers’ IBS. This is especially important if the grantee organization has affiliated organiza-tions who also pay the researchers a salary and the grantee organization treats that payment as its own for IBS purposes. Institutions must have and maintain an effective timekeeping system that properly records the separate activities in which its researchers engage. Furthermore, com-pliance officers should be especially vigilant in overseeing this system and continually educating their researchers about the importance of using the timekeeping system.

In addition, compliance officers should emphasize to their researchers that they must report the correct amount of time they intend to spend on a study in their research applica-tions. For example, reporting in two research applications that they expect to spend 75% of their time on each study could send a red flag to the OIG for investigation. For institutions engaging in multiple research studies, the compliance officer should implement a review process that provides for a check against even an unintentional dual allocation of research study time to more than one study.

Proper allocation of charges. If a research institution obtains multiple federal grants for the same research project, it is imperative that it keeps the two funding sources separate in its accounting system. The federal government takes this issue seriously because many organiza-

tions have been found to transfer costs from an overspent grant to an underspent grant in order to reap as much federal money as possible. This can be especially appealing to a research organization because it usually does not want to return unused grant funds for a study that is on-going. Address this with a properly maintained accounting system.

Complete reporting of financial support. The last area where a research organization can easily get itself into trouble deals with the complete reporting of all the financial support the organization is receiving for a particular study. It is tempting and fairly easy for orga-nizations to be incomplete with this informa-tion in order to obtain more funding from the federal government than it might obtain otherwise. Because the government looks at other sources of funding to determine how much of its own funding it wishes to grant the applicant, incomplete information can re-sult in an organization fraudulently obtaining a research award from the government.

Billing for the subject’s care. Because clinical trial subjects often are unidentified in the orga-nization’s billing system, there is a risk that the organization could improperly bill patients and third party payors for study-funded services or procedures, fail to follow study protocol that is a prerequisite to funding, fail to charge the research account, or both. The result could lead to allegations of false claims, government program overpayments, and civil and criminal penalties and liability.6 Compliance officers should meet with financial managers before beginning the research study to establish a pro-cess for identifying clinical trial subjects and segregating and properly allocating research funded care and services from other standard of care services for the disease.

Illegal Referral and Kickback Risks

Federal and state anti-kickback statutes

prohibit payments to researchers to influ-ence the grant recipients’ treatment practices rather than to compensate them for bona fide research. For example, if a pharmaceutical company is sponsoring a study, investiga-tors will look to whether the payments to researchers are being made to reward past use of their products, encourage the future use of their products, or familiarize them with a new drug. Therefore, to ensure the research is legitimate, compliance officers should look for the following factors: ■ Whether the study has actual scientific or

clinical value■ Whether the researchers involved were

selected on criteria relevant to the study■ Whether researcher compensation is being

tied to the outcome of the study■ Whether the compensation of the researchers

is consistent with the value of their services■ Whether the research results are to be

published in a peer review journal ■ Whether the procedures of the study con-

form to an “adequate and well controlled” study (i.e., statement of the objectives and analysis, controlled comparison, proper sub-ject selection and randomization, blinding, reliable methods of assessment, and analysis of the study results to assess effects). 7

Furthermore, researchers must avoid conflicts of interest caused by having a significant finan-cial investment in the sponsoring company. Likewise, compensation cannot include a sponsor’s stock or stock options. Researchers or their families are also forbidden from holding a direct ownership interest in the specific drug or device being studied. The OIG’s 2006 Work Plan directs NIH to monitor grantees for conflicts of interest that could affect the quality of treatment decisions.8

To avoid unintentional violations of the law and protect the organization against liability under the anti-kickback statutes, the compliance officer

Clinical trials primer ...continued from page 21

should consult with legal counsel to carefully structure clinical research agreements so that they legally fall within the personal service safe harbor.9 The contracts must have the following elements in order for them to be protected:■ Signed written agreement that specifies all of the

services expected to be rendered and the term of the agreement■ Whether the researcher will work part-time or full time■ The term lasts not less than one year■ Aggregate compensation set in advance, is of fair market value,

and is not based on referrals or business volume produced■ The services contracted for are reasonably necessary to accom-

plish a commercially reasonable business purposeIn order to ensure there are no violations of the anti-kickback statutes, compliance officers must monitor the process from the beginning of the contract formation through the end of the study.

Basic compliance tips

The Federal Government has offered a few recommendations to compliance officers to help them protect their organizations from violating the law:■ Revise the organization’s compliance program as necessary to

respond to any changed circumstances or needs;■ Develop and implement an educational and training program

for all research employees so they can become familiar with applicable compliance laws;

■ Respond to any reports of possible noncompliance;■ Independently investigate all possible problems with compliance

and take decisive corrective action if necessary; ■ Report any misconduct to the proper authorities immediately.

Effective compliance programs will help compliance officers become aware of any violations that may be occurring in their research organizations. To encourage the discovery and subsequent prompt voluntary reporting of any misconduct, governmental authorities will consider this reporting as a mitigating factor in their investigations. Thus, an attentive and dogged compliance officer is vital to keeping a research organization out of trouble.10 ■1. 21 C.F.R. § 50.27(a); 21 C.F.R. § 56.109(c).2. See 21 C.F.R. § 50.25.3. See Abney v. Amgen, Inc., Case No. 05-6132 (6th Cir. March 29, 2006)(Although the Court denied plain-

tiffs’ claim that the drug sponsor was legally required to continue providing them with the study drug after the study was abruptly terminated, the court pointed out that the organization “did a poor job of informing the plaintiff as to the grounds upon which the study would terminate and their access to [the drug] would be denied.” The court urged IRBs throughout the Circuit to “take additional measure to ensure that pa-tients fully understand the circumstances” under which they could be denied continued access to treatment.)

4. See 21 C.F.R. § 56.111(b).5. 70 Fed. Reg. 71312 (Nov. 28, 2005).6. See U.S. v. Farber, No. 05-CR-00422 (E.D. Pa. filed July 26, 2005) (indicting a doctor and a research

organization under the False Claims Act for failing to inform their trial subjects and the FDA of altered protocols and new findings that had adverse effects on the subjects. The case settled out of court with the organization having to pay $89,000 in restitution to the pharmaceutical sponsor and $125,000 in fines. Dr. Farber also voluntarily excluded himself from engaging in clinical research and was forced to have a monitor review his practice for 1 year).

7. 21 C.F.R. § 314.126.8. See HHS OIG FY 2006 Work Plan at p. 49.9. See 42 C.F.R. § 1001.952(d).10. The U.S. Food and Drug Administration has provided additional helpful guidance and FAQs related to

IRBs, clinical investigators and sponsors at its website at http://www.fda.gov/oc/ohrt/irbs/.

CERTIfIED INHEALTHCARE ComPLIANCECHCCHC

The Healthcare Compliance Certification Board (HCCB)

compliance certification examination is available in all 50 states. Join your peers and become Certified in Healthcare Compliance (CHC).

CHC certification benefits:

■ Enhances the credibility of the compliance practitioner

■ Enhances the credibility of the compliance programs staffed by these certified professionals

■ Assures that each certified compli-ance practitioner has the broad knowledge base necessary to perform the compliance function

■ Establishes professional standards and status for compliance professionals

■ Facilitates compliance work for compliance practitioners in dealing with other professionals in the industry, such as physicians and attorneys

■ Demonstrates the hard work and dedication necessary to perform the compliance task

CHC Certification, developed and managed by HCCB, became available June 26, 2000. Since that time, hundreds of your colleagues have become Certified in Healthcare Compliance. Linda Wolverton, CHC, says that she sought CHC Certification because “many knowledgeable people work in compliance, and I wanted my peers to recognize me as ‘one of their own’.” With certification she is “recognized as having taken the profession seriously, having met the national professional standard.”

For more information on how you can become CHC Certified, please call 888/580-8373, e-mail [email protected], or visit the HCCA Web site at www.hcca-info.org and click on the HCCB Certi-fication button on the left.

The Compliance Professional’s Certification

Congratulations on achieving CHC status! The Health Care Compliance

Certification Board announces that the following individuals have recently success-fully completed the Certified in Healthcare Compliance (CHC) examination, earning

CHC designation:

Ryan T McCoyKatherine Elizabeth McGrath

Gail A. MeidingerAngela M Melillo

Carole Lynn MorrisSandra L Nettleton

Susan K OttBrian Thomas RiddleSherry Rae Rumbough

Marla SandersPenny J SchimkeRenee M SkeelsRoger A Skinner

Melissa Ann SmithLinda J SprangerScot L Steinheiser

Linda Gayle ThomasMargaret Whitby. Tunstall

Kelly L TurnerThelma H VinsonElizabeth J Walter

Pam R WinslowKimberly Mitsuye Yamahara

Christopher Peter YoungJacqueline Patricia Zehner

Tim K Zipp

August 2006

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HCCA Officers:

Daniel Roach, Esq.HCCA PresidentVP & Corporate Compliance OfficerCatholic Healthcare West

Steven Ortquist, CHCHCCA 1st Vice PresidentSenior Vice President, Ethics and Compliance/Chief Compliance OfficerTenet Healthcare Corporation

Rory Jaffe, MD, MBA, CHCHCCA 2nd Vice PresidentExecutive Director–Medical ServicesUniversity of California

Julene Brown, RN, BSN, CHC, CPCHCCA TreasurerMeritCare Health System

Jennifer O’BrienHCCA SecretaryVP Corporate ComplianceAllina Hospitals & Clinics

Odell GuytonHCCA Immediate Past PresidentSenior Corporate Attorney,Director of Compliance,U.S. Legal–Finance & OperationsMicrosoft Corporation

Frank SheederNon-Officer Board Member of Executive Committee PartnerBrown McCarroll, LLP

CEO/Executive Director: Roy Snell, CHCHealth Care Compliance Association

Counsel: Keith Halleland, Esq.Halleland Lewis Nilan Sipkins & Johnson

Board of Directors:

Urton Anderson Associate Dean for Undergraduate Programsat McCombs School of Business University of Texas

Cynthia Boyd, MD, FACP, MBAChief Compliance OfficerRush University Medical Center

Anne DoyleDirector, Corporate Learning and Organizational DevelopmentTufts Health Plan

Gabriel ImperatoManaging PartnerBroad and Cassel

Al W. Josephs, CHCSenior Director Policies and TrainingTenet Healthcare Corporation

Joseph MurphyPartner, Compliance Systems Legal GroupChairman, Integrity Interactive Corp

F. Lisa Murtha, Esq., CHCManaging DirectorHuron Consulting Group

Mark Ruppert, CPA, CIA, CISA, CHFPDirector, Internal AuditCedars-Sinai Health System

Debbie Troklus, CHCAssistant Vice President for Health Affairs/Compliance University of Louisville, School of Medicine

Sheryl Vacca, CHCDirector, National Health Care Regulatory Practice, Deloitte & Touche

Cheryl WagonhurstPartner, Foley & Lardner LLP

Greg Warner, CHCDirector for ComplianceMayo Foundation

Publisher: Health Care Compliance Association, 888-580-8373Executive Editor: Roy Snell, CEO, HCCA, [email protected] Editor: Odell Guyton, President, HCCA, 888-580-8373Story Editor/ Advertising: Margaret R. Dragon, HCCA, 781-593-4924, [email protected] Editor:Sarah Anondson, HCCA, 888-580-8373, [email protected]:Gary Devaan, HCCA, 888-580-8373, [email protected]: Patricia Mees, HCCA, 888-580-8373, [email protected]

Compliance Today (CT) (ISSN 1523-8466) is published by the Health Care Compliance Association (HCCA), 6500 Barrie Road, Suite 250, Minneapolis, MN 55435. Subscription rate is $357 a year for non-members. Periodicals postage-paid at Minneapolis, MN 55435. Postmaster: Send address changes to Compliance Today, 6500 Barrie Road, Suite 250, Minneapolis, MN 55435. Copyright 2006 the Health Care Compliance Association. All rights reserved. Printed in the USA. Except where specifically encouraged, no part of this publication may be reproduced, in any form or by any means without prior written consent of the HCCA. For subscription information and advertising rates, call Margaret Dragon at 781-593-4924. Send press releases to M. Dragon, PO Box 197, Nahant, MA 01908. Opinions expressed are not those of this publication or the HCCA. Mention of products and services does not constitute endorsement. Neither the HCCA nor CT is engaged in rendering legal or other professional services. If such assistance is needed, readers should consult professional counsel or other professional advisors for specific legal or ethical questions.

Medtronic Settles, To Pay $40 Million

On July 18, MarketWatch reported that “The Minneapolis-based medical-products maker had faced charges filed by the Justice Department that it paid kickbacks between 1998 and 2003 involving sham consulting pacts and royalty agreements, as well as lavish trips for doctors who used the products.

The company “denied any wrongdoing in the cases, said it will re-cord a one-time charge against results for the first quarter ending July 28. But the company also vowed to further strengthen its employee training and compliance systems regarding marketing practices.

“‘We realize that any organization may be judged by the action of a few,” Medtronic Chairman and Chief Executive Art Collins said in a news release. We expect every Medtronic employee to adhere to high ethical standards at all times, and our compliance systems are designed to ensure compliance as our industry evolves.’

“The first civil suit was initiated in 2002 by an internal whistle-blower who turned over the information to the government. A second lawsuit was filed in 2004.

“Medtronic spokesman Rob Clark said the first lawsuit is to be settled for $40 million and dismissed, while the second lawsuit simply is to be dismissed. U.S. Attorney spokesman Charles Miller said the government has filed motions for dismissal but neither case has formally been adjudicated.” For more: http://www.marketwatch.com/news/story/Story.aspx?guid=%7B40C932A5-A1A5-46�F-BA45-4297B63A2DD6%7D&siteid= U.S. Department of Justice press release: http://www.usdoj.gov/opa/pr/2006/July/06_civ_445.html

Medical Center Agrees to Pay $3.75 Million

On July 18, the U.S. Department of Justice (DOJ) announced that Marion County Medical Center in Marion County, S.C. has agreed to pay the United States $3.75 million to resolve allegations of health care fraud against the government, the Justice Department announced today. The settlement resolves allegations that Marion County Medical Center submitted false claims to Medicare, Med-icaid and TRICARE, the U.S. military’s health care program, by engaging in financial relationships with certain physicians that were prohibited under the Stark Law and/or the Anti-kickback Statute.

FYIFYI foR YoUR INfoRmATIoN



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Editor’s note: Becky Sutherland Cornett, PhD, CHC is Associate Compliance Director, and Tina M. Latimer, RN, MS, is Administrative Director, Quality & Operations Improvement at The Ohio State University Medical Center, Columbus, OH. Contact the authors at [email protected] or [email protected].

I t’s a familiar saying: “The United States can send a man to the moon, but we can’t …” Dr. Lucian Leape has

referred to our national triumph of 1969 to aptly describe a troubling situation in the American health care system. We have the most innovative, technologically advanced care available, yet many of our everyday services and safety practices rank surpris-ingly low among the world’s industrialized nations. For example, the Commonwealth Fund reported that despite spending more per capita on health care than any other country, the United States ranks sixth of six industrialized nations surveyed on patient perceptions of safety, patient-centered care, efficiency and equity; third on timeliness of care; but first on effectiveness.2 Moreover, the federal Agency for Health Care Research and Quality (AHRQ) reported in March 2006 that the number of patients being admitted or re-admitted to hospitals due to complications from surgery or medical treat-ment rose from 305,000 annually in 1993 to 452,000 in 2003. The Wall Street Journal

(Laura Landro, March 8, 2006) stated that about two million patients per year—one in 20—contract an infection during hospitaliza-tion, accounting for half of all major compli-cations and 90,000 deaths annually.

Unfortunately, the health care provider com-munity has not consistently demonstrated its commitment to patient safety and quality of care. At the same time robotic surgery is becoming mainstream, we have had to refocus our patient safety efforts on the most mundane goals, such as hand-washing. Some-time during the period from 1700 BC, when the Code of Hammurabi based payment for medical services on outcomes of care, and 1847 when Ignaz Semmelweis discovered that puerperal (childbed) fever was spread because doctors did not wash their hands between patients, to the 2000 Institute of Medicine (IOM) report To Err Is Human: Building A Safer Health System,3 health professionals lost their way. IOM’s report told the world that between 44,000 and 98,000 people die annually due to medical errors.

Since IOM’s landmark report, health care regulators and providers across the country have scrambled to put basic medical error management and patient safety initiatives at the forefront of their priorities. It isn’t that the health care community was ignoring quality. Over the years, approaches to clini-cal and service quality assessment became sophisticated. In 1966, Avedis Donabedian presented the structure-process-outcome quality triad that remains the central way to organize components and aspects of quality today. Health care administrators adopted

performance management models from other industries such as Total Quality Management (TQM), Continuous Quality Improve-ment (CQI), and Six Sigma to try to better organize health care teams, increase efficiency, and reduce costs. Despite these efforts, health care expenditures soared, and various government and private agencies issued negative reports about the state of health care quality, and health care disparities across the United States. The health care industry has also frequently become front-page news with reports about enforcement actions and huge settlements involving Medicare and Medicaid fraud and abuse.

Consequently, federal government agencies, accrediting bodies, private organizations, and business coalitions (i.e., The Leapfrog Group) have demanded much greater accountability, establishing numerous patient safety and quality indicators, goals, and criteria for public reporting, provider inclusion in health plans, and payment for services. Health care regulators and quasi-regulators have achieved unprecedented levels of attention as they have scrutinized every aspect of patient care. This article examines recent regulatory and market trends in the evolving arena of patient safety and clinical and service quality issues. The discussion includes both government and

By: Becky Sutherland Cornett and Tina Latimer


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private-sector initiatives because the sectors have formed partnerships to achieve specific objectives in the health care community.

Patient safety initiatives

Joint Commission on Accreditation of

Healthcare Organizations (JCAHO). The National Patient Safety Goals (NPSG), a project of the JCAHO since 2002, probably is the most well-known safety initiative in the hospital community. The purpose of the NPSG is to promote specific improvements in patient safety. Problematic, system-based areas in health care are highlighted, and evidence- and expert-based solutions are provided to resolve problems. Organizations and programs accredited by the JCAHO are evaluated con-tinuously for adherence to the NPSG. Goals are revised annually for nine types of organiza-tions (e.g., assisted living, long-term care net-works, laboratory services, behavioral health). The 2006 NPSG for hospitals are: ■ Improve the accuracy of patient identification■ Improve the effectiveness of communica-

tion among caregiver■ Improve the safety of using medications.■ Reduce the risk of health care-associated

infections■ Accurately and completely reconcile medi-

cations across the continuum of care.■ Reduce the risk of patient harm resulting

from falls Extensive information about the NPSG and other JCAHO safety activities is found at the organization’s Web site www.jcaho.org.

Although the JCAHO’s safety activities seem to capture the most interest in the hospital community, other primary “drivers” of safety and quality initiatives across the country are the National Quality Forum (NQF), the federal Agency for Healthcare Research and Quality (AHRQ), the Centers for Medicare and Medicaid Services (CMS), the Institute

of Medicine (IOM), the Commonwealth Fund, the Robert Wood Johnson Foundation, the Leapfrog Group, the Institute for Health-care Improvement (IHI), HealthGrades, and the National Committee on Quality Assur-ance (NCQA). The work of several of these organizations merits particular attention.

The National Quality Forum (NQF). NQF was created as a public-private enterprise to develop and implement a national strategy for health care quality and measurement and reporting. Established in 1999, one of the primary goals of NQF is that its consensus-based standards will become the primary standards used to measure quality of care in the United States. The National Technol-ogy Transfer and Advancement Act of 1995 supports this goal. The Act requires federal agencies to use technical standards developed or adopted by consensus-standard setting entities. Therefore, most public and private sector safety programs are using a subset of the 30 safety practices. 4

Agency for Health Care Research and

Quality (AHRQ). The mission of AHRQ, an agency of the DHHS, is to support, conduct, and disseminate research that improves ac-cess to care and the outcomes, quality, cost, and utilization of health care services. The AHRQ’s Web site contains an overwhelming amount of information about quality and safety. AHRQ publishes Patient Safety Indica-tors (PSI), currently used by HealthGrades to rate hospitals via an on-line public database. Some of the indicators are decubitis ulcer, failure to rescue, post-operative sepsis, and post-operative respiratory failure.

The Leapfrog Group. The Leapfrog Group comprises more than 170 companies and orga-nizations that purchase health care services for employees and other individuals. Its purposes are to reduce preventable medical mistakes

and improve the quality and affordability of health care; reward physicians and hospitals for improving safety, quality, and affordability of health care; encourage public reporting of quality and outcomes; and help consum-ers benefit from making informed decisions. Leapfrog uses four safety practices to rate hos-pitals that voluntarily complete the required survey. The four safety rating areas are: ■ Computerized physician order entry

(CPOE)■ Evidence-based hospital referral (hospitals

are rated on process, outcome, and volume indicators for eight high-risk conditions)

■ ICU physician staffing (use of intensivists)■ National Quality Forum-endorsed safe

practices

Institute for Health Care Improvement

(IHI). IHI established an 18-month cam-paign (ending June 2006) to save 100,000 lives (using IOM’s top estimate for lives lost annually to medical errors). Six safety mea-sures were initiated: ■ Deploy rapid response teams (to rescue

hospital patients at the first signs of decline)

■ Deliver evidence-based care for acute myocardial infarction to prevent death from heart attack

■ Prevent adverse drug events by implement-

Going to the moon ...continued from page 25

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ing medication reconciliation practices■ Prevent central line infections■ Prevent surgical site infections by deliver-

ing the correct perioperative antibiotics at the proper time

■ Prevent ventilator-dependent pneumonia

Gosfield and Reinerstsen have written a provocative article about the 100,000 Lives Campaign, contending that the six safety measures of the campaign have become national standards of care.5 According to the authors, the campaign’s appeal is based on a “clear, compelling set of moral, scientific, and practical drivers.” The authors suggest that an additional driver is the four types of legal liabilities hospitals face as a result of the campaign: 1) failure to keep up with science; 2) failure to follow adopted processes; 3) failure of a hospital board to inquire about management’s actions regarding preventable errors; and 4) failure to take action against health care personnel who flout the new procedures. The authors emphasize that the primary reason for hospitals to adopt the evidence-based safety interventions is moral duty, not legal liability.

Culture of safety

The concept of building a “culture of safety” is an integral component of the patient safety movement, and was first suggested in IOM’s To Err Is Human study. The “culture of safety” means designing systems that prevent, detect, and minimize hazards and focus on system errors and remedies within a “blame-free” environment. Blame-free does not mean individuals are never subject to corrective ac-tion. The stress is on structuring programs so that jobs and working conditions are designed for safety; that processes, equipment, and supplies are standardized; and that reliance on memory is discouraged. Automated tools such as bar-coding, computerized order entry, and electronic heath records are strongly

encouraged.

AHRQ’s Hospital Survey on Patient Safety Culture 6 is an excellent tool to assess indi-vidual organization’s commitment to safety and will help readers prepare for future require-ments that will almost certainly result from widespread use of this tool. In addition, the Just Culture Community provides tools “de-signed to assist organizations to move beyond a culture of blame to a system of shared ac-countability, where both individual and system accountability are managed fairly, reliably and consistently.” Contending that a culture of safety must allow for individual accountability, the Just Culture Community focuses on three duties that are balanced against individual and organizational values: the duty to avoid causing unjustified risk or harm; the duty to produce an outcome; and the duty to follow a procedural rule. For more information, see the organization’s Web site: www.justculture.org.

The American Hospital Association (AHA), state hospital and professional associations, and many academic medical centers and health systems have also published toolkits, educational modules, and other resources.

Quality Improvement Initiatives

The nation’s first National Healthcare Quality Report,7 published in 2003 by AHRQ, summarized the strategies needed to transform the American health care system: ■ Reduce medical errors with research■ Improve reporting systems for errors and

adverse events■ Implement proven, evidence-based diag-

nostic and treatment practices■ Increase the appropriate use of effective

health care services by medical providers ■ Increase consumer and patient use of valid, reliable health care quality information

■ Improve consumer and patient protections; ■ Accelerate the development and use of an

electronic health information infrastructure

Core reports drive actions

The impetus for quality initiatives today stems primarily from AHRQ’s reports (subse-quent national quality reports were published in 2004 and 2005)8 and other alarming information published by IOM, the Robert Wood Johnson Foundation, the RAND Corporation, the Commonwealth Fund, and other organizations.9-12 These studies have focused on overuse, underuse, and misuse of health care services; high costs, inefficiency, lack of access to services, and health care dis-parities. As a result, many current projects can be divided into three main areas of emphasis: quality measurement, public reporting, and pay-for-performance.

Most national public and private quality efforts follow the “six aims for improvement of health care quality” identified by another landmark IOM report: Crossing the Quality Chasm: A New Health System for the 21st Century.13 Health care services should be: ■ Safe: avoiding injuries to patients from the

care that is intended to help them■ Effective: providing services based on

scientific knowledge■ Patient-centered: providing care that is re-

sponsive to individual patient preferences■ Timely: reducing waits and sometimes-

harmful delays for both those who receive care and those who give care

■ Efficient: avoiding waste, including waste of equipment, supplies, ideas, and energy

■ Equitable: providing care that does not vary in quality because of personal characteristics such as gender, ethnicity, geographic loca-tion, or socioeconomic status

“Priority areas for national action” were identi-fied in a subsequent report 14 that focused on infrastructure (information technology, pa-tient safety controls) and care processes (e.g.,



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care coordination, health literacy, self-manage-ment, pain management, care at the end of life) for a list of priority health conditions (e.g., cancer, diabetes, obesity, children with special health needs, depression, mental illness).

The CMS quality initiative. The purpose of the Quality Initiative, announced in 2001, is to assure quality health care for all Americans through accountability and public disclosure. The initiative is part of CMS’s recognition that transformational change in our health care system is required. The Quality Initiative uses a multi-pronged approach to move pro-viders toward superior care. The components of the strategy include: ■ Ongoing regulation and enforcement con-

ducted by state survey agencies and CMS■ Providing information about provider

performance on a set of quality indicators to consumers via special CMS Web sites

■ Testing of financial incentives and other re-wards for superior performance on certain measures of quality

■ Providing community-based quality improvement resources to health care or-ganizations through Quality Improvement Organizations (QIO)

■ Collaboration and partnership to leverage knowledge and resources (e.g., the Hospi-tal Quality Alliance).

Specific components of the quality strategy are discussed in the following pages.

Medicare Quality Improvement Orga-

nizations (QIO). Since 1982, CMS has contracted with independent organizations to provide quality-related activities for the Medicare program. The first Statement or Scope of Work (SOW) focused on utilization review. The Eighth SOW is structured to help providers assess and report performance on measures of clinical quality; reduce acute-care hospitalizations; and focus providers

(hospitals, home health agencies, nursing facilities, and physician practices) on adopt-ing standardized processes of care.

However, IOM’s recent report Medicare’s Quality Improvement Organization Program: Maximizing Potential15—concluded that care provided to Medicare beneficiaries has improved too slowly and that QIOs would be more effective if they focused solely on pro-viding technical assistance and transfer other activities, such as case reviews and beneficiary complaints, to other organizations.

Quality indicator reporting. A milestone was reached for the American health care community when CMS began collecting data from health care providers on a set of quality indicators. Nursing facilities were the first to submit data to CMS on a specific set of indicators, followed by home health agencies, hospitals, kidney dialysis facilities, and physician practices. CMS is working in conjunction with the Hospital Quality Alli-ance (HQA), a public-private collaboration that supports efforts to measure and publicly report quality data. The goal of HQA is to identify a robust set of standardized and easy-to-understand hospital quality measures. Ap-proved indicators for hospitals focus on acute myocardial infarction (AMI), heart failure, pneumonia, and surgical infection preven-tion. Items such as giving aspirin to an acute AMI patient upon arrival in the emergency department and giving the initial antibiotic to a pneumonia patient within four hours of hospital arrival are included. The indicators are also used as Core Measures by JCAHO, and are approved by the National Quality Forum consensus process. The complete set of indicators, which expands in phases over a period of several years, is found at the CMS Web site under “Quality Initiative.”

The initial reporting phase is voluntary,

although hospitals that do not submit data on the initial “starter set” of ten indicators do not receive the full Medicare Annual Payment Update (APU). CMS’s requirements for Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) program, mandated by Section 501(b) of the Medi-care Prescription Drug, Improvement and Modernization Act (MMA) of 2003, include a validation process for accuracy and integrity of data submitted.

However, the Government Accountability Office (Report No. GAO-06-54) concluded that CMS must take steps to improve process-es for ensuring the accuracy and completeness of publicly released hospital quality data used for the APU. The complete report is available at the GAO Web site by accessing “Reports and Testimony” www.gao.gov.

Physician-focused quality initiative. The Physician Voluntary Reporting Program (PVRP), part of the CMS Physician-Focused Quality Initiative, began in January 2006 and is focused on care management issues for patients with chronic diseases, avoiding preventable hospitalizations, and improv-ing overall quality of care. The objective of the program is to help physicians obtain information to improve quality and avoid unnecessary costs. Physicians use the admin-istrative claims system to report a defined set of Healthcare Common Procedure Coding System (HCPCS) codes called “G” codes on claim forms to report on a “starter set” of 16 measures (from a total of 36 overall measures). The codes are not specialty-spe-cific and contain no fee value. At this time, submission of G codes is voluntary. CMS is also focused on physicians’ use of health information technology, including electronic health records (EHR), and improved office procedures.



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Corporate Compliance & Ethics weighs heavily on the shoulders of corporate officers, directors, and others who are legally, morally and professionally responsible for corporate actions. The Institute will provide attendees with the knowledge and professional support to make informed decisions.

This year’s Compliance & Ethics Institute will feature 70 speakers including 30 in-house Compliance Professionals and 6 stellar general session speakers. Judge Ruben Castillo with the USSC and Scott Friestad with the SEC will each be presenting a government update.

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To register, please visit www.corporatecompliance.orgFor questions, please call (888) 277-4977 or e-mail [email protected]

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The Society of Corporate Compliance and Ethics (SCCE) will offer the first opportu-nity to take the Certified Compliance and Ethics Professional certification exam on September 14, 2006 at the Chicago Downtown Marriot. The exam will follow the 5th Annual Compliance & Ethics Institute, September 11–13, 2006. For additional infor-mation about the CCEP certification, includ-ing the Candidate Handbook and Examination Application, please visit www.corporatecompliance.org.To register for the exam, please download the Examination Application on our Web site, www.corporatecompliance.org, and fax it to the number provided on the form.For questions please call (888) 277-4977 or email [email protected].

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Meanwhile, the American Medical Associa-tion (AMA) is developing a set of up to 140 physician performance measures that will cover 34 clinical areas, focusing on diagnos-tic tests and treatments known to produce better patient outcomes. It is expected that in 2007, physicians will voluntarily report to the federal government on three to five indica-tors per physician. More information about the AMA’s efforts to develop evidence-based performance measures is found at the AMA Web site under “Physician Consortium for Performance Improvement.” It is unclear how the AMA’s activities will intersect with the CMS Physician Voluntary Reporting Initiative already in progress.

Public reporting of hospital quality indica-

tors. CMS is using reporting of hospital qual-ity indicators for a dual purpose: payment differential and public reporting. Hospital Compare, a Web site that was launched by CMS in April 2005 (www.hospitalcompare.hh.gov) gives consumers easy access to hospitals’ performance on twenty quality measures (the 10-measure “starter set” and 10 additional measures that will be used for payment purposes in the future). The Web site also offers a checklist of things to consider when choosing a hospital and information on patients’ rights. CMS also offers Nursing Home Compare and Home Health Compare consumer Web sites. [Note: HealthGrades, the independent ratings company, offers a similar Web site, but uses AHRQ safety indicators].

HCAHPS—Patient experience of care

survey. Another important component of the CMS Quality Initiative is development of a national standard for assessing patient experi-ences in hospitals. A survey instrument, called the Hospital CAHPS (Consumer Assess-ment of Healthcare Providers and Systems) was developed by AHRQ, in collaboration

with CMS and provider groups. Although most hospitals conduct patient satisfaction surveys, AHRQ and CMS sought to develop an instrument that would enable regulators, payors, and consumers to make “apples to apples” comparisons across hospitals (as part of the public reporting initiative). Hospital CAHPS is composed of 27 items that address issues such as communication among the patient care team, responsiveness of caregiv-ers, pain control, medication management, hospital amenities, and discharge informa-tion. The instrument was formally endorsed by NQF in May 2005. The first full national implementation of HCAHPS is planned for late 2006 and is scheduled to be included in public reporting in late 2007.

Pay for performance. According to the Alliance for Health Reform, pay-for-perfor-mance (PFP) sets differing payment levels for providers of care based on their performance on measures of quality and efficiency. Pay-for-performance incentives were suggested in IOM’s Crossing the Quality Chasm report and mandated by the Benefits Improvement and Protection Act (BIPA) of 2000 and MMA 2003, but the federal government is not the only important player in this increas-ingly popular incentive program.

The issue brief “Pay for Performance: A Promising Start” (Feb 2006) by the Alliance for Health Reform (see www.allhealth.org) re-ports that over 100 health care PFP initiatives are currently underway in the United States. PFP programs are the result of employer and government frustration with high costs and persistent deficiencies in the U.S. health care system. Categories of financial incen-tives include bonus payments, awards for innovation projects, differential fee schedules based on performance measures, and expense differentials for consumers (patients of high-performance providers enjoy lower co-pay-

ments for services). Prominent private sector PFP programs include Bridges to Excellence and the Integrated Healthcare Association’s (IHI) program.

Institute of Medicine encourages one

set of measures. Recognizing that both health care providers and payers are faced with many different sets of quality and safety indicators suggested or mandated by a variety of public and private entities, the IOM has called for agreement on a universal set of measures so that pay-for-performance programs can realize broad success. The IOM’s report—Performance Measurement: Accelerating Improvement16—calls upon Congress to establish a new National Quality Coordination Board (NQCB) to oversee the development of a centralized, standard set of performance measures (using a combination of existing measures from private and public sources, all approved by the NQF consensus-standard setting process). Currently, hospitals and other providers are forced to choose to participate in only a portion of the possible initiatives because budgets, human resources, and technological capacity are limited. The IOM calls current efforts a “patchwork” of measurement and reporting systems that are insufficient to meet the overall goal of health care that is safe, effective, patient-centered, timely, efficient, and equitable.

Future directions

Both the public and private sectors are moving rapidly to transform our health care system. Over the past few months, several changes have been announced that will have a major impact upon all health care providers and organizations.

Deficit Reduction Act of 2005. The quality provisions of the Deficit Reduction Act (DRA) extend pay-for-performance far




��to register, please visit www.hcca-info.org

Medicare Prescription Drug Par t D Compl iance Conference

The Health Care Compliance Association (HCCA) will be holding a Medicare Prescription Drug Part D Compliance Conference in Baltimore, MD, September 10–12, 2006. Topics to include:

Part D Drug Coverage Fraud and Abuse Under Part D Long-Term Care Issues Pharmacy Appeals & Grievance Auditing & Monitoring Discipline & Enforcement

Save the Date

September 10–12, 2006Renaissance Baltimore Harborplace Hotel

202 East Pratt Street, Baltimore, MD 21202Tel 800-535-1201 • Fax 410-539-5780

The Health Care Compliance Association presents


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beyond current activities and incorporate the concepts of value-based purchasing (also introduced in Senate Bill 1346 the “Medicare Value-Based Purchasing Act” by Senators Grassley, Baucus, Enzi, and Kennedy). The APU (or “market basket increase”) for hospitals that do not submit quality data in FY 2007 and beyond will be reduced by two percentage points (increased reduction from minus 4%). The number of publicly reported quality measures will be expanded in October 2006 and in October 2007, other measures will be added, reflecting the consensus standard-setting process, that include the parameters of structure, process, outcome, pa-tients’ experience of care, efficiency, and cost. In FY 2009, the secretary of DHHS must develop a plan to implement value-based purchasing for Inpatient Prospective Payment System (IPPS) payments. That is, payment will consider hospital performance according to the value formula (value is the product of quality divided by cost).

Penalties for hospital-acquired infections

and complications. On October 1, 2007, hospitals must report information on second-ary diagnoses present at a patient’s admission. Beginning with discharges on October 1, 2008, CMS will reduce payments to acute-care hospitals on selected Diagnostic Related Groups (DRGs) for patients who acquire in-fections in the hospital that reasonably could have been prevented by applying evidence-based guidelines. This provision is likely to be the “blockbuster” of the entire Act.

DRGs based on costs, not charges. Another important factor in transformational change is CMS’s proposal (see the April 25 Federal Register) to pay acute-care hospitals based on their costs, not charges. The DRG system would no longer be based on resources as defined by hospital chargemasters. Accord-ing to CMS, the proposed new system,

slated to take effect October 1, 2006, would eliminate biases in the current DRG system because hospitals assign different mark-ups for ancillary services among the DRGs. The second phase of the new Inpatient Perspec-tive Payment System (IPPS) payment system, proposed for FY 2008, would replace current DRGs with a severity-adjusted DRG system.

Implications for compliance and quality

professionals

The collaborative roles of quality and compli-ance professionals are increasingly important as quality and compliance functions intersect in new and evolving ways. The words of Alice Gosfield say it best. Gosfield, in her article “The Quality and Compliance Nexus: Appreciating the Connection,”17 calls for programmatic integration of the two func-tions. Because “the delivery of high quality care is the essential purpose of all health care businesses, the linkage of the quality mandate into compliance and audit activities will be increasingly important.”

Gosfield advises that a reorientation of compliance programs away from the many administrative tasks that seem to operate apart from the organization’s core mission to-ward “basic themes of health care delivery….would improve both compliance and quality.” To that end, she asks us to consider reviewing enforcement challenges such as conditions of participation, QIO measures, premature discharge and Emergency Medical Treatment and Labor Act (EMTALA) and incorporate those issues into the compliance program; work to standardize care delivery and docu-mentation in accordance with national clini-cal practice guidelines; and determine how measuring the organization’s performance in accordance with CPGs can “point out lurking compliance problems.”

Conclusion

It may not be rocket science, but our com-mitment to the developing science of quality improvement and safety (while not forgetting the art of healing) is at least as important as going to the moon. ■

References1. Schyve P. An interview with Lucian Leape. Joint Commission Journal on

Quality & Safety. Vol. 30, No. 12, pp. 653-658, 2004. 2. Davis K., Schoen C, Schoenbaum A, Audet M., Doty M, Holmgren A., &

Kriss, L. “Mirror, mirror on the wall: An update on the quality of American health care through the patient’s lens.” The Commonwealth Fund, April 2006. Available at www.cmwf.org.

3. Committee on Quality of Health Care in America, Institute of Medicine of the National Academies. “To err is human: building a safer health system”; 2000. Available at www.nap.edu. .

4. National Quality Forum. Safe practices for better healthcare: A consensus report; 2003. Available at www.qualityforum.org

5. Gosfield A & Reinertsen J. “The 100,000 lives campaign: crystallizing standards of care for hospitals.” Health Affairs, 2005; 24: 1560-1570.

6. Sorra JS, Nieva VF. Hospital survey on patient safety culture. AHRQ Publication No. 04-0041. Rockville, MD: Agency for Healthcare Research & Quality; 2004. Available at: http://www.ahcpr.gov/qual/hospculture/

7. Agency for Health Care Research & Quality. National healthcare quality report, 2003. Available at www.ahrq.gov.

8. Agency for Health Care Research & Quality. National healthcare quality report, 2005. Available at www.ahrq.gov.

9. Agency for Health Care Research & Quality. National healthcare disparities report 2005. Available at www.ahrq.gov.

10. National Committee on Quality Assurance. The state of health care qual-ity 2005: industry trends & analysis, 2005. Available at www.ncqa.org

11. Rand Health. The first national report card on quality of health care in America. Research highlights, 2004. Available at www.rand.org

12. Asch S, Kerr E, Keesey J, Adams J, Setodji C, Malik S, McGlynn E. “Who is at greatest risk for receiving poor-quality health care?” New England Journal of Medicine 2006; 354: 1147-156.

13. Committee on Quality of Health Care in America, Institute of Medicine. Crossing the quality chasm: a new health system for the 21st century; 2001. Available at www.nap.edu.

14. Committee on Identifying Priority Areas for Quality Improvement, Institute of Medicine of the National Academies. Priority areas for national action: Transforming health care quality; 2003. Available at: www.nap.edu.

15. Institute of Medicine of the National Academies. Medicare’s quality im-provement organizations: Maximizing program potential, 2006. Avaiable at www.iom.edu.

16. Institute of Medicine of the National Academies. Performance measure-ment: accelerating improvement; 2006. Available at: www.nap.edu.

17. Gosfield A. “The quality & compliance nexus: Appreciating the connec-tion.” New Perspectives on Healthcare Auditing 2005 (Summer); 26-28.



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By Lawrence A. Fogel & Joseph M. Watt

Editor’s note: Lawrence Fogel, principal, and Joseph Watt, partner, are both members of BKD Health Care Group, a division of BKD, LLP, in Kansas City, Missouri. Contact the authors by e-mail at [email protected] or [email protected]

How would you answer this question: Is your health care organization’s compliance training

effective? If “yes,” how do you know what is effective? If “no,” then why not?

Clearly, one of the biggest compliance chal-lenges for health care organizations is to de-velop effective compliance training programs. Unfortunately, many health care organiza-tions struggle to develop training programs that enable their employees to perform their job duties and responsibilities according to applicable rules and regulations.

An assessment approach

So how do you determine if your organiza-tion’s compliance training is effective? An ex-cellent place to start is by reviewing the Office of the Inspector General’s (OIG) Compliance Program Guidance for Hospitals of February 23, 1998, and OIG’s Supplemental Compli-ance Program Guidance for Hospitals of January 31, 2005.

In fact, this should be required reading for compliance officers and compliance com-mittee members to ensure they understand the OIG’s expectations and requirements. Because some members of the compliance committees represent high-risk areas, this provides the opportunity for them to teach their employees the rules by which the OIG expects all providers to play.

OIG makes it clear proper education is important for effective compliance pro-

grams and that corporate officers, managers, employees, physicians, and other health care professionals should be trained. OIG believes this compliance training should be mandatory and should cover relevant topics such as federal and state statutes, regulations and guidelines, private payors’ policies, and corporate ethics training.

Ask yourself two important questions. First, does your health care organization’s train-ing cover these persons? Second, does your organization’s training encompass these areas? If not, a warning sign should appear on your radar screen. Here’s another question to consider: Is initial training alone sufficient in these areas? In other words, is training new employees during their orientation adequate to keep them informed of all new statutory, regulatory and technical policy changes? The answer is “no” since continuous retraining of personnel at all levels is crucial to keep everyone updated on current developments according to OIG.

Have you stopped to analyze what topics should be included in compliance train-ing? OIG notes compliance training should include such topics as your role in the organi-zation’s compliance program, fraud and abuse laws, coding requirements, claims submission process, and prohibitions on receiving or pay-ing remuneration for inducements. Further-more, OIG expects health care organizations to communicate its standards and procedures to affected employees, independent contrac-tors, physicians and other persons functioning on behalf of the organization. However, some organizations limit their compliance training to employees only and do not include the other persons OIG believes should receive it. If the right topics are not covered and the right persons are not educated, your organiza-tion would be hard pressed to demonstrate

that its compliance training is effective.

Benchmarks for training effectiveness

So how do you know if your compliance training is effective? Initially, ask the fol-lowing questions contained in the OIG’s Supplemental Compliance Program

Guidance for Hospitals of January 31, 2005:■ Has your hospital provided qualified

trainers?■ Has your hospital evaluated its training

program content annually?■ Has your hospital kept up-to-date with

federal health care program requirements?■ Has your hospital considered the results

from its auditing, monitoring, and investi-gations and modified its training program when necessary?

■ Has your hospital evaluated the appropri-ateness of its training format by reviewing length, method, and frequency of training as well as need?

■ Has your hospital asked trainees to evaluate the training provided?

■ Has your board of directors been trained on fraud and abuse laws?

■ Has your hospital documented which individuals have been trained?

■ Has your hospital imposed sanctions for people who have failed to attend the training?

How would your organization answer these questions? Too many “no” answers could be a warning signal that your compliance train-ing is ineffective. If your compliance training needs improvement, consider these strategies:■ Meet with your compliance committee to

seriously and objectively evaluate existing compliance training

■ Review new employee orientation and evaluate its effectiveness

■ Review your annual training program to determine its effectiveness


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■ Review your department-specific education to determine its effectiveness, enlisting the help of department managers

■ Determine if all training is being properly documented

■ Determine if all training is being reported to the education department, human resources department and/or the compli-ance officer

■ Determine if the appropriate individuals are being trained

■ Determine if the governing body has received compliance training

Plan your strategy & take it step by step

These strategies will not provide overnight solutions, especially if your compliance train-ing is ineffective. However, it is important to get the training back on track if it is not accomplishing its objectives. Clearly, compli-ance training is a team effort and requires

a concerted effort by all. As the expression goes, the proof is in the pudding. Ask your employees and other affected persons if their compliance training meets their needs. You can do this in private interviews or employee surveys. Too many negative responses will tell you the compliance training is not effective and needs improvement. In evaluating how to overhaul your compliance training pro-gram, critically review the following:■ Employee orientation■ Annual training■ Department-specific training

Remember, a chain is only as strong as its weakest link. In other words, each link of your compliance training chain needs to be strong for your overall compliance program to be effective. For example, if you provide effec-tive employee orientation and annual training but do not provide department-specific

education to high-risk employees, your overall compliance training program will be missing some links in its chain. Equally important to the method of compliance training is who recieves it. For example, providing effective compliance training to some persons but not to others who need it is a risky proposition.

Don’t be frustrated because your compli-ance training is off the road. Remember, the first step toward resolving a problem is to recognize one exists. If your compliance training is in a ditch, call for help. Capitalize on the expertise and resources within your organization to develop a road map to get your compliance training program back on track. If you teach your people well, your compliance training program will be on the right pathway to success. ■

FYI ...continued from page 24

Specifically, the settlement focuses on the compensation Marion paid to two physi-cians which the United States contends far exceeded the fair market value of the services provided by those physicians and was not commercially reasonable. The settlement also resolves allegations that Marion submitted claims to Medicare for professional services for initial hospitalizations which were coded at a level higher than the services that were provided. For more: http://www.usdoj.gov/opa/pr/2006/July/06_civ_447.html

Doctor Sentenced to One Year and One Day

On July 14 the Jackson Sun reported that “A federal judge sentenced former medical doctor Sheran Yeates Friday in U.S. District Court in Jackson to 12 months and a day in prison on a health care fraud charge.

“Yeates will serve 85 percent of that time or a little more than 10 months, his attorney,

Mark Donahoe said.

“Yeates will get a letter from the Federal Bu-reau of Prisons telling him when and where to report to serve his sentence, Donahoe added. Judge James Todd said that usually happens within five to six weeks after sentencing.” For more: http://www.jacksonsun.com/apps/pbcs.dll/article?AID=/20060714/NEWS01/60714001

Three Indicted in Health Care Fraud and

Identity Theft Conspiracy

On July 7, U.S. Attorney for the Southern District of Florida R. Alexander Acosta announced that three defendants who were indicted by a Federal Grand Jury in a multi-million dollar health care fraud were arrested. The Indictment charges Ramon Avila, Yvette Aguilera, and Noemy Ruiz, with conspiracy to defraud a health care benefits program (Medicare), and defrauding a health care

benefits program (Medicare) in violation of Title 18 U.S.C. §1347. It also charges Yvette Aguilera and Ramon Avila with Identity Theft for fraudulently utilizing Unique Physician Identification Numbers (UPIN) without the physician’s approval or knowledge in violation of Title 18 U.S.C. § 1028(a)(7) and §1028 (b)(1)(A). For more: http://www.usdoj.gov/usao/fls/060707-02.html ■

Contact UsTo place an advertisment in Compliance Today, contact Margaret Dragon at [email protected] or by phone at 781/593-4924.


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By José A. Tabuena and Jack Scott

Editor’s note: José A. Tabuena is a manager in the Forensic & Dispute Services practice of Deloitte Financial Advisory Services LLP, and Jack Scott is a senior manager in the Life Sciences & Health Care practice of Deloitte & Touche USA LLP. José may be reached by telephone at 214/�40-7410 and Jack may be reached at 724/622-2751

The views in this article are those of the author, and do not necessarily represent the views of Deloitte Financial Advisory Ser-vices LLP or Deloitte & Touche USA LLP.

The Centers for Medicare and Medicaid Services (CMS) released the final version1 of the Part D

Program to Control Fraud, Waste and Abuse on April 25, 2006. This final guidance con-stitutes an entire updated chapter (chapter 9) of the prescription Drug Benefit manual and supersedes the draft guidance issued on February 8. This article, Part II in a two-part series, focuses on strategies and techniques to address the fraud, waste, and abuse (FWA) and other compliance requirements of the Medicare Part D program. We will explore practical compliance program recommenda-tions and suggest immediate action items for plan sponsors to consider in response to the release of the final chapter 9 guidance.

Final versus draft guidance

Our first article, published in the June issue

of Compliance Today, was based on the draft version of the FWA guidance. Although the final chapter 9 guidance does not differ substantially from the draft, there are several clarifications, revisions and additions worth noting here.

Use of the terms “should” versus “shall”

and “must”. The final version clarifies that the use of the term “should” reflects recom-mendations, while the use of the terms “shall” or “must” reflects requirements.2 During the May 2 “open door forum” to discuss this final guidance, CMS indicated that the new Part D guidance offers a more flexible approach to implementing the FWA requirements and is not intended to be as prescriptive as the draft released on February 8. Items described using the term “should” are merely what could be in a plan and are not considered requirements by CMS.

First tier, down stream and related entities. The final guidance replaces the term “sub-contractor” with first tier, down stream and related entities.3 A first tier entity is any party that enters into a written agreement with the plan sponsor to provide administrative or health care services for Medicare eligible beneficiaries under the Part D program. For example, a pharmacy benefit manager (PBM), who contracts with a plan sponsor,4 is considered a First Tier entity. A down stream entity is any party that enters into

a written agreement below the level of the arrangement between the plan sponsor and First tier entity. For example, network phar-macies that contract with the plan sponsor’s PBM would be considered down stream entities. A related entity is any entity that is related to the plan sponsor by common own-ership or control and:

■ Performs some of the plan sponsor’s management functions

■ Furnishes services to Medicare enrollees under oral or written agreement

■ Leases real property or sells materi-als to the plan sponsor at a cost of more than $2,500 during a contract period

The final guidance indicates that all first tier, down stream and related entities must provide certification to the plan sponsor regarding:■ The adoption of a code of conduct

particular to their organization■ The review of Health and Human

Services (HHS), Office of Inspec-tor General (OIG) and General Services Administration (GSA) exclusion lists upon initial hiring of employees and managers who assist in the administration or delivery of Part D benefits, and annually

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thereafter■ Conflict of interest statements from

managers, officers and directors responsible for the administration or delivery of Part D benefits

■ Training and education programs developed and hosted by their own organization, or where there are sufficient organizational similari-ties, the sponsor may make its own training programs available

Self-Reporting. CMS has re-affirmed that the regulations make it clear that self-report-ing of potential FWA is strictly voluntary.5 CMS is, however, strongly encouraging plan sponsors to self-report, especially when the potential fraud is discovered at the first tier, down stream or Related entity because “the conduct may be systemic and the CMS Medi-care Drug Integrity Contractors (MEDIC) will have information across plan sponsors to compare.”

“General” and “specialized” training. Final-ly, although the final guidance includes much of the “General” and “Specialized” training content introduced in the original draft, the specific training time requirement (hours of training required) has been removed.6

Readiness requirements

Kimberly L. Brandt, Director of the CMS

Program Integrity Group, told the Health Care Compliance Association (HCCA) in April 2006 during the annual Health Care Compliance Institute in Las Vegas that Part D plan sponsors are expected to incorporate recommendations made in the guidance by January 1, 2007. Brandt indicated that the guidance provides “what CMS believes to be prudent methods for preventing, detect-ing, and correcting fraud waste and abuse in Part D.” During the open door forum to discuss the final guidance on May 2, CMS officials indicated that even though the final requirements are not expected to be fully implemented until January 1, 2007, plan sponsors are expected to have “something in place today.”

Risk Areas revisited

In Part I of the series we focused predomi-nantly on the FWA compliance program risk areas and challenges anticipated by Part D plan sponsors as they implement their new benefit. Although we will not revisit the specific areas of fraud risk discussed in that article, there are several key points that should be revisited before we explore practical compliance program recommendations. The following extracts are from our June article and are repeated here to provide context.

MMA mandate. The Medicare Moderniza-tion Act (MMA) requires Part D plans to have in place a program to control FWA.7 While standard Medicare and Medicaid fraud and compliance provisions are applicable to Part D contractors and their subcontractors, it is worth noting that Part D is the first Medicare program to mandate contractors or plan sponsors to have a comprehensive plan and program to detect, correct and prevent fraud, waste and abuse.

CMS auditing and monitoring approach. CMS has delegated some oversight respon-

sibility to organizations known as Medicare Drug Integrity Contractors (MEDICs). CMS has contracted with MEDICs to manage CMS’ audit, oversight and fraud control efforts for the Part D benefit,8 and the Prescription Drug Benefit Manual (chapter 9) provides a table outlining the MEDICs’ expected activities. The MEDICs will have responsibility to monitor and evaluate data from multiple sources to identify potential fraud, waste and abuse.

Regularly scheduled and focused or targeted audits can augment the data monitoring and analysis program. In cases where questionable findings are identified through data analysis activities, CMS will conduct focused or tar-geted audits of the sponsor. In cases of FWA allegations, CMS or a MEDIC will conduct targeted audits.

Finally, CMS will initiate targeted audits based upon complaints received from beneficiaries, other plans, or state regulators, in addition to resulting low performance on CMS-sponsored assessments such as mystery shopping and consumer surveys. In order to properly prepare for CMS monitoring and audits, Part D sponsors should have a com-prehensive approach to compliance and FWA with the Part D regulations and guidance.

The risks of performing poorly on an audit are significant. Depending on the severity of the infraction, CMS has the authority to impose sanctions ranging from corrective action plans to the suspension of marketing and enrollment and may recommend that Civil Monetary Penalties be imposed. These risks are compounded by the fact that CMS is likely to be more stringent than it has been in years past due to the excessive number of plan sponsors admitted to the program, and CMS’s apparent desire to weed out some of

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the lesser performers in the next year.

Compliance programs or FWA programs? Is there any real distinction between a compli-ance program and an FWA program? As viewed in the draft (and final) manual, the structures seem to appear basically the same with merely the insertion of Part D fraud risk considerations into each element of a general compliance program.

A useful perspective to consider is that compliance programs often focus more on preventing fraud committed by the organiza-tion while anti-fraud control strategies tend to be more concerned with reducing the risk of fraud against the company. While there are substantial commonalities in the features of an effective compliance program versus an anti-fraud program (such as employment screening, reporting mechanisms, investiga-tive protocols and enforcement of standards), there are also distinctions. Fraud control draws more heavily on the tools of data-mining, investigation, law enforcement and initiated legal actions; whereas compliance focuses more broadly on education, training and protection from legal actions initiated by others. Effective integration can help optimize the impact from both perspectives.9

Perspectives on the final guidance CMS has made it clear in the final guidance that there is a strong distinction between what is recommended versus what is required in the plan sponsors compliance and FWA programs. Kimberly Brandt reinforced this point during the HCCA compliance confer-ence in April, and CMS officials further reinforced this point during the open door forum to discuss the final guidance on May 2. Plan sponsors should in fact follow the CMS guidance as closely as possible, regardless of whether the guidance meets the definition of a recommendation versus a requirement

(“should” versus “shall” or “must”). We agree with the CMS premise that the chapter 9 guidance “provides what we believe are the most prudent methods for preventing, detect-ing, and correcting fraud, waste and abuse in Medicare Part D.”10 Without implementing the guidance, plan sponsors who never have a compliance or FWA issue discovered by CMS or the CMS MEDIC may have a false sense that they are at a minimum level of risk, and the nature and rigor of their compliance and FWA program is adequate. However, given the complexity and novelty of the program, and Congress’ stated conviction for protecting the Part D trust fund, we believe that this is a highly unlikely scenario. Once robust audit-ing and monitoring by CMS and the CMS MEDICs begin, we believe that there will be ample occurrences of compliance compro-mising events, as well as incidents of FWA across the industry. To the extent that a plan sponsor has followed the CMS guidance, and has cooperated with CMS and the MEDICs in terms of a “full disclosure and reporting philosophy,” we believe that the plan sponsor may be looked at more favorably by CMS should a compliance compromising situation or FWA be discovered. We also know that from the federal sentencing guidelines that an effective compliance program should reduce the severity of sentences and penalties. Our suggested Part D compliance approach, meth-odology and tools, as well as the recommen-dations provided below are based upon this fundamental philosophy.

Compliance and fraud, waste, and abuse

strategies

As a precursor to initiating any Part D compliance activities, plan sponsors need to address several fundamental strategic issues that will likely dictate the direction of the compliance program and the subsequent implementation tasks and activities.

Compliance Approach. Section 50.1 of the final guidance discusses two different approaches that plan sponsors may take when implementing a program to detect, prevent, and control FWA. Option 1 basically is the development and implementation of a stand-alone Part D infrastructure to detect, prevent, and correct the FWA provisions detailed in the final guidance. Option 2 is the incorpora-tion of the FWA provisions detailed in the final guidance into a plan sponsor’s existing compliance program. Plan sponsors need to consider each of their individual circumstanc-es when making this decision. In absolute terms, we do not condone one compliance program approach over the other, however, we do believe that Option 1 should not be undertaken without coordination with the organization’s corporate compliance officer. To the extent that policies and procedures and other compliance evidence documenta-tion are specific to Part D (and not combined with other lines of business), keeping this documentation separate will make it easier for the CMS reviewer or MEDIC to evaluate whether the organization is in fact addressing the requirements.

Dedicated or Part-time Part D Compliance

Officer. In section 50.2.2.1 of the final guid-ance, CMS recommends that plan sponsors dedicate a full-time employee to oversee the compliance program and operations for the Part D benefit. If the plan sponsor decides that the Part D compliance function is to be assumed on a part-time basis, the plan sponsor should adequately back fill appropriate, knowl-edgeable, and dedicated staff to make sure that all requirements are met and that there are adequate resources to execute the compliance implementation work plan. The individual(s) responsible for Part D compliance should report directly to the organization’s corporate compliance officer.

Managing risks under Medicare Part D ...continued from page 39


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Requirements Matrix. A matrix can be a useful compliance tool as CMS is very prescriptive in the way plan sponsors conduct operations. In traditional Medicare Advantage (MA), CMS has developed a clear and concise set of monitoring and audit guidelines relative to plan operations (the Medicare Managed Care Manual and the Monitoring Review Guide). CMS reviewers follow these guide-lines when conducting a site visit or target audit. From CMS’s perspective, a significant part of an organization’s “compliance” is measured against a plan’s relative performance against these standards.

In addition to the chapter 9 guidance on FWA, over the past 18 months CMS has issued a variety of sub-regulatory guidance governing plan sponsor operations for Pre-scription Drug Plans (PDPs) and MA-PDs. Therefore, as part of the larger Part D com-pliance program, these guidance documents should be translated into a Part D require-ments matrix as well, because the evalua-tion of overall compliance will be measured against these standards.

Figure 1 on page 42 is an example extract of a requirements matrix based upon the FWA guidance, Chapter 9 of the Prescription Drug Plan manual and a completed gap analysis.

A requirements matrix breaks down the regula-tory and sub-regulatory guidance into specific regulatory elements and associates these ele-ments with areas of responsibility, policies and procedures, and other compliance evidence documentation to help facilitate implementa-tion within the organization. The development of a requirements matrix is an important and strongly recommended prerequisite to the development of the work plan and can serve as the standards used in a Part D gap analysis.

In addition to the Part D guidance on FWA,

other guidance that should be translated into a requirements matrix include but are not necessarily limited to: (1) The Eligibil-ity, Enrollment and Disenrollment guid-ance, (2) the Prescription Drug Event Data (PDE) guidance, (3) the Medicare Marketing guidelines, (4) the Part D Audit Guide, (5) the Part D Enrollee Grievances, Coverage Determinations and Appeals, and (6) the Part D reporting requirements.

Compliance Gap Analysis. It is important for plan sponsors to understand their relative state of readiness compared to the FWA and other sub-regulatory guidance by completing a gap analysis. The completion of a gap analy-sis typically involves compiling and reviewing applicable policies, procedures, process flows, and other compliance evidence documenta-tion against the regulatory elements identified in the requirements matrix, including the specific requirements for a Part D compliance program and the FWA requirements. The gap analysis can also involve a series of interviews to confirm whether or not existing policies, procedures, codes of conduct, and training content are being internalized, as well as scenario testing to confirm process integrity and control procedure effectiveness. The resulting gap analysis can identify shortfalls, facilitate work plan development, and serve as the benchmark for the plan sponsors’ annual compliance auditing and monitoring plan.

Short- versus Long-term Strategy. Even though CMS has indicated that the recom-mendations presented in the final FWA guidance do not need to be implemented until January 1, 2007, they have also indicated that “something must be in place now.”11 Upon completion of the gap analysis, plan sponsors should prioritize items that are required by CMS (“shall” and “must”) and items that are likely to have the most immediate impact in terms of the detection, prevention, and correc-

tion of FWA. The plan sponsor’s compliance strategy should be captured in a compliance implementation work plan to address any deficiencies identified in the gap analysis. In the near term, plan sponsors should strongly consider immediate actions that help to: confirm the compliance officer and compli-ance committee are in place and functioning in accordance with section 50.2.2 of the FWA guidance; initiate compliance auditing and monitoring activity based upon the sample elements defined in the Part D audit guide and in accordance with section 50.2.6 of the FWA guidance; and initiate the gap analysis as discussed above.

As soon as a gap analysis is completed, plan sponsors should consider a number of next steps. Deficiencies identified in the gap analy-sis should be prioritized and documented in the compliance work plan with a completion date of no later that January 1, 2007.

When the work plan is complete, plan sponsors should organize an implementa-tion team responsible for the execution of the work plan with the Part D compliance officer as the team leader. Progress should be tracked against the work plan and periodic team meetings held to address any variance from plan. Work plan implementation status should be a standing item on the compliance committee agenda.

Evidence Documentation. Plan sponsors should begin to compile compliance evidence documentation to support the existence and robustness of the compliance program. This serves as not only documentation to be provided to a CMS reviewer upon request or during a site visit or target audit, but it also allows the Part D compliance officer to iden-tify areas where additional controls, moni-toring, or auditing activity may be needed.



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We recommend that plan sponsors organize compliance evidence documentation by the chapters defined in the Part D Audit Guide with direct reference to the elements defined in that guide and in the requirements matrix.

Evidence documentation can take many forms and is not prescribed by CMS, but typ-ical evidence documentation might include items such as organization charts; policies and procedures; process flows; tracking logs; training content; meeting minutes; atten-dance rosters; results of internal auditing; monitoring sampling; and testing activities; the compliance committee charter; meeting

packets; etc. Additionally, as part of their evi-dence documentation, plan sponsors should include materials associated with implementa-tion activities such as requirements matrices, the results of the gap analysis, the compliance implementation work plan, implementation team organization structure and charter, etc.

Proactive FWA Monitoring and Detection.

Finally, as part of implementing the expected monitoring and auditing elements, a plan sponsor should consider developing advanced analytical technologies and techniques to assist in detecting FWA that are at least on par with the anticipated activities of the CMS

and MEDICs. Technology and expertise for performing transactional data analysis—in-tegrating large and disparate data files within a single user application and then applying various tests—can provide a comprehensive approach to help detect fraud, waste, and abuse.

Many plan sponsors likely have existing claims processing systems and personnel for creating system edits and utilizing sophis-ticated data analysis techniques to identify potential errors and FWA. The final guidance also refers to the role of special investigation units (SIUs), and plan sponsors who have

Managing Risks under Medicare Part D ...continued from page 41

Figure 1


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operated as health plans in certain states may already have an SIU12 in place. In addition to investigative methodologies, SIUs have evolved to further provide expertise on data mining techniques for analyzing potential fraud. Effort should be taken to integrate existing fraud control practices into the Part D compliance and FWA program.

The use of data analysis to detect FWA should not be limited to claims processing issues. A broad consideration of vulnerabili-ties and risks involving the Part D should be assessed for detection and other mitigation techniques.

For example, conflicts of interest are of con-cern as entities are required to certify conflict

of interest statements from those responsible for the administration or delivery of the ben-efits and related risk areas, such as formulary support activities and decision-making, and relationships with physicians. A plan sponsor may want to develop monitoring, auditing and data analysis techniques for oversight over conflict of interest management. An advanced method would be to perform data file matches of related data elements between employee, physician, contractor, and vendor data files to identify potentially inappropriate relationships.

As methods of fraud become increasingly elaborate, resources to detect and prosecute claims frauds should keep pace and remain vigilant. One of the significant challenges

facing an effective compliance and FWA program will be staying current on common and emerging Part D fraud schemes. ■

1. As required under 42 CFR § 423.504(b)(4)(vi). The final version of the manual can be found at http:www.cms.hhs.gov/PrescriptionDrug Cov/Contra/Downloads/PDBManual_Chapter9_FWA.pdf.

2. See final chapter 9 guidance, section 20.3. See final chapter 9 guidance, section 40.4. Refers to a Part D PDP Sponsor, MA organization offering a MA-PD plan,

a PACE organization offering a PACE plan including qualified prescription drug coverage, and a cost plan offering prescription drug coverage. This includes employer and union sponsored plans. (see 42 C.F.R. § 423.4)

5. See final chapter 9 guidance, section 50.2.8.2.6. See final chapter 9 guidance, section 50.2.3.7. 42U.S.C §1395w-1048. CMS RFP CMS-2006-0017, Medicare Prescription Drug Benefit (Part D),

Medicare Drug Integrity Contractor, May 25, 20059. In fact, it can be argued that compliance program elements are mostly

satisfied when an organization has a fraud control program – regardless of whether it works well or not – as opposed to the other way around, although topically fraud control can be viewed as a subset of compliance program management.

10. As presented by CMS officials during the May 2, 2006 open door forum to discuss the final chapter 9 guidance.

11. Ibid12. As noted in Part I, approximately 17 states require insurers to have a fraud plan, with 12 of those states also requiring an SIU. In some states these re-quirements may differ between health insurers and managed care organizations versus other lines of insurance.

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The Health Care Compliance Association welcomes the following new members and organizations. Please update any contact information using the Member Center on the Web site, or e-mail Karrie Hakenson ([email protected]) with changes or corrections.

Arkansas

■ Alicia Berkemeyer, AR Blue Cross Blue Shield

■ Carol Bishop, Wal-Mart■ Sonya Castro, Wal-Mart Stores Inc.■ Wendy L. Dunlap, MBA, Sparks Health Sys■ Jullia Goodman, Sparks■ Carol A. Gray, MBA, UAMS■ Debby A. Hunt, RHIA, HSC Medical Ctr■ Ami Schenck, ARBCBS■ Tiffany Sweeney, Wal-Mart Stores, Inc.

American Samoa

■ Jennifer Tofaeono, LBJ Tropical Medical Center

Arizona

■ Suni L. Brashear, Sun Health Corp.■ Rebecca Buegel, RHIA, CHP, A*S*K■ Russell Burdick, NARBHA■ David Cheney, Banner Health■ Mark Clark, Schaller Anderson■ Janet Elezian, Scottsdale Healthcare■ Ross A. Gaetano, Banner Health, Scottsdale■ Marlene Harden, Schaller Anderson, Inc■ Kathy M. Harris, Health Choice■ Brian A. Horgeshimer, Arizona Physicians

IPA■ David Hu, CIGNA HealthCare of Ari-

zona, Inc.■ Robert Lund, Banner Health■ Laura J. Morrison, RN, BSN, Banner

Home Care■ Granville L. Prince, Health Choice Arizona■ Michael Priniski, CPA, Mercer Govt. Hu-

man Svcs. Consulting■ Mari A. Reed, Banner Health Page Hospital

■ Mark D. Reeth, Medias Pharmaceutical Corporation

■ Sheri S. Sanders, MBA,BSN,RN, Banner Hlth Research Institute

■ Karen Scremin, Banner Baywood Med Ctr■ Mike Stearns, Scottsdale Healthcare■ John Warren, Caremark■ Mitzi Wilson, RPh, JD, Computer

Sciences Corp.■ Greg Wojtal, Banner Estrella Medical

Center

California

■ Le'Von E. Alexander, Kaiser Foundation Hospital

■ Barbara Anderson, RN, CCRC, CCRA, Palo Alto Medical Foundation

■ Cynthia D. Argentine, RN, CPC, Note-worthy Develoments, Inc.

■ Andrea Arnett, Kaiser Permanente■ Maria Avila, American Specialty Health■ Monica J. Azevedo, Kaiser Permanente■ Gigi Baniqued, Kaiser Permanente, SAC■ Steven Baruch, CHC, Kaiser Permanente■ Michael Bathke, CFE, CICA, Univ. of CA,

Irvine■ Valerie Bennett Lewis, Kaiser Permanente■ Benisa Berry, Kaiser Foundation Health

Plan■ Bobbi Bonnet, Kaiser Permanente■ Tara C. Brady, Kaiser Permanente■ Mark Bryan, MSW, County of Yolo■ Noelle Burrill, Kaiser Permanente■ Kate Bystrowski, Kaiser Permanente■ Albert Cadena, USCB, Inc.■ Michael Cane■ Jack A. Carlino, MBA, Memorial Health

Srvs.■ Scott Champion, Kaiser Permanente■ Chu Chang, Genomic Health, Inc.■ Denisia L. Chen, RN, CPC, ACS-EM,

Stanford Hospital & Clinics■ Rebecca Clearwater, Computer Science

Corp.■ Diana L. Cline, St. Joseph Hospital

■ Virginia Coker, Kaiser■ Bonnie Conrad, Valleycare Heath System■ Kirsten A. Cornelius, Kaiser Permanente■ Judy Cotta, Kaweah Delta Health Care

District■ Debra D. Craig, MD, Loma Linda

Physicians Med Group, Inc.■ Emily A. Cruz, Kaiser Permanente■ Alexis E. Delgado, Eskaton Properties, Inc.■ Cindy Dickinson, CNM,MPH,MBA,

North County Health Services■ Brigitte Didier, Methodist Hospital■ Shelby A. Diede, Banner Lassen■ Carmen Dobry, Inland Empire Health Plan■ Mary E. Drayer, RN, BS, CPHQ, County

of Riverside■ Rick Elkins, Tulare District Hospital■ Meaghan X. Ellis, Kaiser Permanente■ Gayle Everidge-White, Kaiser Permanente■ Mary B. Fitzgerald, Kaiser Permanente■ Angela Fornataro McMahill, JD, UCSD

Central Clinical Trials Office■ Marcy A. Fraser, Univ. of CA■ Mark Gara, Kaiser Permanente■ Melinda Garcia, Alameda Alliance for

Health■ Patrick Garcia, Santa Clara Valley Health-

care & Hospital System■ Craig B. Garner, Coast Plaza Doctors

Hospital■ Laura L. Grigoruk, Schaller Anderson of

CA, Inc.■ Annette C. Grimes, Univ Community

Medical Center■ Jason Hall, Kaiser Permanente■ Christopher Hansen, MBA, Sierra View

District Hospital■ Sharon Hardy, Aptium Oncology, Inc.■ Debra Harper, American Specialty Health■ Rob Harris, Kaiser Permanente■ Arlene L. Harrity, Kaiser Permanente■ Ann Hill, WellPoint■ Lucinda Hopewell, PA-C, Kaiser

Permanente■ Chris Howell, Kaiser Permanente


��

On one side, it’s a technology solution. On the other, a servicesolution. SMART2.o is more than a software tool, it’s a technologysolution designed to help you continuously assess coding accuracy and data quality as an important part of your hospital’scompliance program.

For more than 15 years, we’ve worked with HIM professionalsproviding affordable tools and services that help them with codingaccuracy, regulatory compliance, data management and reportsto monitor PPS requirements.

So, whether you look at your hospital’s compliance program froma technology perspective or a service perspective, SMART2.o is a very smart, very budget-friendly way to work.

To start an in-depth conversation about your particular needs,contact Doug Barry at 866-792-4920 or visit pwc.com/healthcare

®SMART2.o : bringing HIM people and HIM technologytogether.*

© 2005 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP (a Delaware limited liability partnership) or, asthe context requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. *connectedthinkingand SMART2.o are trademarks of PricewaterhouseCoopers LLP (US).

*connectedthinking

SMART2.o

SMART2.O FINAL MECH 4c 12/14/05 2:03 PM Page 1


��

National Specialty Conferences and Compliance AcademiesMedicare Part D Compliance ConferenceSeptember 10-12, 2006Renaissance Harborplace HotelBaltimore, MD

Research Compliance ConferenceSeptember 17-19, 2006Caesars PalaceLas Vegas, NV

Audit & Compliance Committee AcademySeptember 20-22, 2006Orlando World Center Marriott ResortOrlando, FL

AHLA/HCCA Fraud & Compliance ForumSeptember 25-27, 2006Renaissance Harborplace HotelBaltimore, MD

Physician Group Practice Compliance ConferenceOctober 1-3, 2006Renaissance Parc 55 HotelSan Francisco, CA

Advanced Compliance AcademyOctober 23–26, 2006Harrah’s Las VegasLas Vegas, NV

Compliance AcademyNovember 6-9Portofino Bay HotelOrlando, FL

Local Area Conferences

New England Area Compliance ConferenceBoston, MASeptember 8, 2006

Upper Midwest Area Compliance ConferenceSeptember 15, 2006Minneapolis, MN

Mid Atlantic Area Compliance ConferenceSeptember 29, 2006Pittsburgh, PA

North Central Area Compliance ConferenceOctober 6, 2006Chicago, IL

Hawaii Area Compliance ConferenceOctober 19 - 20, 2006Honolulu, HI

Tri-State Area Compliance ConferenceNovember 3, 2006Louisville, KY

South Central Area Compliance ConferenceNovember 10, 2006Nashville, TN

HCCA Presents its Fall 2006 Conference Calendar

For complete details go to HCCA Web Site: www.hcca-info.org

HCCA has a number of National Specialty, Academies, and Local Area Conferences planned for this Fall. Please check this listing below. Local Area Conferences are offered by HCCA to provide inexpensive compliance education

and local networking opportunities for compliance officers and their staff. You will find conference details on the HCCA Web site www.hcca-info.org, or you may call HCCA at 888/580-8373 with questions.

meet edward g. longazel · associates, such as a medical transcription ser-vice organization...

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