Kusserow’s Corner: Ongoing Monitoring and Auditing of Physician Arrangements

In all its compliance guidance, the OIG stresses the importance of ongoing monitoring and auditing of high-risk areas. Physician arrangements rank as the number one compliance high risk area; however for many, if not, most hospitals, they receive the least attention.  In determining the reasons for this, it is worth remembering that monitoring is a program manager’s responsibility.  This means that all program managers, including those establishing and maintaining physician arrangements, should:

1. Keep abreast of rules and regulations affecting their areas of operation;

2. Establish policies, procedures, and controls to ensure they are meeting the requirements;

3. Ensure their staff is properly trained on what is expected of them; and

4. Monitor their operations to verify the rules are being followed.

Ongoing auditing is an independent review of high-risk areas to ensure that managers are meeting their monitoring obligations and to validate that the controls are working effectively to reduce errors or potential liability exposure.  This function cannot be done by managers of their own operation, as it would not be independent.  It can be done by the compliance officer, internal audit, outside consultants or auditors, or any combination of any of these.

The problem for many is that most arrangements involve either inside or outside legal counsel to some degree.  As a result, many compliance officers are discouraged from auditing arrangements that place them in conflict with their legal advisor.  We have found among many of our clients that the compliance officer is given a “wave off” by legal counsel who asserts superior knowledge and expertise in the area. Rather than “buck” this resistance, the whole area is either avoided or given minor attention.  Yet, every year, dozens of health care organizations are found to have violated the Anti-Kickback Statute or Stark Law at the cost of many millions of dollars.

From experience, many organizations may have started out with legal advice but have modified arrangements over time without the continued involvement of competent legal advice.  As such, one of the first lines of inquiry is whether legal counsel has reviewed or approved all arrangements.

Compliance Officers must be prepared step up to the plate and not be intimated from asking the right questions about how the physician arrangements process is operating and whether it is undergoing proper ongoing monitoring along the lines noted above.   In many cases, that only answer may be to bring in outside experts to perform the independent audit review of the arrangements process.

Richard P. Kusserow was the Department of Health and Human Services Inspector General for over eleven years, where he was responsible for issuing the original “safe harbor” rules related to the Anti-Kickback Statute. He is the founder and CEO of Strategic Management, a firm that conducts reviews and does FMV determination of physician arrangements on behalf of clients.  For more information, contact him at rkusserow@strategicm.com. Richard now contributes content to the Wolters Kluwer Law & Business Health Law to assist the industry in its understanding of compliance from the perspective of a former Inspector General.

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Copyright © 2013 Strategic Management Services, LLC.  Published with permission.