Kusserow on Compliance: Questions Boards should be asking their compliance officer

Effective compliance programs require top-down commitment beginning at the Board level to oversee and support its implementation and operations.  The Board should have a committee to do this. The OIG compliance guidance calls for a Board level committee to oversee the Compliance Program (CP). The HHS Inspector General, General Dan Levinson has noted that the best boards as those that are active, questioning, and exercise (constructive) skepticism in their oversight. He further stated that Boards have a duty to ask probing questions about the operation of the Compliance Program, including how the compliance reporting system works and what reports they can expect on the reporting of compliance issues. They have a duty to ask probing questions about the goals and objective of the compliance program. The problem for most Boards is to know what type of questions they should be asking. Compliance Officers should assist them with this problem; however they in turn should be prepared to provide full and complete answers to them. The OIG and American Health Lawyers Association developed specific suggested questions that Board’s should be asking about the compliance program that the compliance officer should be prepared to provide proper responses to them. They jointly produced “Corporate Responsibility and Corporate Compliance: A Resource for Health Care Boards of Directors” and “Corporate Responsibility and Health Care Quality (2007): A Resource for Health Care Boards of Directors.” The following are drawn from these advisory documents:

  1. Does the compliance officer have sufficient authority to implement the program?
  2. What are the resources necessary to properly implement operate the program?
  3. Has compliance officer been given the sufficient resources to carry out the mission?
  4. Have compliance-related responsibilities been delegated across all levels of management?
  5. What evidence is there that all employees held equally accountable for compliance?
  6. How has the code been incorporated into corporate policies across the organization?
  7. What evidence is there that the code is understood and accepted across organization?
  8. Has management widely publicized importance of the code to all of its employees?
  9. Are there compliance-related policies that address operational compliance risk areas?
  10. Are there policies/procedures for the compliance program operation?
  11. How often are compliance-related policies reviewed and updated?
  12. What is the scope of compliance-related education and training?
  13. What evidence is there of the effectiveness of compliance training is effective?
  14. What measures are taken to enforce training mandates?
  15. What evidence that employees understand what is expected of them regarding compliance?
  16. How is compliance risks identified?
  17. What is the evidence that identified compliance risks are being addressed?
  18. How is the compliance program structured to address such risks?
  19. Does the compliance program undergo periodical independent effectiveness evaluation?
  20. What is the process for the evaluation and responding to suspected compliance violations?
  21. What kind of training is provided to those who conduct investigation of reported violations?
  22. How does Compliance, HRM & Legal Counsel coordinate resolving compliance issues?
  23. What are the policies to ensure preservation of relevant compliance program documents and information?
  24. What policies address protection of “whistleblowers” and those accused of misconduct?
  25. What are the results of ongoing compliance monitoring by all program managers?
  26. How is ongoing compliance auditing being performed and by whom?
  27. How often is sanction-screening conducted with what results?
  28. What are the results from sanction-screening and are they certified by responsible parties?
  29. Has the compliance program been evaluated for effectiveness by a qualified independent reviewer?
  30. What evidence is there concerning hotline operation and follow-up investigations?
  31. What are the metrics being used to evidence compliance program effectiveness?
  32. What are the results of an independent review and assessment of the compliance program?


Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2017 Strategic Management Services, LLC. Published with permission.

New York dietary supplement maker accused of failing to comply with cGMP regulations

At the request of the FDA, the U.S. Department of Justice filed a civil complaint against Riddhi USA Inc. of Ronkonkoma, New York, and its owner and President Mohd M. Alam, to enjoin the distribution of adulterated and misbranded dietary supplements. The complaint alleges that Riddhi and Alam prepared, packed, and held dietary supplements under conditions that failed to comply with the FDA’s current good manufacturing practice (cGMP) regulations for these products.

According to the complaint, the FDA inspected the Riddhi facility in January 2017 and found numerous significant deviations from cGMP regulations, including a failure to: (1) establish product specifications for identity, purity, strength, and composition of their finished dietary supplements; (2) conduct at least one appropriate test to verify the identity of a dietary ingredient; and (3) establish and follow written procedures for quality control operations.

The complaint further alleges that many of the cGMP deviations were the same as those observed by the FDA during a previous inspection that occurred in January 2016. The complaint notes that on April 27, 2016, the FDA issued a warning letter detailing violations of cGMP regulations observed during the 2016 inspection and that these violations are the same as those observed during the FDA’s subsequent 2017 inspection.

The complaint also alleges that the dietary supplements were misbranded under the labeling provisions of the federal Food, Drug & Cosmetic Act (FDC Act) (21 U.S.C. §301 et seq.) because the products are fabricated from two or more ingredients but fail to declare any ingredients on their product labels or labeling. Specifically, the complaint alleges that the dietary supplement Neuroxygen is misbranded because it is manufactured using soy lecithin, which contains “soy,” but soy is not listed on the product label. The complaint also alleges that the products Prenatal Formula, Osteo Gest, Neuroxygen, Inflam-Ease, and All-Ease, are misbranded because their label or labeling fails to declare the place of business of the manufacturer, packer, or distributor.

CMS, FDA provide support in response to natural disasters

In response to the natural disasters that have inundated the U.S. in recent months, CMS and the FDA have provided additional support to the individuals and businesses dealing with the aftermath.


Administrator Seema Verma announced on October 19, 2017, support for California residents displaced and recovering from the October wildfires in response to the declaration of a public health emergency for the state by Acting HHS Secretary Eric D. Hargan. Such a declaration permits CMS to waive or modify certain Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) requirements to provide necessary services. Specifically, the following steps have been taken by CMS:

·         A blanket skilled nursing facility waiver and assistance for hospitals and other health care facilities.

·         Special enrollment period for all Medicare beneficiaries so they may change their health or prescription drug plans immediately.

·         Assistance for dialysis patients displaced from their usual facility.

·         Hotline to assist Part B providers and suppliers in helping recovery efforts and receiving temporary Medicare billing privileges.

Similar assistance was provided in response in areas affected by Hurricanes Harvey, Irma, and Maria (see Emergency preparedness in the wake of historic hurricanes, Health Law Daily, October 3, 2017).



The FDA, knowing that tobacco manufacturers and importers in some areas (including certain Caribbean Islands and counties in Florida, Texas, and California) have been affected by both the hurricanes and wildfires, is extending the compliance deadlines for ingredient listing and health document submission requirements by six months. The extension applies to areas for which a disaster area has been declared by the Federal Emergency Management Agency (FEMA). For non-small-scale manufacturers and importers in the specified areas, the deadline for ingredient listings is now May 8, 2018; for small-scale manufacturers, November 8, 2018. For small-scale manufacturers, the health documents are due May 8, 2018; the non-small-scale manufacturers and importers deadline remains the same—February 8, 2017.

Kusserow on Compliance: October 2017 Work Plan update

This year, the OIG is updating their annual Work Plan during the year, rather than annually. The Work Plan sets forth various audits and evaluations that are underway or planned during the fiscal year and beyond. The updates will include the addition of newly initiated Work Plan items and removal of completed items. In conducting its work, the OIG assesses relative risks in HHS programs and operations to identify those areas most in need of attention. In evaluating potential projects to undertake, the OIG considers a number of factors, including mandates set forth in laws, regulations, or other directives; requests by Congress, HHS management, or the Office of Management and Budget; top management and performance challenges facing HHS; work performed by other oversight organizations (e.g., GAO); management’s actions to implement OIG recommendations from previous reviews; and potential for positive impact. In addition to working on projects that often result in audits, reviews, and reports, the OIG also engages in a number of legal and investigative activities that are separately reported.

5 New Projects Added

  1. Secretary Price’s Use of Chartered Aircraft for Federal Travel. Federal Travel Regulations provide limited instances in which chartered aircraft can be used for official Government business. OIG initiated a review of HHS Secretary Price’s use of chartered aircraft for Federal travel. He subsequently resigned and agreed to payback funds improperly expended.


  1. Specialty Drug Coverage and Reimbursement in Medicaid. Medicaid spending on specialty drugs has rapidly increased. There is no standard definition for specialty drugs. They may be expensive; be difficult to handle, monitor or administer; or treat rare, complex or chronic conditions. OIG plans are to determine states’ definitions of, and payment methodologies for, Medicaid specialty drugs and determine how much states paid for specialty drugs; and review strategies that states use to manage specialty drug costs, such as formularies, cost sharing, step therapy, and prior authorization.


  1. FDA Oversight of Risk Evaluation and Mitigation Strategies to Address Prescription Opioid Abuse. Opioid abuse and overdose deaths are at epidemic levels in the United States. The FDA has been provided legal authority to require pharmaceutical companies to develop Risk Evaluation and Mitigation Strategies (REMS), when the FDA determines that the risk of using a drug outweighs its benefit. Through the REMS program, the FDA intends to “increase the number of prescribers who receive training on pain management and safe prescribing of opioid drugs in order to decrease inappropriate opioid prescribing.” The OIG will conduct an evaluation on how the FDA determined the need for opioid REMS and determine the extent to which they have held pharmaceutical companies with required opioid REMS accountable for REMS assessments. The OIG also plans to determine the extent to which the FDA has held opioid REMS sponsors accountable for REMS goals to mitigate risks of misuse, abuse, addiction, overdose, and serious complications because of medication errors.


  1. Drug Traceability Test. Potentially dangerous drugs, including diverted, counterfeit, and imported unapproved drugs, can enter the supply chain and pose a threat to public health and safety. The Drug Supply Chain Security Act (DSCSA) provides the FDA and others with new tools to prevent the introduction of harmful drugs into the supply chain and to identify and remove them. DSCSA requires trading partners to exchange drug product tracing information when they take ownership of drugs, resulting in a tracing record that the FDA and others can use to investigate suspect and illegitimate drugs. Ensuring that DSCSA’s drug product tracing requirements function as intended will help the FDA respond effectively to potentially harmful drugs in the supply chain. The OIG plans to determine the extent to which selected drugs can be traced from the dispenser back to the manufacturer. This study—part of OIG’s body of work in this area—builds on the OIG’s previous examinations of trading partners’ early experiences exchanging drug product tracing information by testing the accuracy of those tracing records.


  1. Review of Medicare Payments for Bariatric Surgeries. Bariatric surgery is performed to treat comorbid conditions associated with morbid obesity. Medicare Parts A and B cover certain bariatric procedures if the beneficiary has (1) a body mass index of 35 or higher, (2) at least one comorbidity related to obesity, and (3) been previously unsuccessful with medical treatment for obesity. Treatments for obesity alone are not covered. The Comprehensive Error Rate Testing program’s special study of certain Healthcare Common Procedure Coding System codes for bariatric surgical procedures found that approximately 98 percent of improper payments lacked sufficient documentation to support the procedures. OIG auditors will review supporting documentation to determine whether bariatric services performed met the conditions for coverage and were supported in accordance with federal requirements.


Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2017 Strategic Management Services, LLC. Published with permission.