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Kusserow’s Corner: Experts Answer Questions About Using an Interim Compliance Officer (ICO)

Most health care organizations have a compliance program under the direction and management of a Compliance Officer. It has become increasingly common for vacancies to occur in their compliance program, as result of a retirement, someone moving on to another organization, removal of incumbents, or any number of other reasons. The question becomes how to fill the gap until a new permanent replacement can be found. In some cases, it may be simply promoting someone in the compliance office, but for most it requires hiring a new person for the position. Many choose to hire a temporary expert to be an interim Compliance Officer (ICO). From previous blog articles on the subject, I have received many questions about using ICOs. I went to experts who have acted in the capacity of an ICO on multiple occasions for the answers to these questions, with the following results:

  1. Does the HHS Office of Inspector General (OIG) recognize and approve the use of ICOs?James Cottos is widely recognized as a national compliance expert. He was the OIG Chief Inspector and retired as an Assistant Inspector General. He has served as an ICO on eight different occasions. He is also hosting a complementary Webinar on June 4 relating to this subject. Cottos noted that “It has been long understood by the OIG that it may be reasonable to outsource compliance duties and activities.” He cites various OIG compliance guidance documents that state that outsourcing for compliance expertise is acceptable, especially for smaller organizations with limited in-house staff and support. Cottos stated that “Over 10 years ago, OIG and HCCA co-sponsored a government-industry roundtable that discussed outsourcing compliance programs with the participants agreeing that their function could be outsourced to independent compliance experts.”
  1. Is there a problem using someone internal as ICO? Steve Forman, CPA, is another national expert who served as the VP for Internal Audit and Compliance for the largest provider in the state of New York for 10 years and previously was an executive with the OIG. He has also served on multiple occasions as an ICO. He states, “the difficulty in designating someone internal to be the ICO is that often it is an individual who is not a compliance professional and is lacking the experience and expertise required by the job, which in turn, results in lack of credibility with both management and employees. The fact is that I have not seen a successful use of an internal party to be an ICO as a secondary duty. It can be worse than having no one at all.”
  1. Why is having an unfilled gap in Compliance Officers a problem? Cottos noted that he has on several occasions been called in to be the ICO after a long gap, and found as a result the program had rapidly deteriorated. He said, “The prolonged absence of the compliance officer sends a powerful signal to everyone that the program is not essential or important to management. Regaining the trust and confidence in the compliance program thus becomes a daunting challenge. Furthermore, under such circumstances, the organization will be playing ‘Russian Roulette,’ gambling that a serious compliance problem will not emerge during this period of vacuum. For these and other reasons, organizations are well advised to not let the compliance program go unattended”.
  1. What qualifications should be used in selecting an ICO? Cornelia Dorfschmid, Phd has more than twenty years of experience in health care compliance consulting and is one of the foremost experts in the country on billing and reimbursement compliance. She has served on multiple occasions as an ICO. She states that any outsourced compliance expert hired to be an ICO “must have extensive knowledge and varied experience with compliance programs in all facets of the seven program elements. They also must have experience of having worked with executive leadership and Boards in dealing with sensitive issues.” Most importantly, “the individual must have understanding of regulatory high-risk areas and the proper ongoing auditing and monitoring of these areas.”
  1. What are the benefits to offset the cost of using an ICO? Cottos stated engaging an outside expert as an ICO “has a lot of benefits, over and above, just the management of the day-to-day operations of the compliance program. The expert can approach the work with ‘fresh eyes’ and is able to perform the duties of the position with independence and objectivity, without preconceived notions about personnel or programs, or investment in prior decisions and actions. This has proved to be extremely valuable to clients.” He also notes that there is great benefit of having worked in a variety of program settings, and with that experience he is able to provide clients with proven methods to build a sounder compliance program foundation. He also noted that “perhaps the best benefit of hiring an outside ICO is having the experience, credibility, and authority that come from working with a variety of leadership and Boards.”
  1. Is it necessary to have a full time ICO? Depending on the size and complexity of an organization, Cottos, Forman, and Dorfschmid all agree that in most cases, hiring an expert at less than full time is an option that can be considered. An expert ICO can bring a wide range of experience and efficiency that may not require their full time presence on site with the organization. However, they all also agree that the ICO must be available on-call at all times in case of urgent need.

All the experts agreed that the trick for management, wanting to use an ICO, is to design the engagement to bring maximum return of benefit for the cost.

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.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.

Kusserow’s Corner: When Does It Make Sense to Use an Interim Compliance Officer?

By now, every health care provider is aware of the need for an effective compliance program under direction and management by a compliance officer.  This need was underscored by the Affordable Care Act, which calls for CMS to establish mandatory guidelines for such programs as a condition of participation.  Most have developed such a program and many have been operating them for a considerable period of time.   However, one does not have to look far to find organizations with vacancies in their compliance program operations.  This may be a result of a retirement, someone moving on to another organization, removal of incumbents for any reason, or any number of other reasons.

The departure of a compliance officer may leave an organization without day-to-day management of the compliance efforts that can result in serious problems and potential liability, especially at a time when mandatory compliance requirements are under development.  All this makes the problem of finding a suitable replacement of someone properly qualified in a timely manner a relatively high priority.  Many are finding this to not be an easy task.  The costs of hiring a properly experienced and qualified person may be prohibitive, not counting relocation costs.

Many decide upon using an interim compliance officer (ICO).  It may be costly in the short run, but it is only for a temporary time frame. [1]  The trick is to design the engagement to bring maximum return of benefit for the cost.  In addition to managing the existing program, consider having him or her:
  • Provide an independent assessment of the status of the compliance program;
  • Make an assessment of high-risk areas that warrant attention;
  • Offer suggestions to build a firmer foundation for the compliance program;
  • Review the existing code, compliance policies, and other guidance;
  • Evaluate the quality and effectiveness of compliance training;
  • Develop a “road map” for the incoming compliance officer to follow;
  • Assist in identifying and evaluating candidates for the permanent position;
  • Assess resources needed to effectively operate the compliance program;
  • Identify or build metrics that evidence compliance program effectiveness; and
  • Develop comprehensive briefings for management and board on the state of the program.

It is also important to remember that ICOs, as is implied in the name, are temporary compliance officers serving for a period of time while an organization seeks a qualified permanent replacement.  Finding the right ICO with a lot experience and technical skills can make significant improvements for any compliance program in a relatively short order.  In fact, it may be the most economical means to have an independent evaluation of a compliance program.

[1] For More information on the use of ICOs, see “Understanding the Role of an Interim Compliance Officer” by James Cottos, SVP Strategic Management and former HHS OIG Chief Inspector in the Journal of Health Care Compliance, Vol. 10, Number 6.

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.

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

IOM Committee Releases Interim Report on Geographic Payments in Medicare

Because there are differences in practice patterns among doctors within a practice and hospitals within a hospital referral region (HRR), using a geographic value index, which would adjust payment to all providers within a defined region based on aggregate data measures of spending and quality, would unfairly punish low-cost providers in high-spending regions and unfairly reward high cost providers in low spending regions, according to an interim report by the Committee on Geographic Variation in Health Care Spending and Promotion of High-Value Care. The report observed that recent health reforms, which tie a decision maker’s payment to its actions, are a preferable method for inducing changes in care.


In 2009, the Quality Care Coalition, a group of U.S. House of Representatives members, asked HHS Secretary Kathleen Sebelius to sponsor two Institute of Medicine (IOM) studies on geographic payments in Medicare, independent of final health reform legislation. The first study evaluated the accuracy of geographic adjustment factors used for Medicare payment. For the second study, the IOM committee investigated geographic variation in health care spending and quality and analyzed Medicare payment policies that might encourage high-value care. To meet a deadline, the committee filed this interim report; the final report is due to be released this summer.

Clinical Decision Making

The report observed that whether a geographic index is an appropriate policy depends on whether modifications pursuant to the model effectively shift provider behavior toward greater efficiency without substantially diminishing health care outcomes. Because health care decision making generally occurs at the level of an individual practitioner or organization, and not at the geographic level, payments that target these decision makers are more likely to trigger change. The report concluded that a geographic index value, which treats everyone in the area the same, does not target an appropriate level of clinical decision making to affect change.

Payment Reforms

The report also concluded that payment reforms created by the Patient Protection and Affordable Care Act (P.L. 111-148), including value-based purchasing, accountable care organizations, and bundled payment systems, target decision makers instead of geographic areas. Although these reforms are relatively new, there is little evidence as to their effect on the value of care; however, tying a decision maker’s payment to its actions, as these reforms do, is a preferable method for inducing change in care, according to the report. Further, reforms that address overuse of post-acute care could have a substantial impact on health care efficiency, since home health and skilled nursing care are a major source of unexplained variation in Medicare spending.


The report noted that the literature on geographic variation suffers from a number of methodological and statistical limitations. For example, the Medicare data that the committee examined for the study excluded the Medicare Advantage population, and most studies exclude Part D spending. In addition, many variables of potential importance to understanding geographic variation in health care utilization, spending, and quality might not be measured accurately in claims data.

States likely to succeed in lawsuit challenging contraceptive exemption regulations

Pennsylvania and New Jersey are likely to succeed in proving that the agencies did not follow the Administrative Procedure Act (APA) in creating the contraceptive mandate exemption regulations and that the regulations are not authorized under the Affordable Care Act (ACA) or required by the Religious Freedom Restoration Act (RFRA), held the Third Circuit Court of Appeals. The court also concluded that the States will suffer a concrete and imminent financial injury from the increased use of state-funded services were the regulations to go into effect, and that an injunction would redress that injury. Therefore, it affirmed the district court’s order preliminarily enjoining the rules’ enforcement nationwide (Commonwealth of Pennsylvania V. Trump, July 12, 2019, Shwartz, P.).

State challenges to regulations

As previously reported, the Health Resources and Services Administration determined that health plans covered by the Affordable Care Act (ACA) (P.L. 111-148) must provide contraceptive services. This mandate included a narrow exemption for certain religious organizations. In 2017, President Trump issued an executive order directing the relevant agencies to consider amending regulations to address conscience-based objections to the contraception mandate. These agencies promulgated two interim final rules (IFRs) which expanded the religious exemptions authorizing employers with religious objections to limit employees’ access to health insurance coverage for contraception (see Contraception coverage exemptions extended for objecting employers on religious, moral grounds, Health Law Daily, October 11, 2017).

Pennsylvania and New Jersey (the States) sued seeking to enjoin enforcement of these two new rules. Both have state-funded programs that provide family planning and contraceptive services for eligible individuals and argued that when women lose contraceptive insurance coverage from their employers, they will seek out these state-funded programs and services. The district court granted a preliminary injunction, enjoining the rules’ enforcement nationwide. While the appeal of the order preliminarily enjoining the IFRs was pending, the agencies promulgated two final rules, virtually identical to the interim final rules.

States have standing

The court concluded that the States will suffer a concrete and imminent financial injury from the increased use of state-funded services, and that an injunction would redress that injury. The States are not required to define a specific woman who will be affected by the final rules.

Preliminary injunction granted 

The court held that the States are likely to succeed on their procedural APA claims because the agencies failed to comply with the notice-and-comment requirement and this defect tainted the final rules. The regulation provision of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) does not grant the agencies discretion to proceed by IFR in lieu of notice-and-comment rulemaking and the agencies lacked good cause for dispensing with notice of and comment to the IFRs. The court rejected the agencies’ argument that there was an urgent need to alleviate harm to those with religious objections to the current regulations. It also held that previous notice and comment does not allow agencies to forego notice and comment for a later regulation on similar matters. In addition, the notice and comment provided for the final rules suggest that the opportunity for comment was not a meaningful because the final rules are virtually identical to the IFRs and the IFRs impaired the rulemaking process by altering the agencies’ starting point in considering the final rules.

The court also held that the States were likely to succeed on their substantive APA challenges because neither the ACA nor RFRA authorized the agencies to create exemptions. The unambiguous language of the ACA’s Women’s Health Amendment only authorized the agencies to decide what services would be covered, not who provides them, and RFRA did not require or authorize such broad exemptions, particularly given RFRA’s remedial function that places the responsibility for adjudicating religious burdens on the courts, not the agencies. In addition, the final rules would impose an undue burden on nonbeneficiaries—the female employees who will lose coverage for contraceptive care. The public interest favors minimizing harm to those third parties. Because the current accommodation does not substantially burden employers’ religious exercise and the exemption is not necessary to protect a legally-cognizable interest, the States’ financial injury outweighs any purported injury to religious exercise. Finally, a nationwide injunction is appropriate to provide complete relief (for example, 14 percent of the New Jersey workforce works out of state).