Kusserow on Compliance: What to look for in an independent review organization

At any given time, the HHS Office of Inspector General (OIG) has over 300 active corporate integrity agreements (CIAs) in force, resulting from settlement of a civil false claims case with the Department of Justice (DOJ). A provider or entity consents to certain defined obligations as part of “the civil settlement and in exchange for the OIG’s agreement not to seek an exclusion of that health care provider or entity from participation in Medicare, Medicaid, and other federal health care programs.” The CIAs normally are five years in duration and require an independent review organization (IRO) to act as guarantor that the organization will comply with the terms of the agreement. Financial audits are not normally part of the agreement; as such, IROs usually are firms with expert health care consultants, rather than financial auditors.  IRO selection is a critical decision process that should not be taken lightly, because the wrong IRO can prove to be very costly both in terms of what it charges and how it performs its services, but also in the credibility of its work. The OIG does not select or endorse any organizations to be the IRO; however it reserves the right to approve or deny the entity’s or provider’s choice if found deficient in meeting its guidelines. Any problems the OIG finds with an IRO will reflect badly on the organization and could aggravate matters.

Thomas Herrmann, J.D., is an expert without peer with regard to IROs, as result of having been previously responsible on behalf of the OIG for negotiating CIAs and monitoring compliance, and later serving for years as a consultant involved in more than a dozen IRO engagements. Hermann recommends selecting a firm with an established record of serving successfully as an IRO. Expecting a firm to have so served 10 or 12 times is not unreasonable. An experienced IRO will manage reporting and communicating with the entity and OIG in a clear and efficient manner. The more familiar the OIG is with an IRO entity, the better that communication will be and the more efficient the process.

Carrie Kusserow has 20 years of health care compliance consulting experience and serving as a compliance officer with organizations under a CIA. She noted that one of the added challenges is implementing mandates negotiated by attorneys, normally without much input from the compliance office. Often, there are issues requiring clarification and, in some cases, changes. The reality for compliance officers having to implement the terms of a CIA is that the organization has admitted to have engaged improperly, leaving credibility severely damaged; after months of negotiation, the government has little interest to “re-litigate” any issues, including any modifying or clarifying terms and conditions.   A solid professional relationship with the IRO is in the best interest of both the organization and the OIG. Any issues that may arise that require clarification or modification will have a much better chance of a favorable hearing from the OIG if supported by the IRO. If they are inexperienced or lack expertise, it may add confusion and problems in efforts to comply with all the terms of the Agreement. As such, it is important to ensure the firm selected has the specific qualifications, experience, and expertise to properly address the defined scope of work under the CIA. Absence of program expertise can lead to hidden costs in learning the business and may result in difficulties meeting the obligations; and possibly proper level of OIG credibility.

Steve Forman, a CPA with more than thirty years’ experience as a compliance officer, consultant, and OIG executive has worked on numerous CIAs. He believes that the more experienced the IRO, the better the result in terms of efficiency of work, cost, and credibility of results with the OIG. This should not be a learning opportunity for the firm at organization expense.   It is also important to avoid a “bait and switch” and insist on the identification of all key persons that would be assigned to the engagement.   Only engage an IRO that will attest to meeting the OIG required Government Accountability Office (GAO) “Generally Accepted Government Auditing Standards” for operational reviews. Operational reviews and financial reviews are dealt with separately in those standards. The OIG requires IROs meeting certain of these standards. Always require references that speak to the level of professionalism, competence, reasonableness, and if there were unreasonable up-charging over their estimate.

Dr. Cornelia Dorfschmid has 25 years’ experience as a compliance officer and consultant. She has worked on more than a dozen IRO engagements. Dorfschmid noted that one of the criteria upon which the OIG insists is absence of conflicts of interest, which has grown in importance and sensitivity over the last year. As such, it is very advisable to require written attestation of a prospective IRO that it has no conflicts of interest problem. It is best it not have done any work for the organization for the past three years, or have prospective work with the organization that would overlap the IRO engagement. Even the appearance of conflict can be a serious problem. Fee rates and charges can range considerably and it is important to consider that cost right alongside of experience, professionalism, and industry knowledge.

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.

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

Kusserow on Compliance: Board compliance experts and certifications under corporate integrity agreements

The HHS Office of Inspector General (OIG) now requires in its corporate integrity agreements (CIAs) the engagement of independent compliance experts to assist it in meeting its obligations of oversight of compliance programs. This trend has been part of a movement to hold members of governing boards more accountable for compliance program oversight.  Those engaged as compliance experts must create a compliance review work plan, perform the program review, and provide a compliance program review report.  The report has to describe the review performed, findings, and any recommendations for program improvement.  The board must review the report and act upon any findings and recommendations. A copy of the report must be sent to the OIG as part of each CIA annual report.   In addition, any materials provided by a compliance expert, as well as any minutes of meetings must be available to the OIG upon request

Carrie Kusserow has a long history as a compliance officer and as a compliance consultant working on compliance with CIAs.  She noted that the “real game changer” in CIAs has been the movement toward increased certifications by executives, compliance officers, and board members.  Board members now have the burden to adopt and sign a resolution for each CIA Reporting Period.  This is serious business, in that making false certifications could criminally violate federal law (18 U.S.C. §1001).  In order to hold boards fully accountable, the OIG mandates that they engage a compliance expert to assist them in carrying out their compliance program oversight and to assist them in being able to make their certification.  Selecting the right compliance expert is critical; once selected, they are likely to be doing this work for five years.  Kusserow also warns that time is not an ally when CIAs are signed.  The attorneys handling the litigation and settlement process often are working ahead of the organization and those who will have to implement the terms and conditions of the CIA. This means that many organizations find themselves in a race against time to do all that is required, including engaging independent review organizations (IROs) and compliance experts.   She advises organizations moving toward settlement to begin looking and evaluating potential parties to be engaged as outsider experts.

Tom Herrmann, J.D. has many years’ experience managing the CIA process with the OIG, as well as having been engaged by numerous organizations in meeting CIA obligations.  He believes that it is important to remember that moving from settlement to meeting obligations under a CIA is also moving from having parties advocating on behalf of the organization to parties  assisting in meeting the requirements that have been agreed to. He speaks from firsthand experience when he says that the OIG does not like parties trying to re-litigate a case, and any effort to do so will likely prove counter-productive.  This means that the compliance experts engaged must focus implementation on the terms of the agreement.  To do this, they must be free of any conflicts of interest if they are to meet the independence and objective standards required by the OIG.  The OIG wants to see organizations select true experts who will carry out their responsibilities with independence and integrity.  As such, Herrmann agrees that the more experience that parties have as experts under the CIA, the better known they are to the OIG and more credible will be their work.

Selecting compliance experts

Organizations selecting compliance experts should keep the following tips in mind:

  • An independent expert must be properly qualified to perform the work described in the CIA.
  • The work to be performed consists of operational reviews, not financial audits.
  • The focus is on compliance program expertise.
  • A CIA may require several different types of expert (e.g. IROs, compliance experts).
  • Those selected should be qualified and experienced in the industry sector covered by CIA.
  • Lack of expertise in the area for which the experts are engaged equals potential problems with OIG.
  • Sub-standard reports risk loss of compliance credibility.
  • Work performed by experts must be professionally independent and objective.
  • Compliance experts follow Government Accountability Office Government Audit Standards (GAGAS) standards for operational reviews.
  • Experts should certify to OIG professional standards.
  • Entities should ensure and seek certification that the experts have no conflicts of interest with the entities.

Steve Forman, CPA has been engaged as a compliance expert on behalf of several organizations. Based upon his experience, he offered tips on how to go about selecting an outside compliance expert. He believes it is very important engage parties with considerable experience doing this kind of work.   Using people inexperienced in compliance or using them as compliance experts is risky. Those lacking experience tend to be more costly, as they charge for their time in learning what needs to be done at the expense of those that have engaged them. The more experience they have doing this kind of work under a CIA, the better. As such, it is advisable to find experts who have been engaged by entities under CIAs on multiple occasions. It also permits reference checking on how well the experts did with organizations that used them. Forman also added that having served many years as a compliance officer, in addition to serving as a health care consultant, was critical in being able to deal with real and practical considerations in acting as a board compliance expert. He believes having that combination of experience provided those organizations using his services with the most efficient results.

Reference-checking questions

Appropriate reference-checking questions include:

  • Did the firm meet its obligations satisfactorily?
  • Were there any problems?
  • Did the OIG find a firm’s work satisfactory?
  • Did a firm perform services economically and efficiently?
  • Was a firm sensitive to the entity’s operations and needs?
  • Was a firm’s work professional, competent, and timely?

Last tip

One last piece of advice for compliance officers is that they educate their boards on this new trend, whether or not the organization may be involved in settlements with the government. What the OIG mandates is what it believes all organizations should do–that is, provide greater board oversight of the compliance program. As such, all boards should add members who are “compliance literate” and/or secure outside experts to advise them on the progress in development of an effective compliance program.

OCR shows no signs of slowing HIPAA enforcement

The HHS Office for Civil Rights (OCR) is on pace to have another record-breaking year for enforcement actions against covered entities (CEs) and business associates (BAs) accused of Health Insurance Portability and Accountability Act (HIPAA) (P.L. 104-191) violations. As of February 13, 2017, it had already entered into two resolution agreements with CEs and imposed civil monetary penalties (CMPs) on another for only the third time in its history. Prior to 2016, the OCR had not entered into more than six resolution agreements with CEs or BAs in single year. As of December 2016, the OCR had entered into twice that number. As of February 13, 2016, the OCR had just imposed its second CMP, but had not yet entered into any resolution agreements.

The agency kicked off the year by entering into a $475,000 resolution agreement with Presence Health. Unlike past agreements that settled potential violations of the HIPAA Privacy and Security Rules, the Present Health resolution represented the OCR’s first agreement to resolve potential violations of the HIPAA Breach Notification Rule. Presence failed to notify the OCR, affected individuals, and the media that paper-based operating schedules containing the protected health information (PHI) of 836 individuals had gone missing in the statutorily-required 60-day timeline for breaches affecting more than 500 individuals; instead, it waited more than 100 days.

Eight days later, the OCR announced a $2.2 million resolution agreement with MAPFRE Life Insurance Company of Puerto Rico for Security Rule violations affecting the data of 2,209 individuals. The OCR determined that MAPFRE failed to perform a risk analysis, implement risk management plans, and encrypt data stored in removable storage media led to a breach caused when a thief stole a USB data storage device containing electronic PHI (ePHI).

In early February, the OCR announced that it had issued a final determination and imposed a $3.2 million CMP on Children’s Medical Center of Dallas due to a pattern of noncompliance with the Security rule. Children’s suffered a breach in 2010 due to the loss of an unencrypted, non-password-protected BlackBerry device containing the ePHI of 3,800 individuals.  It suffered a second breach in 2013; despite the first breach, Children’s had failed to encrypt a laptop containing the ePHI of 2,462 individuals that was later stolen. The agency determined that the CMP was merited based on Children’s failure to implement risk management plans, in contravention of prior recommendations to do so, and its failure to encrypt mobile devices, storage media, and workstations. The OCR also imposed CMPs against Lincare, Inc., a home health company, in 2016 and against Cignet Health in Prince George’s County, Maryland, in 2011.

The agency stepped up enforcement efforts in 2016, in part due to negative reports regarding its performance from the HHS OIG and the Government Accountability Office (GAO). It began the Phase 2 audit process, targeting both CEs and BAs, and announced its intention to allocate resources for the first time to investigate complaints of breaches affecting 500 individuals or fewer. It appears geared to continue, if not ramp up, its enforcement efforts, but the impact of newly appointed HHS Secretary Thomas E. Price, M.D.–who will appoint a new OCR director–remains to be seen. Price, a physician and former Congressional representative has historically opposed government regulatory activity of physicians. However, Adam H. Greene, Partner at Davis Wright Tremaine, suggests that, although Price the physician may dislike HIPAA, “his personal views will [not] necessarily lead to a significant change in enforcement.”


Kusserow on Compliance: When a CIA looms, it is time to seek a new job, career change, or hiding place, or take action

When organizations fall under the spotlight of the Department of Justice (DOJ), there is a period of many months before a settlement is negotiated that is followed by another negotiation process with the HHS Office of Inspector General (OIG) that leads to a corporate integrity agreement (CIA). By time of settlement, or shortly thereafter, it is common to find the compliance officer has left, as many  see the warning signals and decide to leave, or later are asked to do so.  When this happens, there begins a struggle to replace the compliance officer.   This is not an easy thing to accomplish as it take three to five months on average to find someone qualified and is complicated by the fact that many would-be candidates may not wish to take on a “fire storm” job at the outset of a five-year stringent CIA set of terms and condition.   All this takes place at a time when CIA terms will be adding great new burdens on the compliance program.

Replacing compliance officers

One short-term solution, when replacing the compliance officer, is to designate someone in-house to act until the gap can be filled by a permanent appointment.   This is seldom a good solution.  At a time when a steady, experienced, aggressive, and professional hand is needed to meet the immediate challenges of meeting the stringent compliance mandates of a CIA, the temporary appointee will be just trying to hold things together, without creating any future problems for themselves.   The alternative is hiring an interim compliance officer, until the right permanent solution can be found. This has the benefit of using someone who knows what has to be done and will be replaced within a matter of a few months.  This permits a steadier hand and includes the benefit of having someone to independently assess the state of the program and move on a plan to strengthen it.

Compliance officers who want to keep their jobs

Those desiring to keep their jobs cannot afford to wait in the wings to see what develops while the attorneys are negotiating with the DOJ and OIG.   It is dangerous and career-threatening.  They need to shore up the program and be considered part of the solution.  While negotiations are underway, the attorneys focus on the transaction terms with the government to resolve the pending issues, and not necessarily the consequences of living with the negotiated terms.  This may take many months, during which time the compliance officer needs to act affirmatively and with celerity to strengthen his or her position, before the CIA descends and the attention is redirected back to compliance.  The OIG follows predictable patterns in setting terms and conditions. Anticipating and preparing for what is coming with the CIA is being smart and, quite frankly, a job security effort.   The time should be used to educate management and the Board on what to expect, as well as preparing for what will come.

Evidencing compliance program effectiveness

Compliance officers should move at the earliest date to develop independent evidence that the program is operating the way it should and the problems that gave rise to the government intervention were an aberration. This also will help the attorneys in negotiating terms and conditions. It is wise to consider having an independent compliance program evaluation done by experts far in advance of the CIA mandates going into effect that will mandate the Board to hire a compliance expert to do the same thing. This will provide evidence of program strengths and identify areas of opportunities for improvement, as well as provide time for taking corrective action to address any weaknesses.  Results can be presented to the executive leadership and Board; attorneys may find them useful in negotiating settlement terms.  This further keeps the whole effort under direction of the compliance officer, who can take credit for the identified strengths in the program, as well as in addressing any findings otherwise.  If this is not done well in advance, then all findings will come from the Board-engaged compliance expert and reflect negatively on the compliance officer. There is a big added benefit, in that the independent assessment will likely become the framework for the Board-engaged compliance expert to focus attention to determine if all the corrective action measures have been addressed, rather than developing his or her own review criteria.

Help identify potential Board compliance experts

After a settlement, there usually is a big scramble to find qualified parties to be the independent review organization (IRO) and Board compliance expert.   It takes a lot more time and effort to find the right qualified parties to do this kind of work than to properly vet them.   The fact is there are relatively few such experts with the requisite experience.  It is therefore useful for the compliance officer to have researched the subject long before any CIA is signed or anyone else is focused on this.   Laying a proper foundation for identifying qualified candidates can help the compliance officer to be seen as part of the solution to the challenges facing the organization.  When it comes to compliance experts, it is very important engage parties with considerable experience doing this kind of work. Engaging inexperienced people as compliance experts is risky and unpredictable. Inexperienced people also tend to be more costly as they charge money while learning what needs to be done.  The more experience with this kind of work under a CIA, the better for gaining efficient result.  Those who have done this work before know what needs to be done and have a track record with the OIG.  It also permits reference checking on how well they did with organizations that used them.

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.