Recently, the U.S. Department of Health and Human Services ("HHS") Office of Inspector General ("OIG") released guidance for health care governing boards ("Boards" or "Board") in their supervision of their institutions' compliance with federal health care laws and regulations. This guidance underscores the increasing importance of a Board's role in maintaining institutional compliance. It advises that a crucial aspect of a Board's oversight is "asking the right questions of management."
- Be active and engaged
- Stay abreast of regulatory risks
- Be aware of how their institutions' compliance programs respond to those risks
- Understand how problems are reported within the institutions
- Promote a culture of compliance
The OIG advises that a Board "must act in good faith in the exercise of its oversight responsibility" so an institution has a "corporate information and reporting system" that will regularly provide the Board with information concerning institutional compliance. To maintain institutional compliance, a Board is urged to consult the Federal Sentencing Guidelines, OIG voluntary compliance program guidance, and OIG Corporate Integrity Agreements, so it may assess how its institution's compliance program may be strengthened or better structured.
Knowledge of regulatory changes will also help the Board assess its compliance program. The OIG recommends that a Board formalize a procedure for staying current with regulatory changes, such as obtaining regular updates from management or participating in educational programs. The OIG also suggests that a Board may benefit greatly by "rais[ing] its level of substantive expertise with respect to regulatory and compliance matters," through the retention of a compliance consultant or the addition of a compliance expert to the Board.
Effective oversight is the Board's charge. As an effective overseer, a Board should, according to the OIG, regularly review its institution's legal, compliance and audit functions, and enable access to "corporate information and resources" necessary to execute these functions. A Board should review how the institution's management works as a team to: 1) detect and investigate risk; 2) initiate corrective actions; and 3) keep the various functions well-informed during the process. Further, a Board should be attuned as to how management settles disputes regarding compliance matters.
A Board should also ensure that material information flows freely to the Board from the institution's management team. As such, a Board should require frequent updates concerning compliance and the reduction of risk from individuals in charge of legal, compliance, audit and other functions, and mandate accountability for such reporting. This reporting can include information regarding investigations, audits and fraud or misconduct on the part of management.
A critical item within the oversight of any Board is risk assessment. A Board should make certain that: 1) robust procedures exist to identify potential risks; 2) the institution's management audits such risks; and 3) the institution's management institutes corrective action when necessary. The OIG advises that Boards should pay attention to industry trends in these endeavors, and points to "the increasing emphasis on quality, industry consolidation, and changes in insurance coverage and reimbursement," as ripe areas for risk assessment.
Finally, a Board should promote compliance throughout the institution. It can do so by evaluating an individual's job performance based on his or her "promot[ion] [of] and adher[ence] to compliance." It can also do so by promoting self-disclosure of violations. The OIG notes that a Board would be well-advised to foster an environment where open communication about compliance issues is permissible.
Managing Your Compliance Risk
The OIG expects a Board to be both active and engaged in overseeing its institution's compliance. This can be a daunting task for many Boards due to the constantly-evolving and complex health care regulatory landscape. Polsinelli's significant experience in defending heath care entities, coupled with its depth in regulatory expertise, makes Polsinelli well-positioned to counsel health care institutions and their respective Boards in risk avoidance and corporate governance best practices.
For More Information
For more information on the OIG's guidance or how your Board can meet or exceed its recommendations, please contact the author or a member of Polsinelli's Health Care Litigation practice.