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In this special five-part podcast series, sponsored by Affiliated Monitors, Inc., I visit with AMI Managing Director Jesse Caplan on emerging issues in healthcare compliance and monitoring. In the previous episodes, we considered how healthcare organizations can benefit by having an independent compliance expert – a fresh set of eyes, so to speak – evaluate the organization’s compliance program.  We explored the emerging risks involved in opioid prescribing and how organizations can mitigate that risk by pro-actively assessing the prescribing practices of their physicians and physician extenders.  In this final episode we discuss how an independent integrity review can be helpful for organizations that may be facing actual or potential compliance issues.

Some of the issues we consider are:
Can independent integrity review and monitoring be helpful where a healthcare organization may have reason to believe it has an actual or potential compliance problem, but has not yet been subject to an enforcement action or a corporate integrity agreement imposed by the government?

1. The use of an independent compliance expert to assess a healthcare organization’s ethics and compliance program at a point in time where the organization has reason to believe it has a compliance problem and is likely to face an enforcement action can have tremendous value to the organization. Where a healthcare organization has reason to believe it has a compliance issue, that organization will be faced with a range of obligations and potential consequences, and the organization and their counsel will likely seek to mitigate those potential consequences to the extent possible.  Using an independent compliance expert to review and assess the organization’s ethics and compliance program, make recommendations for remediation and improvement, and then offering to have that independent expert monitor the organization’s implementation of those remedial measures and improvements can be a useful tool in dealing with the government enforcement agency and convincing that agency to grant the organization some leniency in the sanctions that might otherwise be imposed. 

How engaging an independent integrity monitor in these circumstances can help an organization in dealing with an enforcement agency?

1. Coming from my enforcement background, and consistent with guidance from the Justice Department and the CMS Inspector General, we know that the government expects – in fact demands – that healthcare organizations self-report certain types of compliance violations – like overpayments they’ve received, or false or fraudulent claims that they’ve billed the government, to certain types of privacy breaches. The government also wants to see that the violation has been investigated and remediated, and just as importantly, that the violation is not indicative of a systematic failure of the organization’s ethics and compliance program.  While the organization can and should investigate compliance violations using internal resources or outside counsel, using an independent compliance expert to assess the ethics and compliance program and culture, make recommendations, and then monitor implementation of those recommendations, provides a level of objectivity and credibility that is more likely to resonate with the government enforcers. 

2. We have had many engagements where the healthcare organization either directly, or through their legal counsel, engaged our firm to conduct an assessment of the ethics and compliance program and culture, where we made recommendations for improvement and remediation, and where we monitored the organization’s implementation of those recommendations and remedial measures. In many of those cases the organization and their counsel were able to convince the government enforcement agency that the company’s actions in addressing its deficiencies justified leniency – in effect, the organization and its lawyers were able to say to the government: “you don’t have to take our word for it; you can rely on the assessment and monitoring of this independent, objective and credible monitoring firm.”  In some of these cases, using the independent monitor likely meant the difference between the healthcare organization being permitted to continue to participate in government healthcare programs, as opposed to being excluded or having a license revoked. 

Why is it government enforcement and regulatory agencies would prefer not to exclude important health care providers who have compliance issues?  

1. Ensuring access to sufficient quality health care providers – whether they be behavioral health providers, or providers serving other vulnerable and under-served populations – is a constant challenge for healthcare policymakers. Excluding an important provider with significant compliance issues may address those compliance concerns, but it may raise a different problem and challenge when it means there are not sufficient accessible healthcare resources.  The better solution, of course, is to have providers with compliance issues remediate their problems and implement a sustainable and effective ethical and compliance program so that the healthcare market has the benefit of high-quality, efficient, and transparent providers.  While the government is suspicious of healthcare participants who run afoul of their regulatory and compliance obligations, engaging an independent compliance expert and monitor can provide the government with the tools to temper, if not overcome, those suspicions. 

For more information on Affiliated Monitors, check out their website here.

In this special five-part podcast series, sponsored by Affiliated Monitors, Inc., I visit with AMI Managing Director Jesse Caplan on emerging issues in healthcare compliance and monitoring. In the Episode 3, we discussed how independent monitoring can serve important public policy goals in the healthcare industry.  In this Episode 4, we consider examples of independent monitoring involving healthcare organizations or systems.

We consider some of the following issues:
How do healthcare organizations or the agencies that regulate them may use monitoring in connection with significant business transactions – as opposed to law enforcement or disciplinary proceedings. 

1. Healthcare transactions – like acquisitions, mergers, non-profit conversions, and even capital improvements – are subject to regulatory oversight and scrutiny that may be more intense than in other industries.For example, major capital improvements to hospitals are often subject to a state’s Certificate of Need – CON — or Determination of Need – DON –approval.  Not-for-profit hospitals that seek to convert to for-profit – often as part of a merger or acquisition transaction – are likely to face scrutiny and require approval by those agencies that regulate and oversee both their licensing and their charities functions – typically the state department of health and state Attorney General’s Office.  A merger or acquisition of a hospital, health insurance company, or even a physician practice can be subject to antitrust scrutiny –by state authorities like the Attorney General’s Offices, and possibly federal review by the Department of Justice or the Federal Trade Commission.   

2. In each of these healthcare transactions, the government agencies involved are not seeking to address compliance violations or to take disciplinary action. In most of these matters the healthcare organization is not doing anything wrong. But these transactions are likely to impact the structure and dynamics of the local healthcare market, and the regulators – typically state regulators – have both the authority and the objective of ensuring those impacts are a net positive for the local healthcare marketplace. The government’s healthcare regulators and policymakers will want to ensure that the transaction improves the quality of healthcare, increases access to healthcare – particularly for vulnerable and under-served communities, and does so more efficiently. In order to withstand government review, and to get the approvals required, the healthcare organizations entering into the transaction often offer up representations and concessions about actions, investments and improvements they will agree to take and engage in going forward – actions designed to address the state’s concerns and objectives.  And the state regulators themselves will often seek to impose additional conditions or requirements on the transacting healthcare organizations to address the state’s public policy objectives. 

3. Whenever you have conditions being imposed or being offered as a prerequisite of approval of a healthcare transaction, there is a need to have someone monitoring whether those conditions are being effectively implemented and sustained. The government agencies can do the monitoring themselves, but as we previously discussed, that may require resources that are not readily available. We find that a better alternative will often be that the regulators and the healthcare organizations agree to an independent monitoring firm to oversee that the conditions, investments and improvements are being timely and effectively implemented.  In these matters, the independent monitor is paid for by the healthcare organization but reports to the government agencies.

What are some examples of where organizations and government regulators have jointly agreed to use an independent firm to monitor implementation and compliance with conditions of a healthcare transactions?

1. AMI is currently engaged in monitoring conditions imposed by a state Attorney General’s Office on two separate hospital systems, both of which converted not-for-profit hospitals in the state to for-profit companies as part of major acquisitions. In this state the Attorney General’s Office is charged with regulating public charities registered with the state.  When the not-for-profit healthcare organizations sought to convert to for-profit, the Attorney General’s Office imposed conditions to ensure the charitable assets of the original entities were appropriately used for charitable purposes, that there were no impermissible conflicts of interest, that the entities maintained sufficient local representation and control, and that the new entity followed through on capital investments.  The state attorney general’s office, the healthcare organizations, and our firm entered into a three-way agreement where our firm provided the monitoring of these conditions, where we reported the status and progress of implementation of those conditions to the attorney general’s office, but where we were paid by the healthcare organization.  

2. Other areas where regulatory agencies are using independent monitors with healthcare organizations include the US Department of Justice and Federal Trade Commission in their review and approval of mergers requiring divestitures of certain assets. These two agencies are relying on independent monitors to make sure that the divestitures are accomplished consistent with the agreements approving the mergers, and in ways that don’t otherwise compromise competition. 

3. Related to those examples, we are currently engaged in monitoring a very large multinational corporation in connection with the company’s acquisition of another large company. That acquisition was approved by federal regulators only after the parties agreed to specific conditions meant to ensure continued competition in the industry and enhanced consumer welfare.  While this engagement is not in the healthcare field, the value proposition in using an independent monitor to oversee implementation of these conditions in a merger or acquisition transaction would apply in the healthcare context.  In this engagement, we hired certain subject matter experts – for example, engineers – to address those conditions that required specialized training and experience. 

Join us for our final installment, Episode 5, where we tie it all together by discussing how to use an independent integrity monitor in a proactive approach that can lead to greater business efficiency and profitability.
For more information on Affiliated Monitors, check out their website here.