Those involved in healthcare compliance should be aware of two recent and significant developments coming from the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) and the U.S. Department of Justice (DOJ). 

On Sept. 20, 2016, the OIG announced the largest penalty in history for a provider failing to comply with the requirements of a corporate integrity agreement (CIA). Kindred Healthcare, Inc. had to pay a penalty of more than $3 million for failing to comply with the specific requirements of its CIA.   

The OIG’s press release indicated that the agency had made several unannounced site visits to Kindred facilities and found ongoing violations of the CIA requirements. From 2013 to 2015, Kindred and its predecessors failed to implement required CIA policies and procedures and had poor claim submission practices. This resulted in what the OIG described as “significant error rates and overpayments by Medicare.” 

This penalty should send a signal to providers that failure to implement these requirements will have serious consequences,” HHS Inspector General Daniel R. Levinson said. 

The takeaway for organizations operating under a CIA now or those that will be in the future is to make sure you understand all the CIA obligations you have agreed to and have resources in place that will allow you to adhere to all of the requirements. This should include required education, audits, reportable events, contract management systems for arrangements, independent review organization reviews, and more. Simply put, if you are operating under a CIA, please be prepared to invest to make sure your compliance personnel have the resources to ensure that you are 100-percent compliant with all the CIA’s requirements. Behaving otherwise, as indicated by the Kindred penalty, could be a costly mistake for your organization. 

On Sept. 27, 2016, the DOJ reported that the former president and CEO of Toumey Healthcare will be required to personally pay $1 million for his involvement in directing the company to enter into suspect physician arrangements that led to a $72 million Stark settlement and the sale of Toumey to another organization. In addition, he has been excluded from participation in any federal programs for four years.   

The DOJ’s press release noted that during the jury trail of this Stark case, the government alleged and presented evidence that the CEO “ignored and suppressed warnings from a hospital attorney that the physician contracts were risky and raised red flags.”   

This case illustrates that the Justice Department will hold executives accountable for their involvement in unlawful activities taking place within their organizations. It also reminds us of the inherent risk of hospital/physician arrangements and the need to have proactive processes in place to mitigate the potential for non-compliant behavior.  

If there are executives within your organization trying to “push the envelope” by entering into risky arrangements and/or not adhering to organizational processes when executing contracts (and/or ignoring good legal advice), this information should be shared with them. Remember, part of the role of the compliance officer is to educate all staff members about the compliance risks that exist in today’s healthcare environment.

These two developments reinforce the continued need for proactive, robust compliance programs in healthcare organizations, led by knowledgeable compliance officers empowered by board leadership to advise and recommend on suspect actions or behavior. I highly recommend sharing these stories with your board and C-suite. 

About the Author

A veteran in healthcare compliance (since 1997), Bret Bissey has served as senior vice president and chief ethics compliance officer at UMDNJ in Northern New Jersey. The author of the Compliance Officer’s Handbook, he has been a thought leader and popular speaker at industry conferences and meetings for many years. Bissey has more than 30 years of diversified healthcare management, operations, consulting, and compliance experience.

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