Optional_2023 Board Resources

HISTORY OF COMPLIANCE PROGRAMS

A Historical Perspective In the 1970s and early 1980s, it became clear that the Department of Defense was paying exorbitantly high prices for military supplies. Under the direction of June Gibbs Brown, the Defense Department’s Inspector General, the defense industry developed voluntary self-regulatory guidelines, called “Compliance Programs,” designed to help eliminate waste and bring prices into line. In the early 1990s, the government became concerned about fraud and abuse in health care. In 1993, Ms. June Gibbs Brown was appointed Inspector General at the Office of Inspector General (OIG) for the U.S. Department of Health and Human Services (HHS), and she immediately began working with the industry to develop Compliance Programs like those in the defense industry. Under Ms. Gibbs Brown’s eight years of guidance, the OIG promoted the development of Compliance Programs while aggressively pursuing any questionable activities. In her first full year at the OIG, prosecutions resulted in savings of the record amount of $6 billion. During her tenure, the OIG settled LABSCAM cases for over $300 million, National Medical Enterprises netted over $370 million, Caremark, Inc. was settled for $161 million, and the Columbia/HCA case obtained an unprecedented $745 million. By the time Ms. Gibbs Brown retired in January 2001, the OIG was receiving as many as 50,000 hotline calls a month. Since Ms. Gibbs Brown’s retirement, the OIG has continued to aggressively police the industry. In 2017, the National Health Care Anti-Fraud Association conservatively estimates that health care fraud costs the nation about $68 billion annually – about 3% of the nation’s $2.26 trillion in health care spending. Other estimates range as high as 10% of annual health care expenditure, or $230 billion. The Importance of Compliance Programs With health care fraud such a priority for the government, the stakes are high. Compliance programs help organizations comply with all applicable laws and regulations. An effective compliance program should: • Demonstrate to the community that an organization has a strong commitment to honesty and responsible corporate citizenship; • Help the organization fulfill its legal duty to government and private payors; • Ensure that the organization understands what type of behavior may result in fraud, waste, and abuse; • Encourage staff to refrain from involvement in illegal, unethical, or other improper acts; • Provide procedures to promptly identify and correct misconduct; and • Mitigate any sanctions imposed by the government. The Essential Elements of an Effective Compliance Program At a minimum, an effective compliance program must include the following seven essential elements: 1. Compliance Personnel & Structure: The designation of a Chief Compliance Officer and other appropriate bodies ( e.g. , a corporate compliance committee) charged with the responsibility of operating and monitoring the compliance program and who report directly to the CEO and the governing body. 2. Compliance Documents: The development and distribution of written standards of conduct and written policies and procedures that promote the commitment to compliance and that address specific areas of potential fraud, such as claims development and submission processes, code manipulation, and financial relationships with physicians and other health care professionals. 3. Compliance Training & Education: The development and implementation of regular, effective education and training programs for all affected employees.