Private-sector fraud seen affecting health care compliance

Compliance officers say internal audits and interactions with boards are key components

While the Health Insurance Portability and Accountability Act now is taking up half the time of most compliance officers, Bret Bissey, chief compliance officer at Deborah Heart and Lung Center in Brown Mills, NJ, predicts the financial upheaval and corporate fraud unfolding in the private sector will significantly affect the role of compliance officers as well. Specifically, he says, compliance officers are likely to find themselves helping to make sure the right decisions are made at the corporate level and that external auditors do not have any conflicts of interest.

David Orbuch, corporate compliance officer at Allina Health System in Minneapolis, argues that, going forward, the role of compliance officers should be to create strategies that, if implemented by operation leaders, will ensure that the company is doing it right the first time. "Previously, compliance officers were more about ensuring that the I’s were dotted and the T’s were crossed," he says.

The question is more than speculative for many compliance officers. For example, Bissey says he now is formulating plans on how to present these types of issues to his board. "Most board members are going to want to know how to make sure the integrity of the organization is protected," he argues.

Bissey says the background of individual compliance professionals will likely affect this trend because there is a wide disparity of skill sets among compliance professionals. "When you begin to look at corporate communications and monitoring different organizational tactics, it really becomes a business function vs. the classic E&M [evaluation and management] coding type of issue," he explains.

Al Josephs, director of corporate compliance at Hillcrest Health System in Waco, TX, says that is why he does not think compliance officers necessarily will be part of that corporate-level corrective activity. While Josephs has a financial background, he notes that most compliance officers do not possess the same experience. Rather than assume responsibility for those areas, he says, compliance officers often are more likely to become involved in the internal control process for review of financials.

John Harrison, corporate compliance officer at TMC HealthCare in Tucson, AZ, says that is how the upheaval in the private sector is affecting his responsibilities. He says he is looking at an expanded internal audit function, and deciding who should determine the agenda for the audit committee and what resources that might require. He also is trying to assess how vigilant boards should be and what role compliance should play in that regard.

Harrison says he also is branching out from an internal audit function to help the board understand its responsibilities from a financial reporting standpoint and to determine whether it follows all of its policies and procedures in areas such as pay practices.

"It reaches beyond traditional fraud and abuse," says Harrison, who reports to the audit and compliance subcommittee of the board of directors. "With all the financial reporting issues that are surfacing, the board may want somebody besides the CFO addressing financial reporting practices and disclosure," he says.

Harrison says he also is considering more education for the board on how the revenue cycle works. "Board members have to understand the exposure areas and how the auditors will go about testing that," Harrison explains. He says the company’s outside consultant will likely give all board members a primer on financial information to help them understand the key risk areas in health care finance. "Compliance is a part of that because of cash flow," he says.

"The question is whether we are following our own procedures and where boards can go to look for those answers," Harrison concludes. "There may be a realization that the previous channels for information and early detection may have been inadequate given the complexity of health care today."