Integrated delivery systems pose compliance challenge

Simply by virtue of their sheer size and scope and the range of services they provide, integrated delivery systems (IDS) face unique compliance challenges. But Dan Roach, vice president and corporate compliance officer for Catholic Heath Care West (CHW) and former in-house counsel with Minneapolis-based Allina Health System, says systems can improve their overall compliance efforts through diligent attention to operational issues.

"While every hospital, lab, or doctor’s office has a certain set of rules to follow, the typical IDS has a much broader set of rules," says Roach. Allina includes hospitals, physicians, managed care, home care and durable medical equipment. "That required me to have a broader understanding of what the laws and issues were, and some understanding of how they worked together," he says.

CHW is no different. That system includes 45 hospitals and 19 home care and hospice providers spread across three states, all with their own divisions and subsidiaries.

Here is a rundown of the operational areas that Roach says require special attention as an IDS establishes its compliance programs:

s Systems and processes. According to Roach, systems and processes will vary greatly within a large IDS. "Typically, you don't develop a system from the ground up," he says. "You develop it by acquiring different organizations and different entities, each bringing in their own culture, their own information system and their own way of doing things," he warns. "There is ambiguity and the application of the laws and rules in the IDS setting can be unclear at times."

Roach says there is often conflicting authority between licensing and regulatory authorities. For example, CHW had a hospital and clinic in one of its regions that was brought into the system after the clinic had become an outpatient department of the hospital. "From a legal perspective, the clinic is an outpatient department of the hospital, and that is how it is licensed," he explains. But when CHW tries to submit a claim to the Medicare carriers or managed care organizations using a hospital site service code, they often refused to pay it.

"Working through some of these issues is very difficult," says Roach. In some cases, an IDS will face a decision of either billing its claims consistent with the legal structure or billing them consistent with how carriers are actually paying claims. Of course, doing the latter can open the door to charges that an IDS has been falsely billing the Medicare program or managed care payers.

s Organizational maturity. The maturity of an IDS is another area that has great impact, according to Roach. At Allina, once his compliance program was developed and communicated, he expected that every business unit within the organization would implement it. "CHW is not as closely integrated, and I am not sure in many cases that things are getting implemented," he says.

There are several reasons why, he adds. First, there is a much broader span of control. Also, staff are much more independent and aren’t sure what authority this guy from corporate has to tell them to do things.

- Culture. Culture includes how the corporate policy is developed, whether it’s made at the regional or local level, and how it’s implemented. It also includes an understanding of who is responsible, what the approval processes are and who must buy in. "My experience at Allina was that we needed corporate buy-in and we wanted input from the systems such as hospitals or clinics because we wanted to be sure we did it correctly," he says.

- Control. Control includes how a system implements decisions and who bears the financial consequences for those decisions. "There’s a lot of financial pressure on hospitals and clinics, and it’s not easy for many organizations and CEOs and CFOs to be saddled with demands from someone at the corporate office that will impact their bottom line," he warns. "On the other hand, you need to be constantly communicating to them that it is their hide that is on the line."

Roach says that during the more than 24 investigations he has been engaged in involving OIG or FBI, he has often been asked for specific information about the CFO or person in charge of the business unit. "They wanted information on their compensation structure, and on any bonus provisions and how bonuses were calculated," he says. "If you are having a hard time working with your CFO, remind them that there is nothing that the OIG or DOJ would like better than to throw one of them in jail."