Chief Compliance Officers and the Healthcare Industry
The healthcare industry is very familiar with risks and compliance. In many areas of compliance, the healthcare industry has led the way. The record of success is mired in one significant glaring area – the independence and authority of chief compliance officers.
The industry as a whole deserves a pat on the back; however, it still is coming to grips with the need for an independent CCO with a direct line of authority to the board or the compliance/audit committee. Even assuming the structure is in place, I have seen too many situations where the CCO has little independent autonomy, authority and resources.
Many CCOs in the healthcare industry are not treated equal with the legal general counsel. This continues to hinder CCOs from doing their jobs, leading their compliance programs, and promoting the ultimate success of their organization.
Many healthcare organizations have the right structure (i.e. Compliance reporting separately from Legal) but fail to allocate the necessary authority to the CCOs. Indeed, Chief Financial Officers play an active role in compliance and legal issues relating to healthcare finances such as billing, potential fraud and government audits.
For many CCOs in the healthcare industry, they have to struggle with two sets of elbows – the finance side and the legal side. It is enough to drive them crazy. CCOs often are required to “consult” with legal and/or finance staff before carrying out necessary initiatives and responsibilities.
There is a natural tension between the CCO and the General Counsel. It can only be solved if clear definitions and structures are put in place and enforced by the organization. In many instances, the problem exists because the CCO is given a narrow mission – to make sure the organization complies with all laws and regulations and identifies potential violations of laws and regulations and company policy.
CCOs should demand a broader mandate which includes:
- Reporting directly to the Board and/or Audit/Compliance Committee;
- Responsibility for developing a “tone-at-the-top” which is communicated throughout the organization;
- Responsibility for developing, implementing and overseeing a compliance program;
- Conducting training and education programs as part of a compliance program;
- Supervision of billing, coding, reimbursement, revenue cycles, marketing and responding to government inquiries;
The general counsel serves as the legal defender of the healthcare company, not as the proactive compliance officer. The general counsel is most helpful when defining risks under the law and how compliance can minimize those risks. This is when a CCO and a general counsel should work together and coordinate their efforts. To put it more simply, lawyers define the rules of the road, and CCOs make sure the organization does not veer off the road.
Given the nature of their respective roles, it is no wonder that the government has instructed healthcare companies for the last fifteen years to separate the CCO and general counsel function.
While most healthcare companies have separated the positions, a large number have not take the second and perhaps most important step – elevating the CCO within the organization, clarifying the responsibilities and the relationship between the CCO and the general counsel, and making sure the board adequately supervises these two important positions in the organization.
This has been very nicely and succinctly stated. To add to the above, a huge part of compliance is instilling, developing and monitoring the ethical behaviors of all key personnel, including legal counsel. If you report to legal, then the ability to address ethical vs legal becomes a challenge. Also, although rare, I have seen where legal has advised on how the law can make a situation work, but it was not in compliance with CMS and other regulatory or oversight agencies, aside from the fact that though it could be lawful, the particular situation would not have past the ethical scrutiny. Working side by side with mutual respect and appreciation for each others forte allows the CCO to be more effective. I know , I have worked in both environments in which I reported to Board and CEO and worked alongside legal, and where I reported through legal. and the first is more efficient, effective and compliant.