This year’s webinar highlighted ways that Legal, Compliance and Finance leaders collaborate to ensure that their organizations’ financial arrangements are complying with critically important laws, such as the Stark Law and Anti-kickback Statute, to prevent violations and mitigate potential financial and reputational harm. Our speakers Kate Eshghi, Senior Vice President and General Counsel at UMass Memorial Health, Timothy Hogan, Senior Vice President and Chief Compliance Officer at Boston Children’s Hospital, and Grace Jodhan, Executive Director, Compliance and Privacy Officer at Beth Israel Lahey Health shared their insights with 65+ participants on the webinar.
As we all know, the Office of Inspector General (OIG) released the General Compliance Program Guidance (GCPG) in November 2023 for the healthcare compliance community. Recognizing that one size does not fit all, this guidance aims to provide voluntary compliance guidelines and practical tips for organizations to consider. The General Compliance Considerations section of the GCPG emphasizes a few areas of risk that the OIG believes warrants consideration. One of those areas of risk is Financial Arrangements Tracking. The OIG notes that to ensure compliance and detect potential fraud, companies should:
- establish a centralized tracking system to maintain documentation,
- conduct regular legal reviews, and
- perform fair market value (FMV) assessments.
These tracking systems must track service and activity logs, as well as the use of leased space and equipment, ensuring alignment with contract terms. Additionally, it is crucial to document the business need or rationale for arrangements to achieve transparency and effective monitoring.
Based on this recommendation from the OIG, panelists provided insights on financial arrangements from the financial, legal, and compliance perspectives. Here are some highlights from the discussion:
- Grace Jodhan provided a general overview of FMV and three different types of valuation (the cost, market, and income). FMV means the value in arm’s-length transactions, consistent with the general market value. Ms. Jodhan underscored the importance of ensuring that compensation or price does not take into account the volume or value of anticipated or actual referrals.
- Both the Office of Inspector General (OIG) and the Department of Justice (DOJ) provide compliance program guidance to mitigate the risk of violating laws such as the Anti-Kickback Statute, Stark Law, and the False Claims Act. While the government offers guidance, it often does not codify it into law, leaving organizations responsible for developing fair market value guidelines. These guidelines should be measurable, objective, and supported by documented methodologies. Many companies seek third-party assistance to ensure that their fair market value guidelines are objective, measurable, based on industry best practices, and compliant with regulations.
- When asked if a FMV rate based on benchmarking is a reliable source or not, Ms. Jodhan noted that while benchmarking is helpful, it cannot be relied upon entirely. The reason being is that you don’t know how other companies arrived at their compensation rates and if it’s based on a defensible methodology.
- Kate Eshghi advised listeners that an entity’s governance starts at the top and stressed that it is important for an organization to:
o Proactively ensure an adequate compliance program is in place
o Be knowledgeable; ensure information is flowing to the board
o Ensure autonomy of, and direct access to, Compliance Officer
o Alignment of Incentives; focus on executive compensation – Clawbacks - Ms. Eshghi shared some great examples of what could go right and wrong, even when all elements of a compliance program are in place, and highlighted the importance of establishing a culture of compliance and developing relationships that will pave the way to inviting Compliance into the room to participate in key discussions.
- It is important for the executive and leadership team to avoid risks that will derail the organization’s strategy. No matter the size of the organization, developing and implementing a contracting process is critical. Ms. Eshghi underscored the importance of considering key factors in the contracting process, such as the authorized signatory, controls that will trigger an alert when something goes off track, ensuring an ethical obligation at all levels of the organization, etc.
- Tim Hogan recommended organizations refer to “Focus Arrangements” specific Corporate Integrity Agreements (CIAs) to guide their approach in managing such arrangements and ensure compliance. Specifically, he directed individuals to the section in the back of CIAs that speak to the entity’s compliance program and the elements that the OIG recommends/requires.
- Mr. Hogan pointed out that the OIG’s CIAs are based on compliance with the Stark law and Anti-Kickback Statute and tend to consider the following elements:
o Agreement is maintained in centralized tracking system
o Compliance with internal review and approval process
o Remuneration is based on process for determining FMV
o Business need or business rationale is documented
o Service or activity logs are properly completed and reviewed
o Space, supplies, devices, equipment are properly monitored
In summary, it is critically important that organizations have appropriate controls and monitoring procedures in place to mitigate risks of non-compliance with key laws related to financial arrangements. Proactively establishing a culture of compliance, putting auditing and monitoring procedures in place, ensuring FMV assessments are periodically reviewed and are supported by documented methodologies, maintaining effective, on-going education for leadership and key stakeholders, and inviting Compliance leaders into the room, are some of the steps that can support efforts to compliantly manage financial arrangements.
For those who are interested in obtaining a copy of the webinar slide deck, they can be found on the HFMA MA-RI’s website.
The HFMA MA-RI Chapter would like to thank all those who made the July 25th compliance webinar a success! Thank you to our participants who joined us, speakers, sponsors, volunteers, and Compliance Committee members. Your dedication and contributions made this webinar possible, allowing us to provide valuable and timely content to our community.
Last but not least, don’t forget to sign up for the upcoming HFMA MA-RI Chapter and New England Healthcare Internal Auditors (NEHIA) Compliance and Internal Audit Conference, which will be held from December 4th to December 6th. The early-bird rate expires on September 8th, so register today!
