INSIDE · 2012. 4. 18. · 2 HCCB CEUs) HIPAA Forum Digital Reference CD (with 20 HCCB CEUs)...

Volume SixNumber T h r e e

March 2004Published Monthly

INSIDELeadership letterSites & scenesOn the calendarA little Medicare reliefSpecial Report: Revis-iting an omnipresentf r a m e w o r kSpecial Report:Proposed Guidelinessignal future directionsSteve Ortquist on theCompliance InstituteCEO’s letterAuditing physicalrehabilitation servicesHIPAA securityOvercrowding crisisCT 2003 indexNew members

Steve Ortquistd i s c u s s e sH C C A’s u p c o m i n gC o m p l i a n c eI n s t i t u t e

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9

16

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REGISTER TODAY!FOR THE HCCA COMPLIANCE INSTITUTE, CHICAGO, IL–APR 25-28,2 0 0 4 - For registration info go to the HCCA Website, www.hcca-info.org, or see page 39 of this issue.

INSIDE

HCCA exists to champion ethicalpractice and compliance standards in the health care community and

to provide the necessary resources for compliance professionals and others who share these principles.

DearColleagues:

“What have we done for you lately?” is a

good daily motivational question for those

of us in a leadership role of HCCA. Often

times the efforts of individual HCCA

Sheryl Vacca assumed the

office of President in 2002,

she found herself immersed

in the management of the

transition. She, along with

Greg spent countless hours

working with Roy Snell and

Dan Roach to set up an

AL JOSEPHSHCCA President

HCCA’SM I S S I O N

2March 2004

board members, staff, or members go without notice, because

they quietly go about the business of getting things done. As I

began this year, I found the responsibilities of the President

include the assignment of projects and responsibilities to vari-

ous board members. I quickly discovered that HCCA has a

“gold mine” of resources in our board, membership, and staff.

We all work together as an effective team, and it is always

difficult to single out any individual for his or her contribu-

tion without first recognizing the support of the team.

During my short tenure as President I have been asked

numerous times, “how can I become a member of the HCCA

Board?” or “How can I become a Board Officer?” My answer

has been and will always be, “Become involved, work hard,

and it will happen”.

At the risk of leaving someone out, I want to share with you

what I think is the “behind the scenes” story of the efforts of

several members of HCCA. As we all know, we each find our-

selves where we are today, in a large part, as the result of what

we did yesterday. If we reflect back on HCCA’s yesterdays to a

board meeting in 2001, the topic of self-management (hiring

a CEO and our own staff to run the association, as opposed

to an association management company) was raised by then

President Greg Warner. The plans were laid that day for a

project that would take a full three years to complete. As

office in Minnesota. There is not space in this newsletter to

recount the details of contract negotiations, equipment pur-

chases, records transfers, and on and on and on…….. Then

Alan Yuspeh’s leadership brought us through the first full year

of operations. In addition, if you were to review the many

other efforts these individuals made during those years, your

first question would have to be; “Where did they find the

time?” One other individual that has worked tirelessly since

the beginning of the Association and, in fact was the recipi-

ent of the HCCA Pinnacle Award, is Debbie Troklus. She did

not retire after receiving that award for her tremendous con-

tributions to HCCA. Since her year as President, Debbie

continues to be the “go to” person for education and training

and has been instrumental in the development of many of

the HCCA educational products and publications. And

simply stated, the HCCB would not exist today without

Debbie’s leadership.

This provides a highlight of only a few of the leaders of

HCCA. Trust me, there are many more. If you want to know

how to become involved and work hard, ask Greg, Sheryl,

Dan, Alan, Roy, Debbie, or any other member of the HCCA

Board. Odell Guyton shared a quote with me the other day

which is fitting here: “We are standing on the shoulders of

giants”. I’ll close by again answering the questions of “How

can I become a member of the HCCA Board?” and “How

can I become a Board Officer?” by simply saying “Become

involved, work hard and it will happen!” ■

Health Care Compliance Association • 888-580-8373 • www.hcca-info.org

HCCA • 5780 LINCOLN DRIVE, SUITE 120 • MINNEAPOLIS, MN 55436

3March 2004

R E S O U R C E S

T H E C A L E N D A RONON

HCCAHCCA

2004

CONFER-

ENCES:

(See page 5 for upcoming

audioconferences)

ANCHORAGE, AK■ JUL 22-23, Alaska Area

Meeting

LOS ANGELES, CA■ JUL 16, (Date Changed)

Southwest Area Meeting

WASHINGTON, DC■ MAY 21, Northeast Area

Meeting

ORLANDO, FL■ OCT 22, Southeast Area

Meeting

ATLANTA, GA■ MAR 26, Southeast Area

Meeting

CHICAGO, IL■ APR 25-28, HCCA

Compliance Institute ■ SEPT 17, North Central Area

Meeting

BOSTON, MA■ SEPT 10, New England Area

Meeting

BALTIMORE, MD■ MAR 1-4, Advanced

Compliance Academy

MINNEAPOLIS, MN■ MAY 24, Upper Midwest Area

Meeting

KANSAS CITY, MO■ AUG 6, Midwest Area

Meeting

LAS VEGAS, NV■ NOV 5, Southwest Area

Meeting

NEW YORK, NY■ NOV 15, Mid Atlantic Area

Meeting

PHILADELPHIA, PA■ OCT 15, Northeast Area

Meeting

SALT LAKE CITY, UT■ SEPT 13, Mountain Area

Meeting

SEATTLE, WA■ JUN 4, Pacific Area

Meeting ■

For more information about eventsor resources, check out the HCCAWebsite, h t t p : / / w w w. h c c a - i n f o . o r gor call 888/580-8373.■ Monitoring & Auditing Prac-

tices for Effective Compliance■ H C C A’s Compliance, Consci-

ence, and Conduct™, a video-based compliance training p r o g r a m

■ HCCA’s book, Compliance 101■ Individual & Small Group

Physician Practice Compliance:

What every physician shouldknow

■ Privacy Matters–HCCA’s video-based HIPAA Training Program

HCCA’s CD Videos - ■ Alice Gosfield-Unplugged (with

2 HCCB CEUs)■ HIPAA Forum Digital Reference

CD (with 20 HCCB CEUs)■ Physician Group Practices

Compliance Conference (with3.6 HCCB CEUs) ■

HCCA • 888-580-8373 • www.hcca-info.org

& S C E N E SSITESSITES from the january board meeting

N E W S F L A S H: Compliance among Top 10 hot executive jobsThe ranking, according to a December 3, 2003 press release fro m

Christian & Timbers, says the 10 Hot Exe c u t i ve Jobs in 2004 are :1. Board director at public company2. Human resource director: tech or health care3. Executive VP of sales4. Executive at medical devices company5. Campaign managers6. Chief nursing officer7. Chief ethics officer8. Chief compliance officer9. VP data mining10. EVP at national security/DOD consulting companyFor more information, go to:http://www.ctnet.com/pr/releaseDetails.asp?prid=256<http://eccn.c.tep1.com/maabUeyaa325ja8YhGVe/> andhttp://wwwctnet.com/pr/studies/hotjobs2004/pfversion.html<http://twcc.c.tep1.com/maabUtlaa34T2a78pgie/> ■

4March 2004


s e rvices? Since such providers are not

e m p l oyees, how is the medical group to

re c e i ve payment from Me d i c a re dire c t l y,

rather than have the funds paid to the

physician? Essentially, the answer is that

the group cannot have the benefits re a s-

signed and paid directly from Me d i c a re .

In practice, the medical group seeks to

collect the Me d i c a re re i m b u r s e m e n t s

f rom the independent contractor physi-

cian directly; not always an efficient and

e f f e c t i ve pro c e d u re .

A l t e r n a t i ve l y, the Me d i c a re Ca r r i e r’s

Ma n u a l p rovides, in Section 3060.11,

that payments can be made to the physi-

cian via a bank account, so long as only

the physician has control over the bank

account and the bank is not otherw i s e

p roviding financing to the physician.

Again, this is not an error free pro c e-

d u re. The physician still has control ove r

the funds in the bank account and can

abscond with the funds at any time

without turning them over to the med-

ical gro u p. As a pro t e c t i ve measure ,

medical groups can establish the bank

account as a “ze ro balance” account,

meaning that the contents of the bank

account will be transferred daily to the

medical gro u p’s account. The medical

g roup can further protect itself by hav-

ing a contract with the physician where-

by the physician agrees to assign all

accounts re c e i vable for his services, and

set up and transfer the contents of the

ze ro balance account. This is a complicat-

ed process, and is often misunderstood

by Me d i c a re re p re s e n t a t i ves, the medical

g roups, and the physician.

Howe ver the new Me d i c a re legislation

amends 42 U.S.C. §1395u(b)(6)(A) by

revising the entities entitled to re c e i ve

reassigned Me d i c a re benefits. The

reassignment exception to the facility is

amended to state that payment can be

made to the entity “when the service was

p rovided under a contractual arrange-

m e n t” between the physician and anoth-

er entity, if under the contractual

arrangement, the entity bills for the

p rov i d e r’s services. The addition of the

“contractual arrangement” language is

c rucial. It is what now allows an inde-

pendent contractor to directly re a s s i g n

Me d i c a re benefits to the medical gro u p.

T h e re f o re, if a physician contracts with a

medical group to provide services, the

Me d i c a re benefits for those services can

n ow be reassigned to the medical gro u p

as the entity entitled to bill for the

s e rvices. This is a huge relief for medical

g roups across the country trying to hire

p roviders in a market where only inde-

pendent contractors are available. Now,

the expense and inconvenience of finan-

cially collecting Me d i c a re accounts

re c e i vable paid to an independent

c o n t r a c t o r, or setting up ze ro balance

bank accounts, is obviated. All Me d i c a re

benefits can be reassigned directly to the

medical gro u p.

Also, this particular provision of H.R. 1

is effective upon enactment. However,

it is subject to the Secretary of Health

maintaining “program integrity and

other safeguards.” Naturally these latter

terms have yet to be defined by either

Congress or Medicare. ■

Ed i t o r’s note: Clare Stebbing is staff attor-

ney for Team Health Anesthesia Ma n a g e -

ment Se rvices, Inc. in San Diego, CA. Sh e

may be reached at 858/277-4767.

he recent Medicare reform

legislation, the Medicare

Prescription Drug and

Modernization Act of 2003 (H.R. 1),

signed on December 8, 2003, by

President Bush, does much more than

establish a prescription drug benefit

under the current Me d i c a re laws and

guidelines. The Act includes an amend-

ment that could dramatically affect how

physicians and medical groups are paid

by Me d i c a re for their services. Prior to

the enactment of H.R. 1, Me d i c a re

would only reassign Me d i c a re benefits

d i rectly to the physician’s employer (as a

condition of employment) or to the facil-

ity when a facility contracted dire c t l y

with the physician. Other exceptions to

the general prohibition on re a s s i g n m e n t

of Me d i c a re benefits included payments

to an organized health care delive ry sys-

tem and payments to a physician for pur-

chased diagnostic tests. Thus physicians

e m p l oyed by a medical group could re a s-

sign Me d i c a re benefits directly to their

e m p l oyer medical group if it was a condi-

tion of employment.

But what about physicians hired by the

medical group as independent contrac-

tors and paid on a per diem basis for their

By Clare Stebbing

T

5March 2004


Get the latest “ how to” information–tools you can imple-ment–without even leaving your office! Register on theHCCA Website–www.hcca- info.org. Once payment isreceived you are registered and will receive an email a fewdays before the conference with any conference handoutsand contact phone number and instructions.

➤ ➤ Anatomy of a Fraud InvestigationSpeakers: Gabe Imperato and Dan SmallFebruary 25 and 26

➤ ➤ HIPAA Secur itySpeakers: Frank Bresz, Michael McDermand and Nancy ScottMarch 10 and 12

➤ ➤ Pr ivacy LitigationSpeakers: Edward Shay and Ronald LevineMarch 23 and 24

➤ ➤ HIPAA Research Repositor iesSpeakers: Linda Malek and Marti ArvinApr il 6

➤ ➤ JCAHO and Pr ivacySpeakers: John Knapp and Joette HannaApr il 8 and 9

Be on the lookout for :

➤ ➤ Stark Final RulesSpeakers: Lisa Murtha, Dan Roach, John Knapp, and Roy Jaffe

➤ ➤ Coding and Documentation: Anesthesiology and Cr itical Care

➤ ➤ Surgical Documenting and Coding

March 2004

6 Health Care Compliance Association • 888-580-8373 • www.hcca-info.org

Editor’s note: José A. Tabuena provides

Investigative and Integrity Services with

KPMG's Forensic Practice, including the

design and evaluation of compliance and

fraud prevention programs. He is based

in Dallas, TX, and can be contacted at

214/840-2666 or by e-mail at

[email protected]

rofessionals in the industry

are by now well acquainted

with the framework in which

health care compliance programs are

based. Adopted in 1991, the Federal

Sentencing Guidelines for organizations

(the Guidelines) revolutionized how the

government responds when an organi-

zation is convicted of wrongdoing.

Thereafter, the Office of Inspector

General (OIG) for the Department of

Health and Human Services began to

issue sector-specific voluntary compli-

ance program guidances for health care-

related organizations who do business

with the federal government. The OIG

guidances essentially follow the federal

sentencing framework, with the addi-

tion of more specific criteria for meet-

ing the steps or elements of an effective

program, based on the particular risks a

particular industry sector is said to face.

The Guidelines have had far reaching

impact in influencing the development

of corporate compliance programs. Yet

they have not been formally evaluated

or revised since they were adopted in

1991, although the statute contem-

plates ongoing amendment. The U.S.

Sentencing Commission finally con-

vened a panel of experts in 2002 to

revisit the Guidelines with particular

focus on the definition of an effective

program–which has emerged as the cor-

nerstone for designing and implement-

ing compliance programs since

its inception.

As a general matter, the Guidelines

mandate severe monetary fines when

misconduct occurs. On the other hand,

companies can have the greater part of

their penalties waived if they can

demonstrate good corporate citizenship

actions, including voluntary disclosure,

cooperation with authorities and, most

importantly, having in place an effec-

tive compliance program.

The Guidelines are important in the

context of compliance program evalua-

tions because they have created: (i) a

judicial framework that rewards respon-

sible, self-governing companies; (ii) a

sound model that companies can follow

for managing their business conduct;

and (iii) a standard that is influencing

regulatory enforcement policies, crimi-

nal prosecutions, and the liability of the

board of directors in civil litigation.

Extending the frameworkMuch has changed in the field of

organizational compliance since the

advent of the organizational sentencing

guidelines back in 1991, even beyond

what is espoused in the OIG guidances.

While legal standards that have

emerged are built upon the federal

sentencing guidelines model, more

detailed and sophisticated criteria

continue to be articulated.

This was demonstrated when an

influential Delaware court broke new

ground in 1996 with the decision,

In re Caremark Int’l Inc. Derivative Lit1.

The court opined that boards of direc-

tors that exercise reasonable oversight of

a compliance program might be eligible

for protection from personal liability in

shareholder civil suits resulting from

employee misconduct. The Caremark

case also makes it clear that a director’s

fiduciary duty goes beyond ensuring

that a compliance program is in place

in that “[t]he director’s obligation [also]

includes a duty to attempt in good faith

to assure that [the compliance program]

is adequate…”

➤➤ SPECIAL REPORT ➤➤ ➤➤ SPECIAL REPORT ➤➤

By José A. Tabuena By José A. Tabuena

P

7March 2004

that “[p]rosecutors should therefore

attempt to determine whether a corpo-

ration’s compliance program is merely a

‘paper program’ or whether it was

designed and implemented in an effec-

tive manner.”

The DOJ guidance, now titled Federal

Prosecution of Business Organizations,

was updated in January 2003. In the

commentary section, the DOJ added an

important dimension as to what makes

a compliance program worthy of posi-

tive consideration–namely the role of

the board of directors. Furthermore,

there is additional emphasis on the

importance of a company’s voluntary

disclosure and cooperation with the

government’s investigation. The DOJ

approach, as reflected in these memo-

randa, remains significant as the avoid-

ance of an indictment altogether is

generally of greater consequence than

reducing the harshness of a penalty

after a conviction.

The concepts found in the federal

sentencing guidelines continue to

appear in other frameworks. For

instance, on November 4, 2003, the

Securities and Exchange Commission

(SEC) approved new listing standard

requirements for the New York Stock

Exchange and NASDAQ. Those stan-

dards require, in part, that listed com-

panies adopt and disclose a code of

business conduct, including standards

and procedures that will facilitate the

effective operation of the code, such as

the reporting of compliance violations

and protection from retaliation. More

recently in response to the mutual fund

scandals, the SEC issued a new rule

requiring registered investment compa-

nies and advisors to designate a chief


compliance officer and have policies

and procedures designed to prevent vio-

lations of securities laws; subsequently

the SEC proposed that investment

firms that advise the funds adopt ethics

codes that spell out standards

of conduct.

Of course we cannot neglect Sarbanes-

Oxley. Although not explicitly men-

tioned, compliance programs are obvi-

ously impacted by the legislation and

resulting SEC rules. Requirements

pertaining to the adoption of a code of

conduct, and a whistleblower reporting

mechanism, clearly implicate a compli-

ance function. Further, the new annual

requirement for issuers to report on the

establishment, maintenance, and assess-

ment of a company’s internal control

structure bring to mind the sentencing

Guidelines, as the components of inter-

nal control overlap considerably with

the framework3–especially factors

pertaining to the control environment.

Features of the Guidelines can be found

in diverse frameworks such as the fraud

control models collectively offered by

the American Institute of Certified

Public Accountants, Association of

Certified Fraud Examiners, and other

professional associations, as well as the

business conduct management system

project to develop internationally recog-

nized standards, being pursued by the

Ethics Officers Association, and the

development of a system to accredit

compliance practitioners by the

Australian Compliance Institute–much

like the certification in health care com-

pliance (CHC) pioneered by t h e

HCCA. Also globally, similarities with

f r a m ew o rk can be seen abroad including

A similar theme emerged from the

1998 U.S. Supreme Court’s decision in

Faragher v. Boca Raton2, a case analyzing

an employer’s liability for sexual harass-

ment in the workplace. The Faragher

Court determined that an employer

may be able to avoid liability by

demonstrating that it exercised reason-

able care in preventing and correcting

the offending behavior. Interpreting the

Faragher decision, the United States

Equal Employment Opportunity

Commission issued an enforcement

guidance underscoring that this defense

rests not only upon whether the

employer had the “best policy and com-

plaint procedure but also on whether,

in light of specific facts of each claim,

the employer implemented the policy

and procedures effectively.”

In 1999, the U.S. Department of

Justice (DOJ) issued guidance to

federal prosecutors on bringing criminal

charges against corporations. The guid-

ance provides a number of factors that

prosecutors should consider in deciding

how to treat a corporate target poten-

tially involved in misconduct, including

the “existence and adequacy of the

corporation’s compliance program.”

Specifically, the guidance states that

“[w]hile the Department recognizes

that no compliance program can ever

prevent all criminal activity by a corpo-

ration’s employees, the critical factors in

evaluating any program are whether the

program is designed for maximum

effectiveness in preventing and detect-

ing wrongdoing by employees and

whether corporate management is

enforcing the program or is tacitly

encouraging or pressuring employees to

engage in misconduct to achieve busi-

ness objectives.” The guidance provides


Continued on page 8

➤➤ SPECIAL REPORT ➤➤

March 2004


e f f o rts focused on corporate social

responsibility such as the corporate gov-

ernance initiatives of the Un i t e d

Kingdom, the AA 1000 assurance

s t a n d a rds, and the Global Re p o rt i n g

In i t i a t i ve .

Updating the GuidelinesThe advisory group appointed by the

U.S. Sentencing Commission consisted

of fifteen individuals with pro m i n e n t

b a c k g rounds in business, federal criminal

p rosecution and defense, legal scholar-

s h i p, and corporate compliance and

business ethics. The group issued a 137-

page re p o rt4 on October 7, 2003, re c o m-

mending that changes be made to give

organizations “g reater guidance on fac-

tors that are likely to result in effective

p rograms to pre vent and detect viola-

tions of law.” The re p o rt is definitely a

valuable read as it provides a compre h e n-

s i ve context with substantial discussion

on the evolution of the Guidelines since

1991, while capturing the leading ideas

and controversies in field of organiza-

tional compliance.

Two factors we re influential in the

g ro u p’s recommendation for changes.

First, recent re velations of widespre a d

misconduct went undetected, despite the

existence of compliance programs; and

second, the need was expressed to

update the organizational guidelines to

reflect the learning and pro g ress in the

compliance field since 1991. No t a b l y,

the recommendations elevate the stature

of the definition of an effective compli-

ance program. Cu r rently the d e f i n i t i o n

resides in “c o m m e n t a ry” to the Gu i d e -

lines and the proposal moves the defini-

tion from commentary to become its

own Guideline. The proposed new

Guidelines would have three parts. Pa rt

1 states that an effective pro g r a m

re q u i res two essential c o m p o n e n t s. An

organization must (i) exe rcise due dili-

gence to pre vent and detect violations of

l a w, and (ii) otherwise promote an orga-

nizational culture that encourages com-

mitment to compliance with the law.

The range of efforts to pre vent all viola-

tions of law would be re l e vant factors to

determining organization culpability.

Violations of law are defined as “v i o l a-

tions of any law or regulation to which

the organization is, or would be, liable.”

Pa rt 2 presents minimum s t e p s n e c e s s a ry

to achieve the two components re f e r-

enced above. These steps draw on the

c u r rent steps (or the seven elements

using OIG parlance) listed in the

Guidelines, with enhancements. Pa rt 3 is

an explicit re q u i rement for the need for

ongoing risk assessments in designing

and operating the program. In imple-

menting the steps provided in Pa rt 2, the

organization shall conduct ongoing risk

assessments and take steps to design,

implement, or modify each element to

reduce risk of violations of law identified

by the risk assessment.

The core recommendations can be sum-

m a r i zed as follow s :

■ A controversial new re q u i rement that

an effective compliance pro g r a m

should promote an “o r g a n i z a t i o n a l

c u l t u re” that encourages a commit-

ment to compliance with the law

(finding that culture, values, and

ethics we re becoming increasingly vis-

ible in government polices, with the

revised seven steps assisting in adding

clarity to the ambiguity inherent in

those terms)

■ A proposal for changing the pro g r a m

s t a n d a rds from focus on pre ve n t i n g

and detecting criminal conduct to

p re venting and detecting violations of

l a w

■ New explicit expectations for i)

b o a rds of directors; ii) organizational

leadership; and iii) specific individuals

for program implementation and

e va l u a t i o n

■ Mo re complete description on moni-

toring, auditing, and eva l u a t i o n

expectations, beyond auditing for ille-

gal acts, including requiring the

organization to “e valuate periodically

the effective n e s s” of its compliance

p rogram (nothing new for those uti-

lizing the OIG compliance guidances

in health care )

■ New re q u i rements to have a system

w h e re by the organization’s employe e s

and agents can “seek guidance”

re g a rding concerns or potential viola-

tions (in addition to a system to just

re p o rt violations after the fact)

■ New re q u i rement to provide “a p p ro-

priate incentive s” to perform in accor-

dance with the compliance pro g r a m

o b j e c t i ves (in addition to disciplinary

action for violations)

■ New explicit re q u i rement to perf o r m

ongoing risk assessment

■ A recommendation that the Se n t e n c -

ing Commission initiate dialogue

t ow a rd the resolution of the “litiga-

tion dilemma” with policymakers and

C o n g re s s

On November 5, 2003, the Commission

voted to publish for public comment the

a d v i s o ry gro u p’s proposed amendments.

Fo l l owing the public comment period,

the Commission has until May 1, 2004,

to decide whether to promulgate the

p roposed changes in whole or in part, or

Continued on page 32

Revisiting...continued from page 7


9March 2004

of law;" a significant expansion in speci-

fied responsibilities of governance, senior

management, and the compliance exe c u-

t i ve, as well as the introduction of a

re q u i rement for an organization to con-

duct ongoing risk assessment and take

a p p ropriate steps to design, implement,

or modify each of the seven elements of

an effective compliance program to

reduce the risk of violations of law iden-

tified by the risk assessment process.

If implemented on November 1, 2004,

the amendments to the Guidelines will

bring changes both profound and subtle

to the stru c t u re and operation of com-

pliance programs in eve ry industry. It is

not too early to for health care compli-

ance officers to begin thinking about the

ramifications, and to start discussing and

planning for the implementation of the

Guidelines amendments.

B a c k g r o u n dIn conjunction with the 10t h a n n i ve r s a ry

of the Federal Sentencing Gu i d e l i n e s ,

the U.S. Sentencing Commission

appointed an Ad Hoc Ad v i s o ry Gro u p

to re v i ew the effectiveness of the

Guidelines. The Ad v i s o ry Gro u p, com-

missioned in September 2001, was

charged with re v i ewing the organization-


Editor's note: Mr. Koenig is Vice

President, Corporate Responsibility, for

Catholic Healthcare Partners, in

Cincinnati, OH. He may be reached at

513/639-2833.

n December 30, 2003, the

U.S. Sentencing Commission

proposed amendments to the

Sentencing Guidelines for United St a t e s

C o u rts (the Guidelines). Chief among

the proposed amendments are ten major

enhancements and refinements to

Chapter Eight of the Guidelines dealing

with organizational misconduct and

e f f e c t i ve compliance programs. Chapter

Eight's provisions apply to "organiza-

tions," rather than individuals and this

includes both for-profit corporations as

well as not-for-profit organizations, part-

nerships, associations, joint-stock com-

panies, unions, trusts, pension funds,

unincorporated associations, and gove r n-

ment and political subdivisions there o f.

Proposed changes to Chapter Ei g h t

include, among others, an expansion of

the definition of "established compliance

s t a n d a rds and pro c e d u res" to include

" s t a n d a rds of conduct and internal con-

t rol systems that are reasonably capable

of reducing the likelihood of violations

al sentencing guidelines, and urged to

place particular emphasis on examining

the criteria for an effective program to

e n s u re an organization's compliance

with the law. During its 18-month

t e n u re, the Ad v i s o ry Group's 15 mem-

bers surve yed the scholarly literature ,

i n t e rv i ewed federal prosecutors, re v i ewe d

re g u l a t o ry guidance of gove r n m e n t a l

agencies and departments, solicited

input from the public on the effective-

ness of the compliance criteria of the

Guidelines, and conducted a public

hearing.

Perhaps even more important than its

scheduled re v i ew activities we re the envi-

ronmental factors swirling about the

Ad v i s o ry Group at this time–En ro n ,

WorldCom, Tyco In t e r n a t i o n a l ,

Adelphia Communications, and

C o n g ress's response to these corporate

scandals: the Sarbanes-Oxley Act of

2002. Section 805(a)(2)(5) of the Ac t

d i rected the Commission to re v i ew and

amend the Guidelines to ensure that the

Guidelines are "sufficient to deter and

punish organizational criminal

misconduct."

A d v i s o ry Group report and SentencingCommission action

By Donald E. Koenig, Jr., JD

O


March 2004


offers demonstrable and concrete incen-

t i ves to organizations that will re d u c e

their culpability score if they face sen-

tencing in any federal court .

Format change to underscore theimportance of effective compliancep r o g r a m sAs a pre l i m i n a ry matter, the Commis-

sion proposes to raise the visibility of

the seven elements of an effective com-

pliance program by moving them out of

Application Note 3(k) to §8A1.2 and

establishing them as a new guideline at

§8B2.1. The intent is to provide gre a t e r

visibility to the importance of compli-

ance program development by eleva t i n g

the seven elements of an effective com-

pliance program to a specified guideline

in the main body of the Guidelines, ve r-

sus a commentary footnote.

Expansion of "Violation of Law"The Commission proposes to expand

the focus of compliance pro g r a m

b e yond the current definition that

includes only criminal law to include

"violations of any law, whether criminal

or non-criminal (including a re g u l a-

tion), for which the organization is, or

would be, liable." In its re p o rt, the

Ad v i s o ry Group indicated its belief that

the past responsibility of an organization

in addressing possible criminal conduct

does not completely measure an organi-

zation's culpability in connection with a

criminal offense. Rather, the full range

of efforts undertaken by an organization

to comply with the law, including, but

not limited to, criminal offenses, are re l-

e vant factors to determining organiza-

tional culpability.

Organizational culture of complianceas a purpose for compliance programs

ership for compliance effort s

(3) Explicitly requiring organizations to

focus their compliance efforts by con-

ducting careful risk assessments of

p robable types and sources of miscon-

duct in company operations and then

using the results of these assessments

to target compliance efforts and tailor

compliance program feature s

These emerging compliance standard s

a re reflected in the amendments pro-

posed in the Ad v i s o ry Group's re p o rt to

the Sentencing Commission.

The U.S. Sentencing Commission

p romulgated a formal proposal to amend

the Guidelines on December 30, 2003

in the Fe d e ral Re g i s t e r. The Commission

adopted the Ad v i s o ry Groups' re c o m-

mendations extensively re g a rd i n g

Chapter Eight and compliance pro-

grams. Public comments on the pro-

posed amendments are due to the

Sentencing Commission by Ma rch 1,

2004. The Commission will submit its

Guideline amendments to Congress by

May 1, 2004, with an effective date of

November 1, 2004, unless Congress acts

to change the effective date or modify or

d i s a p p rove the amendment. Or g a n i z a -

tions will have six months to pre p a re for

the effective date of final amendments to

the Guidelines, absent Congre s s i o n a l

action to delay or re v i s e .

Amendments proposedThe amendments proposed for Chapter

Eight are intended to provide gre a t e r

guidance to organizations and court s

re g a rding the criteria for an effective

compliance program to pre vent and

detect violations of the law. Compliance

p rograms play a fundamental part in the

Guidelines, as an effective pro g r a m

On October 7, 2003, the Ad Ho c

Ad v i s o ry Group released its re p o rt to the

U.S. Sentencing Commission on pro-

posed amendments for Chapter Eight of

the Guidelines. The Ad v i s o ry Gro u p

reached two major conclusions in its

re p o rt that shaped the proposed amend-

ments: First, re velations of widespre a d

misconduct in some of the nation's

largest publicly held companies–miscon-

duct perpetrated at the highest levels of

corporate leadership that went undetect-

ed despite the existence of compliance

p ro g r a m s – re q u i red evaluation of

whether the compliance efforts pre c i p i-

tated by the Guidelines could be made

m o re effective in pre venting and detect-

ing violations of law.

Second, the Ad v i s o ry Group re c o g n i ze d

that much has changed in the field of

organizational compliance since the

a d vent of the organizational Gu i d e l i n e s

in November 1991. Ef f o rts and experi-

ence by industry and organizations con-

tributed to an evolution of "best prac-

tices" during the 1990s that should be

reflected in updated Guidelines.

The Ad v i s o ry Group re p o rt re c o g n i ze d

the emergence of three new compliance

s t a n d a rds that re p resent a shift in the

compliance paradigm, as a result of

analyses of the corporate scandals of

2001 and 2002 and the legislative and

re g u l a t o ry responses to them:

(1) Extending conduct codes and re l a t e d

compliance efforts beyond mere law

compliance to the development of an

organizational culture that encourages

a more effective commitment to com-

pliance with the law, including ethics-

based standards and pro c e d u re s

(2) Recognizing the responsibilities and

accountability of organizational lead-


Sentencing Guidelines...continued from page 9

11March 2004


The Commission proposes an amend-

ment to amplify the definition of

re q u i red "compliance standards and pro-

c e d u res that are reasonably capable of

reducing the prospect of criminal con-

duct" to include "standards of conduct

and internal control systems that are

reasonably capable of reducing the likeli-

hood of violations of the law." (Em p h a -

sis mine.) The Ad v i s o ry Group deter-

mined that it was necessary to amplify

the sorts of pro c e d u res that are re q u i re d

for effective compliance standards, and

concluded that standards of conduct and

internal controls are essential aspects of

e f f e c t i ve compliance programs and that

these measures should be deve l o p e d ,

implemented, and evaluated in terms of

their impact on reducing the likelihood

of violations of law. The Ad v i s o ry Gro u p

indicated that the results of risk assess-

ments are linked inextricably to the

n a t u re of internal controls that manage-

ment would implement to manage the

d i s c ove red risks, as well as the fre q u e n c y

of monitoring and testing of those

implemented internal controls to assure

compliance with expected actions.

Organizational leadership & gover-nance responsibility for complianceThis is one of the most significant are a s

of proposed changes. The Commission

p roposes to expand the second element

of an effective compliance program (that

dealing with the re q u i rement for speci-

fied high-level personnel within the

organization to have overall re s p o n s i b i l i-

ty for the implementation of an effective

compliance program), to define basic

g overnance and senior management

responsibilities vis á vis compliance pro-

gram oversight to underscore that the

ultimate responsibility for an effective

compliance program rests with gove r-

nance. Ad d i t i o n a l l y, the proposal estab-

lishes a re q u i rement for the "high-leve l

person with overall responsibility for

compliance" to have adequate authority

and re s o u rces to implement an effective

compliance program, as well as mandat-

ing direct re p o rting by the compliance

official to the governance authority

re g a rding the effectiveness of the compli-

ance program.

The Ad v i s o ry Group re p o rt stated that it

was struck by the pattern of senior man-

agement misconduct evident in the pub-

l i c i zed corporate scandals, as well as the

malfeasance or negligence of gove r n a n c e

at those companies. In view of that pat-

tern, the Ad v i s o ry Group concluded it

was unacceptable for the Guidelines to

be wholly silent re g a rding the role of

g overnance and senior management in

compliance. Fu rt h e r, the Ad v i s o ry

Group noted that in a 2000 survey of

the top 1,000 corporations, De l o i t t e

found that 77% specified the role of the

g overning authority or its audit commit-

tee in their compliance pro g r a m s .

Sp e c i f i c a l l y, the Ad v i s o ry Group pro-

posed three new provisions, namely:

■ The organizational leadership shall be

k n owledgeable about the content and

operation of the compliance pro g r a m

■ The organization's governing authori-

ty shall be knowledgeable about the

content and operation of the compli-

ance program and shall exe rcise re a-

sonable oversight with respect to the

implementation and effectiveness of

the compliance program

■ The high-level individual(s) who are

assigned direct, overall re s p o n s i b i l i t y

to ensure the implementation and

e f f e c t i veness of the compliance pro-

The Commission proposes to expand

the purpose of a compliance pro g r a m

b e yond the obligation to exe rcise due

diligence to pre vent and detect violations

of the law, by adding a re q u i rement that

an organization shall also "otherw i s e

p romote an organizational culture that

encourages a commitment to compliance

with the law." This proposed amend-

ment reflects the paradigm shift of

emerging compliance practices, noted by

the Ad v i s o ry Gro u p, that arose from the

corporate scandals: the expectation that

an organization cannot and should not

limit itself to a narrow focus on pre ve n t-

ing criminal misconduct, but must

accept a broader responsibility to ethical-

ly comply with all civil and criminal laws

as well as regulations governing an orga-

nization's activities and operations. T h e

Ad v i s o ry Group also noted the grow i n g

t rend in ethics-based compliance pro-

grams as a "best practice" of the 1990s,

as evidenced by the 2000 Ethics Of f i c e r s

Association survey that indicated that

86% of compliance programs we re a

combination of ethics-based and compli-

ance-based components, while just 6%

we re described as solely "compliance-

based" programs. The Ad v i s o ry Gro u p

concluded that abundant evidence exists

that the effectiveness of compliance pro-

grams can be enhanced if, in addition to

due diligence in maintaining compliance

p rograms, organizations also took steps

to build cultures that encouraged

e m p l oyee commitment to compliance.

Ac c o rding to the Ad v i s o ry Gro u p, pri-

m a ry responsibility for building a culture

of organizational integrity rests with the

organization's leadership and gove r-

n a n c e .

Internal controls as part of compliances t a n d a r d s



March 2004


Hi g h - l e vel person with ove r a l l

responsibility for compliance. T h e

specified accountabilities and re s p o n-

sibilities within the proposal may

re q u i re significant changes to how,

what, and when compliance officers

re p o rt to organizational leadership

members, as well as to the Board or

B o a rd committee members if a Board

Compliance Committee is assigned

p r i m a ry oversight re s p o n s i b i l i t y. T h e

p roposal also addresses the expecta-

tions for the "high-level person within

the organization with overall re s p o n s i-

bility for the implementation of an

e f f e c t i ve compliance program." T h e

p roposal specifies "high-level person-

nel of the organization" (HLP) to

e n s u re that this person has the formal

a u t h o r i t y, access to senior manage-

ment, and the respect needed to man-

age and oversee the implementation

of a compliance program. HLP are

persons with substantial control ove r

the organization or with a substantial

role in the organization policy-mak-

ing. Examples include a dire c t o r,

e xe c u t i ve officer, individual in charge

of a major business or functional unit

of the organization, or an individual

with a substantial ownership intere s t .

The proposal also specifies that the

activities of the HLP, and the opera-

tion of the program as a whole, must

be supported by the organization

with reasonable re s o u rces sufficient to

e n s u re due diligence on the part of

the organization to pre vent and detect

violations of law and to otherw i s e

p romote an organizational culture

that encourages a commitment to

compliance with the law. The alloca-

tion of these sorts of re s o u rces is

needed to ensure that a company's

compliance program is not just a

organization or a unit of the organiza-

tion and substantial authority person-

nel within the organization. T h e

terms collectively mean the key deci-

sion-makers within organization man-

agement–the group of leaders who set

d i rections for organizational actions

and who determine when organiza-

tional performance is successful in

attaining organizational goals. T h e

p roposal specifies that organizational

leaders must be knowledgeable about

the content and operation of the

compliance program. The expectation

of the Ad v i s o ry Group is that such

organizational leaders will gain infor-

mation about these programs on a

regular basis, as well as act on this

information to pursue constant

i m p rovement in the programs. Each

organizational leader is expected to be

a t t e n t i ve to matters relating to com-

pliance with the law and appro p r i a t e

responses within the bounds of his or

her area of re s p o n s i b i l i t y.

Organizational leaders are expected to

s c ru t i n i ze periodically the adequacy of

p rogram features in their areas of

l e a d e r s h i p, analyze gaps, if any, in

those features, and appropriately alter

compliance practices or other organi-

zational conduct to eliminate re a s o n-

ably foreseeable risks of future illegal

conduct. In short, the Ad v i s o ry

Group advocates that ongoing organi-

zational compliance within the law is

a task that must be pursued by orga-

nizational leaders, based on re g u l a r

attention to compliance program fea-

t u res and operations and the pursuit

of compliance excellence thro u g h

ongoing risk assessments and program

a d j u s t m e n t s .

gram shall be given adequate re -

s o u rces and authority to carry out

such responsibility and shall re p o rt on

the implementation and effective n e s s

of the compliance program directly to

the governing authority or an appro-

priate subgroup of the gove r n i n g

a u t h o r i t y.

Gove rning authority. The pro p o s a l

defines "governing authority" of an

organization as the Board of Di re c -

tors, or, if lacking a Board, the highest

l e vel governing body of the organiza-

tion. Ac c o rding to the Ad v i s o ry

Group re p o rt, the compliance pro-

gram knowledge that members of the

g overning authority should gain

includes: practical management infor-

mation about the major risks of

unlawful conduct facing the organiza-

tion; the primary compliance pro-

gram features aimed at counteracting

those risks; and the types of pro b l e m s

with compliance that the organization

and other similar parties have encoun-

t e red re c e n t l y. The oversight obliga-

tion related to the implementation

and effectiveness of a compliance pro-

gram is a critical duty of gove r n a n c e ,

just as compliance with the law is a

critical feature of organizational con-

duct. The Ad v i s o ry Group re p o rt sets

an expectation that effective ove r s i g h t

re q u i res governing authorities to be

p ro a c t i ve in seeking information

about compliance problems, eva l u a t-

ing that information when re c e i ve d ,

and monitoring the implementation

and effectiveness of responses when

compliance problems are detected.

Organizational leadership. The pro-

posal defines "organizational leader-

ship" as high-level personnel of the



Health Care Compliance Association • 888-580-8373 • www.hcca-info.org 13March 2004

training has two components: (1) edu-

cating all employees about compliance

re q u i rements, and (2) motivating all

e m p l oyees to comply. Ad d i t i o n a l l y, the

p roposal establishes a re q u i rement that

compliance training be provided to all

e m p l oyees, organizational leadership,

and the governing authority in order to

qualify as part of an effective compliance

p rogram. The burden is on the organiza-

tion to determine what training will be

p rovided and to explain why it believe d

it to be effective training, in order to

re c e i ve the credit in culpability scoring

p o rtion of sentencing.

Monitoring and auditing as a re q u i re-

ment. Similar to above, the Commission

p roposes to underscore that monitoring,

auditing, and periodic evaluations of the

e f f e c t i veness of compliance programs are

not just examples of how an organiza-

tion can demonstrate it undertook re a-

sonable steps to come into compliance

with its standards, but are essential

re q u i red components of an effective

compliance program. Ad d i t i o n a l l y, the

p roposal re q u i res that the monitoring

and auditing systems are to be designed

to detect violations of the law. T h e

Ad v i s o ry Group concluded that an

i n c reased emphasis on monitoring,

auditing, and evaluation practices is jus-

tified on three independently sufficient

g rounds: (1) the recognition of the

i m p o rtance of compliance monitoring,

auditing, and evaluation in recent legal

s t a n d a rds; (2) practical evidence of the

i m p o rtance of these practices in re ve a l-

ing recent incidents of major corporate

misconduct; and (3) privately deve l o p e d

s t a n d a rds and expert opinions identify-

ing monitoring, auditing, and eva l u a t i o n

e f f o rts as important components of

paper program, but rather a substan-

tial management effort with the

re s o u rces needed to succeed.

Fi n a l l y, the proposal specifies that the

HLP with overall responsibility for

compliance should periodically re p o rt

on the nature, pro g ress, and success of

the program to the governing authori-

ty of the organization or some appro-

priate subgroup (such as an audit

committee) within the gove r n i n g

a u t h o r i t y. Such re p o rting is designed

to bring two types of information

d i rectly from the head of the compli-

ance program to the gove r n i n g

authority without any potential filter-

ing or censuring influence of senior

organization managers: 1) Pe r i o d i c

re p o rts to update governance mem-

bers on the current features of the

company's compliance program and

the compliance problems that are

being addressed; and 2) in cases of

actual or apparent invo l vement in, or

s u p p o rt for, illegal conduct by top

l e vel organizational exe c u t i ves, the

head of the compliance pro g r a m

should ensure that re p o rts of this

behavior are made directly to the gov-

erning authority, an appropriate sub-

g roup of the governing authority, or

the organization's qualified legal com-

pliance committee. These re p o rts will

help the governing authority fulfill its

p roper role in ensuring accountability

on the part of senior organizational

managers and pre venting the initia-

tion or continuation of misconduct at

upper organizational levels. The above

listed types of re p o rts are intended to

e n s u re that the governing authority

will have key information necessary to

m e a n i n gfully exe rcise its ove r s i g h t

responsibilities. Howe ve r, additional


operational information may be

re q u i re d .

Day-to-day compliance administra-

t o r. To further assist the gove r n i n g

authority in obtaining an understand-

ing of how a program operating

under its oversight is actually work-

ing, the Ad v i s o ry Group believes that

the governing authority should typi-

cally re c e i ve re p o rts from the person

with day-to-day administrative

responsibility for compliance, if that

person is different than the HLP with

overall responsibility for compliance.

These re p o rts would periodically sup-

plement, but not replace, re g u l a r

re p o rting by the HLP with ove r a l l

compliance re s p o n s i b i l i t y. T h e

Ad v i s o ry Group believes that periodic

re p o rts directly from the individual(s)

with day-to-day responsibility for the

p rogram will enable the gove r n i n g

authority to form an even more prac-

tical and compre h e n s i ve understand-

ing of how the program is function-

ing. Di rect contact with those who

h a ve day-to-day responsibility might,

for example, help the gove r n i n g

authority more effectively assess the

adequacy of re s o u rces being made

a vailable to the pro g r a m .

Compliance training as a requirementThe Commission proposes to underscore

that effective training is not an example

of one way that an organization can

communicate effectively its standard s

and pro c e d u res, but is a distinct re q u i re-

ment. The Ad v i s o ry Group's re p o rt stat-

ed that training should not merely be

c o n s i d e red as one of the many ways to

"communicate effectively [organization-

al] standards and pro c e d u res. T h e

Ad v i s o ry Group believes that effective Continued on page 14

14March 2004


e f f e c t i ve compliance programs. T h e

Ad v i s o ry Group re p o rt also pro p o s e d

that compliance monitoring, auditing,

and effectiveness evaluation practices

should be based on compliance risk

assessments. This change clarifies that

characteristics of monitoring, auditing,

and evaluation efforts, such as the target-

ing and frequency of compliance assess-

ments, should correspond to the likeli-

hood of compliance problems in part i c-

ular organizational activities, as identi-

fied in ongoing risk assessments.

Reporting systems to provide adviceand ensure anonymityThe Commission proposes to amend the

re q u i rement for having in place and

publicizing a re p o rting system where by

e m p l oyees could re p o rt criminal conduct

by others within the organization with-

out fear of retribution into more specific

re q u i rements for "a system where by the

organization's employees and agents may

re p o rt or seek guidance re g a rding poten-

tial or actual violations of law without

fear of retaliation, including mechanisms

to allow for anonymous re p o rting." T h e

Ad v i s o ry Group proposed these changes

for several reasons, 1) to re i n f o rce that

an organization committed to compli-

ance with the law should seek to prov i d e

guidance to employees facing difficult

ethical choices and not limit itself to

receiving re p o rts of criminal violations,

in order to encourage early re p o rt i n g

and consultations to pre vent violations;

2) to reiterate that internal re p o rt i n g

mechanisms should encourage self-

re p o rts of potential violations by

e m p l oyees, and not merely re p o rting on

the misconduct of others, and 3) to re i t-

erate the critical nature of a mechanism

to facilitate anonymous re p o rting to

encourage re p o rts of concerns.

Compliance standards enforcementi n c e n t i v e sThe Commission proposes to augment

the re q u i rement re g a rding appro p r i a t e

d i s c i p l i n a ry action for detected violations

of organization standards with a re q u i re-

ment for appropriate organizational

i n c e n t i ves to perform in accordance with

the compliance standards. The Ad v i s o ry

Group determined that compliance pro-

gram effectiveness can be enhanced by

including both the "carrot and the

s t i c k . "

Ongoing risk assessmentsThe final major amendment pro p o s e d

by the Commission to Chapter Eight of

the Guidelines introduces an additional

re q u i rement upon organizations as they

e n d e a vor to implement effective compli-

ance programs that include the seve n

elements: ongoing risk assessment.

Ad d i t i o n a l l y, the proposal will re q u i re

organizations to act upon the results of

the risk assessment to design, imple-

ment, or modify any of the program ele-

ments implemented to achieve compli-

ance with the seven effectiveness ele-

ments in order to reduce the risk of vio-

lations of the law identified by the risk

assessment. Fu rt h e r, the proposal would

re q u i re that risk assessments include

t h ree critical steps:

a. Assessing periodically the risk that

violations of law will occur, including

assessment of 1) the nature and seri-

ousness of such violations; and 2) the

likelihood that certain violations may

occur because of the nature of the

organization's business; and 3) the

prior history of the organization re l a t-

ed to violations of law

b. Prioritizing as most likely to occur

and most serious the actions taken

under each of the seven effective n e s s

elements in order to focus on pre ve n t-

ing and detecting compliance viola-

t i o n s

c. Modifying, as appropriate, the actions

taken under any of the elements of an

e f f e c t i ve compliance program to

reduce the risk of violations of law

identified in the risk assessment

The Ad v i s o ry Group concluded that the

need for risk assessment in designing and

operating an effective compliance pro-

gram is implicit in the definition of

e f f e c t i ve. The Ad v i s o ry Group deter-

mined that risk assessments need to be

made at all stages of the deve l o p m e n t ,

testing, and implementation of a com-

pliance program to ensure that compli-

ance efforts are properly focused and

e f f e c t i ve. An explicit provision is war-

ranted in the proposed Gu i d e l i n e

a d d ressing risk assessment and its re l a-

tionship to compliance program activi-

ties to emphasize both the importance of

risk assessment and its re l e vance in con-

nection with a wide variety of compli-

ance program activities. A detailed risk

assessment is re q u i red to appro p r i a t e l y

tailor a compliance program to a compa-

ny's business circumstances. T h e

Ad v i s o ry Group favorably cited the com-

pliance program evaluation standard s

d e veloped by the Health Care

Compliance Association (HCCA) that

re c o g n i ze the central role of risk assess-

ment in law compliance programs. T h e

drafters of the HCCA standards con-

cluded that "[c]reating an effective com-

pliance program . . . re q u i res a

systematic effort (scaled to the size ,

re s o u rces, and complexity of the organi-

zation) to understand its principle legal

obligations and risks and to make

e m p l oyees aware of how the re l e va n t

laws and risks impact the performance of



the governance authority to point out

w h e re the organization stands in alre a d y

having adopted the 10 critical pro p o s a l s

or which provision(s) might re q u i re

additional organizational action, should

it or they appear in the final version of

amendments to Chapter Eight of

the Gu i d e l i n e s .

If adopted as proposed, the amendments

would further elevate compliance fro m

an operational program to a critical

information source through which the

g overnance authority assures itself of the

extent to which the organization is oper-

ating legally and ethically, in fulfillment

of the Board's fiduciary duties. Gove r n -

ance oversight of the effectiveness of the

p rogram and adequacy of re s o u rc e s

assigned has the potential to ensure a

committed organization can create an

e f f e c t i ve program, but it has the poten-

tial to also create additional tension for

compliance officers as they maneuver to

obtain re q u i red re s o u rces without alien-

ating senior leadership's support and

confidence by putting management in

the position of defending compliance

budget cuts to the Board .

Ad d i t i o n a l l y, the amendments would

establish a second focus area for

compliance efforts–to wit, the establish-

ment of an organizational culture that

encourages a commitment to compli-

ance with the law. This deve l o p m e n t

will offer compliance officers the oppor-

tunity to develop communications for

and from the governance authority and

organizational leadership to assist in

communicating that top-down commit-

ment and support for compliance.

Fi n a l l y, the advent of re q u i red internal

c o n t rols related to compliance and on-

15March 2004


their job functions."

Ad d i t i o n a l l y, the Ad v i s o ry Gro u p

intended to emphasize that the results of

risk assessments should influence the

design and implementation of a bro a d

range of features of an effective compli-

ance program. For example, risk assess-

ments identifying an organization's legal

obligations and the types of practices

that may cause an organization not to

meet those obligations can provide va l u-

able information for decisions on com-

pliance program standards, pro c e d u re s ,

and internal controls. These assessments

may be able to specify actions that

e m p l oyees and other organizational

agents should take to ensure compliance

with legal re q u i rements. Si m i l a r l y, risk

assessments that identify likely means of

violating legal standards in an organiza-

tion's operating context can help the

organization develop training pro g r a m s

for pre venting and detecting its most

p robable forms of unlawful conduct.

Ad d i t i o n a l l y, risk assessments identifying

a company's law violation risks will help

company auditors and compliance pro-

gram evaluators target the frequency and

content of program evaluations in ord e r

to make the most effective and efficient

use of these studies.

C o n c l u s i o nThe formalization of compliance stru c-

t u res and practices that have been largely

cited as best practices (e.g., anonymous

hotlines, direct re p o rting to the Board

on effectiveness of compliance pro g r a m s ,

a c t i ve monitoring, and auditing of com-

pliance) and adopted by many organiza-

tions over the past decade should enable

compliance officers to pre p a re a compar-

ison score c a rd for further discussions

with both organizational leadership and

going risk assessment will further opera-

t i o n a l i ze compliance as a function of

e ve ry operational manager and dire c t o r,

as they will be in the best position to

identify the controls that will be most

e f f e c t i ve in managing or contro l l i n g

identified risks. This is a favorable deve l-

opment, as it bucks a natural tendency

of some to view compliance as the com-

pliance officer's job instead of eve ryo n e ' s

re s p o n s i b i l i t y. Howe ve r, more disci-

plined risk assessments to prioritize com-

pliance risks will re q u i re additional col-

laboration between compliance officers

and operational managers and dire c t o r s

t h roughout health facilities and systems

to coordinate the many risk assessment

and management activities underw a y.

Collaboration and coordination will be

essential to maximize efficiency, mini-

m i ze duplication of efforts, and enable

compliance officers and organizational

leadership to assure the gove r n a n c e

authority that key compliance risks

t h roughout the organization are being

e valuated, monitored, controlled, tested,

and re p o rted in a rational pro c e s s .

November 1, 2004 looks like it is just

a round the corner when you consider all

that these amendments entail. Back to

w o rk ! ■


HCCA Call for authors! HCCA is seeking authors for upcom-

ing issues of Compliance To d a y. All

members who wish to propose topics

and write articles are welcome. We seek

a rticles focused on new regulations and

related compliance issues, as well as

compliance program deve l o p m e n t ,

monitoring, and evaluation. Art i c l e s

a verage 1,250 to 2,500 words, and

often include “how to” tips. Pl e a s e

email the editor Ma r g a re t . d ra g o n @ h c c a -

i n f o. o r g with your article topic. ■

featureHCCA’s Compliance Institute

Steve Ortquist discusses HCCA's upcomingCompliance Institute, April 25-28, 2004

article

16March 2004


weekly for several months to conceive a

plan for the conference, and to refine

the plan until it reached final form.

These folks include Dan Roach from

Catholic Healthcare West in San

Francisco (Dan was last year's CI pro-

gram chair), Lisa Murtha from

Children's Hospital of Philadelphia,

and Wilma Acosta from Franciscan

Health System in Tacoma, Washington.

HCCA's staff has also been hard at

work–Erin O'Donnell and Tracy

Hlavacek have been especially busy

with the behind the scenes work that

makes the Compliance Institute so suc-

cessful each year.

M D : What are some of the highlights

from this year's program agenda?

S O : As I mentioned earlier, we've

Editor's note: The following Q & A

with Steve Ortquist, CI 2004 Planning

Committee Chair, offers a short preview

of the premier compliance conference for

the health care compliance professionals

in 2004. Margaret Dragon conducted

this interview with Steve Ortquist in

January 2004. Steve may be reached at602/495-4845.

M D : Steve, you are chair of this

year's Compliance Institute planning

committee. Tell us a bit about what

the committee has put together for

CI 2004.

S O : The planning committee

worked hard this year to put together

a phenomenal program. We've taken

steps to make certain that there will

be a significant amount of new mate-

rial for HCCA members. The most

important addition is inclusion of a

corporate responsibility tract in CI

2004.

Some of the general session

speakers, and speakers in at least one

break out session during each time

slot, are folks who work in ethics and

compliance roles outside of the health

care industry. We wanted to bring

these non-health care professionals to

the Compliance Institute this year so

that a larger number of our members

could benefit from what those of us

who have been able to attend the

HCCA Corporate Responsibility

Conference in Seattle have heard.

We have also considered develop-

ments in health care, and included

speakers who will incorporate informa-

tion on the Medicare Prescription Drug

Act, on the new Stark regulations, and

on other current topics on which our

members need to stay updated to

remain effective in their roles as

compliance professionals.

M D : Can you tell us a little bit about

the CI 2004 venue?

S O : The 2004 Compliance Institute

will be held April 25th through April

28th in downtown Chicago. As a former

resident of Chicago, I can tell you this

is one of the best times of year to be in

the Windy City. We will be at the

Downtown Chicago Marriott again this

year, right in the heart of the

Magnificent Mile and within a short

walk or cab ride from some of the best

museums, best dining, and best shop-

ping in the United States. Of course, no

one will be able to pull themselves away

from the fantastic CI program to take

advantage of all that Chicago has to

offer–but the weekend before the CI,

and evenings are fair game.

M D : Who was involved in planning

this year's Compliance Institute?

S O : There are literally dozens of peo-

ple who worked diligently to help

HCCA put this year's Compliance

Institute together. A core group met

included several corporate responsibility

sessions featuring speakers from outside

of health care. One session, for exam-

ple, will feature the Chief Compliance

Officer from Dupont who will discuss

the structure and operation of Dupont's

compliance program.

We also have as a luncheon speaker

this year, a business ethics professor

from Arizona State University. Professor

Marianne Jennings recently published

an allegory on business ethics titled A

Business Tale: A Story of Ethics, Choices,

Success, [and a Very Large Rabbit]1. I

learned about Professor Jennings from a

colleague in Phoenix who is the local

compliance officer for the Boeing

Corporation. Last year Boeing went

through a process very similar to what

we in health care would experience

when implementing a corporate integri-

ty agreement. As part of this process all

Boeing employees in Phoenix were

given five hours of ethics and compli-

ance training. Boeing hired Ms.

Jennings on short notice to record a

two hour video on ethical decision

making that was included in this train-

ing. Boeing's Phoenix training program

was administered in July in large circus

tents on the Boeing campus. While the

tents were cooled, this still creates an

amazing mental picture. Thousands of

employees in circus tents in 110 degree

heat for five hours of ethics and com-

pliance training! Boeing's employees

were so engaged by Ms. Jennings' video

presentation that their compliance offi-

cer described them as being on the edge

of their seats and raising their hands

whenever Ms. Jennings' video image

asked them a question. Several Boeing

employees approached the compliance

officer after this training to confess

their own ethical failures! Professor

Jennings' perspective on incorporating

ethics in a compliance program should

make an interesting addition to this

year's Compliance Institute.

The Compliance Institute will also

include regulatory updates from several

key health care regulatory bodies:

Acting Principal Deputy Inspector

General Dara Corrigan from the OIG,

Jim Sheehan from the United States

Attorney's Office, Leslie Norwalk and

Kim Brandt from CMS.

M D : The addition of a corporate

responsibility tract seems to be a focal

point in this year's Compliance

Institute. Why did the planning com-

mittee believe that this addition was

important?

S O : There are actually several reasons

for inclusion of corporate responsibility

in this year's conference. First, we

believe that understanding the require-

ments of Sarbanes-Oxley, and under-

standing what is being done within and

outside of health care to address those

requirements, is important for health

care compliance officers. Another sig-

nificant motivator for including corpo-

rate responsibility in the CI this year is

that HCCA members who have been

able to attend an HCCA Corporate

Responsibility Conference have consis-

tently said it is one of the better meet-

ings they have attended. We wanted to

bring the benefits of content developed

for the Corporate Responsibility

Conference to a larger group of HCCA

members.

Finally, we believe with the enact-

ment of Sarbanes-Oxley and the

increased focus on ethics and compli-

ance programs in the public sector, that

there will increasingly be opportunities

for professionals who have honed their

skills as health care compliance profes-

sionals, to apply those skills in indus-

tries outside of health care. We includ-

ed a corporate responsibility tract this

year in part to introduce HCCA mem-

bers to this new opportunity for profes-

sional growth.

M D : The industry immersion sessions

were a big hit last year. Has the plan-

ning committee included industry

immersion sessions in this year's

Compliance Institute?

S O : Yes, there will be industry

immersion sessions, and we've taken

steps based on what we learned last year

to make these sessions even more useful

for compliance professionals. We have

some great session chairs working on

putting together interactive immersion

sessions that compliance professionals

will not want to miss.

M D : Are there other new areas of

focus in this year's Compliance

Institute?

S O : One other thing I would men-

tion–HCCA's leadership has been

discussing recently the need to provide

opportunities for Board training to

HCCA's membership. We think it is

increasingly important for compliance

professionals to promote understanding

of what a well conceived compliance

program looks like, and of regulatory

requirements, within the ranks of their

own organization's Board and Board

Committees. This year we're offering

HCCA members an opportunity to

bring a Board member with them to

the Compliance Institute at a reduced

registration cost. Details of this offer

will be forthcoming in a flyer and in

emails from HCCA's office. ■

17March 2004

Health Care Compliance Association • 888-580-8373 • www.hcca-info.org1 Marianne Jennings, AMACOM (2003)

People who debate

effectively remove

emotions from the

debate which are

often caused by the

desire for victory or

the frustration of

being questioned.

18March 2004


teaching or convincing someone to change their mind. De b a t e

helps us cut through complex government regulations. De b a t i n g

is difficult. If done poorly you may not only fail but irre vo c a b l y

e n t rench someone in their position. Compliance pro f e s s i o n a l s

use debate constantly. Debate is important to the field of compli-

ance. It doesn't always occur on a stage. Debate occurs during

e ve ry day conversation in offices, meeting rooms, and in the hall-

w a y. You debate more than you re a l i ze. It's best to be as good as

you can be. Many lawyers I know are ve ry skilled at debate.

Much of what I know about debate has come

f rom my legal colleagues. I have learned from

two of the best. So that I will not embarrass

them and to conceal their identity I will refer to

them as Orville Orbuch and Redenbacher Roach.

Much of what I share in this article has come as

a result of debating Orville and Re d e n b a c h e r.

The key to their success is their attitude tow a rds

debate. Orville and Redenbacher are more

successful in the field of compliance because of

their debating skills.

G e n e r a l i z a t i o n sThe generalization I just made about lawyers can be helpful for

getting a point across. Some generalizations can be constru c t i ve

and some can be destru c t i ve. You may agree or disagree with a

generalization but it does help you understand where the person

making the generalization is coming from. Ge n e r a l i z a t i o n s

b e t ween two contrasting groups of people can be even more

helpful to make a point. Generally speaking, generalizations are

r i s k y. T h e re f o re it is at some risk that I say lawyers generally

debate effective l y. It is at even greater risk that I say physicians

generally struggle with debate.

Why lawyers are effective at debateL a w yers are taught to question and be questioned. They are

ROY SNELLDebate is an important part of learning.

Debate is an important part of pro b l e m

resolution. It is an important part of

Debate:It’s important

c o m f o rtable with being questioned.

Physicians are not questioned on a

regular basis. They are less comfort-

able with being questioned which

makes debate difficult. Physicians are

trained to make serious decisions in a

s h o rt period of time. T h e re is little

time for debate. This type of training

can be good for your health but

c o u n t e r p ro d u c t i ve for debate. How you view debate affects yo u r

ability to debate.

L a w yers have an edge on the rest of us because they debated all

t h rough school and then spent years perfecting it. We can learn

f rom them. T h e re is a reason why they are so effective. I some-

times disagree with their point but I am often impressed with

their skill at making it. I have learned one ve ry valuable lesson

f rom my legal colleagues about the spirit of debate. Don't view

e ve ry debate as a life or death struggle.

People that don't like to be questioned re m i n d

me of the now famous scene from the Indiana

Jones movie, Raiders of the Lost Arc. In that

m ovie, a guy jumps out of a crowd to fight

Jones. The opponent is standing 15 feet away

and begins chanting and waving two long

s w o rds. It was like he had been training for

this encounter his whole life. He was ready for

a dual with Jones. He was proud to be up to

the challenge. Then Jones pulls a gun and

shoots him dead. People who debate effective -

ly enjoy the art of the duel and the challenge

of the encounter as much as they enjoy vanquishing their oppo-

nent. They want more than a win. They want an encounter that

they can learn from and an encounter they can teach with.

I don't think lawyers enjoy winning when they are wrong. T h e y

don't enjoy battling with an unskilled opponent. The joy of victo-

ry is tainted when a lawyer wins against an unskilled opponent.

L a w yers get in to the process as much as the outcome of a debate.

Debate is a way of life. The whole experience is appreciated and

respected. It's not so much about winning and losing, it's the duel

they enjoy.

Emotion and Anger

19March 2004


L a w yers are often surprised and disappointed when their va n-

quished opponent runs off in a huff. The good ones fight hard

but fight with a smile. They don't blink, or back down. Pe o p l e

who are effective at debate stay calm because they fight to learn

and teach. They want to keep a clear head. People who debate

e f f e c t i vely re m ove emotions from the debate. Emotions are often

caused by the desire for victory or the frustration of being ques-

tioned. Don't confuse passion with emotion. Individuals who

k n ow how to debate are passionate or pretend to be passionate

but they don't get emotional. Out of control passion can turn

into emotion. Out of control emotion can turn into anger. Anger

kills your ability to think and entrenches your opponent. So m e

deliberately try to anger their opponent. If they do, they often

win but really nobody wins. Don't let it happen to yo u .

If you see the end of a debate as winning and losing or life and

death you react differently before you finish the debate. If you see

value in the debate no matter what the outcome you will re a c t

d i f f e rently before you finish the debate. If you enjoy the experi-

ence as much or more than the outcome you will react differe n t l y.

Looking at a debate as a starting point rather than an end point

can change your actions during the debate. If you see the debate

as a winning experience no matter what the outcome and you will

h a ve a better chance of being victorious. Calm clear thinking helps.

You can lose a debate and still learn or teach. A successful debat-

er often sees debate as a beginning point, not an end point. Fo l l ow

t h rough helps you aim a ball even though it happens after you hit

the ball. Thinking about the desirable outcomes of a debate helps

you even though the outcome occurs after the debate.

The flip sideSometimes it helps to describe what not to do as opposed to what

to do. Take, for example, my 15 year old daughter Jessica whose

name I will not disguise because she will never read this. Sh e

should probably read this article but I don't want to give her any

edge. She is a wonderful student and athlete but effective debate

skills have eluded her. Iro n i c a l l y, I have told Jessica several times

that she should be a lawyer because she loves to debate with her

p a rents so much. Her debating style reminds me of the TV show

The Rat Pa t ro l .

The Rat PatrolMachine guns we re mounted on the back of jeeps with good guys

bouncing through the desert going after bad guys. The gunner in

the back of the jeep is hanging onto the machine gun for dear life

firing randomly in the direction of the bad guys. If it we re re a l ,

and not a TV show, they would have killed a dozen of their driv-

ers each month. That's how Jessica debates. Random arguments

shooting out in all directions hoping one hits her target. Debate a

15 year old and you will see the greatest example of someone who

sees debate as a life and death struggle. She must win at all cost.

Forget passion, it's full out emotion and anger. T h e re is no hope

of thinking straight. T h e re is no hope of seeing debate as a posi-

t i ve experience.

List of recommended booksI sent 10 people an email asking for the name of a good book on

the subject of debate. I wanted to share those books with you. I

sent the email to some of the best in the business. Un f o rt u n a t e l y,

no one had a clue as to what to read. Not only do they not have

one on their shelf but they didn't even remember the name of

one. I am disappointed that I have no books to recommend but I

think there is a far greater message in my discove ry that these peo-

ple have no books on debate. I don't think they have studied

debate that intently. I think they’re naturally effective.

How could they be good without studying tactics and strategy on

a regular basis? T h ree hundred page books on debate discuss step

by step strategy. Ex p e rts tell you hundreds of things to re m e m b e r.

Like most things it may not be as complicated as the expert s

make it out to be. Could it be that strategy and tactics are not

that important? Are effective debaters good because they naturally

come by the skills that I have observed; attitude, perspective ,

p rocess verses outcome, and avoiding emotion and anger? If so,

becoming effective at debate could be as simple as flipping a

switch. Just decide to take their approach and do it. Un f o rt u n a t e -

l y, changing is hard. Howe ve r, the first step in changing behavior

is acknowledging that change would be helpful.

Debate is important to compliance professionalsGood debating skills are particularly important for dealing with

physicians and administrators. Debate is a constant in our job.

Compliance professionals re s o l ve difficult issues. We are here to

change behavior. We are here to challenge behavior. We are here

to sort through complex regulations. We are here to be sure that

all sides are considered and eve ryone gets a voice. Ef f e c t i ve debate

can help us perform our function within the organization.

Ef f e c t i ve debate can reduce stress. In e f f e c t i ve debate will incre a s e

s t ress. Study debate and observe those who debate effective l y. Yo u

will sleep better. ■

Editor's note: Becky Sutherland Cornett,

PhD, CHC, is Director, Compliance

Coordination for The Ohio State

University Health System, Columbus,

Ohio. She holds a doctoral degree in com-

munication disorders, is a former speech-

language pathologist, and was director of

inpatient rehabilitation services at the

same organization. Dr. Cornett is a

Fellow of the American Speech-Language-

Hearing Association. She may be reached

at 614/293-5937 or via email at:

[email protected]

hysical rehabilitation services

have been in the news

frequently over the past few

years as CMS [Centers for Medicare

and Medicaid Services] introduced the

Inpatient Rehabilitation Facilities

Prospective Payment System (IRF-PPS),

and the on-again, off-again nature of

the financial limitation on outpatient

therapy services [Note, the moratorium

on the financial limitation, or "therapy

cap," is on again as of December 8,

2003 through December 31, 2005. See

CMS Pub. 100-4, Transmittal 42,

Change Request 3005 for more infor-

mation. The "cap" did not apply to

outpatient hospital services].

Further, the HHS' OIG targeted the

medical necessity of inpatient rehabili-

tation facilities stays in both its 2003

and 2004 Work Plans (see www.oig.hhs.

gov). CMS and its fiscal intermediaries

(FI) struggle to educate therapy

providers about the many service deliv-

ery and documentation requirements

associated with these services via Local

Medical Review Policies (LMRP - now

Local Coverage Determinations -LCD)

and through medical review

seminars, Q&A sessions, and other

teaching tools.

Compliance professionals should audit

and monitor the provision of inpatient

and outpatient rehabilitation services in

their organizations, but may find the

task daunting. There are many rules

and regulations published, but the

amount of information may be over-

whelming and difficult to organize (for

extensive educational information see

"Therapy Resources" at www.cms.hhs.

gov/medlearn/therapy and the applicable

FI's website (www.adminastar.com is an

excellent source of reference materials ).

An article in Report on Medicare

Compliance titled "Audit Highlights

Problems with Physical Therapy

Certification" (10/24/02) pointed out

the difficulties rehabilitation service

providers face in complying with

government payer requirements. For

example, in one FI audit, half of a

hospital's PT claims were denied

because the physician certification was

not obtained promptly or at all. In

addition, the FI denied services that

were found to be non-skilled (not

requiring the services of a PT) and

repetitive services.

Adminastar Federal, Inc., FI for the

quad-state region including Ohio,

Indiana, Illinois, and Kentucky pub-

lished a "Frequently Asked Questions"

document in January, 2003. Providers

were concerned about denials due to

insufficient documentation and the

nature of services rendered. Excerpts of

helpful answers that address frequent

problem areas found in audits are pro-

vided here:

■ Documents must demonstrate that

treatment is medically necessary and

provided on the dates billed, includ-

ing nurses and other clinicians' notes

demonstrating that the therapy serv-

ices are helping the beneficiary, and

causative factors that support the

start of therapy and the continuation

of therapy services, as well as expla-

nations for therapy absences.

■ We review the medical records to

determine whether therapy is effec-

tive and producing results or if

progress plateaus. In order to make a

determination on progress, we need

20March 2004


By Becky Sutherland Cornett, Ph.D., CHC

P

Text continued on page 27

21Health Care Compliance Association • 888-580-8373 • www.hcca-info.org

EXHIBIT A: Audit Template for Inpatient Rehabilitation Services

Source Documents: CMS Publication 100-2, Medicare Benefit Policy and Draft LCD for Inpatient Rehabilitation (Draft PMR-1-003),Adminastar Federal, Inc.

Patient’s Name: MRN: Physician: Service: Reviewer’s Name: Date of Review:

Rehabilitation hospital care criteriaPatients needing inpatient rehabilitation services must require a hospital level of care. Rehabilitation care in a hospital is reasonable andnecessary for a patient who requires a more coordinated, intensive program of multiple services than is ordinarily available outside of ahospital. To qualify for a Medicare inpatient rehabilitation admission, the patient must meet two basic requirements: 1. The services must be reasonable and necessary (in terms of efficacy, duration, frequency, and amount) for the treatment of the patient’s

condition; and2. It must be reasonable and necessary to furnish the care on an inpatient hospital basis, rather than in a less intensive facility such as a

SNF, or on an outpatient basis.

Inpatient rehabilitation in a hospital setting will be considered medically reasonable and necessary if: ■ there is a reasonable expectation of measurable improvement that will be of practical value to the patient within a predictable and rea-

sonable period of time, and ■ the patient requires the active and ongoing therapeutic interventions of at least two disciplines (physical therapy [PT], rehabilitation

nursing, occupational therapy [OT], speech-language pathology services (also referred to as “speech therapy” in some Medicare docu-ments), psychology, social work, and prosthetics/orthotics, one of which must be a therapy, acting in a coordination fashion, and

■ the patient requires and can tolerate a least three hours per day of skilled therapy at least five days per week, or, in the instance of amedical condition that limits participation, an equivalent amount of combined therapy, medical, and nursing care, and

■ the therapy cannot be provided in a less intensive setting due to the need for 24-hour per day access to a registered nurse (RN) withspecialized training in rehabilitation or a need for frequent physician assessment or intervention due to a significant risk of rapid dete-rioration of physical or mental status, or the need for specialized equipment at such a frequency and duration so that it is impracticalfor the patient to use the equipment in an outpatient facility.

The patient meets criteria to qualify for a hospital-level-of-care. ❏ Yes ❏ No Comments:_____

Patients for whom admission was for evaluation Inpatient assessment of individual’s status and potential for rehabilitation (for cases in which hospitalization was focused on intensiveassessment):a) There is evidence in the record of extensive assessment by multiple professionals. ❏ Yes ❏ Nob) If the patient’s stay is longer than 10 days, the record contains evidence that very careful review was conducted to ensure that addition-

al time was necessary for evaluation. ❏ Yes ❏ Noc) If the patient received therapy prior to admission to this hospital for the same condition, it is documented that this evaluation admis-

sion was necessary because: ■ some intervening circumstance rendered such an assessment reasonable and necessary; or■ this hospital uses techniques or technology not previously available in the first hospital.

Close medical supervision, monitoring, and oversight by a physician with specialized training or experience in rehabilitation Patient’s condition must require the 24-hour availability of a physician with special training in rehabilitation. The documentation reflectsfrequent and direct, medically-necessary physician involvement in the patient’s care (at least every 2-3 days during the patient’s stay.) ❏ Yes ❏ No

In order to support the medical necessity of the services, the plan of care must contain the following elements:

March 2004Continued on page 22

EXHIBIT A: continued ■ diagnosis being treated and specific functional problem areas identified■ specific functional goals in measurable terms■ specific treatment modalities or procedures being used for each specific problem to attain the stated goals ■ amount, frequency, and duration of each therapeutic modality■ documentation at initiation of treatment that there is reasonable expectation the patient possesses the rehabilitation potential to meet

the treatment goals

The plan of care documents the required elements. ❏ Yes ❏ NoPhysician progress notes reflect the need for active and ongoing medical management. ❏ Yes ❏ No Comments:_____

The patient requires rehabilitation nursing care on a twenty-four hour basis The patient requires the 24-hour availability of a registered nurse with specialized training in rehabilitation.

Examples of nursing documentation reflecting specialized nursing care: ■ Progress in bowel and bladder continence or regulation following an injury that impacts such functions■ Skin integrity issues, including positioning techniques and weight shifting to prevent pressure areas in relatively immobile patients, and

care for any wounds or areas of already-compromised skin integrity■ Ongoing assessment of nutritional and hydration status in patients who are no longer able to eat and/or drink in the manner to which

they were accustomed■ Ongoing assessment of safety concerns, including not only physical limitations, but also such cognitive functions as memory, judg-

ment, pathfinding skills, and problem-solving abilities■ Educational interventions with the patient and/or family members/caregivers in how to maintain optimal health despite changes in the

way the patient’s body functions. Such interventions may include: training in medical techniques (e.g., tube feedings, tracheostomycare, catheterization), medication administration, bowel and bladder programs, prevention of complications, and planning for follow-up care

■ The patient’s proficiency on the nursing unit with techniques learned in therapy sessions ■ Discharge planning - assisting in the identification of the patient’s special medical needs for after-care

The documentation reflects the patient’s need for 24-hour RN care. ❏ Yes ❏ No Comments:_____

The patient requires a relatively intense level of rehabilitation therapy services The general threshold for establishing the need for inpatient hospital services is 3 hours a day of PT and/or OT, 5 days per week.However, other combinations of therapies, such as speech-language pathology services, or prosthetic/orthotic services, depending uponthe patient’s condition and individual needs, can qualify the patient for the inpatient stay. An inpatient stay can also be covered eventhough the patient has a secondary diagnosis or medical complication that prevents him/her from participating in a program consisting of3 hours of therapy per day. Inpatient hospital care may be the only reasonable means by which even a low intensity rehabilitation pro-gram can be carried out.

Note: the “three hour rule” should not be considered an inflexible “rule of thumb,” but a patient receiving a less intensive schedule oftherapy will require additional documentation to explain why he or she requires an inpatient rehabilitation facility level of care.

The medical record justifies an inpatient rehabilitation level of care, either by demonstrating at least 3 hours per day of therapies (PT, OT,or other combination), or by explaining why a low-level intensity is needed due to complicating factors. ❏ Yes ❏ NoComments:_____

The patient requires a coordinated, multidisciplinary team approach to rehabilitation Documentation should reflect not only the active involvement of multiple clinical disciplines, but also the interdisciplinary nature of theirtreatment. A multidisciplinary team usually includes a physician, rehabilitation nurse, social worker and/or psychologist, and those thera-pists involved in the patient’s care.

Auditing...continued from page 21

March 2004

22

EXHIBIT A: continued Example of interdisciplinary care: a long-term goal of independent bathing may require physical therapy to work on transfer techniques,occupational therapy to work on adaptive mechanisms for washing all body parts, and nursing to assess how well the patient remembersand follows through with these skills outside of therapy sessions.

Documentation demonstrates the team used an interdisciplinary approach to rehabilitation care. ❏ Yes ❏ No Comments:_____

Team conferences Team conferences are held at least every two weeks* to: assess the individual’s progress or problems impeding progress; consider possibleresolutions to problems; and reassess the validity of the rehabilitation goals initially established. Decisions made during such conferences,such as those concerning discharge planning and the need for any adjustment in goals or in the treatment program are recorded in theclinical record. ❏ Yes ❏ No

Note: Although CMS requires the frequency of team conferences to be “at least every two weeks,” more frequent (i.e. weekly)team conferences may be required to effectively demonstrate that the requisite interdisciplinary intensive rehabilitation is beingprovided and the patient is making measurable progress. Comments:_____

The patient demonstrates the potential for significant practical improvement“Practical improvement” is evaluated in the context of individual patient’s physical impairment. For example, practical improvement in apatient with paraplegia might include learning to manage a wheelchair, transfer back and forth from the wheelchair to bed, toilet, etc.,and dress, bathe, and toilet himself independently. For a patient with quadriplegia, however, practical improvement may include learninghow to direct others in his day-to-day care needs, achieve independent mobility with a customized electric wheelchair, and use adaptivedevices such as a mouth-stick or remote control unit to increase independence in controlling the environment.

There must be a reasonable expectation of improvement that will be of practical value to the patient, measured against his condition atthe start of the rehabilitation program. “Significant, practical improvement” in the patient’s condition is evident in the clinical record. ❏ Yes ❏ No Comments:_____

The patient has realistic goals requiring inpatient rehabilitation The most realistic rehabilitation goal for most Medicare beneficiaries is self-care or independence in the activities of daily living; i.e., self-sufficiency in bathing, ambulation, eating, dressing, homemaking, etc., or sufficient improvement to allow a patient to live at home withfamily assistance rather than in an institution. The aim of treatment is achieving the maximum level of function possible within a realistictimeframe.

Goals should be measurable and stated in terms of their functional impact. A goal of ambulating only 2-3 feet without assistance mayappear to be of little functional use to a patient unless it is also noted that he or she lives in a home with no accessible bathroom, thusrequiring the person to leave the wheelchair at the bathroom doorway and ambulate a few steps to the toilet or shower chair.

Both short-term and long-term goals should be documented. If the patient has not made the projected amount of progress between teamconferences, documentation should include the reasons and the plan for changes in the goals or treatment program.

Realistic goals are evident in the clinical record. ❏ Yes ❏ No Comments:_____

Length of rehabilitation program Coverage stops when further progress toward the established rehabilitation goal is unlikely or it can be achieved in a less intensive setting.There is evidence in the clinical record that the team considered all factors when planning discharge, and that the patient’s stay in theintensive rehabilitation setting was appropriate for the patient’s condition, progress made, and suitability of placement in a less-intensivedischarge setting. ❏ Yes ❏ No Comments:_____

Prepared by Becky Sutherland Cornett, Ph.D., CHC, The Ohio State University Medical Center, 1/04

23March 2004


March 2004



EXHIBIT B: Outpatient Rehabilitation Services Audit Template INDIVIDUAL RECORD WORKSHEET

Patient Name: MRN: Acct.:Referring Physician: DOS: Today’s Date:Rehabilitation services are designed to improve or restore physical and cognitive functioning following disease, injury, or loss of a bodypart. Impairments, functional limitations, and disabilities are assessed and addressed by the design and implementation of a therapeuticintervention tailored to the specific needs of the individual patient.

Therapy staff Qualified staff members provide PT, OT, and SLP services. ❏ Yes ❏ NoThe services provided are of such a level of complexity and sophistication that such services can be provided safely and effectively only byor under the supervision of a therapist. ❏ Yes ❏ No

Physician certification/approval/supervision All therapy services must be ordered, certified, and supervised by a physician. The physician order (prescription) alone does not consti-tute approval. The physician must certify approval of the plan of care/treatment by reviewing and signing the plan.

All records for Medicare beneficiaries contain the required physician certification. ❏ Yes ❏ NoIf applicable, the physician recertifies the plan of treatment every 30 days. ❏ Yes ❏ No

The written plan of treatment contains the following information: A plan of treatment for each therapy service is established by the physician, or the qualified therapist (PT, SLP, or OT). The physicianmust review and approve the plan and certify the need for treatment as soon as possible after the initial evaluation. ❏ Yes ❏ NoPrimary diagnosis resulting in the therapy disorder. ❏ Yes ❏ NoTreatment diagnosis for which services are rendered. ❏ Yes ❏ No

Initial assessment information - current relevant history; major functional limitations; prior hospitalization and therapy for the samecondition; pertinent baseline tests and measurements from which to judge future progress or lack of progress. Functional limitations aredocumented in terms that are objective and measurable. ❏ Yes ❏ No

Re-evaluations are completed only when a significant change in condition necessitates a revision of the current plan of treatment (re-evaluations are not routine, and are not indicated for all patients). ❏ Yes ❏ No

Long-term treatment goals focus on functional gain geared toward “significant, practical improvement within a reasonable and generallypredictable period of time;” short-term goals state objectives for the monthly billing period. Goals reflect the level of independence thepatient is expected to achieve in the discharge environment. Activities are designed to have a positive effect on the quality of the patient’severyday life. ❏ Yes ❏ No

Specific treatment modalities, activities, or interventions to be used to treat each specific problem are identified. ❏ Yes ❏ No

Type, amount, frequency, and duration of treatment are documented (e.g., PT, 3 times per week for 4 weeks). ❏ Yes ❏ No

Documentation of discharge planning is indicated early in the treatment plan. ❏ Yes ❏ No

The plan is sufficiently detailed to permit an independent evaluation of the patient’s specific need for the indicated services and of thelikelihood that he/she will derive meaningful benefit from the services. ❏ Yes ❏ No

Progress reports Progress notes may be written daily or weekly (however, each session must be documented) and reflect specific progress toward long-termdischarge goals.

25March 2004


EXHIBIT B: continued Documentation in the medical record is descriptive, clearly related to functionality, and reflects interaction among the professionalsinvolved. ❏ Yes ❏ No

Timelines are established for short-term goals (2-4 weeks), and reasons for not achieving short-term goals are documented in the record.❏ Yes ❏ No

Documentation includes information about the patient’s prior and current level of function, progress made (or lack thereof) for thisbilling/reporting period; techniques used to achieve goals; the patient’s continued potential to make “significant, practical improvement,”and changes in the plan of treatment. ❏ Yes ❏ No

All adaptive equipment and supplies used (billed) are documented. ❏ Yes ❏ No

Group therapy Group therapy consists of simultaneous treatment to two or more patients who may or may not be doing the same activities. If the ther-apist is dividing attention among the patients, providing only brief, intermittent personal contact, or giving the same instructions to twoor more patients at the same time, it is appropriate to bill each patient one unit of group therapy - 97150 (untimed code).

When direct one-to-one contact is provided, the therapist bills individual therapy and counts the minutes of therapy provided to eachpatient in order to determine how many units of therapy to bill each patient for timed codes. These direct one-on-one minutes may becontinuous (15 minutes straight) or in notable episodes ( 10 minutes now, 5 minutes later). Each direct one-on-one episode should be ofsufficient length of time to provide the appropriate treatment in accordance with each patient’s plan of care. The manner of practiceshould clearly distinguish from care provided simultaneously to two or more patients.

No more than four (4) patients may participate in a group therapy session conducted by one therapist; 6 patients may participate ifa therapist and one assistant (PT assistant) conducts the session (according to PT LMRP, Adminastar Federal).

Therapy sessions must be conducted by either a qualified therapist or therapist assistant, with appropriate supervision. Medicare will notpay for therapy conducted by therapy aides, regardless of the amount or type of supervision provided.

The -59 modifier is used to bill for both a group therapy session and an individual therapy session in the same day (CCI edit require-ment). The -59 modifier signifies that distinct, separately identifiable services were provided on the same day. CCI edit rules must befollowed (e.g., CPT codes may not be billed together if both codes require one-to-one patient contact or “constant attendance.” Grouptherapy codes may not be billed with individual codes that require constant attendance, etc.).

In a hospital setting, group therapy codes may be billed more than once per day, but sufficient documentation must be provided to deter-mine medical necessity and clinical appropriateness.

Billing issues Specific minutes of therapy provided are recorded in the record (no less than 8 minutes can be provided to bill for one unit - 8 to 22min.= 1 unit; 23-37 minutes = 2 units, etc.). ❏ Yes ❏ NoThe number of minutes recorded is correct and correlates with units of therapy billed. ❏ Yes ❏ NoTherapy codes billed are supported in the clinical record. ❏ Yes ❏ NoPhysician involvement in therapy intervention is evident in the clinical record. ❏ Yes ❏ NoDocumentation is legible, and is authenticated and dated promptly by the person (identified by name and profession), who is responsiblefor ordering, providing, or evaluating the service furnished. ❏ Yes ❏ No

Source documents•Medicare Coverage Guidelines for Medical Review of Hospital Therapy Services, AdminaStar Federal Part A Customer Service Center,9/15/00. •Outpatient Therapy Services Coverage Guidelines, AdminaStar Federal Medical Review Seminar, 6/02.


26March 2004


the initial evaluation. The initial

evaluation should document the rea-

son therapy has been ordered,

including the history of the injury or

illness. We also need to see that the

services rendered are physician-

approved and the service is reason-

able for the condition being treated.

We look for reduction in pain,

increases in joint movement, ADL

(activities of daily living) ability or

performance, and any other objective

and measurable data.

■ Medicare law requires that the physi-

cian be involved in the beneficiary's

care. An order for therapy does not

necessarily indicate that the physi-

cian is aware of the services you are

providing. The physician's signature

on the plan of treatment indicates

the physician is involved in the bene-

ficiary's treatment and endorses the

plan of treatment and services pro-

vided under that plan. A certification

form alone is insufficient for services

to be covered; there must also be an

associated plan of treatment.

Documentation of treatment goals is

another area of contention. Therapists

often seem to focus on short- and long-

term goals that address impairments,

but struggle to write goals that reflect

the patient's functional improvement

(ability to function in practical, every-

day situations and environments). For

example, an impairment-focused goal

is: "patient will maintain single-leg

stance greater than 5 seconds" or

"patient will be able to match pictures

with printed names with 80%

accuracy." Functional goals include

statements such as "patient will be able

to toilet independently;" "patient will

be able to reach left upper extremity to

shoulder height to comb his hair with-

out assistance" "patient will be able to

take all nutrition and hydration by

mouth."

The following statements have been

found in actual documentation, and

will likely result in denial of services:

"Patient making slow progress, weather

fluctuations affect her." "Saturday was a

good day." "Balance is improving"

(from what to what? No measures

included). "Speech somewhat slurred

today." The World Health

Organization's publication

International Classification of

Functioning, Disability, and Health

(2001) is an excellent source of infor-

mation about treatment goals and activ-

ities that focus on functionality, activi-

ties, and participation in society. Note

particularly the "ICF Checklist" (which

can be downloaded at www.who.int/

classification/icf/checklist/icf-checklist.pdf).

The checklist provides a complete

overview of impairments of body struc-

tures and functions, activity limitations

and participation restrictions, and envi-

ronmental factors that influence the

individual's participation in society.

Checklist items can be easily translated

into a hierarchy of therapy goals and

activities that would "pass" any CMS or

FI audit.

The two audit templates (see Exhibits A

and B) provided with this article are

intended to be both audit tools and

instructional guides because they incor-

porate a synopsis of CMS' rules for

delivery of inpatient (distinct rehabilita-

tion units and freestanding rehabilita-

tion hospitals) and outpatient rehabili-

tation services. Compliance profession-

als, most of whom are not experts in

rehabilitation, can use these tools to

assess rehabilitation departments' com-

pliance with the regulations, while also

providing rehabilitation managers with

easy-to-use guides to improve docu-

mentation and quality of services. ■


EXHIBIT B: continued •Guidelines for Medicare Coverage of Speech-Language Pathology Services, American Speech-Language-Hearing Association, 10/01. •11 FAQs - Post 9/13/02 Open Door on Group Therapy - Centers for Medicare & Medicaid Services (cms.gov website, 9/02). •LMRP - Outpatient Physical Therapy. AdminaStar Federal, Part A News, 6/02. •LMRP - Speech Pathology Services. AdminaStar Federal, 1/01. •Outpatient Physical Therapy - Speech Pathology Survey Report. (CMS Form 1893) 10/99•Plan of Treatment for Outpatient Rehabilitation. CMS Form-700-(11/91). •Outpatient Therapy Services, Frequently Asked Questions. AdminaStar Federal, 1/03. ■

Prepared by: Becky Sutherland.Cornett, Ph.D., CHC, The Ohio State University Medical Center, Rev. 1/04

27March 2004


Editors note: Eric W. Klavetter, JD, works for the Office for Compliance at

the Mayo Foundation. He may be

reached at 507/266-0195.

ntroductionIn less than 16 months, the

1996 Health Insurance

Portability and Accountability Act

(HIPAA) Security Regulations will be

effective. As institutions recover from

Privacy or continue to work on

Transaction and Code Sets, they are

faced with another question: How do

we deal with HIPAA Security?

As we are all well aware, there are mul-

tiple stages to implementing a regula-

tion: Denial, Anger, Blame, Helpless-

ness, Hopelessness, and then Imple-

mentation. Seriously, there are multiple

approaches with one goal in mind:

Ensuring patient trust by having an

effective and efficient Privacy andSecurity Program.

With numerous implementation

approaches available, the opportunity to

better integrate Privacy and Security is

readily at hand and essential. Frequent-

ly, privacy will set the policy and securi-

ty will enforce it. For example, "mini-

mum necessary" is a privacy standard

and security enforces it through numer-

ous access and authorization schemes,

whereby the users are only able to

access the information they have been

authorized to review or manipulate.

Importance of semanticsAs institutions begin to tackle HIPAA

Security, it is essential to define terms as

quickly and succinctly as possible. For

this article, security is the protection of

people, property, and data. Data securi-

ty's primary components are:

1) Confidentiality through appropriate

access and authorization controls

2) Integrity which ensures data consis-

tency with the source

3) Availability that certifies proper net-

work monitoring, firewall, and a

virus strategy, to name a few

Privacy is ensuring patients can exert

their rights, such as:

1) Requesting an amendment to their

record

2) Requesting alternative communica-

tions

3) Requesting a copy of their protected

health information

4) Right to accounting of disclosures

5) Right to a copy of Notice of Privacy

Practices

6) Right to complain, to name a few

Additionally, privacy implements vari-

ous policies and process for proper use

and disclosure of information, which

ensures patient autonomy.

Institutional integrity is the ethics and

the code of conduct of the institution.

This has been in place since the mid-

90s when most institutions formalized

the standards of honesty, integrity, and

ethical and moral behavior for their

respective institutions. Institutional

Integrity is designed to educate staff

about the current health care environ-

ment, to raise staff awareness of the

Icomplexities of regulatory requirements,

and to provide resources to assist staff

in complying with those requirements.

As such, confidentiality is defined as,

"trust that personal information will be

secure, private, and managed ethically."

Depending on what expert is speaking,

each one of these artful terms can be a

leading component for any institutional

infrastructure. No matter, each institu-

tion's goal is to ensure patient trust;

therefore confidentiality is the leading

component. See Figure 1.

Confidentiality as a serviceConfidentiality is a service that patients

come to expect, which HIPAA has

re-emphasized through various stan-

dards. One unique attribute of this

service is that the patient sets the expec-

tation. We've all interacted with

patients and realize how unique each

one is. At the same time, we can forget

how vulnerable and/or desperate our

patients can be and that it can be or

"is" our fiduciary duty to protect them.

By labeling confidentiality as a service,

it can be incorporated into every aspect

of the institution.


By Eric W. Klavetter

28March 2004


The confidentiality programBy establishing definitions, defining a

virtual infrastructure as illustrated above

and labeling it as a "service", a confi-

dentiality program begins to take shape.

A confidentiality program can coordi-

nate the various issues, while ensuring

compliance with numerous regulations

and standards. The program can ensure

a consistent strategy that patients can

embrace, employees can promote, and

that leadership can utilize as a resource

when assessing new services, like

Telemedicine and Telecommuting. This

is where the value of the program can

be easily illustrated to leadership, as it

comes in the form of Risk Manage-

ment.

By implementing a clear strategy,

employees and work areas are able to

validate which practices and processes

need to be adjusted, eliminated, or sup-

ported. Often times, simple adjust-

ments can reduce the greatest amount

of risk. For example, assessing the need

for a department name on a return

label can subtly communicate to

employees that every detail is important

and often goes unnoticed by patients.

Necessity of a confidentiality programIn 1999, the California HealthCare

Foundation conducted a survey where-

by they found that computerization of

medical records is seen as the most seri-

ous threat to medical privacy. More

than half of all U.S. adults (54%)... say

the shift from paper record keeping sys-

tems to electronic or computer-based

systems makes it more difficult to keep

personal medical information private

and confidential. Most people consider

electronic piracy–not disclosure of per-

sonal information by medical person-

nel, health plan officials, or other

authorized users–as the bigger threat to

privacy. Nationally, 55% say they worry

more about computer hackers breaking

into a system, while only 30% worry

more about authorized users leaking

information.1

When institutions implement elements

of an electronic medical record (EMR)

or as the field of Genomics evolves, the

questions surrounding confidentiality

arise and can be effectively addressed

through a successful confidentiality pro-

gram. Once patients begin to under-

stand the societal benefits of Genomics

HIPAA Security...continued from page 27

Administrative Safeguards

StandardNumber Standard Implementation Specifications

(R)=Required ( A ) = Ad d re s s a b l eHospital A'sEnvironment

ComplianceGAP

1Security

ManagementProcess

Re: InformationSecurity Policies andStandards:

Other groups thatemploy risk analysis:• Internal Audit

Services• IT• Physical Security • Risk Office

(R)Risk Analysis

FIGURE 2

CONFIDENTIALITY

INTEGRITY/ETHICS PRIVACY SECURITY

Relationshipwith industry

Fraud & Abuse

Code of Conduct

Use of confidentialinformation

Disclosure of confi-dential information

Patient rights

Protection ofpersons

Protection ofdata

Availability

Integrity

Confidentiality

Authorizationcontrols

Access controls

Network

Database

Application

Data consistency

FIGURE 1

29March 2004


or the improvements of care through

EMRs, patients will participate with lit-

tle reservation.

Security dashboardOne way to begin is by constructing a

HIPAA Security Dashboard that can be

cross matched with other initiatives that

support confidentiality. Here is an illus-

tration of a HIPAA Security Dashboard

that outlines one HIPAA Security stan-

dard and the other institutional

resources that have some responsibility.

See Figure 2. By combing through the

regulation there are around 18 to 20

standards that can be entered into this

dashboard and rolled up into the confi-

dentiality program.

ConclusionAfter a policy inventory and work area

interview is complete and documented

in a Security Dashboard, the contents

can be rolled up with Privacy and In-

stitutional Integrity for an overall Con-

fidentiality Dashboard. See Figure 3.

With this strategic dashboard in place,

the institution is better positioned to

set a confidentiality strategy that

empowers employees and facilitates

patient trust. ■

1 Accessed on 1/12/03 http://www.chcf.org/

documents/ihealth/survey.pdf

Service Area

Integrity &

Ethics

Privacy

Security

ResponsibleParty

Compliance

Compliance

Compliance

Privacy

Privacy

Privacy

Privacy

Privacy

Privacy

Privacy

Privacy

Privacy

Privacy

Security

Security

Security

Sponsor

Compliance

Leadership

Finance

Compliance

HIM

IT

IT

Component

Relationship

with Industry

Code of Conduct

Fraud & Abuse

Patient Rights

Use

Disclosure

Confidentiality

Integrity

Availability

Initiative

Pharmaceutical Sponsor

OIG Workplan

Amendment

Alternative Com.

Notice of Privacy Practice

Complain

Disclosure Accounting

Copies of Medical Info

Restriction

Revoke Authorizations

Minimum Necessary

Implant Vendor

Donor Documentation

Research

Access Controls

Authorization Controls

Firewall Management

Anti-virus response plan

Back up Planning

Type

P

I

E

E

E

E

E

E

E

E

P

I

I

M

E

Priority

1

2

3

3

3

3

3

3

3

3

1

2

1

3

3

ConfidentialityStrategy, Risk, Initiative Dashboard

Type:

P - PlanningI - InvestigativeE - ExecuteM- Monitor

Priority

1 - Urgent2 - High3 - Routine

FIGURE 3

30March 2004


By Susan Steed

Editor's note: Susan Steed is a consultant

with Cap Gemini Ernst & Young LLC.

She may be reached at 972/556-7531 or

by email at [email protected]

emand for health care

services throughout the

country is on the rise.

Today’s hospitals face many challenges

in terms of providing services to meet

the heightened demand. Hospital

Emergency Departments (EDs) are

directly impacted and frequently reach

dangerously high saturation levels,

which pose risks to the ability to pro-

vide quality care, reach strategic objec-

tives, and achieve financial viability.

The term Emergency Department

“crowding” refers to the saturation crisis

that many hospitals face on a daily basis

when timely evaluation and treatment

by fully committed ED resources can-

not be provided. Extended patient

lengths of stay, delays in treatment,

inability to obtain inpatient beds, and

diversion of ambulances to other facili-

ties all serve as evidence of the crowd-

ing crisis. It is important to note that

ED crowding is not a stand-alone prob-

lem, but rather a symptom of a capacity

constrained hospital. This article out-

lines the causes of ED crowding, poten-

tial solutions, and the impact on com-

pliance.

Causes of ED crowdingThe causes of ED crowding are many

and interrelated. Key contributing fac-

tors include the following:

D

■ Over recent years, many of the

nation’s general acute care hospitals

have closed, resulting in fewer beds

available to accommodate admissions

from the ED

■ The national nursing shortage has

forced many hospitals to reduce their

number of staffed beds, further

reducing inpatient capacity

■ The aging population has brought

with it more complex diseases and a

requirement for specialized medical

services. As a result, patients present-

ing in the ED are “sicker” and

require a higher level of care

■ The numbers of middle class

Americans who now find themselves

without health care insurance cover-

age are seeking primary health care

in the ED. The rise of non-urgent

patients visiting EDs adds stress to

an already capacity constrained

system

■ Facility downsizing and decreased

capital investment in hospitals over

the past several years has led to out-

dated, inadequate, and misaligned

space to efficiently handle current

and future needs

■ The ability of hospitals to manage

current capacity is often impacted by

a lack of information and communi-

cation technologies, which often

times are inconsistently deployed,

cumbersome, and may not provide

real time information on bed avail-

ability status

Implications of ED crowdingAn even more severe downstream effect

of ED crowding is ambulance diver-

sion. According to a March 2003,

report by the U.S. General Accounting

Office (GAO), two-thirds of EDs

diverted ambulances to other hospitals

during 2001. ED diversions have the

potential for significant impacts on

quality of patient care, patient safety,

and patient, physician, and staff satis-

faction and retention. Care must be

taken to work collaboratively with city

and county EMS services to create

diversion policies and protocols that

decrease risk of EMTALA violations

and promote the health of the popula-

tion.

Potential solutionsHospitals can meet the ED crowding

challenge by employing a series of

strategies to optimize hospital capacity

while driving top down growth and

positioning themselves competitively in

their market. Benefit can be achieved

from turning around current opera-

tional problems by knowing where beds

are, ensuring appropriate utilization of

beds, matching staff resources to




March 2004

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Revisiting...continued from page 8Overcrowding...continued from page 30

demand, investigating bottlenecks, and

aggressively working toward improving

patient flow processes.

As ED crowding becomes more preva-

lent, hospitals will continue to look for

new and creative ways to respond to

demands. A few hospitals have utilized

areas such as ED parking lots, auditori-

ums, and other locations for treating

patients when EDs are saturated and

ambulance diversions have a high prob-

ability of occurrence.

Automated patient tracking systems

offer dynamic workflow solutions

aimed toward improving patient flow

and maximizing capacity. The newer

and more innovative systems on the

market take capacity management to

the next level by allowing “real time”

monitoring of patients throughout the

entire spectrum of care.

Although crowding is most prominent

in large metropolitan areas, it is a wide-

spread problem affecting EDs in all

areas of the country. It is important to

note that ED crowding is not a prob-

lem in and of itself, but rather a symp-

tom of multiple, system-wide factors

that act together to create bottlenecks

that impede access to timely and high

quality emergency care. Although long-

term solutions will likely require timely

and significant policy changes, hospitals

can benefit from implementing one or

more short-term capacity management

solutions to help ease the problem of

crowding in the nation’s EDs. ■March 2004

not at all. The Commission can also

choose to defer action until a later time.

It is worth noting that the pro p o s e d

changes add significantly greater strin-

gency to the present day criteria and

raise the bar in defining what is re q u i re d

for an ‘e f f e c t i ve’ program. T h e re f o re ,

organizations should continue to moni-

tor the U.S. Sentencing Commission

revision process, and be ready to make

p reparations to adjust its compliance

p rogram as warranted.

C o l l e c t i ve l y, the legal environment is

saying that having a compliance pro-

gram matters–in fixing liability, setting

fines, and even determining whether an

entity may continue to do business at all.

But more than just having a compliance

p rogram, management must have a basis

for knowing–and must be able to

demonstrate–that its compliance pro-

gram is effective. In sum, the ove r a l l

t rends suggest that dynamic demands

will continue to be placed on the deve l-

opment of organizational compliance

p ro g r a m s . ■

1 698 A.2d 959 (Ct. Chanc. Del. 1996). Anoverview of the duty of care owed by Boards ofDirectors, including discussion on the implica-tions of Caremark can be found in CorporateResponsibility and Corporate Compliance: AResource for Health Care Board of Directors, aguide developed jointly by the AmericanHealth Lawyers Association and the OIG.

2 118 S.Ct. 2275 (1998).3 Most companies in meeting this requirement,

will likely adopt the internal control modeldeveloped by the Committee of SponsoringOrganizations (COSO, also known as theTreadway Commission), which consists of fivecomponents: control environment, risk assess-ment, control activities, information and com-munication, and monitoring.

4 An executive summary and the full report canbe obtained from the U.S. SentencingCommission website located athttp://www.ussc.gov


March 2004

June, p. 12

■ Outpatient outlier payments are also

coming under government scrutiny,

J. Witten, R. Howard, Nov., p. 8

■ Provider alert: Watchdogs are

increasing scope and expertise, C.

Sreckovich, P. Calvin, Sept., p. 6

■ Top ten Part B errors, T. Gilbert,

Mar., p. 12

Compliance Focus Group (CFG)CFG: Academic

■ Data to information: Getting the

best value for your investment,

N. Tarnuzzer, July, p. 7

CFG: Academic

■ Private and public health care:

Regulation application, S. DeGroot,

Sept., p. 25

CFG: Home Care

■ CMS certification on homebound

criteria for home care industry

remains unclear, L. Silveria, July, p. 9

■ New hospice regulations include

many changes, D. Randall, Esq.,

C. Raffa, Esq., Feb., p. 11

■ Do bad surveys make bad claims,

D. Randall, Esq., Mar., p. 9

■ Maintaining profitability for DME-

POS in an environment of

compliance, K. Scamperle, Sept.,

p.22

■ OIG targets overpayments made to

home health agencies for OASIS

answer M0175, L. Silveria, Oct., p.

24

■ Surveys, compliance, and home

health OASIS reports, C. Hughes,

May, p. 25

CFG: Large Health System

Back to basics

■ Hotlines: More than a basic element

of a compliance program, A. Quinn,

Aug., p. 18

■ Measuring the effectiveness of your

compliance program, S. Ortquist,

May, p. 15

■ Strategies for Effective Compliance

Training, R. Frank, S. Ortquist,

Feb., p. 21

CEO's Letter

■ R. Snell, Jan., p. 15; Feb., p. 20;

Mar., p. 16; Apr., p. 18; May, p. 22;

June, p. 20; July, p. 23; Aug., p. 23;

Sept., p. 26; Oct., p. 23; Nov., p. 27;

Dec., p. 25

Compliance

■ Are you ready to deal with what

squirms up when you turn over the

rock?, D. Sheets, Feb., p. 6

■ Blending corporate compliance into

the collegial environment, M.

Walker, Aug., p. 11

■ Cataract surgery comanagement, B.

Peters, Dec., p. 10

■ Clinical quality as a compliance

issue: An update, A. Helder, B.

Cornett, Nov., p. 22

■ Compliance and quality combined,

K. Jenkins, June, p. 18

■ Compliance professionals and

administration: Living in perfect

harmony, B. Crewse, May, p. 23

■ Continuous regulatory compliance

improvement, C. Sreckovich, P.

Calvin, Oct., p.10

■ Corporate responsibility and the

compliance officer, F. L. Murtha,

Apr., p. 18

■ Corporate responsibility and corpo-

rate compliance, M. Hemsley, June,

p. 4

■ Corporate responsibility reflected in

hospital criminal conviction, G.

Imperato, July, p. 4

■ Compliance monitoring of the

research enterprise, F. L. Murtha,

Jan., p. 9

■ Developing a research audit plan,

F. L. Murtha, Oct., p. 6

■ Economic value of compliance,

T. Gregory, Mar., p. 6

■ Ever changing observation billing,

D. Sheets, May, p. 8

■ Fifteen new opportunities for com-

pliance professionals, F. Sheeder, July,

p. 17

■ Health care compliance professionals

faced with a unique opportunity, S.

Ortquist, Oct., p. 4

■ How CCOs enhance quality patient

care, K. Catalano, Oct., p. 25

■ Identifying elements and process for

conducting internal auditing and

monitoring, G. Gustin, Sept., p. 4

■ Inter-rater validity and the physician

audit, P. Moore, Nov., p. 6

■ Legal audit compliance check list,

J. Johnson, Dec., p. 18

■ Liability issues related to illegible

physician documentation, J. Russo,

July, p. 21

■ New risks of physician recruitment,

J. Krave, Sept., p. 12

■ No show: To bill or not to bill,

P. Moore, July, p. 20

■ Outpatient reimbursement: Based on

the setting, not the service, S. Steed, Continued on page 34

3434

2003 Index...continued from page 31

■ Update, M. Hemsley, Jan., p. 20

CFG: Payor/MC

■ Conflicts of interest in payor and

managed care organizations, R.

Freeman, V. McCormick, July, p. 11

■ HIPAA privacy rule preemption

analysis of the NAIC Insurance

Information and Privacy Protection

Act, J. Moen, Nov., p. 10

■ OIG Compliance Guide for

Pharmaceutical Manufacturers: A

defensive switch for health plans,

J. Michaels, Jan., p. 6

■ Refining your HIPAA privacy

implementation, R. Jones, Sept., p. 9

■ Refining your HIPAA privacy

implementation, R. Jones, Oct., p.17

■ Regulatory compliance: One

Medicare contractor's perspective,

E. Bair, Feb., p. 8

■ Government and Keystone develop

new credentialing policy, E. Moran,

Apr., p. 10

■ Monitoring and auditing the Claims

Prompt Payment process, C. Dubois,

May, p. 11

Focus on ethics

■ The Antonio Test, J. Oak, PhD,

Mar., p. 11

■ The interdependence of ethics,

J. Oak, PhD, Aug., p. 5

Feature

■ Meet L. Stephan Vincze, Jan., p. 11

■ Meet William N. Whatley, Feb.,

p. 18

■ Meet Odell Guyton, Mar., p. 14

■ Meet Janet Rehnquist, Apr., p. 14

■ Meet Rory Jaffe, May, p. 17

■ Meet Jeffrey Oak, PhD, June, p. 14

■ Meet Britt Crewse, July, p. 14

■ Meet Mac Thornton, Aug., p. 14

■ Meet Drema Pierson, Sept., p. 15

■ Meet Linda Wolverton, Oct., p. 15

■ Meet Sharon Hoyle, Nov., p. 15

■ Meet Al Josephs, Dec., p. 16

Government/enforcement/regulation■ CMS issues revised outlier payment

policy, J. Valenta, Aug., p. 6

■ Dara Corrigan named acting princi-

pal deputy inspector general, Aug.,

p. 9

■ Sarbanes-Oxley Act, F. Sheeder,

Jan., p. 4

■ Sarbanes Oxley Act of 2002:

Practical tips for providers,

F. Sheeder, Feb., p. 13

■ FYI, M. Dragon, Jan., p.21; Feb.,

p. 17; May, p. 28; Sept., p. 28; Nov.,

p.28; Dec., p. 22

■ PostSOX: Spotlight on private non-

profit boards brighter than ever,

J. Krave, Apr., p. 4

■ OIG Pharma Guidance released, M.

Dragon, June, p. 23

■ OIG 2004 Work Plan, eight actions

for hospitals, G. Herschman, Dec.,

p. 8

■ The New EMTALA: Part I What

you need to know, M. S. Lipton,

Nov., p. 18

■ The New EMTALA: Part II,

M. S. Lipton, Dec., p. 12

■ The next focus area for Medicare

payment reviews: Outliers, J.

Valenta, Apr., p. 7

■ In the Federal Register, Dec., p. 29

HCCA

■ Alan Yuspeh HCCA's 2003

President, M. Dragon, Jan., p. 17

■ Announcing the 2004 HCCA Board

of Directors, M. Dragon, Nov., p. 24

■ HCCA Appoints Greg Warner to

serve as HCCA's CO, M. Dragon,

Aug., p. 4

■ HCCA new members, Jan., p. 18;

Mar., p. 20; May, p. 26; Aug., p. 24;

Nov., p. 30; Dec., p. 28

■ HCCA Compliance Focus Groups,

Apr., p. 20

■ Introducing your HCCA staff,

Mar., p. 17; June, p. 24; July, p. 24;

Aug., 22; Nov., p. 29; Dec., p. 27

■ Preview of HCCA's Compliance

Institute 2003, M. Dragon, D.

Roach, Feb., p. 15

■ Compliance Performance

Measurement Initiative Task Force

Letter, Mar., p. 5

■ Regional contacts, June, p. 22

HIPAA

■ Common HIPAA privacy implemen-

tation misconceptions, J. Sanders,

M. Ortenberg, May, p. 4

■ HIPAA privacy compliance phase

two: Constant vigilance, G. Hughes,

June, p. 7

■ HIPAA transaction and code set

compliance, E. Klavetter, Dec., p. 6

■ Next stage of privacy compliance,

E. Klavetter, Aug., p. 20

■ Survey on HIPAA preparedness

released, M. Dragon, Feb., p. 5

Leadership letter

■ A. Yuspeh, Jan., Feb., March, April,

May, June, July, Aug., Sept., Oct.,

Dec., p. 2

■ Al Josephs, Nov., p. 2

Website Resources

■ Website Resources, Aug., p. 17,

Nov., p. 31 ■


March 2004


The Health Care Compliance

Association welcomes the following

new members and organizations (U.S.

states Maryland to Oklahoma) who

joined HCCA. All member contact

information is available on the HCCA

Website in the Members Only section -

http://www.hcca-info.org - Please update

any contact information using the

HCCA Website or email April Kraft

([email protected]) with changes

or correction to your membership

information.

Maryland■ Kathy Bradley-Wells, JD, Kaiser

Permanente ■ Debbie Eccles, Specialized Care Services

Maine■ Steven K. Sanborn, BA, JD,

MaineHealth

Michigan■ Barbara J. Cliff, RN, BSN, MSA, MPA,

Cheboygan Memorial Hospital ■ Shawn P. Eyestone, Cox, Hodgman &

Giarmarco PC ■ Jim King, Gogebic Community Mental

Health ■ Mary K. Kralapp, RN, JD■ Priscilla K. Maher, United Mem.

Health System ■ Mary A. Storm, BS, RHIA, CHP,

McLaren Regional Medical Center

Minnesota■ Jennifer M. Anderson, Ernst & Young ■ Lyndy Benson, Specialized Care Services ■ Jodi L. Grimm, Mayo Clinic -

Rochester ■ Michelle L. Jezierski, Medica ■ Anna Korinko, Ovations ■ Thomas M. McSteen, JD, Compliance

Strategies, LLC■ Nancy Y. O’brien, LICSW, VA Medical

Center ■ Kim J. Tast, EMT, North Memorial

Medical Transport

■ Diana J. Vance-Bryan, BSN, JD, Briggsand Morgan

■ David A. Westlin, Arizant, Inc

Missouri■ Michael Cardenas, MHA, JD, St.

Anthony’s Medical Center ■ James W. Elder, Mallinckrodt Inc ■ Yvonnda L. Ford, JD, MHA, Lincoln

County Medical Ctr.■ Mark A. McKinney, Force 3, Inc. ■ Darlene Ornburn, Univ. of Missouri

Healthcare

Mississippi■ Debra A. Lawson, BBA, RHIA, Mid

South Rehab Services, Inc

Montana■ Mary B. Lazarus, RHIT, VA Montana

Healthcare System ■ Kristen K. Strizich, MT (ASCP),

Beartooth Hospital and Health Center

North Carolina■ Pam Benet, RHIA, Carolinas Health

Care System ■ Julie Ciarrocchi, UnitedHealthcare■ Pandora Holloway, CIA, WakeMed ■ M. Russell Payne, Alamance Regional

Medical Center

New Hampshire■ Deborah Shipman, MBA, Monadnock

Community Hospital

New Jersey■ Anna M. Burian, MHA, Monmouth

Medical Center ■ Mikole Burke-Anderson, JD, South

Jersey Health ■ Celia Connaire, Ortho Biotech

Products, LP ■ Darlene Den Hollander, Daiichi

Pharmaceutical Corp ■ Kellyann Dziedzic, Hunterdon

Healthcare System ■ Jean L. Furdella, MS, Catholic Charities ■ Deirdre Henry-Taylor, UMDNJ-

University Hospital ■ Kathleen Johnson, CPHRM, Kimball

Medical Center ■ Crystal London, MONOC ■ Paul Siock, Ortho Biotech Products, LP ■ S. Gilmore Stone, MA, CPA, FHFMA,

Peloquin & Associates ■ Melissa Straub, Ernst & Young, LLP ■ Donna Winters, Paralegal Certificat,

Physician Practice Services

New Mexico■ Don L. Daniel, JD, Presbyterian

Medical Services

New York■ Steven J. Chananie, JD, Garfunkel,

Wild & Travis, PC ■ Robert L. De Carlo, Slocum-Dickson

Medical Group, PC ■ Candace I. Finkelstein, MPA, Lutheran

Medical Center ■ Shari L. Grenier, RN, MPH, Esq.,

Staten Island Univ. Hosp.■ Brigid M. Maloney, JD, State Univ. of

New York at Buffalo ■ Lourdes M. Martinez, JD, Garfunkel,

Wild & Travis, PC ■ Darlene A. Noyes, RN, BS, Sunny

Upstate Medical University ■ Jane Smeland, Westchester Medical

Center ■ Marc B. Wilenzick, Pfizer ■ Leila Wilson, Versatile Innovative

Progressive Inc

Ohio■ Kevin T. Anderson, Esq., Kevin T.

Anderson, Esquire■ Beth Cesta, Premier Health Care Svcs.■ Istvan Hargitai, Legacy Health Services ■ Polly Maroun, RN, Associated

Physicians of MCO, Inc. ■ Angelia Z. Raney, M.Ed., CCDCI,

LSW, Scioto Paint Valley Mental HlthCntr.

■ Susan D. Ward, Barnesville HospitalAssociation

Oklahoma■ Deborah Rodgers, Duncan Regional

Hospital ■ Shawn Stone, Oklahoma Univ. Medical

Center ■

Editor:Margaret R. Dragon, Director of Communications, HCCA, 781/593-4924,[email protected]

Publisher:Health Care Compliance Association, 888/580-8373

Consulting Editors: Al Josephs, President, HCCA, 254/202-8620Roy Snell, CEO, HCCA, [email protected]

Design & Layout:Robin Taliesin, Raven Creative, 781/631-4639, [email protected]

Advertising:Erin O’Donnell, HCCA, 888/580-8373, [email protected]

HCCA Officers and Board of Directors:

Compliance Today (CT) (ISSN 1523-8466) is published by the Health Care ComplianceAssociation (HCCA), 5780 Lincoln Drive, Suite 120, Minneapolis, MN 55436. Subscription rateis $357 a year for non-members. Periodicals postage-paid at Minneapolis, MN 55436. Postmaster:Send address changes to Compliance Today, 5780 Lincoln Drive, Suite 120, Minneapolis,MN 55436. Copyright 2004 the Health Care Compliance Association. All rights reserved. Printedin the USA. Except where specifically encouraged, no part of this publication may be reproduced,in any form or by any means without prior written consent of the HCCA. For subscription infor-mation and advertising rates, call HCCA at 888/580-8373. Send press releases to M. Dragon, POBox 197, Nahant, MA 01908. Opinions expressed are not those of this publication or the HCCA.Mention of products and services does not constitute endorsement. Neither the HCCA nor CT isengaged in rendering legal or other professional services. If such assistance is needed, readers shouldconsult professional counsel or other professional advisors for specific legal or ethical questions.

Al W. Josephs, CHCHCCA PresidentDi rector of Corporate ComplianceHi l l c rest Health Sy s t e m

Odell GuytonHCCA 1st Vice PresidentSenior Corporate Attorney,Director of Compliance,US Legal-Finance & OperationsMicrosoft Corporation

Daniel Roach, Esq.HCCA 2nd Vice PresidentVP & Corporate Compliance OfficerCatholic He a l t h c a re We s t

Allison Maney, CPA, CHCHCCA TreasurerDirector of Claims Research andResolutionPacificare

Steven OrtquistHCCA SecretaryVP of Ethics & Compliance, Chief Compliance OfficerBanner Health Sy s t e m

Alan Yuspeh, JD, MBAHCCA Imme. Past PresidentSenior Vice PresidentEthics, Compliance & CorporateResponsibilityHCA, Inc.

Julene Brown, RN, BSN, CHC, CPCBilling Compliance ManagerMe r i t C a re Health Sy s t e m

CEO/Executive Director: Roy Snell, CHCHealth Care Compliance Association

Britt Crewse, MBA, MHSAssociate VP and Chief Compliance OfficerDuke Un i versity Health Sy s t e m

Shawn Y. DeGroot, CHCVice President of Corporate ComplianceRapid City Regional Hospital

Suzie Draper, BSN, RNCorporate Compliance Officer and PrivacyOfficerIntermountain Health Care

Rory Jaffe, MD, MBAChief Compliance OfficerU.C. Davis Health System

F. Lisa Murtha, Esq., CHCPrincipalParente Randolph

John Steiner, Jr., JDChief Compliance OfficerThe Cleveland Clinic Health Sy s t e m

Debbie Troklus, CHCAssistant Vice President for HealthAffairs/Compliance University of Louisville, School ofMedicine

Sheryl Vacca, CHCDirector, National Health Care RegulatoryPractice, Deloitte & Touche

Greg Warner, CHCDirector for ComplianceMayo Foundation

Counsel: Keith Halleland, Esq.Halleland Lewis Nilan Sipkins & Jo h n s o n

Place HCCA Cool Clothes

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