2016: Time for an Independent Compliance Program Evaluation? Alternative Methods and Best Practice Tips for Each Type of Evaluation

The DHHS OIG and other regulatory bodies have stressed the importance of evidencing Compliance Program (“CP”) effectiveness. The Compliance Officer, like any program manager, is responsible for ongoing monitoring of the CP, but cannot independently audit his or her own program’s operations. The OIG recognizes two alternatives: (1) a full evaluation by outside experts; and (2) an independent compliance survey of employees.

Complete Compliance Program Review by Experts

The very best way to evidence CP effectiveness is to hire experts to conduct an independent evaluation, which is especially convincing to boards and outside authorities. This type of review is complex, as effectiveness is related to outcome metrics rather than process output. Assessments should draw direction from a number of authorities, including the Sentencing Commission Guidelines, OIG Compliance Guidance, JCAHO, CMS, and overlapping requirements from HIPAA and the Sarbanes-Oxley Act. Assessments should focus on: (1) how well the CP infrastructure and operations function; existing metrics that provide evidence of CP effectiveness; and the effectiveness of ongoing monitoring and auditing of major OIG-identified high-risk areas. Using experienced compliance experts is critical to obtain the most useful results. A detailed CP review is typically 50-75 pages in length. The cost will depend on the size of the organization and the number of facilities.

Al Bassett, JD, has conducted more CP effectiveness evaluations than just about anyone in the country over the last 20 years.  He states, “The results from this approach should provide an in-depth analysis of the status of the program, opportunities for improvement, and specific recommendations and suggestions as to how any deficiencies may be overcome. Done properly, it should include a full compliance-related document review, onsite interviews with members of executive leadership and selected key staff, focus group meetings, and onsite audits of key features of the program. The focus should be on the compliance work plan and how well ongoing auditing and monitoring is addressing high-risk areas.”

Best Practices Regarding Compliance Program Effectiveness Evaluations

• For CP evaluations, engage a firm that is truly an expert.
• Check the credentials of the individuals conducting the review.
• Ensure that those who perform the review are real experts, and avoid bait-and-switch.
• Examine the history and leadership of prospective firms.
• Ask the firm how many evaluations it has conducted.
• Avoid firms that use a common checklist approach, which produces poor results.
• Ensure that the evaluation includes (1) full document review; (2) onsite audit of operations; (3) executive, board, and key employees interviews; and (4) focus group meetings.
• Ensure that reviews focus on auditing and monitoring high-risk areas.
• Use individuals who certify meeting General Accounting Office operational review standards.

Limited Scope Compliance Program Review

Many organizations try to avoid the more costly expert CP evaluations by looking for a cut-down effort. Many firms offer a cheaper approach, using a “checklist” review and lesser qualified persons. These reviews are two-dimensional, focusing more on document review rather than onsite interviews and auditing. Taking this approach could reduce costs by half or even more, but may provide very little in useful information. Steve Forman, a CPA that has been building, managing, and evaluating CPs since 1981, states, “Generally, the reduction of costs in limited scope compliance effectiveness reviews is matched by the diminishment in value of the result of the work. I have found among my clients that many such reports were disappointing to management, and in some cases proved to be ‘counterproductive,’ in that they may provide misleading results that can come back and haunt later. The old adage about ‘getting what you paid for’ applies here.” If organizations choose this option, they must take care in selecting those who would do the work.

Best Practices Regarding Limited Scope Compliance Program Reviews

• As a rule, avoid these reviews, as the value of the results will likely be very limited.
• Reducing the scope of work results in a greater need for experts to perform the work to avoid wasting money.
• Limited scope reviews should not try to cover all aspects of a CP, but should focus on specified areas.
• Ensure that management and the board are prepared to expect curtailed results.

Knowledge Surveys

Compliance Knowledge Surveys© are among the best and most inexpensive means for evaluating, evidencing, and benchmarking CP effectiveness. The OIG suggests such surveys as one of the two methods for measuring CP effectiveness in its Compliance Program Guidance for Hospitals and Supplemental Guidance for Hospitals. The OIG noted that “as part of the review process, the compliance officer or reviewers should consider techniques such as…questionnaires developed to solicit impressions of a broad cross-section of the hospital’s employees and staff,” and recommends that organizations should evaluate all elements of a CP through employee surveys. Results from a professionally and independently administered survey can provide a very powerful, approximately 30-page report for compliance oversight committees, as well as credible independent evidence for any outside authority questioning the program. A professionally developed and independently administered Compliance Knowledge Survey© is able provide great insights into CP effectiveness. It can signal both strengths as well as areas potential weakness warranting attention. A survey must be reasonable in length to permit participants to complete it in no more than 20 to 30 minutes.

Jillian Bower, whose firm has been conducting healthcare compliance surveys since 1993, notes, “Knowledge surveys are extremely useful in measuring the outcome of the CP and examining the extent to which individuals, coworkers, supervisors, and leaders demonstrate commitment to compliance. This type of survey is most often used by organizations with maturing a CP to learn about its progress by testing knowledge of employees about the CP structure and operations, including the understanding of the role of the Compliance Officer, how the hotline functions, etc. This is useful in providing empirical evidence of the advancement of program knowledge, understanding, and effectiveness.” This is not a substitute for a full-scale evaluation. But at about 10% of the cost of a full-scale evaluation, the value of return is relatively high. Using this approach is a good alternate-year strategy to full-scale evaluations.

Tips for Choosing the Right Survey

1. Use professionally developed and validated surveys for reliable and credible results.
2. Use an independent party to administer the survey to avoid questions of bias and reliability.
3. Use only valid and independently administered surveys tested over many organizations.
4. Choose professionally developed/tested surveys, which are less costly than internally developed surveys.
5. Use surveys that ensure confidentiality of participants.
6. Use a firm specializing in health care compliance, which is surprisingly inexpensive.
7. Look for surveys that provide comparative data to others that have taken an identical survey.