Contracting Out the Compliance Program
Designated Compliance Officers vs. Interim Compliance Officer
Recent trends show more organizations utilizing outside experts to operate and/or manage their compliance programs. Contracting out key compliance program functions takes the form of either an Interim Compliance Officer (ICO) or Designated Compliance Officer (DCO). Camella Boateng has been engaged as both an ICO and DCO for many organizations. She explains that use of each role similarly involves bringing in proven experts to help ensure the effectiveness of the compliance program. However, there are important differences between an ICO and DCO. The former involves engaging an expert to fill a temporary gap in the compliance program. This gap is typically triggered by the departure of an incumbent, or by a special circumstance or incident requiring compliance expert assistance. In contrast, the DCO is an outside expert focused on building and managing the compliance program. Contracting with a DCO is an alternative to hiring a full-time internal Compliance Officer. It is very important for organizations to understand the differences in these two roles.
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Designated Compliance Officers
Steve Forman, CPA has 35 years experience serving as a full-time Compliance Officer at major health care organizations as well as serving in ICO and DCO roles. Mr. Forman points out that the option to engage a DCO primarily benefits smaller organizations that cannot afford the expertise and resources needed to manage all the duties and responsibilities of an effective compliance program. The Department of Health and Human Service (HHS) Office of Inspector General (OIG) recognizes this in its Compliance Program Guidance, noting that: “For those companies that have limited resources, the compliance function could be outsourced to an expert in compliance.” In order for an organization to hire a true expert as its DCO, the hire must be programmatic and make financial sense. Further, the DCO engagement should truly be a part-time engagement. If the organization cannot afford to have a qualified, full-time, expert Compliance Officer, then it doesn’t make sense to hire an expert consultant to work anywhere near full-time. In fact, the OIG recognized that the DCO could be serving several different, unrelated organizations at the same time. As such, DCOs can be a part-time and permanent alternative to a W-2 employee Compliance Officer. The DCO can work half the time, or less, than a full-time W-2 employee. Most DCO engagements rely on ongoing availability and limited on-site work. On-site work occurs as needed to address compliance issues as they arise. Mr. Forman offered the following examples of when it may make sense for an organization to engage a DCO:
- A part-time DCO may be less costly that a full-time employee.
- The DCO has needed experience and nuanced knowledge of federal and state laws and regulations.
- There is a need for independence and objectivity in how the compliance program is managed.
- The organization can benefit from the expertise and perspective gained from working in a variety of programs.
- The DCO brings knowledge of proven compliance program methods through working with other organizations.
- The DCO can credibly communicate compliance needs to executive leadership and the Board.
- The organization needs to enhance confidence in the compliance program and its culture of compliance.
- The DCO can establish clear metrics to evidence compliance program effectiveness.
Interim Compliance Officers
Carrie Kusserow, with 15 years experience as a Compliance Officer and ICO, notes that it is vital for organizations to clearly understand the ICO as a temporary solution meant to fill a gap in the program. An ICO engagement is an arrangement that lasts 3-5 months on average. During that time, the outside expert can be used to manage and assess the compliance program, as well as assist in finding a suitable, long-term replacement. The two most common reasons organizations engage an ICO is either to temporarily replace a departing Compliance Officer; or to provide needed expedited expertise in response to an incident or crisis situation. The latter typically occurs after a government investigation or movement towards a Corporate Integrity Agreement (CIA). Ms. Kusserow stresses that, when selecting an ICO, it is extremely important to be sure the ICO is properly qualified. A qualified ICO should have multiple levels of experience the organization can draw upon, rather than merely having served as a Compliance Officer in another organization. For example, the individual may have prior experience as a Compliance Officer, but that experience may not have been with a model effective compliance program. The ICO can be contracted full-time, half-time, or part-time depending on the size and complexity of the organization. Ms. Kusserow offered the following as reasons to consider using an ICO instead of a W-2 full-time employee:
- To temporally fill a gap resulting from the departure of the Compliance Officer.
- To bring expertise and “fresh eyes” to assess the current state of the program.
- To manage an event or crises requiring greater expertise than is available internally.
- To provide needed expertise in response to government investigations or a CIA.
- To temporarily support executive leadership by serving as a proven expert to enhance the program.
- To provide an independent evaluation of the status of the program’s effectiveness.
- To add expertise and detailed knowledge of Federal and State laws and regulations.
Find a Compliance Officer for Your Organization
Strategic Management Services has Designated Compliance Officers (DCO) and Interim Compliance Officers (ICO) with decades of experience assessing and improving compliance programs. If you are looking to fill a leadership gap in your organization or have questions about which solution is best for you, you can contact us online or by calling (703) 683-9600.Subscribe to blog