No Managed Care Organization Should Allow a Gap between Compliance Officers

Richard P. Kusserow | April 2014

Medicare Parts C & D programs require managed care organizations (MCOs) to develop and implement effective compliance programs that include having a compliance officer that reports directly to senior management. [1] In 2010, the Centers for Medicare & Medicaid Services (CMS) commenced conducting audits of managed care plans, including a number of compliance areas using Medicare Drug Integrity Contractors (MEDICs). The results of the audits were significant and led to a number of terminations and sanctions against audited plans.

CMS has continued this audit process, and over time these reviews have become more efficient and effective in finding deficiencies in the programs. As such, MCOs are well advised to prepare for the real possibility of being audited and should not allow their compliance program to falter in meeting the MCO’s compliance obligations.

This can easily happen when a compliance officer vacancy occurs, which is not an uncommon occurrence. It may result from a retirement, someone moving on to another organization, or removal of incumbents for any reason. No MCO can afford the risk of operating without day-to-day management of the compliance efforts. This can result in serious problems and potential liability, especially at a time when mandatory compliance requirements are under development.

Losing a compliance officer from a sudden departure often creates a new vulnerability.  Many MCOs are now focusing more on contingency planning to fill gaps in the key leadership positions, including the compliance officer. All this makes the problem of finding a suitable replacement of someone properly qualified, in a timely manner, a relatively high priority. This is not an easy task, and filling that gap with a properly qualified and experienced person normally takes four to six months. Hiring a compliance officer hastily can be a costly mistake, as would be trying to function with someone in an acting capacity that is not properly qualified.

Cost and Benefits of Using an Interim Compliance Officer
For many, hiring an outsourced compliance officer to serve for an interim period is the answer. The cost of going this route is more than offset by having an “outside” expert come in to not only manage the day-to-day operation of the program but also to provide independent feedback on the state of the program.

The key is to design the engagement to bring maximum return of benefit for the cost. James Cottos, who retired from the U.S. government as an Assistant Inspector General, has been working as a compliance consultant for organizations for over 15 years, completing six engagements as an interim compliance officer, including multiple MCO assignments.  He observed that “each engagement has represented different challenges. In two assignments, I found basically no program and had to build one from the ground up.  In another case, I took a basic program and upgraded it to be a fully effective program. In a third situation, my work involved not only making the program more effective but also strengthening the relationship with the senior management and board.” [2]

[1] 42 CFR Section 422.503 (b) (3) (vi) and 42 CFR Section 423.504 (b) (4) (vi).

[2]  See “Understanding the Role of an Interim Compliance Officer” by James Cottos, senior vice president at Strategic Management and former HHS OIG Chief Inspector in the Journal of Health Care Compliance, Vol. 10, No. 6 and reprinted at

About the Author

Richard P. Kusserow established Strategic Management Services, LLC, after retiring from being the DHHS Inspector General, and has assisted over 3,000 health care organizations and entities in developing, implementing and assessing compliance programs.