Governance
Effective Hospital Governance: Compliance Risk Areas
By Phillip S. Schaengold
According to the Joint Commission on the Accreditation of Healthcare Organizations (JCAHO), each hospital should have "governance with ultimate responsibility and legal authority for the safety and quality of care, treatment, and services. Governance establishes policy, promotes performance improvement, and provides for organizational management and planning." The board must also ensure that the hospital adheres to all appropriate regulatory and legal compliance standards.
This is not an easy task. Compliance risk areas continue to expand in scope and complexity, frustrating board members in their efforts to fulfill their fiduciary responsibilities. Too often, hospital law presentations, no matter how well intended, do not give the board the knowledge it needs to ask the right questions or demand the required documentation to protect the hospital, its management and the board.
It is therefore important for the board to demand that its management team and legal counsel teach trustees about compliance risk areas so that the board will be able to monitor compliance appropriately. For example, to oversee physician relations, a continuously updated and detailed list of current contracts should be maintained and presented to the board's audit committee and, subsequently, presented in summary form to the board itself. To monitor risk issues such as billing and reimbursement, management should present aggregated and trended data to the board's finance committee and, subsequently, to the board itself. For compliance risk areas such as quality of care, the Health Insurance Portability and Accountability Act (HIPAA) and the Emergency Medical Treatment and Active Labor Act (EMTALA), management should prepare summary reports of periodic reviews, findings and related action plans for submission to the board's quality of care, safety or executive committees and, subsequently, to the board itself.
To assist the board in monitoring compliance, a summary of key risk areas is presented here as a basic review. Obviously, this presentation is not comprehensive, nor does it negate the need for the board to retain appropriate legal expertise to keep itself up to speed on compliance and to offer necessary legal advice on all compliance risk areas.
Antikickback/Stark Law
1. Physician Relocation and Recruitment: Income guarantees, grants, loans, practice support, lease of space or equipment, medical directorships and similar arrangements, must be reasonable and reflect fair market value (FMV).
2. Physician Medical Directorship: Contracted duties and the adequacy of their performance need to be documented; payment for services must be FMV; and the number of directorships should not exceed the need for them.
3. Physician/Hospital Joint Ventures: Return on investments must be reasonable and based on a legitimate investment/capital risk; there must be a mandatory sell-back if a physician retires or leaves the hospital's area; and referrals must be tracked to ensure appropriate use of hospital resources.
4. Medical School Affiliation Agreements: Documentation is needed for contracted clinical and administrative physician services, and payments must reflect FMV.
5. Medical Office Buildings: All leases must be in writing and reflect FMV, and rent collection must be current and documented.
6. Other Physician Compensation: There must be a legitimate business purpose for all payments to physicians, including loan forgiveness; payments must be FMV and absolutely not tied to ancillary tests or referrals.
Billing/Reimbursement
1. Medical Education Payments: Medicare and Medicaid payments must relate to resident head counts. Nondirect teaching duties must be monitored to prevent excess Medicare and Medicaid payments.
2. Medicare Payments for Clinical Trials: Medicare payments need to be monitored to prevent payments for services actually covered by clinical trials.
3. Part B Physician Billing: Monitor billing and payments by hospital-employed physicians to prevent duplicate payments when interpretations are made and billed by both emergency department physicians and radiologists. Audit evaluation and management billings to prevent upcoding.
Other Risk Areas
1. Quality of Care: Ensure appropriate systems are in place for monitoring the prevention of adverse clinical outcomes. Establish a peer review system that educates, prevents, detects and resolves problems and potential problems, and monitor case reviews through such quality indicators as significant potential or actual adverse patient occurrences.
2. Hospital Clinical Laboratories: Ensure compliance to the Clinical Laboratory Improvement Amendments (CLIA) regulations as they relate to proficiency testing and compliance with the Centers for Medicare & Medicaid Services (CMS) regulations.
3. Independent Review Board (IRB): Monitor the IRB approval process to prevent bogus or duplicative clinical research proposals designed to generate referrals.
4. Health Insurance Portability and Accountability Act: Ensure adherence to all HIPAA regulations, especially training requirements and how processes are implemented to safeguard patients against inappropriate disclosure of protected health information.
5. Emergency Medical Treatment and Active Labor Act: Ensure appropriate medical screening, examination and stabilizing treatment regardless of patients' ability to pay. Audit emergency department practices to prevent inappropriate transfers or transfer refusal.
It is incumbent on all board members to understand their role in improving hospital governance effectiveness, protecting the hospital's assets from unnecessary risk and ensuring quality of care and patient safety. Each board member should be familiar with key compliance risk areas and be inquisitive at each board meeting to make sure that major compliance activities are ongoing. During board meetings, trustees should actively discuss compliance and make decisions based on clear, understandable data. They should also set forth the expectation that monitoring processes need to be in place to ensure that action items determined in meetings are followed through to completion. Finally, the board should take advantage of available knowledge and advice from in-house and outside legal counsel to help reduce the hospital's compliance risks.
Phillip S. Schaengold, J.D., is a partner with Brightworks Management LLC, a health care organization management company in Philadelphia, and is a former hospital and health system CEO.
This article 1st appeared in the December 2099 issue of Trustee Magazine.
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