What Does Your Board Need to Know and How Do You Communicate It to Them?

One of the biggest factors in an effective compliance program is transparency based upon a basic rule of thumb is that a compliant organization is a knowledgeable organization. Communications must go up and down the entire organization, from any starting point, and be evident to anyone, as an effective compliance program is one that doesn’t keep secrets from the rest of the organization. This transparency and clarity must extend to the Board as they need to know what is going on within the organization and within its compliance program through detailed board meeting minutes, training, annual reports, etc.

“Every required provider shall adopt and implement an effective compliance program…Required providers’ compliance programs shall be applicable to: Billings; Payments; Medical necessity and quality of care; Governance; Mandatory reporting; Credentialing; Other risk areas that are or should with due diligence be identified by the provider.”

-Title 18 NYS CRR Part 521.3(a)

A Knowledgeable Board is a Committed Board

Board involvement is key for a compliance program to be effective because an effective compliance program requires the understanding, leadership, and commitment of Senior Management and the Governing Body. Regulators clearly look to this group for the development and implementation of an effective compliance plan and there is an expectation of Board involvement and leadership in the compliance program.

It is no longer sufficient to pass along a piece of paper to the board in the form of a report as the Board is ultimately responsible for compliance program oversight. It is necessary to prove involvement of the Board which can be accomplished by having detailed documentation including Board meeting minutes with compliance discussions indicated.

How many of your Compliance Officers have made a personal appearance at a Board meeting in the past 12 months? The Compliance Officer should be a known entity to Board members. This is accomplished by attending meetings and giving the Board the opportunity to ask the compliance officer questions.

Getting the Board Involved

How does a Board get involved and ensure that the compliance standards are adequate, consistent, and maintained?

One of the most important steps is through a Board resolution for a compliance program. The Board should be involved in: (1) the creation, review, and approval of the compliance plan, and (2) approval of compliance policies and procedures, and (3) an annual review and approval of a compliance work plan. This assures that the Board is involved in the beginning and stays involved throughout the year.

The Board should also be provided information through regular education and training, for example, through annual training. Having a Board member on your compliance committee is a great way to get the Board involved. Routine reporting on compliance activities is another way to keep them abreast of compliance activities.

Raising Board Awareness Through Communications

Now let’s talk about how you go about communicating with the Board.

Have any of your Compliance Officers ever had a closed door meeting with the Board without management present? This is a good way to demonstrate transparency and demonstrate confidence and trust in the Compliance Officer. It demonstrates an organization wide compliance program, and it allows the Board an opportunity to ask questions about management, if needed. This should be considered not a bad thing but rather an opportunity to enhance the communication and transparency of the organization.

Compliance activities should be communicated through an annual work plan, and throughout the year, through regular, periodic updates on progress. On an annual basis, a compliance report should be prepared and communicated to the Board.

A culture of compliance and ethics must run from the top down and should be embedded within the organization. An effective compliance program will lead to decision making and re-aligning priorities, and possibly creating compliance related policies, procedures or systems. You do not want your Board to be left in the dark and surprised when urgent issues or requests arise.

Understand the Regulatory Environment

The Board needs to understand the current regulatory environment and any regulatory changes that may impact the organization. For example, the regulations that went into effect in July 2009 lowering the threshold for mandatory compliance programs from $5 million of Medicaid revenue to $500,000 of Medicaid revenue cold have a dramatic, long term impact on your organization. For those impacted, additional resources and Board decisions will be necessary.

The Board should also be aware of who is auditing whom, and for what, as well as what is happening to peer organizations. Again, communication, education, and transparency are key elements to demonstrate an effective compliance program.

The Compliance Report

Let’s talk a little bit about what should be in a report to your Board.

The first thing that you want to include is a summary of any external audits - any review, survey, assessment, and audit performed by someone else including DOH, OMIG, OIG audit, state surveys, license reviews, bed hold audits, etc. You also want to include a summary of any internal audits - those performed by staff, or a consultant on behalf of the organization.

You want to give your Board a copy of your annual compliance work plan, so they can see what the compliance program will be doing in the coming year.

Also, summaries of any internal or external risk assessments performed should be in your report. Don’t forget to include summaries of compliance activities, including investigations and results of those investigations and changes or revisions to the compliance plan and compliance policy and procedures.

Essentially, your Board Report is a reflection of your compliance program -- what you have accomplished and what you did for the organization.

While it would be nice to have the Board sit through three hours of a presentation of the report, the reality is you may only have 15 minutes. Make your presentation clear, actionable and consider using dashboard reporting, as it can be a good tool that the Board can view and easily understand in a relatively short period of time.

Trouble in the Boardroom

WellCare, one of the biggest Medicare/Medicaid insurance providers in Florida, with thousands of employees and billions of dollars in revenue, was charged with securities fraud several years ago.

That’s really not the issue here, however -- the issue is what happened to them during the initial investigation. Many FBI agents swarmed WellCare’s headquarters when a quarterly Board meeting was taking place, and several agents went straight to the board room. Board members were held in the board room for several hours of questioning, several of which questions related to their Corporate Compliance Program (per Wall Street Journal, October 26, 2007).

What would happen if your Board was questioned about your compliance program and its activities? Would your Board be able to answer any questions regarding your program? Hopefully, this scenario will never occur at your organization, but having your Board educated and informed about your compliance program activities is essential for an effective compliance program.

Your Board should be able to answer the question “how good is your organization and how do you know?” Using the recommendations outlined above will provide your Board with the information to help them answer this question and other questions about your compliance program, but more importantly, it will make your Board a working part of your compliance program that will help your organization fulfill its mission to its stakeholders.

Click here to return to the newsletter