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Healthcare Compliance Programs: Not Just Another Cost Center

Richard Kusserow, CEO of Strategic Management Services and author of SAI Global’s 2020 Healthcare Compliance Benchmark Survey, discusses the benefits of a compliance program, from cost avoidance to reducing billing errors to raising employee morale and improving patient care and outcomes.

Compliance officers constantly struggle to sell the compliance program as more than just another administrative cost center, a necessary defensive function created in response to ever-increasing rules and regulations that affect business practices and healthcare delivery. The real challenge is to identify the other positive benefits of an effective compliance program and make the case that they far outweigh the costs of supporting the program — with the opportunity to save a lot of money in the long run.

There’s no better example of this than the impact of COVID-19. With the U.S. government’s efforts to support healthcare providers during the COVID-19 pandemic by issuing regulatory waivers and exemptions, compliance offices have been a critical resource in guiding their organizations on proper billing and coding practices.

The reality is that an effective compliance program can really save money for the organization and contribute positively to the overall efficiency.

Avoid the costs of expensive government interventions

This comes under the category of “an ounce of prevention versus a pound of cure” and is most cited by compliance officers in justifying program costs. There is no question that the Office of Inspector General (OIG), Center for Medicare and Medicaid Service (CMS), Office for Civil Rights (OCR), and other federal and state agencies are increasing enforcement efforts, resulting in escalating fines and penalties.

In the 2020 Compliance Benchmark Survey compiled by SAI Global and Strategic Management Services, over half of the respondents reported having encounters with OCR regarding HIPAA breaches and were subject to a government audit or investigation. One quarter reported having been involved in a settlement process with the Department Office Justice (DOJ) or OIG. This evidence makes it clear that it is not “if” but “when” a close encounter with an enforcement agency will occur.

Effective compliance programs reduce or mitigate the risk of such liabilities by ensuring that proper safeguards are in place for all high-risk areas, along with ongoing monitoring and audits. The organization is, therefore, far less likely to encounter these extraordinary expenses that are unrelated to the core purpose of providing quality care.

The key to success here is early identification that permits addressing weaknesses before they escalate into significant liability issues that can have the organization avoid costly penalties. In this way, the compliance program can help prevent expensive and time-consuming audits and investigations.

Reduce claims processing error rates

One of the significant cost problems for organizations is dealing with claims processing error rates. Correcting errors and resubmitting them is time-consuming and costly. Weaknesses in this area also expose organizations to outside audits and investigations by CMS contractors, OIG, DOJ and state agencies.

Effective compliance programs conduct ongoing monitoring of the claims processing system. This includes having a quality assurance program with online quality control reviews (sampling live claims) to identify errors before submission for payment and those responsible for them. This should include tracking the source of errors and taking corrective action to address them, such as educational contacts or retraining of those making errors.

This monitoring effort should be done by the program managers, but the ongoing testing of this activity to verify it is working correctly and effectively should be part of compliance auditing. Done properly, there should be a record of reduced error rates and resulting savings. It is noteworthy that in the 2020 Compliance Benchmark Survey, respondents rate this area as a top priority.

Raise workplace morale and increase productivity

It is essential to create avenues of compliance communication with employees to detect and address concerns and suspected violations of law, regulations, code of ethical conduct or policies.

There are several compliance communications channels, but the one that most think of first is a hotline. The OIG has also encouraged other channels, including surveying employees about their compliance knowledge, perceptions and attitudes, and using compliance training to gain feedback from employees. Training sessions need to explain to employees and medical staff what compliance issues are and how to report them and seek resolution.

Having and actively supporting compliance and ethics programs not only allows healthcare organizations to address emerging problems before they become a liability, but also can raise the morale of those in the workplace.

The message is that the organization is committed to doing the right thing and that what employees think is important to management. This message should begin with new employee orientation and continue with ongoing compliance education and training programs. Studies have shown that where employee morale is high, so is productivity.

Improve patient care and outcomes

Studies confirm that caregivers performing their services in an environment that is supportive of doing the right thing provide better services to patients, which generally results in improved outcomes.

If the message from management is consistent with the focus on the quality of care, this translates to better care. On the other hand, if the message focuses on bottom-line monetary issues, that message does not translate to better service and results. Sending the right message begins with the initial employee orientation and is continually reinforced with ongoing compliance education and training. Addressing compliance concerns impacting employees will ultimately lead to better outcomes.

Effective compliance programs have multiple, tangible benefits to healthcare organizations beyond satisfying regulatory mandates. Avoiding costly fines, reducing billing errors, and improving patient outcomes all affect the bottom line, and that’s how compliance officers can reframe the value of their investments in healthcare compliance programs.


SAI Global thanks Richard Kusserow, CEO of Strategic Management Services and former Department of Housing and Human Services (DHHS) Inspector General, for this guest blog post.


See additional resources and insights from SAI Global for managing healthcare compliance during the pandemic.

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