See page 16. Thomas A. Vallas

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1 Compliance TODAY July 2014 a publication of the health care compliance association What s the key to successfully merging two large hospital systems? an interview with Michael R. Holper Senior Vice President, Integrity & Audit Services CHE Trinity Health See page Overcoming the challenges of conducting a thorough and meaningful risk assessment Charro Knight-Lilly 31 Getting ahead of the ACA compliance program mandate Thomas A. Vallas 39 Provider-based departments: Managing risk Stephen Sonnenfeldt-Goddard 43 Ensuring ADA compliance: Revising the employment and medical staff application process Andrea Bell This article, published in Compliance Today, appears here with permission from the Health Care Compliance Association. Call HCCA at with reprint requests.

2 by Ann Dunham, MBA, SPHR; and Sharon Blackwood What every compliance officer needs to know about Human Resources The Human Resources (HR) department is responsible for overseeing a complexity of laws and regulations. Compliance officers have many opportunities to collaborate on issues with the HR department. Non-compliance with HR regulations will result in prosecutions and penalties. Monitoring activities are essential to ensure compliance. The Compliance/HR team provides an effective safety net for the organization. Ann Dunham (ann.dunham@hrhonline.org) is the Compliance Officer for Hannibal Regional Healthcare System in Hannibal, MO. She has experience in Compliance, Human Resources, and Medical Practice Management. Sharon Blackwood (Sharon.Blackwood@AltegraHealth.com) is an Independent compliance and privacy professional in the Nashville area. She conducts nationwide compliance projects and audits with Altegra Health. Healthcare organizations vary in size and services, but they all have one thing in common: They all have a Human Resources (HR) department that manages their most important assets people. The effective management of people requires a highly complex and changing web of legal, regulatory, social, and political forces which influence healthcare. Human Resources is responsible for compliance with federal and state legislation pertaining to all personnel matters and the regulatory requirements include, but are not limited to, employee rights, discipline, privacy, and equal employment opportunity. These fall under government oversight that includes the Office for Civil Rights (OCR), Department of Labor (DOL), and the Occupational Safety and Health Administration (OSHA). And, depending on the size of the organization, the Human Resources department often takes on additional tasks that include background checks, credential management, and employee file management. Human Resources departments are responsible for recruiting and retention programs that impact Dunham employee turnover, but their involvement in the healthcare organization is far-reaching. The HR department contributes to the quality of patient care by recruiting skilled and qualified employees, and, in most instances, is the first impression an employee has of the organization s culture and business ethics. In addition, managers rely on HR to provide Blackwood them with information and guidance on laws that govern the relationship between the employees and employer. When should HR and Compliance overlap? Compliance with laws, regulations, and organizational policies begins the minute the applicant starts the interview process and continues up to the point an employee

3 terminates employment with the organization. The compliance officer plays an important role in assisting Human Resources in co-creating a culture of compliance where the employee feels safe to report any non-compliant behavior and practices. HR also assists in developing the organization s code of conduct, which guides the employee s behavior, and in suggesting ways to monitor compliance with the regulations. For the compliance officer who receives the hotline tips, you know that most are usually HR-related. By knowing what regulations pertain to the HR department, the compliance officer will know when to involve HR in the hotline investigation, in policy development, and other investigations involving the employees. Likewise, although the HR professional is highly trained in their area, there are times when the HR professional should reach out to the compliance officer and/or legal counsel for help with regulatory application, interpretation, and investigations. A quick checklist of collaborative activities would include: Conducting an HR policy and procedure audit to determine compliance and areas for improvement; Improving input in training and education; Ensuring equal and fair hiring practices are occurring; Ensuring equal and fair promotion practices; Collaborating on performance evaluation elements related to compliance and privacy; Conducting investigations for potential harassment situations; Developing or updating policies to ensure compliance with legislation; Reviewing mandatory items required in the employment manual; Reviewing mandatory new hire and annual employee education; Auditing the pension plan; Reviewing documentation processes for employee and investigation files; Reviewing employee and vendor screening; When a compliance infraction has occurred, ensuring accountability with fair and appropriate discipline; Collaborating on the grievance process as it relates to non-compliance; and Collaborating on exit interview questions and processes. HR laws The HR department is HR also assists responsible for a long list of regulations and in developing the they are listed here organization s code as a resource. Keep in mind that there are of conduct and in additional obligations suggesting ways to related to organized labor forces. There monitor compliance are also policies and with the regulations. practices not included here, such as those related to workplace searches, electronic monitoring, and the employment-at-will principle. The primary regulatory oversight body for the HR department is the DOL although many of the regulations also fall under the OCR s scope of duties. The DOL s objective is to make sure US employees have legal protections against employment discrimination at the state and federal levels. These protections come from laws and from court cases. Protections at the state level vary from state to state. It is important to remember there

4 are protected classes. To receive employment discrimination protection under federal legislation, an employee must be a member of a class of individuals intended to receive protection. Generally, protected classes are age, race, gender, religion, color, national origin, disability, and ethnicity. The basic mission of the OCR is to investigate complaints and enforce civil rights laws that prohibit discrimination in programs or activities that receive federal financial assistance. The following is a list of federal regulations that pertain to HR. Health Insurance Portability and Accountability Act (HIPAA) (1996) Provides protections for participants and beneficiaries in group health plans, including limiting exclusions for pre-existing conditions and general health conditions. HIPAA establishes privacy protections for employees against unauthorized disclosure of healthrelated information. Another aspect is holding employees accountable for keeping the patient s protected health information (PHI) confidential and only accessing this information on a need to know basis to do their job. Title VII, Civil Rights Act (1964) (1991) Prohibits the discrimination in all terms and conditions of employment (including pay and benefits) on the basis of race, religion, ethnic group, sex, national origin, or disability. Title I, Americans with Disabilities Act (ADA) (1990) Protects qualified individuals with disabilities from unlawful discrimination in employment. Discrimination is prohibited if the individual can do the essential job functions. An employer must make reasonable accommodations for such individuals unless doing so would place an undue hardship on the employer. Executive Orders (1965), (1967), (1969) Prohibits federal contractors that have contracts valued at greater than $10,000 from discrimination on the basis of race, color, religion, sex, or national origin. In addition, the federal contractor must develop a written affirmative action plan, based upon the stipulations of each Executive Order. Fair Labor Standards Act (FLSA) (1938) Regulates the status of employees (versus independent contractors) and provides for a minimum wage and overtime unless the employee meets an exempt classification. Pregnancy Discrimination Act (1978) Protects pregnant employees from being forced to resign or take a leave of absence. Age Discrimination in Employment Act (ADEA) (1967) Prohibits discrimination in employment for persons age 40 and over. Prohibits mandatory retirement ages. Immigration Reform & Control Act (IRCA) (1986) Requires that new employees provide specific documents to employers showing that they are who they claim to be and that they have a legal right to work in the United States (I-9 forms). Employee Polygraph Protection Act (1988) Prohibits employers from requiring preemployment polygraph examinations. Uniformed Services Employment & Re-employment Rights Act (1994) Prohibits discrimination against military service members because of past, current, or future military service. Protects military service workers employment rights and benefits of employment

5 Equal Pay Act (1963) Prohibits wage discrimination by requiring equal pay for equal work of the same skills, effort, and responsibilities. Consumer Credits Protection Act (1968) Sets a national maximum limit on the amount of an employee s wages that can be withheld to satisfy wage garnishment. National Labor Relations Act (NLRA) (Wagner Act) (1935) Prohibits employers from certain unfair labor practices. Primary responsibility for enforcement rests on the National Labor Relations Board. Labor-Management Relations Act (Taft-Hartley) (1947) Protects management rights by prohibiting certain unfair labor practices by unions. Employee Retirement Income Security Act (ERISA) (1974) Establishes standards and requirements for the administration of employee benefit and welfare plans, to ensure employees will actually receive monies they set aside for a pension plan. The act also covers part-time employees who work 1,000 hours a year. This Act applies only if the employer offers benefits. Uniform Guidelines of Employee Selection Procedures (1978) Prohibits selection policies and practices from having an adverse impact on the employment opportunities for any race, sex, or ethnic group unless it is a business necessity. Federal Insurance Contributions Act (FICA) (1935) A federal payroll tax imposed on both employees and employers to fund Social Security and Medicare, which provides benefits to retirees, disabled workers, and children of deceased workers. Genetic Information Nondiscrimination Act (GINA) (2008) Prohibits health insurers from discriminating based upon genetic information. Also prohibits employers from requesting or requiring employees or family members to provide genetic information. Fair Credit Reporting Act (FCRA) (1970) Defines employees and potential employees rights regarding employers use of information obtained in reports compiled by third-party credit reporting agencies as the basis for employment decisions. Fair and Accurate Credit Transactions Act (FACTA) (2003) Requires employers to take reasonable measures to reduce the risk of identity theft and other harm to their employees that results from the employer s failure to properly dispose of confidential records. Consolidated Omnibus Budget Reconciliation Act (COBRA) (1985) Requires employers to permit employees to extend their health insurance coverage at group rates for up to 36 months following a qualifying event. Family Medical Leave Act (FMLA) (1993) Provides that employees who have worked at least 12 months and at least 1,250 hours in the previous 12 months are eligible to take up to 12 weeks leave during any 12-month period for the purposes of birth, adoption, or foster care of a child; caring for a spouse, child, or parent who has a serious health condition; or serious health condition of employee. Additionally, the National Defense Authorization Act of 2008 amends FMLA to allow a spouse, parent, son, daughter, or next of kin up to 26 weeks to care for a member of the armed services suffering injuries or illness sustained while on active duty. Allows 12 weeks unpaid leave for a qualifying exigency for a son, daughter, parent, or spouse on active duty

6 Occupational Safety & Health Act (OSHA) (1970) Mandates compliance with federal health and safety standards. Employers with fewer than 10 employees are exempt from certain reporting requirements. Many of the safety regulations may be delegated to another department, but HR is generally trained in this area and may have some responsibilities. Other safety organizations include the Environmental Protection Agency, National Fire Protections Association, The Joint Commission, Compressed Gas Association, the Institute of Standards and Technology, as well as various state and local agencies. Worker Adjustment & Retraining Notification Act (WARN) (1989) Requires employers with more than 100 employees to give notice of plant closings or layoffs that affect at least 50 people. For federal contractors, there are additional regulations that include: EEO-1 Report filed annually with EEOC Requires federal contractors that have contracts valued at greater than $50,000 to submit a list of the number of employees by race and sex for each EEO job category. Drug Free Workplace Act (1988) Requires some federal contractors to have written drug-use policies and to follow certain requirements to certify that they maintain a drug-free workplace. Vietnam-Era Veterans Adjustment Act (1974) Requires federal contractors that have contracts valued at greater than $25,000 to take affirmative action in hiring and promoting Vietnam-era veterans, special disabled veterans, and veterans who served on active duty during a war or in a campaign or expedition for which a campaign badge has been authorized. All job opportunities must be registered with local employment services. Davis Bacon Act (1931) Requires federal contractors that are performing construction, alteration, repair, painting, or decoration on public buildings or public works with contracts valued at greater than $2,000 to pay the same minimum wage rates as similar jobs in the community. Copeland Act (1934) Precludes federal contractors from inducing an employee to give up any part of compensation to which they are entitled (anti-kickback). EEO-1 Report filed annually with EEOC (if not a federal contractor) Requires employers to submit a list of the number of employees by race and sex for each EEO job category. Vocational Rehabilitation Act (1971) Prohibits federal contractors that have contracts valued at greater than $10,000 from discriminating against people with physical or mental disabilities by requiring the contractor to take affirmative action in employing and advancing disabled individuals. McNamara-O Hara Service Contract Act (1965) Requires federal contractors performing services with contracts valued at greater than $2,500 and that use service employees for the United States to pay that same minimum wage rates as similar jobs in the community. Walsh-Healy Act (1936) Requires federal contractors that have contracts valued at greater than $10,000 to pay wages equal to the area, including minimum wage and overtime

7 What to audit? Every hospital or healthcare organization department should be aware of the regulations that impact them and have appropriate monitoring to ensure compliance with the regulation. These activities can be performed in the HR department by the department personnel as part of their regular duties. This takes some of the responsibilities off the compliance officer, because he/she cannot oversee or monitor everything. Some type of reporting process should be used when there are significant variances. In addition, the annual compliance audit work plan should occasionally include some type of HR audit that is independent of the monitoring processes. Personnel from other departments, such as Compliance or Internal Audit, may be appointed to assist with the HR audit process, determined by their areas of expertise and experience. The auditor should include a review of current HR policies, procedures, and documentation to ensure compliance with ever-changing rules and regulations. Sections of review include: Background and OIG Excluded List checks Credentials (especially licenses) Training and orientation Performance evaluation process Promotion practices Termination process and exit interviews Form review Non-compliance risks An employer who overlooks regulatory compliance with their HR practices could face: A fine of $1,100 for any violation of the appropriate payment of overtime for non-exempt employees in accordance with the Fair Labor Standards Act; Penalties as high as $10,000 for each occurrence of failing to post required safety notices or keep accurate records; and Fines up to $1,000 per employee for non-compliance with the Federal Immigration Reform Act. By maintaining a satisfied and productive workforce, an employer lessens the expense associated with costly turnover of staff. Losing one employee is estimated to cost a company 50% 150% of the lost employee s salary in time and money spent to replace that employee. Conclusion HR continues to become more complex as the result of new laws, regulatory guidelines, and recent court decisions that interpret existing laws. The compliance professional should be knowledgeable of these laws and regulations, and rely on the HR professional s expertise. Compliance officers will work in partnership with HR to have appropriate safeguards in place to prevent poor decisions and costly errors. When a non-compliant situation is reported or found, HR and Compliance should be involved as a team. To monitor the level of compliance for HR, a variety of audits should be on the annual audit work plan to be proactive, before any external survey finds a problem. Employees should be reassured the workplace has a culture of compliance in which to do their jobs. They need to feel empowered to report a situation they feel is not in compliance, without the fear of any retaliation. The leaders of the healthcare system rely heavily on both Human Resources and Compliance to make sure the best employees are hired, treated equally and fairly, and are confident their workplace has a culture of compliance so they can report a non-compliant situation. Employees need guidance in what the healthcare industry determines is legal and ethical in treatment and practices, and Human Resources and Compliance must walk in a unified direction so that employees believe that every employee is held accountable for compliance