Compliance in an Outsourced World

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1 Compliance in an Outsourced World HCCA Compliance Institute April 26-29, 29, 2009 Karen D. Wilson Citadel Compliance Group, LLC Dallas, Texas citadelcompliance.com Today s s Themes Embedded risks in outsourced functions New risks triggered by service delivery models Rigorous transaction scrutiny is needed Sustained oversight and relationship management Healthcare outsourcing and compliance risks Role for compliance personnel Group LLC 1

2 Let s s Define Our Terms Outsourcing and offshoring are not synonymous. Outsourcing Operations managed by a third party Capital investment, service levels Innovation Technology & process Long-term relationship Offshoring Foreign sites, local workers Labor rates, English-speaking Interdependent services Multiple countries & time zones Why Outsource? Reduce costs Drive innovation & technology Redeploy internal resources Offload risk & low-value operations Improve focus Access world-class capabilities Accelerate re-engineering engineering benefits Your mess for less Group LLC 2

3 New Services, New Risks Value-Added Services» Logistics, Transportation» Engineering, Animation» Research» Human Resources» Medical & Legal Transcription» Procurement» Debt Collection» Tax Services» Records & Management» Compliance Compliance Risks -- Know Them When You See Them Industry-Specific Healthcare Banking, Insurance Securities Telecommunications Transportation Education Agency-specific Group LLC 3

4 Compliance Risks -- Know Them When You See Them Industry-Neutral Laws & Regulations Data Privacy & Security; PCI Conflicts of Interest Kickbacks, Bribery, Fraud Government Contracting Securities & Insider Trading Employment & Labor Advertising & Marketing Intellectual Property; Software Licensing Antitrust, Fair Competition Consumer Protection; Regulations E&Z Export-Import USA Patriot Act Records Management & E-Discovery Healthcare Compliance Programs Areas of Focus Fraud, waste & abuse Physician referrals Kickbacks Data privacy & security False claims Patient rights Certification standards Group LLC 4

5 Healthcare Compliance Standards Laws and Regulations OIG Compliance Program Guidance Federal Sentencing Guidelines Federal Anti-Kickback Act Federal False Claims Act PhRMA & AdvMed Codes of Conduct CMS Compliance Program Requirements HIPAA Healthcare Fraud & Abuse Control Program FDA Labeling & Promotion State laws Healthcare Compliance Standards Federal Sentencing Guidelines Seven Elements of Effective Compliance & Ethics Programs Board oversight Designated Compliance Officer & Management Committee; Tone at the Top Written policies and procedures Training and awareness Monitoring and auditing Enforcement of standards through disciplinary guidelines Systemic fix to core cause of breach to prevent future violations Group LLC 5

6 Healthcare Compliance Enforcement Who Are the Enforcers? OIG Audit & Investigation U.S. Department of Justice FBI, Treasury Department Other federal, state agencies (e.g., Banking, Insurance) Patients Interest groups Private litigants What Do They Expect? Oversight of the program Reasonable knowledge of key risks Independence of compliance personnel Adequate resources, support Healthcare Compliance and Outsourcing Outsourcing and Healthcare Compliance Identify outsourced services with embedded regulatory requirements Data entry Claims processing and payment and records management Data center Technology development IT operations Helpdesk Website hosting Client services, call centers Remittance processing Collections Group LLC 6

7 Managing Compliance While Outsourcing Understand the outsourcer s service model & data flows Examine closely services delivered partly or wholly from offshore Understand how and by whom a function will be managed by the outsourcer vs. the client Review policies and procedures & fill any gaps Identify critical employees and controls required to maintain compliance after a function is outsourced Prohibit the use of subcontractors for services with high compliance risk Address duties and liabilities in the contract in adequate detail; allow flexibility for future changes in the law and the client s business Identify costs of compliance and obligations to pay Monitor and manage throughout the relationship Where Are the Risks? Services Claims Processing Data Entry Remittance Payments Data Center Operations Systems & Programming Helpdesk Website Hosting Messaging & Records Management Call Centers Human Resources Finance & Accounting Healthcare Compliance Risks HIPAA Fraud False Claims OIG Investigations, Audits General Compliance Risks Data Privacy & Security Conflicts of Interest Intellectual Property & Third Party Software Antitrust (Teaming Agreements) Export-Import & USA Patriot Act; E-Verify Regulation Z and E; PCI Consumer Regulations; Red Flag Rules Government Contracting; FAR Electronic Discovery Rules Group LLC 7

8 Don t t Forget Risks From Outside Sources Subcontractors & vendors Licensed software Mission-critical technology and licensed software Foreign laws & regulations Political & legal stability Environment & natural disaster Customers and patients Outsourcer s stability (e.g., Satyam) Compliance Needs a Champion! Value-added role Contracts surprisingly vague Rules and standards are needed Focus on process -- how, who & when Use experts Enforce obligations with audits Manage relationship for the long term Group LLC 8

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