Blast from the Past – Duties of Boards: An OIG Perspective

There are nearly 300 articles/posts on this site and from time to time, I’m going to repost an “oldie but a goodie” that is as applicable now as it was when I originally wrote it.  This is from July of 2009.  This follows well with Tuesday’s piece on OIG initiatives and SNFs…

This seemed to be a natural successor topic to my last post, “Why Quality Matters”; principally arising out of recent press releases from the OIG.  For example, in June the OIG reported that it had recovered $2.4 Billion in fraud, waste and abuse.  In July, an OIG release reported that a Nursing Home Executive was banned from being involved in any Federal health care programs as part of a settlement with the OIG.  Undoubtedly, more news of the same vein will be forthcoming, particularly since the Stimulus Bill included additional dollars for the OIG to stay on the offensive in “fighting waste, fraud and abuse”.  With some reconciled legislation on health care reform also due out in the coming months, a portion of the savings to pay for the added benefits coming from recovery actions, greater scrutinty will no doubt be placed on providers and individuals by the OIG on billing and quality of care activities.

Having been a CEO in a large health care organization I can attest that Boards (especially non-profit boards) believe, more often than not, that compliance and quality is management’s job.  I can also attest that all too often, limited time is provided at meetings for matters of quality and compliance.  Unfortunately, from all too many conversations with colleagues over the years, I know that even CEOs don’t pay enough attention to the rigors of quality and compliance and  as a result, their boards definitely don’t understand how important these matters are – organizationally and personally.

A seemingly complicated lanscape (quality and compliance and the Federal requirements) is perhaps the primary reason why so many organizations fail to fully and adequately embrace what the OIG is actually getting at.  In reality, most of the core provisions and what needs to occur at the organizational level is fairly straightforward.  Legal counsel that specializes in health care is usually a safe, first step in terms of board education and laying out a compliance program.  Grasping the basics however, is an operating responsibility and for most organizations and their boards, they should understand the following.

  • Boards have two main responsibilities in this area – the Duty of Care and the Duty of Loyalty.  The OIG has made it plain that these fiduciary duties include the maintenance of a corporate compliance program.
  • Boards have the oversight obligations to the Quality/Compliance Plan and the Corporate Integrity Agreement.  The OIG via recent cases and actions has indicated that the Board must review compliance with federal health care programs at least quarterly.  Documentation standards have also been raised  to the point where Board resolutions  and individual certifications are now the benchmarks for directors to substantiate agreement with board activities on the compliance front and to document board level reporting and investigative actions into quality and compliance at the organizational level.
  • Board members are at risk “personally” in terms of liability if the Duty of Care is breached.  The OIG has been issuing papers for several years encouraging boards to become more active and more knowledgeable about the federal health care programs their organizations are participating in.  The OIG, citing a case involving Caremark has indicated that, “directors under extreme circumstances may be at personal risk if they fail to reasonably oversee the organization’s compliance program or act as mere passive recipients of information”.

Taking the above “core” into account, Boards can and should take a few very simple steps (of course this should be part of  a written program adopted by the Board) to achieve and to maintain, essential compliance (legal counsel again is advisable here to make sure that all “Is” are dotted and “Ts” are crossed).

  1. Quality is a Standing Subject/Report at Each Meeting: The OIG says a minimum of “quarterly” and frankly, in today’s environment that is not enough.  This report should be structured and management and other organizational representatives need to bring quality information directly to all members of the Board.
  2. Document Board Engagement: Board members need to be engaged and minutes should reflect questions and a back and forth conversation to illustrate a dialogue about quality.
  3. Board Statements: The Board should adopt a resolution and perhaps even sign on to a mission statement commiting each director to his/her Duty of Care.
  4. Allocate Resources: The Board needs to be active participants in strategic planning and budgeting processes where resources such as staff, equipment and infrastructure are allocated to maintain and improve, the delivery of care to patients and residents.
  5. Create Structure and Processes: The Board should create for itself, formal programs and processes to solicit feedback beyond information presented by management.  For example, the Board should seek education on quality matters and matters of compliance.  The Board should require reporting of turnover, resident/patient satisfaction, complaints, and key quality indicators.  The Board should also seek outside counsel (physicians, clinicians and other experts) to from time to time, provide additional information and resources to its members and to attend on behalf of the Board, meetings where quality matters are discussed as an “independent” resource or auditor to the Board.
  6. Implement Accountability: The Board’s chief duty is to assure not just that information is freely flowing but that standards are met and when they are not, corrective action is taken.  The Board must assure that management is held accountable for inadequate quality and compliance and that corrective action is taken immediately and reported back to the Board.

It is important to note that these steps are not guarantees of compliance with OIG requirements but certainly, a fabulous practical start – especially if memorialized by action and written documentation.  What I can guarantee will occur if these steps are taken and implementation is done carefully and correctly (not just as an exercise in “paper” compliance) is the following.

  • Culture of Quality: The organization begins to develop a culture of quality.  The Board sets the tone for management and employees and that tone is an expectation of high levels of quality in resident and patient care.  The priority is clearly known that quality is as important as financial results.
  • Finances and Quality are Connected: When the Board is engaged with equal attention to the quality of care delivered, a better allocation of resources and a better strategic plan and budget is built.  The Board becomes far more aware of how resource use is and should be tied, to the ultimate product delivered to patients and residents.
  • Quality and Success are Connected: The quality of care is tied to every aspect of an organization (see last post, “Why Quality Matters”) from liability to malpractice to regulatory citations to billing audits to reputation and ultimately, volume.  Quality improves staff retention, reduces complaints and regulatory actions and improves customer retention and supply.

The conclusions here are quite simple: Boards and individual Directors need to become more engaged in oversight and inquiry of their organization’s delivery of care to patients and residents.  Additionally, given the link between payment and compliance under Federal health care programs (Medicare and Medicaid), Boards have a duty to make certain that compliance programs are in place, effective, and provide detailed enough information to the Board so that the pitfalls associated with individual director liability and organizational criminal and civil penalties can be avoided.  In short, compliance programs need to be in place which monitor not only the delivery of care but the billing practices thereto, especially pertaining to Medicare and Medicaid.


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