When is Having a Part-Time Compliance Officer a Viable Option?

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) emphasizes that one size does not fit all for compliance programs.  Yet, the burdens of building and managing a full-fledged compliance program can be daunting regardless of organization size.  For a smaller organization, keeping up with the expertise needed to cover a wide range of compliance responsibilities can be a serious problem since small organizations may not be able to afford a full-time compliance team.  This is further complicated by the fact that it is difficult to find sufficiently qualified Compliance Officers to carry out the necessary duties and using less experienced candidates may prove risky.  The worst solution for the dilemma is to designate compliance responsibilities to an internal individual as a secondary duty; it just doesn’t work.  The individual’s primary duties will almost always push compliance responsibilities to a corner, resulting in a poor, if not sham program.  Also, having unqualified or improperly trained individuals making or failing to make compliance decisions may create potential liabilities.  In the end, finding and hiring someone properly qualified is not an easy task and can be expensive in terms of salary, benefits and relocation costs.

The HHS OIG recognized this problem and noted it in their Compliance Program Guidance.  The guidance states that: “[f]or those companies that have limited resources, the compliance function could be outsourced to an expert in compliance.”   It is also significant that the OIG recognizes that this outsourced party can provide services on a part-time basis.  In short, small organizations would be wise to hire an expert to be the Designated Compliance Officer (DCO) that can serve part-time in the place of a W-2 employed Compliance Officer.  It is increasingly common for smaller organizations to hire an expert to be the DCO.  Using experts with a proven record can reduce staff work loads and help an organization avoid the risks associated with under qualified or improperly trained individuals.  Hiring a part-time DCO also reduces the recruitment, support and benefit costs associated with a full-time compliance staff.  As a rule, utilizing an outside expert, part-time, can accomplish much more than using a lesser experienced full-time employee.  For many organizations, a DCO may only require 40-100 hours per month depending on the size and complexity of the organization. There are a number of other advantageous qualities a part-time DCO may possess such as:

• Knowledge of federal and state laws and regulations;
• Aware of the current state of the regulatory environment and compliance requirements;
• Able to address a wide range of compliance issues;
• Ready to take immediate action to ensure an effective program;
• Ability to move quickly to efficiently address any issue that could result in a liability;
• In a position to provide better risk protection;
• Independent and objective of any personnel issues or prior decisions and actions;
• Able to provide an almost immediate independent evaluation of the Compliance Program;
• Experienced with proven methods;
• Able to provide a broader perspective due to experience in a variety of program settings;
• Experienced in working with a variety of executive leadership positions and Boards;
• Able to build confidence in enhancing the compliance program and culture;
• Able to establish metrics to evidence program effectiveness;
• Prepared to ensure proper risk assessments and claims analysis; and
• Qualified to also act as HIPAA/HITECH Privacy Officer.

It is extremely important that the DCO hired is properly qualified and truly an expert with multiple levels of experience.  Often times, even experienced Compliance Officers do not have the depth of skills and knowledge required to complete the job effectively since they may have served only in organizations with already established or model programs.

To estimate the costs of engaging a DCO expert, begin by determining the going rate for a full-time Compliance Officer.  Thompson Reuters reported the base salary for Compliance Officers at around $106,000 per year for small companies, and the HCCA “Healthcare Compliance Staff Survey” cited the average at approximately $125,000 annually.  After salary, benefits and overhead costs, organizations can expect to pay a full-time Compliance officer, at the low end, approximately $135,000 per year or $10-12,000 per month.  However, this rate is not necessarily indicative of quality and does not encompass the potential costs associated with staffing a compliance or supplemental team needed to support a less experienced but full-time Compliance Officer.  An expert DCO, who would be responsible for a Compliance Program and who may also come with the support of an experienced healthcare consulting firm, could cost similarly when devoting 40-80 hours per month.  However, an expert DCO would be able to bring the organization’s compliance program a level of expertise, experience and support that cannot be found in a full-time employee at the same cost.