Learn the answers to frequently asked questions about choosing & working with a compliance expert, including interim & designated compliance officers.
WHAT IS THE DIFFERNCE BETWEEN AN INTERIM COMPLIANCE OFFICER (ICO) AND DESIGNATED COMPLIANCE OFFICER (DCO)?
An ICO is a temporary engagement, usually to cover gaps between permanent Compliance Officers, whereas a DCO assumes responsibility for development and management of the Compliance Program for smaller organizations on a part time basis. Larger organizations and those under a Corporate Integrity Agreement (CIA) must have a W-2 employee in that role, not a contractor.
WHAT IS AN INTERIM COMPLIANCE OFFICER (ICO)?
An ICO is a contractor expert temporarily engaged to assume the duties of the Compliance Officer for a limited period to avoid the risk of permitting gaps in operation of the compliance program for months on end. The use of ICO has become common, particularly as result of labor disruption arising from the COVID Pandemic. An ICO can keep operation of the compliance program running smoothly while the organization searches for a permanent candidate.
WHEN SHOULD TEMPORARY COMPLIANCE STAFFING BE CONSIDERED?
Compliance programs with gaps in staffing may rapidly degenerate quickly. Engaging contractors to temporarily assume duties is preferable that taking the risk of turning to internal unqualified staff. Properly experienced and knowledgeable professionals can quickly assume duties and provide high-value services for day-to-day compliance program management often on a part time basis, while seeking permanent replacements.
WHAT ADVANTAGES ARE THERE FOR ENGAGING TEMPORARY COMPLIANCE OFFICERS AND STAFF?
There are many potential benefits in engaging an ICO. It permits quickly filling gaps in staffing, while seeking permanent replacement. It also can be cost effective in that you pay only for the hours worked and avoid FICA taxes, overhead costs for leave, and benefits. Outside experts provide independent and objective perspective, free of corporate decisions and actions.
HOW LONG ARE INTERIM COMPLIANCE OFFICER ENGAGEMENTS?
Interim means a temporary engagement, until a permanent replacement is found, usually for about three to five months.
ARE ENGAGING CONTRACTORS TO FILL COMPLIANCE GAPS COST EFFECTIVE
The key factor in making this decision is that the expert is a contractor engaged for a limited time as a risk management action and that they are not an employee. They are paid only for the hours they work under terms of the contract. As such certain expenditures are avoided such as paying (a) FICA payroll taxes, (b) time off (vacation, sick leave, holidays), (c) health, insurance, or retirement expenditures, (d) any other benefits.
WHAT’S THE COST OF HIRING AN INTERIM COMPLIANCE OFFICER?
The cost of using an expert part-time as an Interim Compliance Officer (DCO) versus hiring a full-time Compliance Officer depends on a variety of factors. Thompson Reuters, a leading professional assessment organization, reported the range of Compliance Officer base salaries start at around $106,000 per year for small organizations. The Health Care Compliance Association (HCCA) reported, in its “Healthcare Compliance Staff Survey,” the average salary at around $125,000 with benefits and overhead costs bringing the total to roughly $135,000 per year, or $10,000-$12,000 per month. These estimates are for candidates who are not likely to possess top credentials, expertise, or in-depth industry knowledge.
WHAT IS A DESIGNATED COMPLIANCE OFFICER (DCO)?
A DCO an individual to whom an organization outsources the responsibilities of Compliance Officer to develop and managed the day-to-day operation of an organization’s Compliance Program. The HHS OIG sees this as a suitable solution for smaller health care organizations where hiring a full time Compliance Officer is not financially justifiable. As such DCOs normally are part time contractors. Strategic Management provides experience consultants for this role.
WHEN IS HAVING A PART-TIME COMPLIANCE OFFICER A VIABLE OPTION?
The DHHS OIG recognized that smaller healthcare organizations may not be able to afford having a full time Compliance Officer. To designate compliance responsibilities to an internal individual as a secondary duty is not an option for many reasons, including conflicts of interest, lack of knowledge and expertise that could result in liabilities. Under this circumstance, engaging an expert on a part time basis may be the right solution.
CAN AN ORGANIZATION OUTSOURCE THE COMPLIANCE PROGRAM?
Under certain conditions, it is considered by regulatory authorities that outsourcing the compliance program to a Designated Compliance Officer (DCO) is a reasonable option for organizations to consider. However, this is only for smaller organizations where it would not be reasonable for the engagement of a W-2 employee to perform the duties of Compliance Officer on a part time basis. Most such engagements are for half or quarter time. Using DCO is NOT an option for larger organizations or those under a Corporate Integrity Agreement (CIA).
WHAT ARE THE ADVANTAGES OF ENGAGING EXPERTS AS A DESIGNATED OR INTERIM COMPLIANCE OFFICER?
Advantages for engaging qualified Designated or Interim Compliance includes being able to provide the benefits of wide experience that include awareness of the regulatory environment and what it takes to have an effective program. The can move quickly to efficiently address any issues that could result in a liability.
CAN SMALLER ORGANIZATIONS OUTSOURCE THEIR COMPLIANCE PROGRAM?
Smaller organizations face the daunting challenge of meeting the standards of an effective compliance program while also trying to maintain focus on core business activities. Having a full-time compliance officer may be cost prohibitive but placing compliance as a secondary duty for an employee can invite exposure to liability. It is virtually impossible for an effective compliance program to be managed as a secondary duty. Anyone who has tried this approach can confirm the proposition. Given the challenge of managing the priorities of both compliance and core business, not to mention finding adequate resources to manage an effective program, it is not surprising to know organizations are commonly passing the burden to outside experts to serve as Designated Compliance Officers DCOs. The DHHS OIG has long recognized that: “For those companies that have limited resources, the compliance function could be outsourced to an expert in compliance.” The expert engaged as the DCO would NOT be full time with most engagements being about 40-100 hours per month
IS ENGAGING “ON CALL” COMPLIANCE SERVICES A VIABLE OPTION FOR FILLING GAPS?
One way that many compliance offices are meeting the challenge of short-term needs is by having a Master Service Agreement with an expert compliance advisory consultant to provide services on an hourly basis as needed. This offers the advantage of letting the entity’s compliance officer maintain control and direction of the program.
WHAT IS COMPLIANCE CO-SOURCING?
“Insourcing” is merely hiring staff internally to carry out duties and responsibilities and while this is generally preferred over other options, such as “outsourcing” functions on a temporary or permanent basis. “Co-Sourcing” is a middle ground option and involves using limited vendor services and tools to address key elements in the entity’s compliance program. The most common co-sourcing tools and services include sanction screening tools and services, hotline operations, compliance training programs, code and policy development, compliance surveys. Other services include compliance risk assessments, compliance program evaluations, HIPAA Privacy/Security audits, physician arrangement reviews, conducting Internal Investigations, conducting “mock audits” and claims reviews, etc. Noteworthy is that the OIG recognizes co-sourcing as a useful solution for organizations with limited compliance expertise and resources.