The Benefits of Outsourced Healthcare Compliance: Is It Right for Your Organization?
Under the Affordable Care Act, CMS has been charged with developing mandated Healthcare Compliance Program (CP) standards that will be a condition of enrollment or participation. This will certainly be a “game changer” in that organizations will have to attest or certify their CP is as effective in meeting those standards. In all likelihood, certification will come from senior management and not just the compliance officer.
This shift has made compliance a top priority, requiring organizations to certify the effectiveness of their programs. For hospitals and other healthcare providers, ensuring full compliance can be resource-intensive and complex. As a result, many organizations are exploring the benefits of outsourcing healthcare compliance to reduce costs, enhance expertise, and maintain regulatory adherence without overburdening internal staff.
Benefits of Outsourcing Healthcare Compliance
Healthcare compliance outsourcing offers several key advantages for hospitals, physician groups, and other providers:
- Cost Savings – Reduces the need for full-time, in-house compliance staff while ensuring regulatory adherence.
- Expertise & Efficiency – Compliance specialists stay up to date with evolving laws, reducing risks and improving program effectiveness.
- Reduced Administrative Burden – Allows healthcare organizations to focus on patient care while external experts handle compliance tasks.
- Enhanced Risk Protection – Minimizes exposure to penalties and legal issues by ensuring compliance with federal and state regulations.
- Scalability & Flexibility – Provides tailored compliance support based on the organization’s size and needs.
What These Changes Mean for Hospitals & Healthcare Providers
For many healthcare organizations (hospitals, doctors, etc.) this will not be a huge problem because over the years, CPs have taken root in that sector. However, for many other types of providers, this will have a major impact because most organizations outside of hospitals have not been very aggressive in developing effective CPs. SNFs, DMEs, emergency transportation companies, physician practices, etc., have viewed the cost and effort of developing effective CPs as too costly and have deferred on developing them as a business risk decision. That decision will no longer work, and outsourcing healthcare compliance must be considered.
Why Some Hospitals & Providers Choose to Outsource Compliance
Where the size of a health care organization does not justify a full-time in-house qualified Compliance Officer, or where there are difficulties in filling a Compliance Officer vacancy, compliance outsourcing may be a viable option. This is time for these entities to re-examine their position on compliance. For those providers/suppliers that believe the cost of developing and operating an effective CP may be too expensive, hiring a compliance outsourcing company to independently manage the program may be an appropriate option to consider.
As the complexities of being a health care provider grows, it is critical that management maintain focus on the core activities of the business. As such, in all sectors, outsourcing those activities that are not core services is becoming increasingly common.
Ensuring Compliance with Outsourced Solutions
The Department of Health and Human Services (DHHS) Office of Inspector General (OIG) has long indicated that it understands that health care organizations may reasonably decide to outsource compliance duties and activities. Its general Compliance Program Guidance states: “For those companies that have limited resources, the compliance function could be outsourced to an expert in compliance.” Further, the OIG in its guidance on a “Compliance Program for Individual Physician and Small Group Practices” suggests that one solution for ensuring compliance in a small entity would be to designate a staff person to serve as a liaison with an outsourced compliance officer.
The OIG noted that if the Compliance Officer responsibility is outsourced, it would be beneficial for the compliance officer to have sufficient interaction with the entity to be able to effectively understand its operations.
Therefore, there is a need for an internal liaison person to keep the outside consultant informed of activities and to assist in implementing compliance actions. Furthermore, the OIG and CMS, some years ago co-sponsored a government-industry roundtable devoted to discussing compliance-related topics. One of the topics discussed was compliance outsourcing.
Why Outsourcing Compliance is Effective
Compliance outsourcing companies have experts who know what it takes to operate an effective program and require no on the job training. Their credibility with management is likely to be higher than someone in house doing the work part time. Also, the costs to keep current with compliance standards, changes in regulatory and legal requirements are amortized over a number of clients and therefore more affordable than trying to do all this in house.
There are also the benefits of gaining access to compliance “best practices” by virtue of an independent expert’s broader exposure to the compliance discipline, ongoing verification of internal compliance processes, and the ability to supplement limited internal resources.
While many providers/suppliers have opted for partial outsourcing of compliance functions, mostly for hotlines, sanctions screening, and auditing and monitoring related to claims/medical records; only a relatively small number have outsourced their entire CP, even when there are inadequate internal resources to implement and operate a fully effective CP.
It is common for smaller organizations to add the duties of “Compliance Officer” to the already extensive responsibilities of other staff members. This results in a Compliance Officer being able to provide only a limited amount of their energy to the CP.
How Outsourcing Compliance Benefits CP Development & Enhancement
Compliance outsourcing offers a number of potential benefits for CP development and enhancement, such as:
- More efficient, no learning curve on compliance
- Experience in laws/regulations, clinical, coding/claims processing, physician arrangements
- Experts should be able to deal with a wide range of compliance issues
- Reduced cost of recruiting, supporting full-time staff and employee benefits.
- Full regulatory compliance and reporting
- Better risk protection
- Lower fixed costs
- Reduced staff workload
- No redundant operations
- Executive-level reports on all compliance functions
- Senior executive and shareholder confidence
- Accurate compliance budgeting
- Risk assessments
- Claims analysis
- HIPAA/HITECH privacy and security compliance
Duties of an Outsourced Compliance Expert
The scope of duties for the experts could include:
- Serving as the focal point for and work to develop and integrate the elements of the CP
- Developing/updating of the Code of Conduct
- Drafting/revising compliance policies and procedures
- Effectively overseeing auditing and monitoring activities.
- Assisting in resolving hotline or other compliance issues
- Working under the direction of legal counsel as called for by circumstances
- Developing and delivering compliance training and education programs
- Performing an annual review/examination of the CP
- Assisting management with ongoing auditing and monitoring plans of specific risk areas
- Developing CP policies/procedures
- Staffing and managing the hotline
- Providing overall direction for the CP
- Keeping management and the Board informed on the status and progress of the CP
- Educating management and the Board on the ever-changing regulatory environment
- Providing ongoing healthcare compliance support
- Conducting background, exclusions and sanctions checking
- Conducting risk assessments
If there is a decision to outsource compliance activities, it is critical that the party engaged to perform this service be properly qualified to undertake these duties. It is important to select someone with a wide range of CP experience over a number of years that includes program development, implementation, management, and evaluation.
Engaging with an Outsourced Compliance Professional
Smaller entities may not necessarily need to engage a full-time outsourced compliance officer. A highly experienced healthcare compliance outsourcing company should be more efficient in carrying out the duties on a part-time basis. However, what any organization must have is someone to act as a liaison or primary contact with whom to coordinate the compliance activities.
And finally, high-level executive staff must interface on a regular basis with the outside compliance expert regarding all operations in the organization to ensure that all the necessary elements of an effective CP are effectuated.
Expectations of an Outsourced Compliance Professional
If the decision is made to outsource management of the healthcare compliance program, the experts selected should be prepared to certify the status of the program, so as in turn provide senior management with a reasonable basis to attest to and certify their CP is effective. They should meet the highest standards of expertise, competence, and authority.
The compliance outsourcing company should be able to evidence meeting the General Accountability Office (GAO) General Accepted Government Audit Standards for independence and objectivity in assessing business practices to quickly identify and resolve problems before they turn into potential violations. They should first evaluate the existing CO to identify any gaps and move quickly to fill them. If needed, they should be able to build the CP from the ground up.
