Tips for Developing Annual Compliance Program Review Plans.

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) has called for the independent annual review of corporate compliance programs since 1998. Additionally, CMS has mandated annual independent reviews of Medicare Advantage and Prescription Drug Plan corporate compliance programs.  Despite the federal guidance or mandates, most Compliance Officers fail to initiate these independent compliance program reviews for various reasons. Some Compliance Officers may be deterred by the costs of independent reviews. Others may worry about findings that could reflect poorly on the organization’s compliance program. Yet, ignoring annual compliance program reviews creates a big risk as these organizations may ultimately find themselves under government investigation. The Department of Justice (DOJ) now takes compliance programs into account in its enforcement considerations. In developing the terms and conditions for a Corporate Integrity Agreement (CIA), the OIG also reviews the state of the entity’s compliance program. Moreover, the OIG is increasingly mandating that Boards, in organizations under a CIA, engage outside Compliance Experts to review and oversee how the compliance program is progressing. Given this increasing focus on independent annual compliance program reviews, Compliance Officers should develop effective annual review plans for their entity’s compliance programs.

Practical tips from experts regarding annual compliance program review plans include the following:

1. Characterization of the annual review is key.

• Compliance Officers should make the case that all compliance programs are a work in progress and that there will always be need for improvement. Taking such an approach will allow the Compliance Officer to characterize the independent review as an effort to obtain independent supporting evidence on the progress made to date in the program and find opportunities for improvement. Reports of review should be shared with executive leadership and the Board, along with a detailed action plan to specify steps to be taken to act upon findings. In this manner, Compliance Officers can control the process and take credit for advancing the program. From that time forward the Compliance Officer can report on progress with the plan.

2. Select a consulting firm that goes beyond following a checklist review methodology.

• The cost of compliance program effectiveness reviews depends on the scope of work and size of the organization. Generally, these costs begin at $50,000. To obtain full value for these reviews, a firm’s final report should result from an in-depth review that focuses on outcomes, not outputs. The resulting report should contain findings that are supported in the work papers. Additionally, recommendations and suggestions should arise from particular findings that are specifically actionable. Although it may not make financial or program sense to have an independent review conducted every year, compliance experts advise that every few years is greatly advisable.

3. Use the correct survey instrument.

• Compliance Officers or reviewers should evaluate all elements of a compliance program through “employee surveys.” Indeed, the OIG compliance documents recommend the use of questionnaires to solicit impressions of the compliance program from a broad cross-section of the workforce. The key to this approach is using the appropriate survey instrument. The correct survey will provide the necessary metrics to determine strengths, weaknesses, and overall effectiveness of the compliance program. Using a professionally developed, tested, and validated survey instrument that is independently administered is therefore essential. There are two types of compliance surveys: Compliance Knowledge surveys and Compliance Culture surveys. Compliance Knowledge surveys test knowledge of the compliance program structure and operations, including the understanding of the Compliance Officer’s role and how the hotline functions, for example. These results provide empirical evidence of the advancement of program knowledge, understanding and effectiveness. Compliance Culture surveys are useful in measuring change in the compliance environment over a period of time. Both types of surveys focus on the beliefs and values which guide the thinking and behavior of employees within an organization. They can measure the outcome of the compliance program and examine the extent to which individuals, coworkers, supervisors, and leaders demonstrate commitment to compliance.  Such results are extremely useful for assessing the current state of the compliance climate or culture of an organization. The best surveys are anchored in a database of users that permit “benchmarking results” against the universe.

4. Alternate between program evaluations and workforce surveys.

• The best strategy for annual evaluations is to alternate annually between a complete program effectiveness evaluation by experts, a Compliance Knowledge survey and a Compliance Culture survey the following year. This annual review plan provides the Compliance Officer with an objective, independent and steadily obtained stream of information evidencing the compliance program’s progress.