The Two Ps of Compliance Systems

A marketing rep for a large medical equipment supplier was telling me about an overly aggressive marketing campaign that raised significant concerns under Medicare law and the antifraud rules. I asked him who he was supposed to discuss these problems with, according to his company’s internal compliance program. “I have no idea,” he replied.

A therapist alerted me to the problems in a different company. He knew the person he was supposed to talk to about the issues, but he said, “All of the management people are part of the problem. They are all in this together. I don’t know who to trust.”

When the government scrutinizes a compliance system’s effectiveness, they look first and foremost at whether the company’s personnel understand how the program is supposed to work and whether it actively polices itself. This requires policies that encourage and process communications from its company, customers, etc. Such a reporting system provides the company with a method for self-evaluation, to uncover problems before they become systematic or pervasive, and before they are discovered by the government or disclosed by whistleblowers.

Reporting errors can be harder than it may first appear. HME companies rely on employees to communicate wrongdoing via in-house channels, but research indicates that workers are likely to remain silent about legal and ethical violations in the workplace.

According to a national business ethics study sponsored over a decade ago by Indianapolis-based Walker Information and the Hudson Institute, six out of 10 employees who know or suspect ethical violations in their organizations do not report them. According to the Walker-Hudson study, common reasons for employee reluctance to report violations include fear of retaliation, lack of an anonymous reporting mechanism, perceptions that management would not respond, and a belief that the issue is “none of their business.”

But effective compliance means convincing employees that it is not only their business—it is their obligation to report violations. Set the expectation that if people want to work for your company, they are responsible for reporting suspected errors, non-adherence to policies or ethical concerns. Explain that it is just as bad to see something and not report it as it is to commit the violation itself. That must be your clear message, and should be incorporated into your training and code of conduct.

These steps, while critical, are just a beginning. Homecare companies can emphasize reporting obligations all they want, and employees may still believe that they will be retaliated against, either by managers or coworkers. What is the solution to this problem? The answer lies in the credibility of your organization and its leadership, and the way you execute that commitment from day to day.

Keep the issue visible, and keep reminding people. Demonstrate that you are investing in communicating the message, which tells employees that the company really believes it. For example, put up posters with catchy headlines, and change them periodically so they don’t blend into the background.

Other ideas include payroll stuffers about the importance of reporting compliance violations; wallet cards with contact numbers and key information; and compliance-related articles in the company’s newsletter. Offer feedback; if reporting employees feel as if they are shouting into the abyss, the system is not going to work. Conversely, if problems get resolved, word will get out that the reporting system is effective.

The ideal proof of an effective reporting system is a change in behavior on the part of those responsible for inappropriate conduct. Tell employees with well-founded concerns, “If you don’t see a change in behavior, then you need to call me back.”

All of these ideas can serve to refresh employees’ attitudes about the company’s compliance commitment and their corresponding obligations.