by Neil Caesar

Welcome to Compliance University! This month we continue to challenge common compliance-related wisdom by acknowledging and demanding an answer to The Question They Dare Not Ask: “Why should I bother with a compliance program?”

Our premise is this: Any home care provider that does not have a working, effective regulatory compliance program has, in effect, decided not to bother with compliance initiatives. In other words, the provider has decided that the benefits of an effective compliance program are not worth the costs and hassles of implementing the program.

All types of providers engage in this sort of denial. Medical groups, ancillary service providers, long-term care organizations and even hospitals join many home care providers in electing to operate without a real compliance program in place. Why? There are many misinformed reasons why providers fail to implement effective compliance programs. But those reasons don't hold up in the face of one basic truth: An effective compliance program improves reimbursement, prevents trouble with government agencies and produces ongoing benefits for home care providers.

During past sessions of Compliance University, we explored six ways an effective compliance program helps providers stay out of trouble with the government, improve the accuracy of their claims and increase reimbursement (see “Compliance University,” December 2002.) Then, we explored six ways an effective compliance program can improve efficiency and employee morale within a company, so that providers may nurture a more loyal, efficient and savvy workforce (see “Compliance University,” February 2003).

This month, we'll look at six more benefits of an effective compliance program, focusing on business colleagues, financiers and customers.


An effective compliance program reassures third parties.

A compliance program demonstrates that you are committed to policing your internal and external activities, and that you are able to create and operate an effective system for ongoing problem solving. Consequently, compliance programs assure outside parties that you are unlikely to have substantial fraud or reimbursement problems. If your compliance program satisfies federal guidelines, this further convinces third parties that you have minimized the potential for sanctions due to inadvertent violations of fraud or reimbursement rules.

Which third parties care about your compliance program? First, your board of directors and owners care, because a compliance program suggests they can delegate significant discretion to the management team. This is particularly important for outside directors and passive owners.

Second, contracting networks and other provider alliances care. Having an effective compliance program will make you a more desirable partner in organizations that offer services to health plans, outside businesses, and other purchasers and users of health care. The presence of the compliance program suggests to the alliance partners that you probably will not contribute to reimbursement or other fraud problems that could lead to heightened scrutiny for the alliance. Conversely, if another alliance partner's fraud problems result in heightened scrutiny for the alliance, your compliance program will minimize the scrutiny likely to befall your company.

Third, private, third-party payers care. Many of the federal and state compliance laws relate only to Medicare, Medicaid and other federally reimbursed programs. However, health care fraud also is a substantial problem for third-party payers and managed care organizations.

Furthermore, most states have laws that affect reimbursement and health care relationships — and these laws generally affect all patients, regardless of the type of health care coverage the patients have.

A comprehensive compliance program suggests your willingness and ability to comply with the third-party payers' reimbursement rules. Providing such an assurance may encourage payers to relax scrutiny and presume that your ongoing billing activities are legitimate. At the very least, a compliance program demonstrates your willingness to improve, which makes you an attractive candidate for contracts, risk arrangements and so forth.

Fourth, banking institutions, venture capital firms and the like seek assurance that you are not in trouble with the government, and that you are unlikely to invite trouble in the future. An effective compliance program is evidence of that safety cushion.

Finally, your ability to create and implement a successful compliance program is valuable to many potential business allies — even those who have only a small interest in compliance issues. Your ability to assess your business, use your strengths and minimize your weaknesses relates directly to your ability to take advantage of business opportunities.


An effective compliance program is a valuable part of due-diligence activities.

A home care provider that purchases or sells assets — or that merges with another company — must undertake a due-diligence process to show the parties involved that the transaction will not create any unexpected problems. A compliance program demonstrates that the home care provider is less likely to have any lurking problems stemming from violations of fraud or reimbursement rules.

An effective compliance program demonstrates your capacity for self-assessment and self-policing, and thus assures the other parties that you can identify and resolve internal problems — even problems that do not involve compliance issues. This can result in a less burdensome due-diligence process, which reduces your costs, in money and in time.


An effective compliance program allows home care providers to respond quickly to general problems.

A key part of an effective compliance program is the procedure for identifying, investigating and resolving potential compliance problems. You can expand these internal systems, giving your company the ability to respond quickly to general problems within your business.


A home care provider can use its compliance program to help focus on its objectives.

To create the specific standards, policies and protocols that constitute a compliance program, you must identify what issues are important to you and how you wish to resolve those issues.

Does a conflict-of-interest policy require that you not do business with other businesses owned by your company's employees or owners? Or, does it mean that disinterested parties must approve such transactions? Does it apply to all transactions, or only to those above a certain dollar amount?

There are no correct answers to these sorts of questions. How you decide them should reflect your philosophy, vision and mission, as well as your corporate culture. The process of creating and using the documents that are part of a compliance program can help you identify where your values and corporate culture truly lie, so that you can strive for consistency of vision in your day-to-day operations.


An effective compliance program facilitates growth by establishing approved ways to deal with problems and opportunities.

No company wants to re-invent solutions each time problems arise. Successful home care providers have established procedures to govern appropriate business conduct, both internally and externally.

A compliance program should be compatible with your business philosophy, and therefore should establish standards of conduct that not only focus on fraud and reimbursement issues but also define the appropriate parameters for general for conduct within the company.


Proactive, preventive compliance programs are tax-deductible.

The costs of creating and running a compliance program — including legal fees, consulting costs and hotline services — may be deductible business expenses for federal and state tax purposes. However, if you become the subject of an investigation or government enforcement action, the punitive measures imposed by the government — including compliance initiatives, corporate integrity agreements, and legal and consulting costs incurred when fighting or settling with the government — generally are not tax-deductible expenses.

Benefits: Three Lessons

The past three sessions at Compliance University have taught us three lessons:

First, compliance programs can benefit your company in many ways. Benefits reach far beyond the common wisdom of getting out of — or preventing — trouble with the federal government.

Second, a compliance program is an internal communications system that enables a home care provider to capture information, refine and disseminate information, investigate concerns about the information and correct the internal processes where necessary.

Third, you can market compliance programs to your personnel, to potential venture partners and allies, to financiers and to others as evidence that you have your act together. I cannot overstate value of such a message.

In conclusion, the benefits of an effective compliance program provide a resounding answer to The Question They Dare Not Ask. Why bother with a compliance program? Because it's good business! Class Dismissed.

Neil Caesar is president of the Health Law Center (Neil B. Caesar Law Associates, PA), a national health law practice in Greenville, S.C. ( He also is a principal with Caesar Cohen Ltd., which offers compliance training, outsourcing and consulting. A frequent author and speaker, Caesar is the author and editor-in-chief of the Home Care Compliance Answer Book. He can be reached via e-mail at or by telephone at 864/676-9075.