Welcome to Compliance University! This month we continue to challenge common compliance-related wisdom by acknowledging and demanding an answer to The
by Neil Caesar
April 1, 2003

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


An effective compliance program reassures third

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

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


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

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

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

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

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
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. (www.healthlawcenter.com). 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 ncaesar@healthlawcenter.com or by telephone at