How to measure the effectiveness (or lack ...€¦ · How to measure the effectiveness (or lack thereof!) of your compliance and ethicsprogram March 24, 2017 SCCE Northeast Regional

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How to measure the effectiveness (or lack thereof!) of your compliance and ethics program

March 24, 2017

www.pwc.com

SCCE Northeast Regional ConferenceOmni Parker HouseBoston, MA

PwC | How to measure the effectiveness (or lack thereof!) of your compliance and ethics program

Lauren MottleyManager,Advanced Risk & Compliance Analytics

PricewaterhouseCoopers LLP101 Seaport BoulevardBoston, MA [email protected](617) 530-7823

Steve GillisDirector of Compliance Coding, Billing and Audit

Partners HealthCare System

Prudential Center800 Boylston Street, 11th FloorBoston, MA 02199 (617) 278-1000

Presenters

Andrea FalcioneManaging Director,Compliance & Ethics Solutions Leader

PricewaterhouseCoopers LLP101 Seaport BoulevardBoston, MA [email protected](617) 530-5011

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Agenda

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Elements of program effectiveness – What should you measure and how?1

Proactive, ongoing compliance monitoring – How can data analytics and dashboarding drive program effectiveness? 2

Characteristics of an effective program – What are the other indicators of an effective program and effective compliance leadership?3


Elements of program effectiveness – What should you measure and how?

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An effective compliance and ethics program incorporates every element of PwC’s compliance and ethics program framework

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The PwC Compliance and Ethics Program Framework consists of 11 key elements and their associated attributes, each of which aligns to the U.S. Federal Sentencing Guidelines for Organizations.

Toneat the top

Risk assessment

Oversight and responsibility

Policies and Procedures

Training

Communication

Reporting

Monitoring analysis and response

Enforcement and discipline Resource and performance management Auditing

Business strategy

Business management

Business performance


2. Inconsistent- There is some recognition

of element requirements

- Processes may exist but are executed ad hoc and inconsistently

- There is infrequentmanagement support (e.g., in response to an event)

- Element is fully decentralized

- Board and senior management receive information infrequently

- “Point” technology solutions used

3. Standardized- Element is defined and

consistently applied across different compliance and business areas

- Some compliance and ethics management practices in place, and remediation plans exist for open items

- Consistent management support for compliance and ethics efforts

- Board and senior management receive regular, but somewhat limited, information

- Common technology platforms used for key activities

4. Optimized- Element processes, governance

and controls are standardized and coordinated across business units and risk areas (e.g. sharing of information and plans, coordination of activities, integration throughout employee lifecycle, linked to business planning and performance lifecycle)

- Embedded continuous improvement

- Strong tone from the top, middle and down is evident

- Centralized function sets design and strategy; business executes

- Ongoing, meaningful dialogue with management and board

- Common technologyplatforms and integration with other business systems

1. Undefined- No recognition of element

- Element has not been defined

- Tone at the top is silent There is no element ownership

- Board and senior management have no view into/receive no information

- No use of technology because element is not acknowledged

PwC’s compliance and ethics program effectiveness scale

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What activities does your in-house Compliance Committee regularly conduct?

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Base: 2016(427)

Base: 2015(665)

Identifying compliance-related risks 73% 74%

Reviewing (annually) the effectiveness of the compliance program 70% 64%

Approving corporate compliance policies or policy revisions 69% 63%

Assessing business risks and their impact on compliance 55% 57%

Inputting to annual compliance and ethics work plans 53% 58%

Undertaking compliance risk management activities 51% 68%

Reviewing risk indicators and analysis of trends 45% 50%

Approving annual compliance and ethics work plans 45% 46%

Reviewing output of key compliance performance indicators (KPIs) 44% 44%

Crafting compliance and ethics-related communication plans 28% 37%

Determining compliance and ethics-related curricula and associated audience(s) 27% 34%

Prioritizing compliance related investment decisions 26% 28%

Vetting compliance and ethics staff/staffing changes 15% 28%

Approving annual compliance and ethics budgets 13% 20%

State of compliance 2016 program effectiveness data


Key questions to ask

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Are you doing what you’re supposed to be doing?1

What are you trying to accomplish?2

Is what you’re doing actually working?3

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Elements of effectiveness and associated metrics

• When assessing the effectiveness of a compliance and ethics program, remember there are three areas to measure:

1. Design: Does the program encompass what it should (i.e., FSGs, industry-specific elements, risk-specific elements)?

2. Implementation:Was the program implemented as designed?

3. Impact: Is each element, as designed and implemented, working the way it should?

• It is critical that measurement of effectiveness encapsulate both the overall program, as well as each individual component of the program.

• Measuring effectiveness is both a qualitative and quantitative task – Each metric or component measures a different aspect, and each is valuable in its own right.

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Example – Measuring the effectiveness of a training program

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“The organization shall take reasonable steps to communicate periodically and in a practical manner its standards and procedures, and other aspects of the compliance and ethics program…by conducting effective training programs and otherwise disseminating information appropriate to such individuals' respective roles and responsibilities.”

Training Framework Element/FSG: §8B2.1(b)(4)

Toneat the top

Risk assessment

Oversight and responsibility

Policies and Procedures

Training

Communication

Reporting

Monitoring analysis and response

Enforcement and discipline Resource and performance management Auditing

Business strategy

Business management

Business performance

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• Apply the three forms of measurement to an Anti-Bribery/Anti-Corruption (ABAC) Training:

1. Design: Does it include the relevant information employees need to know? Is it comprehensive, but also comprehensible? Is it targeted to the right audience? Is it engaging? Is it in the appropriate languages? Is it culturally relevant? Is it tailored to different roles within the organization?

2. Implementation: Who is actually being trained? How is it delivered? Is the training updated as rules, policies, regulations change? Does the company address changing language needs?

3. Impact: Do people understand the training? Do they retain what they've learned? Has their behaviorchanged as a result?

• Possible qualitative metrics:

- Audience profiling; delayed assessment results; learner satisfaction survey results; ABAC policy hits/inquiries/reports following training; ABAC violation trends

• Possible quantitative metrics:

- Course completion rates; test scores/answer analysis

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Example – Measuring the effectiveness of a training program(continued)


Program maturity matters

Remember: Measures of success are going to vary depending on the maturity of your program! In year one, a company must focus on design and structure. In years two and three, implementation is key. In years five and beyond, measuring impact becomes imperative.

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Proactive, ongoing compliance monitoring – How can data analytics and dashboarding drive program effectiveness?

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Benefits of using analytics in your compliance program

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Identify root causes and remediate

Deeper insight into compliance relative to operations

Optimize compliance through analysis of 100% of transactions

Reduced risk of regulatory fines/sanctions & protection of reputation

Investigate high risk patterns for corrective action

• Pull in disparate sources of data into a single source for analysis and reporting

• Go beyond sampling transactions

• Monitor activity and metrics proactively

• Understand the detailed impact of non-compliance

• Look for trends and outliers

• Monitor policies exceptions

• Measure program effectiveness (pre- and post- changes)

• Identify alternative value adds

• Identify previously unknown relationships

• Leverage compliance data for operational improvement

• Drill down into varying levels of detail in the organization to target where issues stem from

• Have evidence to drive remediation efforts and plans

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Example – 340B drug discount program

• Regulation: 340B Drug Discount Program U.S federal government program created in 1992 that requires drugmanufacturers to provide outpatient drugs to eligible health care organizations/covered entities at significantly reduced prices.

• Analytic Solution:An ongoing monitoring analytic tool/dashboard with KPIs that allows for granular analysis of high risk areas, as well as provides insights into potential missed cost-savings opportunities.

• High Risk Areas Measured: Diversion(e.g., physician eligibility, location eligibility, patient eligibility), duplicate discounts, the GPO prohibition

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Example – 340B drug discount program (continued)

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Physician Eligibility Summary:How many classified 340B transactions were written by physicians who were not listed as eligible physicians of the Covered Entity, resulting in potential 340B non-compliance?

340B Outpatient Claim Volume by Contract Pharmacy: the potential 340B non-compliance (due to physician ineligibility) a systemic issue across all contract pharmacies within my network or is it isolated to specific contract pharmacies? How many instances of potential non-compliance were identified by contract pharmacy?

340B Outpatient Claim Details:Displays pertinent claim details like NPI, Claim ID, Pharmacy Name, Dollar Amount etc. and can be exported into Excel for follow up.

340B Outpatient Claim Volume by NPI:Which physicians (by NPI #) identified as ineligible wrote scripts classified as 340B transactions by volume of scripts and quantified dollar amounts of potential non-compliance?

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Example – 340B drug discount program (continued)

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5,000 (12%) prescriptions written by ineligible physicians

$400,000 repayable to Pharma Manufacturer

Potential non-compliance with 340B Drug Discount Program

Disclosure to Office of Pharmacy Affairs (OPA)

Analytic finding Regulatory risk Monetary penalty Reputational penalty

If you knew you could get ahead of these problems, would you?


Health Care System Billing Compliance Data Mining Program

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Design

Build

Analyze

� Designed to mimic Office of Inspector General (OIG) Compliance Reviews

� Focused first on hospital risk areas for the acute care hospitals, followed by physician practices and then specialty hospitals.

� Data queries and analysis leads to assessment/inquiry and medical record/coding/billing reviews as needed – Medicare only

� Monthly meetings with compliance officers to discuss results and plan for next quarter as well as potential for processing improvements and sharing of practices.

� Developed monitoring plan and methodology to focus on 5 high risk areas� Outlier payments on inpatient & outpatient claims� Payments exceeding charges on inpatient & outpatient claims� Drug unit billing on outpatient claims

� Developed audit methodology for each & commenced risk-based auditing of items that were identified through the data monitoring process.

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Example – Hospital Outpatient Drug Unit Billing Data Monitoring

• Regulation: Medicare Outpatient Prospective Payment System (OPPS) and many other payers reimburse hospitals for high-cost drugs based on units submitted and reimburses based on average wholesale price.

• Analytic Solution:An ongoing monitoring analytic tool to identify “abnormal” billing activity for high-cost drugs, then evaluate medical record documentation to determine if abnormal billing was appropriate.

• High Risk Areas Measured: Medicare and other third party overpayments based on submission of incorrect submission of units, billing for drug waste of single use vials where waste is not documented.

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PwC

Example – Hospital Outpatient Drug Unit Billing Data Monitoring

Logic around drug unit billing plan: Drug unit billing thresholds calculated for each drug based on clinical dosing guidelines & assuming upper and lower patient height and weight parameters.

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HCPCS Name of Drug

UpperThreshold

LowerThreshold

J0152 Adenosine injection 8 2

J0256 Alpha 1 proteinase inhibitor 680 250

J0475 Baclofen 10 MG 8 2

J1459 Privigen 500 mg 226 36

J1561 Gamunex-C/Gammaked 226 36

J1566 Immune globulin, powder 115 12

J1568 Octagam injection 226 36

J1745 Infliximab Remicade injection 100 14

J9035 Bevacizumab injection 113 23

J9041 Bortezomib injection 35 15

J9043 Cabazitaxel injection 61 54

HCPCS Name of Drug

UpperThreshold

LowerThreshold

J9055 Cetuximab injection 122 35

J9171 Docetaxel injection 200 50

J9217 Leuprolide acetate suspension Not equal to: 1, 3, 4

J9305 Pemetrexed injection (alimta) 122 69

J9310 Rituximab injection 11 4

J9266 Pegaspargase (oncaspar) 2 1

J9355 Herceptin (Trastuzumab) Equal to 44, 88 or 132

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Example 1 – Hospital Outpatient Drug Unit Billing Data Monitoring

Examples of findings from the monitoring and auditing process:

• Identified an error which was causing the hospital to underreport the number of units being billed while, at another facility, the units exceeded the “normal” range.

• The normal range for this drug, based on clinical dosing guidelines, was calculated to be between 250 and 680 units.

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Provider Patient NameMedical Record

Number CPT Code UnitsCharge Covered

ChargeService From

DateService

Through Date Payment

Hospital B James, Stephen 654321 J0256 6010 $91,712 06/25/2013 06/25/2013 $0.00

Hospital B James, Stephen 654321 J0256 6010 $91,712 06/25/2013 06/25/2013 $1,847




Hospital A Gillis, Stephen 12345 J0256 001 $10,145 04/12/2013 04/12/2013 $3

Hospital A Gillis, Stephen 12345 J0256 001 $10,145 04/26/2013 04/26/2013 $3


Example 2 – Hospital Outpatient Drug Unit Billing Data Monitoring

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• As part of our routine quarterly review of Medicare cases where the Medicare payment for a service was greater than the charge we submitted for that service, we identified a scenario where we were getting paid over $1,800 for a drug that had a line item charge of less than $10.

• A charge master set up error was made at one of our facilities for a new drug billing code effective January 1, 2016. The system charged under a new code for a new drug mapped to the administration of a drug that had no payment value under Medicare. The error was resolved on April 2 when this facility went live on a new clinical system that also resulted in new charging processes.

• Identification of this charge master set up error resulting in overpayments of approximately $200,000 over a 3 month period.

HCPCS DOS Units Billed Charge Paid

Q9950 3/30/2016 60 $3.00 $1,943.93

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Characteristics of an effective program –What are the other indicators of an effective program and effective compliance leadership?

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Overall indicators of program effectiveness*

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Management support of/buy-in to initiatives and other meaningful involvement by management in the program

*Adapted from Sheryl Vacca’s November 2015 Presentation at SCCE’s Audit & Compliance Committee Conference

Adequate staffing and other resources

Authority within the organization

Independence from business units, traditional reporting lines

Focus on ethics and proactively shaping organization’s culture – Not just on procedural compliance

Embeddedness within organization’s processes

Alignment with growth objectives and strategic plans

Coordination with other assurance functions (e.g., Risk Management, Legal, Internal Audit)

Quality of implemented practices – Leading versus standard versus sub-standard

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An effective CECO has to:

Characteristics of an effective Chief Ethics & Compliance Officer

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Have strong management skills

Have great relationship skills

Promote and build organizational culture

Be an influencer

Deeply understand the company and its business

Garner respect from above and below

Be fearless and bold

Be entrepreneurial and agood salesperson

Be independent but team oriented

Have executive presence

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved.PwC refers to the United States member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2017 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

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How to measure the effectiveness (or lack ...€¦ · How to measure the effectiveness (or lack thereof!) of your compliance and ethicsprogram March 24, 2017 SCCE Northeast Regional