Home Health & Hospice Week

How often does your compliance officer report to your board of directors?

A) All the time; I love those guys.

B) A few times a year.

C) When something goes wrong.

D) Who?

If your answer is C or D, you are not alone, according to a recent survey by the Health Care Compliance Association, but that will be cold comfort should your home care organization become the target of an investigation.

"[B]oards and even CEOs have less contact with [chief ethics and compliance officers] than recent legislation would suggest is necessary," notes the HCCA. The U.S. Sentencing Commission recently proposed amendments to the Federal Sentencing Guidelines that allow mitigating points to lessen fines if there is a direct reporting relationship. Only 55 percent of the 481 respondents in the HCCA survey said that in their company the compliance officer reports directly to the board. That number varied significantly depending on the profit structure of the company: COs report to the board in 59 percent of non-profits but in only 41 percent of public companies.

The health care industry, which is dominated by non-profits, fared better than other sectors, according to the survey. In health care, 58 percent of companies confirmed a direct reporting relationship, while in non-health care companies, only 48 percent said their CO reported to their boards.

Another problem raised by the survey is the screening or editing of reports, which is more of a problem in publicly traded companies as well. "There are two concerns about submitting a report to the board," says HCCA CEO Roy Snell. "That it doesn't have unsubstantiated accusations, and that it doesn't excessively water down issues. A good compliance professional substantiates and prioritizes and doesn't get lost in the weeds. He or she shares the appropriate things with the CEO and the board."

A recent case involving Pfizer, in which the company accepted a $2.3 billion settlement and a corporate integrity agreement (CIA) that basically forbids the CO from reporting to the General Counsel, doesn't seem to have fully sunk in, Snell agrees. Thirty-six percent of public companies said that CO reports are always screened and substantively edited by the company's general counsel or others, while only 12 percent of non-profits said that was true. In 38 percent of public companies and 62 percent of non-profits, the reports are never screened or edited.

The Pfizer CIA mandates quarterly reports by the chief CO to the company's audit committee,a direct report to the CEO, and a "divorce" between the general counsel and the CO: "The Chief Compliance Officer shall not be, or be subordinate to, the General Counsel or Chief Financial Officer," it says. Another clue to what the feds will consider a direct reporting relationship lies in the U.S. Sentencing Commission's commentary to its proposed amendments. There, "direct reporting obligations"are defined as a CO having "express authority to communicate personally to the governing authority [or subgroup]... (A) promptly on any matter involving criminal conduct or potential criminal conduct, and (B) no less than annually on the implementation and effectiveness of the compliance and ethics program."