Speaker 0 00:00:00 Here's the heart of it, for those who are entering the healthcare market, you're thinking about how to grow your business and your common sense of what you can usually do is not necessarily going to translate. And that's a hard lesson for very smart, ambitious driven entrepreneurs and companies who have really fantastic and great products to offer. It's often the case that compliance is not top of mind.
Speaker 1 00:00:22 Hello, and welcome to integrity through compliance AMS business success series. This podcast was created by season's compliance experts at affiliated monitors who will provide their observations on industry trends, gear to raise your awareness and to protect your brand. So grab a cup of coffee and join us as we guide you to integrity through compliance.
Speaker 2 00:00:48 Hello everyone. My name is Jesse Caplin and I'm managing director of corporate oversight at affiliated monitors. I'm joined today by Miranda hooker, a partner in the Boston office of Trotman pepper. And I'm also joined by my colleague, Jim <inaudible>, who is affiliated monitors, director of healthcare compliance services in our last podcast episode, Jim, myself and our colleague Dion Lomax talked about the opportunities for entrepreneurs in the growing healthcare sector and some of the regulatory risks, these opportunities pose today. We're going to expand on that theme with Miranda hooker who represents venture capital firms and other companies, many of whom are relatively new to the rewards and the risks of participating in the healthcare sector Miranda. And Jim will be discussing the growing opportunities, the significant compliance risks, the available compliance guidance and the limits to that guidance and how to mitigate the potential for government investigations and enforcement actions. Uh, but first I'd like, uh, Miranda and Jim to introduce themselves Miranda.
Speaker 0 00:01:54 Thanks, Jesse. It's great to be here with you and Jim today, and I'm looking forward to our discussion. So a little bit of background on me. I've been working in the healthcare space as a white collar attorney for the majority of my roughly 20 year legal career to date. I've been on both the private side of things, defending companies in government investigations and other sort of government facing inquiries, representing companies in internal investigations and individuals and employees in government investigations as well. I'm also formerly a federal healthcare fraud prosecutor. So for some period of time, I switched sides and was investigating and prosecuting companies and individuals in the healthcare space. I'm now, as you mentioned at Troutman pepper and represent a variety of different companies from pharmaceutical manufacturers, medical device manufacturers, payers, hospitals, providers, and laboratories in all types of government basing Ingres and internal investigations. And I also do a lot of advising and compliance matters for those clients.
Speaker 2 00:02:56 Well, welcome Miranda. And thanks for joining Jim, why don't you introduce yourself?
Speaker 3 00:03:01 Uh, Jesse, thank you. It's been a pleasure to be with both you and Miranda today and looking forward to this discussion myself, I'm the director of healthcare compliance services at affiliated monitors. I've been with the company since we started in January of 2004, and most of my responsibilities involved overseeing our monitoring of healthcare practices that get into trouble with regulatory agencies and also helping healthcare practices develop internal compliance programs and evaluate the effectiveness of those programs. Prior to that, I had been counseled to a number of professional licensing boards here in Massachusetts for about 16 years. So I've had about 35 years now work in the healthcare regulatory space.
Speaker 2 00:03:47 Great, thank you, Jim. So I'm going to start things off with Miranda Miranda. You represent different types of healthcare companies. What are you seeing in terms of opportunities for expansion in healthcare and what seems to be driving the expansion and these opportunities?
Speaker 0 00:04:02 So I think there always been great opportunities for growth development and innovation in the healthcare industry. And that certainly remains true today. And I think in many respects, there are different areas of opportunity today than we would have even predicted a year ago as a result of the global pandemic. We've seen tremendous growth and tremendous opportunity, and I'm not even thinking about things like vaccine development, which is why what's been on everybody's mind or manufacturing of PPE, which was a huge issue, you know, nine months ago or other medical supplies. But what we've learned in the last year is that there's huge opportunity for improvement in the enhancement of the infrastructure of our healthcare system. And that is not necessarily something that was on everyone's radar a year ago. And, you know, while we've made incredible strides in the past decade integration through the adoption of electronic health records, generally the national efforts at collecting COVID data over the past year have demonstrated for all that there's tremendous room for improvement there.
Speaker 0 00:05:00 So I think that's going to be a big area where people are going to be able to dedicate some resources and see dramatic improvements. We've also seen in the past year, a rapid increase brought about by necessity in tele-health and many people predict that that's here to stay. I know Jim can speak at greater length on that, but with the widespread adoption of telehealth services come additional opportunities to improve upon those services. And I think we'll also create a lot of opportunity for those in the healthcare industry to think about how to better operationalize the way in which healthcare is delivered to patients and also to innovate around how patients receive and experience healthcare, which I think has been a focus of the past few years in any event. And this includes innovation around even basic things about how to communicate with patients and providers about their healthcare needs, how to view healthcare from a more holistic perspective than simply treating one specific condition.
Speaker 0 00:05:57 And then, you know how to ensure that, you know, information about drugs, products and tests that exist in the marketplace and then are coming to the marketplace, are known to all, you know, those are some of the big issues that I think everyone's going to be looking at and thinking about in the years to come in terms of what's driving that expansion. I think the government is in heart, a player in driving that expansion and the opportunities that are existing in healthcare right now, because in some respects it's encouraging what I think will be a slow shift, but nonetheless, a shift away from the typical fee for service payment models that we've always operated under in favor of alternative payment models that include value based care or models that allow for incentive payments based on patient outcomes. All of this comes down to the point that, you know, the government is sort of catching up to the innovation that's already existed in the industry, and it's creating a lot of opportunities for venture capitalists, private equity and others to enter the healthcare market.
Speaker 2 00:06:58 It really sounds like this is a, you know, a great opportunity, uh, you know, market for opportunity, but you know, we'll also talk about some of the risks involved, but Jim, let me ask you, you do a lot of work with licensed healthcare professionals. Are you also seeing greater flexibility and opportunities for physicians, but for instance, and other direct care givers?
Speaker 3 00:07:19 Absolutely. I mean, as Miranda has already mentioned, we're seeing a great expansion of telehealth services and specifically the scope of services, which could be delivered through tele-health technology has been expanded exponentially in the last year, year and a half principally in response to the COVID-19 pandemic and the need for those services to be delivered by methods other than in-person delivery, we've equalized the payment rates for services. So the service that is provided via telehealth technology gets paid essentially at the same rate as the same service would be if it were delivered in person. And one of the things that the pandemic has really forced at the state licensing board level is new approaches to flexibility of licensure requirements in a tele-health services environment. You need to be able to have a doctor in Massachusetts, for example, be able to provide services to a patient in New Hampshire under the, the, the system that existed up until a few years ago.
Speaker 3 00:08:20 Um, the question is, did you have to have a license in New Hampshire to provide the service to that patient? Because that's where they were located. The pandemic has really forced state licensing boards to accelerate the process towards interstate flexibility in licensure so that these individuals can provide services to patients across state lines. And that is obviously going to continue in the future. Miranda made reference to the changes in payment models to, you know, we've seen accountable care organizations, for example, are clearly here to stay. There is some promise for pay primary care models in which a patient pays an annual sum directly to a doctorate sometimes called concierge medicine in which the patient pays the doctor a certain amount per year for a certain array of services. And they pay that amount whether they use the services or not. And that works very much like the accountable care organization model at a larger level.
Speaker 3 00:09:15 We're also seeing new options for billing by physicians and other providers. Physicians now can bill for their basic evaluation and management services for a patient based entirely on the amount of time they spent with the patient. But there's a cautionary note there and a very important one to be sounded. There is an assumption by some that if you're billing on the basis of the amount of time you're spending with the patient, you don't have to worry as much about how much you document in the patient's medical record. Be careful to avoid that particular landmine because state medical boards and state licensing boards have their own clinical documentation requirements for providers, and those are not being changed. There's no evidence that those are shifting. So there's a lot of opportunity out there, but it's very important not to assume that the regulatory framework has disappeared entirely. Healthcare is still a very highly regulated industry. And there are a lot of landmines that you can step on accidentally out there if you don't know where they are.
Speaker 2 00:10:17 Yeah. I liked that analogy. And we're going to talk a little bit more about those landmines in just a minute, but Miranda, let me ask you this. Many of your clients are sophisticated investors, you know, experienced business people with truly innovative services and products. The three of us know how challenging the healthcare regulatory environment can be. How about these entrepreneurial companies and professionals who are really entering the world of government healthcare programs like Medicare, Medicaid, maybe for the first time.
Speaker 0 00:10:46 So, you know, here's the heart of it for those who are entering the healthcare market. And first and foremost, there are tremendous challenges in bringing a product or service to the market. And that exercise in and of itself is time consuming and incredibly expensive. And oftentimes your going into it with really just the hope that there will be adoption in the market and that users will recognize the value. So that's all to say that there are many, many things that, you know, entrepreneurs and people bringing products and services to the healthcare market are thinking about and dealing with and worrying about in the first instance. And it's often the case that compliance, and particularly with respect to regulatory compliance or fraud and abuse compliance is not top of mind. And to the extent there is an emphasis on compliance, it's really around regulatory compliance relating to product safety, or, you know, if you're a laboratory or provider protecting patient data, things that are really sort of critical in the first instances, and it's less about fraud and abuse issues.
Speaker 0 00:11:48 So that's the sticky area for those who are entering this marketplace, because you're thinking about how to grow your business, how to educate users and customers, how to generate interest and support for your product or whatever service you're offering. And when you think about that in the context of any other industry, there are things that you can do. There are ways in which you can share information about your product and you can generate interest and you can't do that necessarily in the healthcare industry without potentially running the risk of enforcement under various fraud and abuse statutes. So, you know, it's a tricky area for people because you can come into the industry with common sense and your common sense of what you can usually do is not necessarily going to translate. And that's a hard lesson for very smart. I know ambitious driven entrepreneurs and companies who have really fantastic and great products to offer.
Speaker 0 00:12:37 So that's all to say. I have clients who are entering this space, who just don't necessarily fully appreciate that there are these landmines that you can trip upon, especially if it's anywhere in the chain. You know, whether it's a product, a drug or a service is being paid for by a federal payer in some way, there are just certain rules you're going to have to apply by. And if you don't know that, or if you don't fully appreciate the risk, you can find yourself in a little bit of trouble down the road, you know, and oftentimes with good intentions, these companies are coming into the marketplace from a perspective of what can I do to make my customer happy, whether your customer is a physician or a patient. And that's tough because that's an appropriate perspective to come by when you're thinking about enhanced patient service.
Speaker 0 00:13:23 And yet from a regulator's perspective that can be viewed with some skepticism that there's something troubling a foot, and you're trying to, you know, improperly induce or create demand for your product. So that's the risk that, that I think people when companies come by and, you know, it's why certainly in the VC and private equity space, having a really strong healthcare regulatory counsel that guides you through these investments and acquisitions is critical because a lot of what I've been seeing in recent years is companies that buy healthcare companies with all sorts of hidden compliance issues. And then that, that don't come out in diligence. And so years later, you know, you are the owner of a company that, you know, finds itself trying to navigate these worlds.
Speaker 2 00:14:09 Yeah. And, and Jim, I understand, you know, you've got some examples of companies or practitioners taking advantage of the increased business opportunities in healthcare sector, but then running a foul of the challenging regulatory environment. Could you maybe share some of your insights and experiences?
Speaker 3 00:14:28 Yeah. In the telehealth space. For example, we saw a case recently from Tennessee in which a company had set up call centers and the people who were on the call center staff were impersonating medical professionals and obtaining health information and prescription information from patients in an effort to try and encourage those patients to buy services that they didn't actually need, but which could be built to federal Medicare or Medicaid healthcare programs. And they got into a lot of difficulty with the justice department over that issue. They've signed down to a settlement agreement with those folks in that, in that case, I'm reminded too of, um, you know, entrepreneurial approaches. We had a client several years ago that came up with an interesting idea. They were seeing a situation in which nursing home patients who were having swallowing difficulties needed to be evaluated that way. And rather than sending the patients out of the nursing home to a hospital for that testing, they decided that they would create a company in which they would bring a van with fluoroscopy equipment to the nursing home, test the patient right there on the premises and submit the results to the, the nursing comp.
Speaker 3 00:15:42 They ran into two problems. One, they never understood that they needed to have a physician on the van, overseeing the performance of the fluoroscopy procedure to see whether this patient had a swallowing problem. And the second thing was they didn't understand how they could bill for those services. They were trying to bill Medicare, part B for it. And they in fact, had to bill the skilled nursing facility and get reimbursement directly from the nursing call when they realized that they were faced with these regulatory requirements, they discovered that the business model they had devised for themselves simply didn't work. They couldn't get paid enough money to be able to stay in business. So part of the importance of understanding this regulatory framework is figuring out whether your business model can even work within that regulatory structure.
Speaker 2 00:16:28 So let me follow up with you Miranda, you know, so we've talked about the landmines and some of the, the, the unfortunate practices or examples, you know, are companies on their own, or is there guidance they can follow to help identify and mitigate these regulatory risks we've been talking about when they're operating in the healthcare space?
Speaker 0 00:16:49 Yeah. So, you know, for many, many years, I would say manufacturers and providers were, you know, educating themselves on the rules of the road, through settlement agreements or enforcement actions and other compliance directives that existed in things like corporate integrity agreements. You know, that's, that's a very hard way to learn lessons because what it means is that some company has to find itself in a position. It never wants to be in, in order for others to glean any learnings, you know, and we saw a lot of that through, you know, the first 10 years of the two thousands from it. You know, that's just been for many years, how it is that sort of the industry learns of like, what is, what are the enforcement priorities, activities and parameters on the compliance side of things and compliance is, you know, a relatively sort of emerging field still, if you think of it in a sense that, you know, we didn't see robust compliance programs 20 years ago, and they've been growing and continuing to evolve and grow.
Speaker 0 00:17:42 So there was never really any guidance from the government on that. But beginning in 2017, the department of justice started issuing pretty substantive guidance to prosecutors on how to evaluate corporate compliance programs. And this has guidance that the industry can use to shape their programs since 2017, DOJ has updated and amended that guidance twice once in 2019. And then again in June of 2020. And it's actually this point pretty substantive and gives a lot of direction to industry to think about how it is you want to create a compliance program. And, and the most recent guidance from June of 2020 goes a step further, you know, then prior guidance to say, we're not asking you to create a paper or sort of cookie cutter program. And we recognize that not one size fits all, you know, we are, we are recognizing that this is an evolving industry and that we want companies to evolve their compliance programs as well.
Speaker 0 00:18:42 So what we really want companies to be doing is assessing what are my risk areas, and then developing a program that addresses those specific risk areas and then monitoring the programs to make sure that they're working. And then really, and this is a new piece ensuring that the companies are putting resources into the program, both in terms of financial resources, to ensure that you can make, you can verify that it's effective and working, but also from a corporate culture perspective, you know, they want to make sure there's the tone from the top and the middle of the organizations that it's really carried throughout so that there really is sort of an overall culture of compliance. You know, these are the sort of the fundamental pieces that DOJ is giving industry in terms of a guidance of how it is you should be modeling the program. And there's a lot to unpack in the guidance, but I think it really does provide a substantive roadmap for companies who are looking to ensure that they have a compliance program that, you know, keeps them on the straight and narrow.
Speaker 3 00:19:45 So Miranda, you know, I, I'm the chief compliance officer now for a healthcare company, I've established a compliance program, developed a whole set of written policies and procedures. I have monitoring provisions in place and I'm auditing things and doing all the kinds of stuff that I'm supposed to be doing. I still got a problem now, what do I do?
Speaker 0 00:20:08 Right. So, you know, in some respect you can say, well, if you've discovered the problem, that's evidence that your compliance program works. You know, so I think you can view that as a positive, you know, but what I want to say is that, you know, DOJ is now assessing the effectiveness of compliance programs, both, you know, at the time of the alleged sort of misconduct that occurs. And then a TA at the time that DOJ is, you know, making its sort of decisions on how it wants to address the its investigation, whether by charging a resolution in some nature. And I think that timing speaks to DOJ is understanding that there is an evolution in the development of compliance programs in a way that I think can be helpful to companies in this respect. Right? So what it's ultimately saying is I think DOJ is recognizing that there can be a compliance program that's effective, and yet there can be misconduct in the organization, misconduct can occur.
Speaker 0 00:21:02 And I think it's in these instances that we're DOJ is, is, you know, putting out there into the industry that it wants to incentivize compliance. There's a strong opportunity to advocate to DOJ that if you are a company with an effective compliance program, you've identified misconduct and you're addressing it and investigating it and taking appropriate steps that you don't have the requisite corporate intent to commit fraud, and therefore shouldn't be held liable for it. You know, and I think there are even sort of further arguments that to the extent, you know, DOJ wants to encourage an evolving compliance program. Even if your compliance program isn't at the exact place you want it to be when you discover this, you know, quote unquote misconduct, if you're taking steps in the aftermath of discovering it to ensure that it doesn't happen again and to put in place greater controls, to discover this type of misconduct going forward or prevent it from happening, I think there's still, you know, there's still an argument to be made to DOJ that you have undertaken your obligations to evolve and, and shouldn't be held liable with the same level of intent, you know, that maybe DOJ could be looking at.
Speaker 0 00:22:14 So, you know, I say this all it's, it's admittedly untested, but if a company is following the guidance to create, assess, and enhance compliance programs on an ongoing basis, I think there are very good arguments that if something goes wrong along the line, which happens like mistakes happen, that there's still no corporate intent for any type of misconduct. And that should be something that DOJ is evaluating very carefully in the context of its investigations.
Speaker 2 00:22:41 So Jim you've developed compliance programs for healthcare companies. What would you say? Uh, an effective compliance program would look like?
Speaker 3 00:22:52 Well, I mean, I think there are several essential elements to it. First off is a set of written policies and procedures for operating the company, particularly in smaller healthcare practices. I have been almost astounded by the extent to which the healthcare practices and smaller healthcare organizations have virtually nothing in writing about how they operate about the governing policies and procedures of the company. And I'm surprised by that because, you know, you, you go walk into one of these practices and you might see a bare bones employee handbook, which describes for people what their employee benefits are and so forth. But there's almost nothing about how they operate and you really need those policies and procedures because you need to be able to establish clear lines of accountability within the company. Who's responsible for what, what functions can be delegated to what of, of staff members, so that you create those lines of accountability and an understanding so that everybody knows what they're supposed to be doing.
Speaker 3 00:23:55 That also promotes consistency and fairness. In the management of the operation, I went into a physician practice recently in which there was disagreement among the physicians about what the standards of conduct were for their employees and how they were going to enforce them. And that led to inconsistency in enforcement and a lot of resentment amongst the staff, because they felt somebody was getting an advantage over somebody else unfairly. You need those clear standards of conduct. You need a compliance officer. And that compliance officer needs to be somebody who is visible. The compliance officer, can't be somebody who is stationed in a corner office, playing super cop in the company. That's not their role. You need a compliance officer who is visible to everybody within the organization, from the frontline employees all the way up to the top and who is seen by everybody in the company as a source of help as a resource for making things better.
Speaker 3 00:24:54 And that compliance officer has to be out there and visible. You also need to make sure that that people are being trained on their responsibilities in the compliance program, but not just in terms of what the rules are, but in terms of how the compliance program affects the way in which they do their particular jobs, the training program has to be designed to address how they do their work. Um, and it has to help them in essence, to make sure that they're, they're doing that work in inappropriate ways. And you need effective communication systems. When problems arise, people have gotta be know that there is some place they can go to get help. And they also have to know that if they are reporting a problem, they will be protected against retaliation. I re reminded of a company, a clinical laboratory company for which we did some work a few years ago, in which the tone at the top from the chief executive officer to his senior managers was, I don't want to hear about anything bad that's going on in the company. The only thing I want to hear is five pieces of good news at every staff meeting. Well, what that did was essentially suppressed all the problems. And of course, with the problems erupted, they were in huge difficulty. So you need to create that kind of open communications line so that you can identify problems proactively and take the appropriate corrective action that's involved.
Speaker 2 00:26:21 So we're coming up towards the end of our, our a lot of time, but I'm going to ask Miranda, I'm going to ask you a question. I know that you're a big advocate that healthcare companies should regularly assess and reassess their compliance program, both from, you know, the paper program, but also, you know, is it actually effective? And I don't know, do you have any examples where, where a company may have had, you know, what on paper looked like a strong program, but once it was assessed for effectiveness that there were some surprises,
Speaker 0 00:26:53 I actually think that the best way to answer this question is to get back to the point that Jim made a second ago about having the right tone come from the compliance officer or the chief compliance officer. And what, where I've seen companies trip up is that they don't have the right person in that position. And I think companies are becoming incredibly more sophisticated around who they put in that position and what background and training they have. And when you have someone who is, you know, when you have an experienced compliance officer, I think they bring to bear the notion that their role is not to be the police, but rather to be a resource and to help those in the organization, understand how to best do their jobs. And that is actually really the right tone you want to strike. And that's what creates an environment whereby people come to trust, compliance and recognize that it's not there to stop you from doing your job.
Speaker 0 00:27:48 It's actually there to help you do your job. And so where, you know, that gets back to your question is where you see people get in trouble. As you have just a figurehead in compliance, you have someone who doesn't know the role doesn't want to do the role, doesn't have any background in the role. And it's very clear when that's the situation that one senior management isn't valuing the role middle management, isn't valuing the role and people underneath it, the sort of bottom levels of the sales organization see that to know, not to value the role. And I think of, you know, various companies that I investigated as a prosecutor whereby you know, the compliance officer would be, you know, outwardly mocked by the head of the organization in front of the entire Salesforce. And so what's the message you're sending there about compliance. Sure. You have a manual. You have, you know, some auditing, you have some monitoring, but wait for the president of the company is mocking the chief compliance officer in front of the entire sales organization. That's not really creating a tone. That's going to bring about an effective compliance program.
Speaker 2 00:28:46 Well, I think that wraps up our time for this episode. I really want to thank you so much Miranda and Jim for sharing your expertise and insights and hope to get this team together again shortly.
Speaker 1 00:29:01 Thank you for joining affiliated monitors podcast, integrity through compliance Amies business success series. Today's segment is just a sample of the subject matter expertise captured by AMS compliance professionals. Go to our
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