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Office of Compliance Programs

Revised: December 9, 2017

Regulatory Compliance Training For Management

Why Does Management Need Specialized Regulatory Compliance Training? As a manager or supervisor, you are responsible for ensuring that the activities in your area are in compliance with all laws, regulations and policies that apply. Regulations impact:

Failure to Follow these Regulations can result in…

All members of Management (Chancellor, Vice Chancellors, Deans, Assistant Deans, Department Heads, & Business Managers) and other positions with supervisory responsibilities need to complete this training on an annual basis.


Laws that impact LSUHSC-NO contracts include but are not limited to:

The Louisiana State Constitution

Article VII Section 14 of the Louisiana State Constitution states, "Except as otherwise provided by this constitution, the funds, credit, property, or things of value of the state or of any political subdivision shall not be loaned, pledged, or donated to or for any person, association, or corporation, public or private."

What this means for contracts is that, unless the services specified under the contract fall under one of the exceptions listed in the Constitution, LSUHSC-NO must receive the equivalent value in services for the amount paid to a contractor. Likewise, when LSUHSC-NO is the contractor, it must receive fair compensation for the services it provides and may not enter into contracts whose compensation does not cover the cost of providing services. Exceptions include but are not limited to:

HIPAA and Business Associates

Business Associate’s Failure to Safeguard Nursing Home Residents’ PHI Leads to $650,000 HIPAA Settlement

Catholic Health Care Services of the Archdiocese of Philadelphia (CHCS) agreed to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Security Rule after the theft of a CHCS mobile device compromised the protected health information (PHI) of hundreds of nursing home residents. CHCS provided management and information technology services as a business associate to six skilled nursing facilities. The total number of individuals affected by the combined breaches was 412. The settlement includes a monetary payment of $650,000 and a corrective action plan.  CHCS had experienced a breach of PHI involving the theft of a CHCS-issued employee iPhone. The iPhone was unencrypted and was not password protected. The information on the iPhone was extensive, and included social security numbers, information regarding diagnosis and treatment, medical procedures, names of family members and legal guardians, and medication information. At the time of the incident, CHCS had no policies addressing the removal of mobile devices containing PHI from its facility or what to do in the event of a security incident; OCR also determined that CHCS had no risk analysis or risk management plan. In determining the resolution amount, OCR considered that CHCS provides unique and much-needed services in the Philadelphia region to the elderly, developmentally disabled individuals, young adults aging out of foster care, and individuals living with HIV/AIDS. OCR will monitor CHCS for two years as part of this settlement agreement, helping ensure that CHCS will remain compliant with its HIPAA obligations while it continues to act as a Business Associate.


Who is a Business Associate?

A business associate is a person or entity who performs a function or activity on behalf of the University involving the use or disclosure of PHI.

A business associate is not a member of our workforce (i.e. employee,student,gratis faculty member or other volunteer.

Contracts that may need Business Associate Agreements

The LSUHSC-NO Business Associate Addendum should only be used with contracts in which LSUHSC-NO pays the vendor. The addendum is only required when the services provided under the contract require the use or disclosure of PHI in order to be performed. Examples of such services include but are not limited to:

CM-53 Section V - Use and Disclosure of Protected Health Information to Business Associates contains additional information on business associates of LSUHSC-NO including the contract addendum form.

If you are unsure whether a contract needs a BA agreement, or if contract specifies that LSUHSC-NO will be the business associate of another covered entity, please contact the LSUHSC-N.O. Privacy Officer.

Stark Law and the Anti-Kickback Statute

Stark and Anti-Kickback regulate financial relationships of physicians and other healthcare entities.These financial relationships are frequently defined in contracts. Examples of such contracts include but are not limited to:

  • Rental of Office Space
  • Physician Services
  • In-office Ancillary Services
  • Physician Recruitment
  • I.T. Services
  • Anti-Kickback Statute (42 U.S.C. 1320a-7b)

    "2) whoever knowingly and willfully offers and pays any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person

    shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.

    The Anti-Kickback Statute is a criminal statute and violation of this statute is a felony with punishments that include prison sentences as well as fines.

    To ensure compliance with the Anti-kickback Statute, all contracts must:

    Compensation Set In Advance

    In order to meet the "set in advance" test:

    Fair Market Value

    Fair market value is the value in arms-length transaction, consistent with the general market. It must reflect an arm’s-length transaction which has not been adjusted to include the additional value which one or both of the parties has attributed to the referral between them. It must be in writing and signed by both parties and covers identifiable items or services.

    Value or Volume of Referrals

    Compensation may not be based on the number of referrals for designated health services made. Furthermore, compensation may not be based upon the dollar amount generated by referrals for ancillary services (e.g. Pathology, Radiology, Pharmacy, etc.)

    U.S. v. McClatchey

    In the first appeal and criminal conviction of physicians and hospital administrators the 10th Circuit found Mr. Dennis McClatchey, hospital vice president and Drs. Robert and Ronald LaHue who had a geriatric practice, guilty of violating the Anti-kickback laws by accepting payment in exchange for referring patients to McClatchey’s hospital.

    The indictment charged McClatchey with one count of conspiracy to offer or pay remuneration to the LaHues in exchange for Medicare and Medicaid patient referrals, in violation of 18 U.S.C. § 2 and 42 U.S.C. § 1320a-7b(b)(2)(A), (B).

    Health Alliance of Greater Cincinnati and The Christ Hospital

    The government claimed that the Health Alliance of Greater Cincinnati and The Christ Hospital were paying unlawful remuneration to doctors in exchange for referring cardiac patients to The Christ Hospital in a pay-to-play scheme. Health Alliance of Greater Cincinnati and The Christ Hospital

    The government asserted that The Christ Hospital’s use of Heart Station panel time to induce lucrative cardiac referrals violated the federal Anti-Kickback Statute.

    The defendants agreed to pay $108 million in damages.

    Anti-Kickback Statute Compliance Tips

    1. Use a safe harbor.
    2. It’s a “one purpose” test. (If one purpose of the arrangement is to induce referrals, it is a violation, even if the arrangement serves other purposes.)
    3. Use Fair Market Value for actual/necessary services.


    42 U.S.C. §1395nn

    Section 1877 of the Social Security Act (the Act) prohibits physicians from referring Medicare patients for certain designated health services (DHS) to an entity with which the physician or a member of the physician's immediate family has a financial relationship--unless an exception applies. Section 1877 also prohibits an entity from presenting or causing to be presented a bill or claim to anyone for a DHS furnished as a result of a prohibited referral.3

    Designated Health Services (DHS)

    Designated health services include but are not limited to:

    When ensuring compliance with the Stark regulations there are three questions one should ask:

    1. Is there a referral from a physician for a designated health service (DHS)?
    2. Does the physician (or an immediate family member) have a financial relationship with the entity providing the DHS?
    3. Does the financial relationship fit in an exception?

    United States ex rel. Baklid-Kunz v. Halifax Hospital Medical Center and Halifax Staffing, Inc.

    In this qui tam suit, the government argued that Halifax’s agreements with medical oncologists and neurosurgeons violated the Stark law. Facing possible damages of up to $1.1 billion, Halifax settled with the government for $85 million.

  • The arrangement with medical oncologists provided for a base salary and a bonus pool equal to 15% of the operating margin of the oncology program at Halifax. The bonus pool was allocated among the physicians in proportion to their personally performed services. The bonus pool included revenues for designated health services referred by the physicians (i.e., services not personally performed by the physicians)..

    Arrangements with the neurosurgeons failed to comply with a Stark Law exception because those arrangements resulted in compensation in excess of fair market value. Those arrangements provided for a base salary, benefits, call pay, and a bonus equal to the difference between the base salary and the physician’s collections. According to the government’s expert witness, these arrangements resulted in compensation to the neurosurgeons in amounts over twice the compensation paid to neurosurgeons at the 90th percentile of their specialty, despite producing below the 90th percentile.

    Stark Law Compliance Tips

    Costs in Clinical Trials

    Generally, there are two categories of costs in Clinical Trials:

    1. Research Related Costs:
      • Items or services required solely for the provision of the investigational item or service, the monitoring of the effects of the item or service, and the prevention of complications
      • Generally funded by the sponsor of the clinical trial
      • May not be billed to third party insurance
      • Items or services needed for reasonable and necessary care arising from an investigational item or service
    2. Standard of Care (Routine) Costs:
      • Items or services that are typically provided absent a clinical trial
      • Costs generally are not covered by sponsor
      • May be billed to third party insurance

    If the patient would receive the treatment or service regardless of her/his participation in the research then the treatment or service is considered standard of care. If not, then then the treatment or service is research related.

    Double Billing

    Billing Medicare, Medicaid or other third party insurers for research related items paid by the sponsor is double billing. If the beneficiary has no legal obligation to pay for the item or service then Medicare and other insurance plans don’t cover it. The beneficiary has no legal obligation to pay for the item or service if the sponsor agrees to pay (after denial) so the patient will not have that obligation.

    Watch contractual terms with sponsors closely on this issue. Sponsors might not always understand Medicare reimbursement rules. Sponsors are not billing Medicare and 3rd party insurers so there is questionable liability on the part of Sponsors. Institutions should not rely on Sponsors for correct reimbursement/billing advice when it comes to Medicare.

    National Coverage Decision (NCD)

    The National Coverage Decision Serves to define the routine costs of clinical trials and identify the clinical trials for which payment for such routine costs should be made. Routine costs of clinical trials include all items and services that are otherwise generally available to Medicare beneficiaries.

    Desirable Characteristics of a Clinical Trial

    Qualification Process for Clinical Trials

    Clinical trials that meet the qualifying criteria will receive Medicare coverage of routine costs after the trials lead principal investigator (PI) certifies that the trial meets the criteria. The PI enrolls the trial in a Medicare clinical trials registry.

    Some clinical trials are automatically qualified to receive Medicare coverage of their routine costs. The PI does not need to certify that the trials meet the qualifying criteria. The PI must enroll the trials in the Medicare clinical trials registry.

    What Medicare Won’t Cover

    In order to avoid erroneous bills, performance sites must be informed of research subjects and research related costs. Erroneous billing for failure to appropriately notify performance sites can be considered fraud.

    Rush University

    Rush University Medical Center officials admitted the hospital filed false Medicare and Medicaid claims during a six-year period but maintained it was done inadvertently. Rush agreed to pay $1 million to settle government claims.

    Emory University

    The government claimed Emory billed Medicare and Medicaid for clinical trial services paid by the clinical trial sponsor. Emory agreed to pay $1.5 million to settle the claim.


    Who Audits the University?

    Key to a Successful Audit

    Remember: If it’s not written down, it didn’t happen. Document! Document! Document!

    Challenges at LSUHSC-NO

    Notification of Audits

    If you receive notification from an entity external to LSUHSC-NO that they will be conducting an audit, notify the Office of Compliance Programs at

    Please include in your notification:

    The Office of Compliance Programs will assign someone to:

    Federal and State Sanctions (Exclusions)

    As a recipient of federal and state funds, LSUHSC-NO is responsible for ensuring that no individual or company who has been excluded from participation in federal or state programs is compensated or reimbursed from federal sources of funds. Most hospitals and other organizations affiliated with the University require that any LSUHSC-NO personnel or students working at their facilities must be eligible to participate in federal and state programs.

    Federal Sanctions

    There are three types of sanctions or exclusions that the federal government will impose depending upon the nature of the offense:

    Effect of Federal Sanctions

    No payment may be made by any Federal health care program for any items or services furnished, ordered, or prescribed by an excluded individual or entity. The prohibition applies to:

    The exclusion applies regardless of who submits the claims and also applies to all administrative and management services furnished by the excluded person.

    State Sanctions

    The State of Louisiana maintains two exclusion lists:

    University Responsibilities

    Department Responsibilities

    When a department is notified that an employee, student or vendor is excluded from federal programs, the department has three options:


    Reinstatement is NOT automatic. Any individual or entity wishing to again participate in federal or state programs must apply for reinstatement and receive authorized notice from the excluding agency that reinstatement has been granted.

    Attendance and Leave

    As a manager or supervisor, you are responsible for ensuring that the employees under your supervision are, in fact, at work when and where they are supposed to be, and when they are not, they take the appropriate leave. You are also responsible for ensuring the required documentation for attendance and leave is properly maintained. This means:

    For your reference we have included links to Human Resource Management’s Attendance and Leave Policy and Attendance and Leave Procedures ’ documents.  Please take time to review them and refer back to them as needed.  They are also located on Human Resource Management’s webpage.

    Getting Help

    If you have any questions, please contact the Office of Compliance Programs by: