Office of Compliance Programs
Revised: December 9, 2017
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:
- Clinical Trials
Failure to Follow these Regulations can result in…
- Loss of all Federal funding
- Debarment from participation in any federal programs (Medicare,
Medicaid & Federal grants, etc.) for up to 5 years
- Civil Monetary Penalties (CMP)
- Jail Sentences
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:
- Louisiana State Constitution Article VII Section 14
- Anti-kickback Statute
- The Stark Amendments
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
- The use of public funds for programs of social welfare for the
aid and support of the needy
- Contributions of public funds to pension and insurance programs
for the benefit of public employees
- Acquisition of stock by any institution of higher education in
exchange for any intellectual property
- Cooperative Endeavors
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.
- A Business Associate (BA) Agreement is required anytime LSUHSC-NO
business with entities if:
- The entity is performing a business function for LSUHSC-NO, and,
- The entity needs access to PHI to perform the function.
- LSUHSC-NO can be (and frequently is) the business associate of
another covered entity.
- Any BA agreements that another covered entity requests LSUHSC-NO
to execute must be reviewed and approved by the LSUHSC-NO Privacy
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
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:
- Billing, claims processing or administration
- data analysis
- utilization review
- quality assurance
- benefit management
- practice management
- legal services (e.g. malpractice litigation)
- actuarial services
- accounting services (e.g. if PHI is disclosed to CPA)
- consulting services
- data aggregation
- management services
- administrative services
- financial services, or
- any contract in which the vendor is contracting to do a service
on behalf of LSUHSC-NO where protected health information might be used
or disclosed to the vendor.
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
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
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
In-office Ancillary 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
- (A) to refer an
individual to a person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in
whole or in part under [Medicare] or a State health care program, or
- (B) to purchase, lease, order, or arrange for or recommend
leasing, or ordering any good, facility, service, or item for which
payment may be made in whole or in part under [Medicare] or a State
health care program,
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
- Have Compensation that is set in advance
- Have compensation that reflects fair market value
- Ensure that the compensation does NOT take into account the value
or volume of referrals
Compensation Set In Advance
In order to meet the "set in advance" test:
- The contract term must be at least one year
- The compensation must not vary over the contract term (e.g. fixed
price or fixed rate)
- If the contract
is terminated prior to one year, a new contract may not be executed
between the parties for the same services until a year has passed.
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,
U.S. v. McClatchey
In the first appeal and criminal conviction of physicians and
administrators the 10th Circuit found Mr. Dennis McClatchey, hospital
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).
- Dr. Robert LaHue was sentenced to 70 months in prison
- Dr. Ronald LaHue was sentenced to 51 months in prison.
served 3 years probation, six months home detention and paid $30,000 in
Health Alliance of Greater Cincinnati and The Christ Hospital
The government claimed that the Health Alliance of Greater
and The Christ Hospital were paying unlawful remuneration to doctors in
exchange for referring cardiac patients to The Christ Hospital in a
Health Alliance of Greater Cincinnati and The Christ Hospital
- The Christ Hospital limited the opportunity to work at the Heart
Station - an outpatient cardiology testing unit that provides
non-invasive heart procedures to those cardiologists who referred
cardiac business to The Christ Hospital.
- Cardiologists whose referrals contributed at least two percent of
hospital’s yearly gross revenues were rewarded with a corresponding
percentage of time at the Heart Station, where they had the opportunity
to generate additional income by billing for the patients they treated
at the unit and for any follow-up procedures that these patients
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.
Statute Compliance Tips
- Use a safe harbor.
- 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.)
- 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
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:
- Clinical Laboratory Services
- Physical Therapy Services
- Occupational Therapy Services
- Outpatient Speech-language Pathology Services
- Radiology and certain other Imaging Services
- Radiation Therapy Services and Supplies
When ensuring compliance with the Stark regulations there are three
questions one should ask:
- Is there a referral from a physician for a
designated health service (DHS)?
- Does the physician (or an immediate
family member) have a financial relationship with the entity providing
- Does the financial relationship fit in an exception?
United States ex rel. Baklid-Kunz v. Halifax Hospital Medical
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
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
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
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
- Meet a Stark Law exception.
- Document financial relationships with referring physicians.
- Have systems to ensure properly structured payments that
- Watch out for “lease creep” problems.
- Review productivity bonuses.
- Gifts can implicate the Stark law too.
Costs in Clinical Trials
Generally, there are two categories of costs in Clinical Trials:
- Research Related Costs:
Standard of Care (Routine) 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
- Items or services that are typically provided absent a
- 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.
Billing Medicare, Medicaid or other third party insurers for
related items paid by the sponsor is double billing. If the beneficiary
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
Watch contractual terms with sponsors closely on this issue.
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
National Coverage Decision (NCD)
The National Coverage Decision Serves to define the routine costs
of clinical trials and
the clinical trials for which payment for such routine costs should be
made. Routine costs of clinical trials include all items and services
are otherwise generally available to Medicare beneficiaries.
Desirable Characteristics of a Clinical Trial
- The subject of the trial is to test whether the intervention
potentially improves the participants’ health outcomes
- The trial is well supported by available scientific and medical
information or it is intended to clarify or establish the health
outcomes of interventions already in common use.
- The trial does not unjustifiably duplicate existing studies
- The trial design is appropriate to answer the research question
being asked in the trial
- The trial is sponsored by a credible organization or individual
capable of executing the proposed trial successfully.
Qualification Process for Clinical Trials
Clinical trials that meet the qualifying criteria will receive
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
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
- Investigational item or service itself
- Items/services not normally covered as a Medicare benefit
- Services furnished solely for data collection
- Services normally provided by the sponsor free of charge
In order to avoid erroneous bills, performance sites must be
of research subjects and research related costs. Erroneous billing
for failure to appropriately notify performance sites can be considered
Rush University Medical Center officials admitted the hospital
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.
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
- External Entities
- Federal Government
- DHHS OIG
- Department of Education
- Food and Drug Administration
- State Auditors
- Legislative Auditors
- Board of Regents
- Office of Risk Management
- Grant and/or Contract Sponsors
- Accrediting Agencies (SACS, AAHRP, etc.)
- Internal Entities
- LSU Internal Audit
- LSUHSC-NO Office of Compliance Programs
Key to a Successful Audit
- Organized files
- Documentation for expenses
- Appropriate and timely approvals
- Audit trails (i.e. documentation)
- Knowledge of LSU policies and regulations
- Ensure that all direct costs and revenues are posted to the
- Preparing for an audit the same way you prepare the proposal.
Remember: If it’s not written down, it didn’t happen. Document!
Challenges at LSUHSC-NO
- Accurate charging of direct salary costs to grants and contracts
- Consistency in estimating, accumulating and
- Consistency in allocating cost incurred for the same purpose
Notification of Audits
If you receive notification from an entity external to
they will be conducting an audit, notify the Office of Compliance
Programs at email@example.com.
Please include in your
- The name of the external entity
- The grant or program being audited
- The date(s) the audit is scheduled
- The individual(s) in your area that will be meeting with the
The Office of Compliance Programs will assign someone to:
- Assist you in preparing for the audit
- Participate in meetings with the external auditors
- Assist in writing the response to the audit report
- Assist with any needed corrective action
Federal and State Sanctions (Exclusions)
As a recipient of federal and state funds, LSUHSC-NO is
ensuring that no individual or company who has been excluded from
participation in federal or state programs is compensated or reimbursed
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.
There are three types of sanctions or exclusions that the
government will impose depending upon the nature of the offense:
- Mandatory Exclusions [42 U.S.C. § 1320a-7(a)]: Office of
General (OIG) is required to exclude the individual or entity for a
minimum of 5 years for conviction of certain offenses (e.g.,
program-related crimes, patient abuse, felony health care fraud, or
felony convictions relating to controlled substances).
- Permissive Exclusions [42 U.S.C. § 1320a-7(b)]: OIG may
individuals or entities under 16 different authorities (e.g., losing a
state license to practice, failing to repay student loans, conviction
of certain misdemeanors, or failing to provide quality care).
- Exclusion by another agency. Executive Orders 12549 and 12689
that all federal agencies exclude an individual or entity from
participating in federal programs if one agency excludes that
individual or entity.
Effect of Federal Sanctions
No payment may be made by any Federal health care program for
items or services furnished, ordered, or prescribed by an excluded
individual or entity. The prohibition applies to:
- The excluded person
- Anyone who employs or contracts with the excluded person,
- Any hospital or other provider
or supplier where the excluded person provides services.
applies regardless of who submits the claims and also applies to all
administrative and management services furnished by the excluded
The State of Louisiana maintains two exclusion lists:
- The Louisiana State Adverse Actions List
- This list is identical to the Mandatory and Permissive
exclusions described above under Federal Sanctions.
- The Louisiana Legislative Auditor Non-Compliance List
- This lists includes entities that are not in compliance
the Louisiana Audit Law R.S. 24:513. No LSUHSC-NO funds, regardless of
the source, may be used to reimburse or otherwise compensate such
entities. (R.S. 39:72.1)
- All new hires are required to sign a form disclosing
have been excluded from participation in federal programs.
- All purchase orders include language requiring the vendor
whether they have been excluded from federal programs. University
- A report is run monthly comparing all employees, students
against federal and state exclusion databases.
- Compliance Office staff members
review any matches to certify that the individual or vendor is actually
the one specified in the federal or state exclusion database.
When a department is notified that an employee, student or
excluded from federal programs, the department has three options:
- Option 1 - Separate the individual from the University or
with the vendor. This is the cleanest choice.
- Option 2 - Allow the employment, enrollment or contract to
requires the department to develop a written plan which must be
approved by the Compliance Officer to show how the department will
ensure that no federal funds or state funds, as appropriate,
will be used to compensate or reimburse
the individual or company and that all contract terms regarding
excluded individuals will be followed.
- Option 3 - Allow the employment, enrollment, or contract to
individual or company seeks reinstatement with the federal or state
- This option requires the department to develop a written
in place as described above to ensure that no federal funds or state
funds, as appropriate, will be used to compensate or reimburse
the individual or company until reinstatement has been accomplished.
- This option is often the best compromise. It allows the
retain the individual or contract to its benefit while limiting the
effort of monitoring the individual or vendor to the time that is spent
Reinstatement is NOT automatic. Any individual or entity
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
- For faculty and unclassified employees:
For classified and hourly employees
- All requests for leave are submitted via the University's
- For unclassified employees, supervisors
must ensure leave is reported in an initial half-hour increment and
that all subsequent time is reported in quarter-hour increments.
- For situations in which prior notification is not possible
to call in sick), supervisors should ensure the employee enters the
leave request immediately upon returning to work.
- In situations where the employee’s original
amount leave on the approved leave slip differed from the amount taken,
ensure that a corrected leave is entered into the system and the
original leave request is deleted.
- Ensure that Monthly Attendance Certifications are
submitted online by all unclassified employees (both Leave and
earning faculty and staff) by the 10th of the month following the pay
period of the certification.
are responsible for
completing the supervisor certification statement online for all your
unclassified employees who have certified by the 15th of the month following the pay
period of the certification.
For all employees:
- All requests for leave are submitted on a
completed University approved Application
for Leave Form for all types of leave (i.e. annual, sick, Leave
without Pay, funeral, educational, military, civil).
- A classified employee’s available leave is
on her/his check stub for the previous period.
- For all approved
leave, ensure that the supervisor approval is appropriately documented
(i.e. signed) on the leave form prior to forwarding to the timekeeper.
- For situations in which prior notification is not possible
to call in sick), supervisors should ensure the employee completes the
Application for Leave immediately upon returning to work.
- In situations where the employee’s original
amount leave on the approved leave slip differed from the amount taken
ensure that a corrected Application for Leave is completed or the
original leave slip is amended and initialed by both the employee and
- If the incorrect leave amount was submitted on the
monthly Attendance and Leave Voucher ensure a corrected leave voucher
is submitted to Human Resource Management.
- Ensure that individual work schedules are
maintained in the department for all employees (Full and Part-time).
Actual schedules worked for part-time employees must be included with
the LWOP leave slip in order to verify the accurate dollar amount of
- For employees whose time is recorded in
PeopleSoft Time & Labor, review all Time Detail Reports for
accuracy and to ensure that the employees’ signatures are present. Both
the employee’s and the supervisor’s signatures must be present prior to
submitting to the timekeeper for input. In rare cases where an employee
is on extended leave and the deadline for the time sheets transmittal
to the Payroll Office or timekeeper is at hand, signing and noting
“employee is on extended leave” is acceptable. If the employee has time
worked on the Time Detail report, the employee must sign the form
immediately upon their return to work.
- Ensure that all student workers sign the
Time and Labor Detail Report. All student time sheets should be
maintained in the home department for audit purposes in accordance with
the University’s retention schedule.
- Ensure that the timekeeper enters all
“Applications of Leave” into PeopleSoft (Monitor Absence) accurately
and on a timely basis. All “Applications for Leave” for a pay
period must be entered by the day before Payroll starts the subsequent
monthly payroll process. See the “ Calendar of Payroll Schedule ” on the
Office of Payroll webpage for the specific dates.
- Ensure the timekeeper reconciles all
academic and unclassified employees “Applications for Leave” to
PeopleSoft by the tenth of the month subsequent to entering the leave.
(The reconciliation of leave entered in September should be done by
- Ensure that all original “Applications for
Leave” and reconciliations are maintained in the department for audit
purposes in accordance with the University’s retention schedule.
- In compliance with good business practices,
PeopleSoft will not allow employees to enter their own leave.
Therefore, ensure your department has an alternate timekeeper to record
the other timekeeper’s leave and act as a backup.
Take any necessary disciplinary actions
against any employee who is not following the University and LSU
System’s policies and procedures related to attendance and leave.
- Ensure that the employee has available
leave prior to approval. Leave cannot be taken in advance.
- Ensure that, in addition to the completed
leave request or Application for Leave, a Per-3 is completed and
forwarded to Human
Resource Management for all instances of LWOP of 30 consecutive
calendar days or more. (The approved Application
for Leave Form located on Human
Resource Management's website is required.)
- For all employees on LWOP for 30
consecutive calendar days or more, service time, for leave earning
purposes, will be adjusted, i.e. the leave accrual change date will
move forward for the amount of time on LWOP.
- For LWOP that involves a partial day, the
specific hours must be noted and highlighted in the comment section.
- Ensure emails are submitted to the
appropriate distribution list as soon as the department is aware of an
employee on LWOP, Separation from the University, and/or Change in
- Ensure all employees report all instances
of military deployment to the department business office and to Human
Resource Management’s Employee Relations Manager to ensure compliance
with applicable federal law and university policy. This would apply to
the usual annual active duty requirement as well as activation for any
other reasons and includes any absence for military reasons, whether it
is charged to military leave, annual leave, or leave without pay.
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.
If you have
any questions, please contact the Office of