Why Compliance and Ethics Programs in Healthcare Are Mandatory for Quality Care

By Gerrie Schipske, MS, RNP, JD

If you ask most people how the Affordable Care Act has improved healthcare, those in support will usually respond that it has increased access to care. What is less known about this controversial law is that it also includes a number of tools to increase health care fraud prevention and enforcement efforts and to improve the quality of care.

Fraud and waste have been problems in federal government programs going back to the Civil War when profiteers gouged the Union with fraudulent and inflated charges for goods sold for the war effort. Consequently, the False Claims Act was signed into law by President Lincoln. This law and numerous others have been used to prosecute and to recover billions from offenders.

The Patient Protection and Affordable Care Act provides a comprehensive anti-fraud strategy that has enabled the U.S. Departments of Justice and Health and Human Services to recover a record-breaking $4.3 billion in taxpayer dollars in Fiscal Year (FY) 2013, up from $4.2 billion in FY 2012, from individuals and companies who attempted to defraud federal health programs serving seniors or who sought payments from taxpayers to which they were not entitled. Over the last five years, the administration’s enforcement efforts have recovered $19.2 billion, up from $9.4 billion over the prior five-year period.

The law also requires that healthcare providers put in place a compliance and ethics program. Interestingly enough, the details of compliance programs come from the U.S. Sentencing Commission Federal Sentencing Guidelines which outlines what constitutes an “effective compliance and ethics program” and includes seven key components:

• Establish policies, procedures and controls that effective reduce violations of
• Exercise effective compliance and ethics oversight at the highest levels by individuals (compliance and ethics officer) who have sufficient authority and resources to carry out their
• Exercise due diligence to exclude from authority those individuals who have a propensity to violate the
• Communicate with and train employees on the compliance and ethics
• Monitor and audit the compliance and ethics program for
• Ensure consistent enforcement and discipline of
• Respond appropriately to detected offenses and develop corrective action to prevent future

Federal officials are quick to point out that “no one size fits all” when it comes to developing and implementing a compliance and ethics program. What is key is that the healthcare provider organization promote a culture that encourages ethical conduct and a commitment to compliance with the law.

While compliance means following the law, ethics means doing the right thing even without a law. Compliance is driven by the government. Ethics is driven by the individual. Both are necessary concepts in any successful organization.

Organizations which communicate an ethical culture benefit in several ways. They can attract and retain quality employees who appreciate working for an organization that lives up to its mission statement. These organizations also become more efficient as compliance programs audit, review and update policies and procedures on a routine basis.

Since the ultimate goal of a healthcare organization is to provide quality care to its patients, the connection between compliance and ethics and quality assurance are strong. The Federal Office of Inspector General (OIG) announced in its annual “work plan” that in addition to focusing upon fraud, waste and abuse, that it would focus on quality of care and patient safety. As stated in a recent report: “The provision of care that fails to meet accepted standards of care is an enforcement priority for OIG, which is actively pursuing these cases under administrative sanction authorities that explicitly address quality of care.”

The Affordable Care Act also includes a number of quality assurance and performance improvement strategies that providers and healthcare insurers must comply with. This requires that compliance and ethics programs integrate quality improvement activities of their organizations. Boards of Directors are now responsible for requiring quality performance measures and accountability in order to ensure that quality of care is a reality and not just a slogan of the organization.

Compliance is often viewed as a burden for corporations who must follow countless laws, regulations and endure audits and government review. But in the broadest and best sense, healthcare compliance and ethics simply promote the rights of patients and provide quality care and treatment free of financial influence.

Healthcare is perhaps the most regulated industry in the U.S. However, the outstanding leaders in healthcare recognize that compliance and ethics are not just a legal requirement but a critical component for organizational strength and quality patient care and safety.

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Since 2011, Gerrie Schipske, a healthcare attorney and Registered Nurse Practitioner, has taught law, human resources management and organizational management in the Healthcare Administration Department at CSULB. She is currently developing a “Managing Compliance and Ethics in Healthcare” certificate program for the CSULB College of Continuing and Professional Education. Schipske also is a contributing writer for the Long Beach Business Journal.