Articles on Compliance Strategies

Scorecards Measure Effectiveness, Motivate Managers, Employees

Reprinted from the July 11, 2005, issue of REPORT ON MEDICARE COMPLIANCE, the nation's leading source of news and strategic information on false claims, overpayments, compliance programs, billing errors and other Medicare compliance issues.

The compliance "scorecard" started out as a way to measure the effectiveness of Allina Hospitals & Clinics' compliance program, but it's morphed into something more. The scorecard — which is used to rate the compliance performance of all departments in the Minneapolis-based health system — has become an organizing and cultural force in the compliance program. Because the scorecard is popular with the board of directors, formerly difficult managers are more likely to play compliance ball. The visual appeal of the scorecard can wake up complacent employees during training. And the risk areas on the scorecard are used to set audit work plans for the year.

"It lets us have one way to consistently measure all of our business units," says Jenny O'Brien, vice president of corporate compliance. "It has also been great to see the business units take accountability for the scorecard and integrate it into their everyday work."

Allina created the scorecard in 2001 and has been enhancing it ever since, "as the scope of compliance broadens," O'Brien says. She still sees it as a work in progress.

CMS has indicated support for Allina's approach. "Our [scorecard's] structure, process and outcome methodology has been embraced by the Centers for Medicare and Medicaid Services for use in a compliance-program effectiveness pilot project that began in 2004," she says.

The scorecard rates every business unit on its structure, process and outcomes, which collectively cover the seven fundamental elements of a compliance program.

"Structure" addresses the ability of the compliance program to promote compliance with regulatory requirements as reflected in the program's infrastructure, O'Brien says. "Process" refers to how the compliance program's paper policies and procedures come to life to address risk areas. And "outcome" gets down to measuring performance in concrete terms (e.g., billing errors). So, for example, structure and process include compliance essentials like employee training, compliance awareness, compliance policy review and communication. Outcome involves compliance auditing.

The scorecards also contain compliance risk areas customized for each business unit (e.g., EMTALA for hospitals).

When scoring performance in these areas, structure and process combined count for 50 points, and outcome is worth 50 points. The reason Allina splits things this way is because performance problems come in difference shapes and sizes, and a department may be doing well in one area and poorly in another. "Before, everyone said 'bad audits mean bad compliance.' But, no, you can have strong policies and have a bad audit result," she says. Effectiveness should not be judged solely on one poor audit result. In fact, the ability to detect the problem — and management's alacrity in fixing it — are also hallmarks of an effective compliance program.

Business Units Undergo Quarterly Rating

At the beginning of the year, all business units create a compliance work plan based on the criteria in the scorecard. The plan is reviewed and approved by senior leadership in each business unit. At the end of each quarter, business unit compliance leads meet with their business unit compliance committee and rank themselves on the process and structure parts of the scorecard. O'Brien then meets with each compliance lead to review the memo that has been developed to support that unit's self-rating. She may or may not make changes. Meanwhile, the business units have also undergone billing audits, and she enters these results into the scorecards.

About a week later, O'Brien takes the scorecards to meet with the Allina board of director's oversight and compliance committee, which is chaired by David Orbuch, executive vice president for corporate responsibility and community relations. Together, they score every business unit.

Business units that score 80 and above get a green light, a sign that compliance is A-OK. If they score 60 to 70, that's a yellow light, which means something needs improvement. Weaknesses could be in any number of areas. Did the unit fail to update its compliance policies? Meet the terms of its corporate integrity agreement? O'Brien meets with the compliance lead and/or senior manager and asks what resources the business unit needs to get the job done.

Any score that's 59 or below is a red light. Usually the reason is a recurring billing error because audit results represent half the total points.

"Even red doesn't mean everything is falling apart," she says. Rather, it's treated as a call for help — perhaps more resources or education or new problem-solving strategies are needed. Management devises and implements a corrective action plan, O'Brien monitors it, and hopefully things get back on track.

Scorecards Help Keep Issues Visible

Scorecards are living, breathing documents that can be adjusted as new risks emerge, compliance-program doctrines evolve, or Allina managers fail to meet their compliance-program requirements or fix errors. For example, Allina was informed that its Medicare "Comprehensive Error Rate Testing" (CERT) contractor did not receive some of the medical records requested under the Medicare integrity program.

Allina investigated what had gone wrong. It turned out, O'Brien says, that in some cases Allina actually had submitted the records, and was able to work with the contractor to identify gaps in the intake process. In other cases, the company discovered that process improvement was needed internally. For example, requests were coming into various Allina addresses and taking too long to get to the right department. Reforms were implemented, one of which involves having all requests sent to one company address and one contact person.

Scorecards also give the compliance department leverage with managers who may be dismissive. "If we haven't made headway on something, it can easily end up with the audit committee. No executive wants that to end up with the board," says O'Brien.

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