Impact and Interpretation of Regulatory, Legal, and Ethical Issues

By Robin Singh

The post originally appeared on Robin Singh’s Blog, whitecollarinvestigator.com. 

Regulatory frameworks are essential for ensuring compliance with basic standards, but in some instances, the impact of regulatory as well as legal and ethical issues can be significant.

What Does a Regulatory Framework Mean?

A regulatory framework serves as a model used for enacting regulations. Such frameworks may be developed within specific areas of interest, such as the healthcare industry. Governments often rely on the use of such frameworks to develop and enact regulations, rules, and laws. Regulatory frameworks are typically first developed with an end goal in mind.

Is the Environment in Healthcare Turning Its Focus on Regulations Rather than Patient Care?

While the goal of a regulatory environment should be to ensure higher quality of care, many physicians feel as though the exact opposite is taking place. With an increased focus on regulations, quality of patient care tends to suffer. For instance, a report has found that the majority of physicians experience frustration in regard to the complex and expensive systems that were intended to make healthcare more efficient. A confusing array of record systems, along with the complex functionality of those systems, has proven to be tremendous barriers. Ever-increasing federal regulations have made patient record keeping even more complicated.

What Are the Top 10 Regulatory Challenges in the Healthcare Environment?

1. HIPAA and Data Breaches

Electronic data breaches have become a significant problem in all industries, but can prove to be particularly devastating to the healthcare industry. In response, nearly all states have now developed their own individual laws to combat data breaches. Laws vary among states regarding the definition of personal information, the way in which notice of breaches must take place, and the amount of fine for organizations found to be non-compliant with data breach laws.

2. False Claims and Whistleblower Suits

The healthcare industry also now faces challenges related to false claims and whistleblower suits. The False Claims Act covers any type of fraud involving any federally funded program or contract, such as Medicaid or Medicare. Under this act, healthcare providers may be prosecuted for acts that result in a fraudulent claim being submitted. One of the primary activities constituting violation of this act is knowingly presenting a false claim for payment to the federal government, and knowingly using a false statement or record to get the federal government to pay a claim. Recent efforts at reform have also resulted in whistleblowers becoming empowered. For instance, whistleblowers may now initiate false claims actions based on publicly disclosed information made available through civil, criminal, and administrative proceedings. This means that whistleblowers no longer have to be the actual source of information in such a claim, making it easier for them to make claims against healthcare organizations.

3. Anti-Kickback and Physician-Hospital Issues

Under the Anti-Kickback Statute, the financial relationships of a hospital with physicians are regulated. To avoid potential lawsuits, hospitals must make certain all physician relationships are not simply a means to obtain payments for physicians for referrals. Healthcare organizations can run into trouble with this law when they offer free services to a medical practice or when they provide discounts or pay for unnecessary services.

4. Impact of Stark Law on Physician-Hospital Relationships

The goal of the Stark Law was to prevent referral sources, primarily doctors, from profiting in an inappropriate manner from referrals. Under this law, doctors are not allowed to refer patients for services that are to be reimbursed by federal healthcare programs to any organization with which the doctor has any type of compensation arrangement or interest. Due to the complicated nature of this law, healthcare organizations must be extremely careful regarding the way in which compensations arrangements are made with physicians. Intent does not need to be proven in order for the statute to be violated, which means that violations are frequent.

5. Co-Management Arrangements

Co-management arrangements refer to agreements in which a hospital compensates physicians for fulfilling certain duties while meeting performance objectives. Such arrangements can result in legal issues related to anti-kickback, antitrust, physician self-referral prohibitions, civil monetary penalties, and Medicare regulations and laws.

6. Changes in Reimbursement

Under PPACA, reimbursement rates have changes, resulting in a significant lowering of reimbursements for some healthcare providers and increasing rates for other providers.

7. Antitrust Issues

Accountable care organizations, or ACOs, also present a legal challenge, as competing hospital systems must join together and share pricing information. Technically speaking, this could be considered illegal under the Sherman Act. While the goal of accountable care organizations is to help hospitals lower prices, the potential does exist for ACOs to serve as a means for actually raising prices.

8. Recovery Audit Contractors

Recovery audit contractors, responsible for auditing providers while looking for overpayments, are also having a tremendous impact on the healthcare industry. While hospitals and medical practices are able to file an appeal against recovery audit contractor determinations, the process can be time-consuming and expensive. In the event the appeal is lost, the hospital or practice must pay annual interest on the amount owed.

9. Tax-Exempt Hospitals and Compliance Requirements

Hospitals that want to obtain or maintain tax-exempt status are required to meet specific requirements under the Patient Protection and Affordable Care Act. Such requirements include conducting a community health needs assessment and preparing written financial assistance and emergency care policies. In addition, there are limitations on charges as well as collections policies.

10. Employment and Labor Issues

Hospitals are also now facing increasing age discrimination claims associated with termination. Additionally, hospitals must also handle more requests to accommodate employees with disabilities. In an effort to avoid legal action, hospitals must ensure that they provide accurate job descriptions and implement formal written policies regarding employee dismissals.

What Are the Top 5 Ethical Issues in a Healthcare Environment?

1. Consent

In order for hospitals and practices to legally provide treatment, patients must provide informed consent. For example, if a hospital performs a surgery without the patient providing informed consent, that procedure could be considered assault.

2. Balancing Efficiency and Quality of Care

Moving into the future, the healthcare industry will face a number of challenges related to the need to balance safety and quality with efficiency. At the heart of this issue is the need to ensure that everyone is provided with access to the most basic level of care.

3. Cultivating and Sustaining a Competent Healthcare Workforce

With baby boomers aging and leaving the workforce, the need to build and sustain a sufficient number of competent healthcare workers is a serious challenge. Even though a number of young people have entered the healthcare profession, experts have predicted that there will still be a shortage of nurses within the next several years.

4. End-of-Life Issues

As the population continues to age, end-of-life issues will become increasingly important. This includes not only the decision-making process related to such issues but also the need to finance end-of-life care.

5. Allocation of Limited Medications

Medication shortages will remain a serious issue in the future, particularly as manufacturers find a lack of sufficient economic incentive. A prime example of this occurs when certain generic medications become scarce because there is only a small amount of profit in manufacturing those medications.

How Can This Ethical Problem Be Solved?

Ethical conflicts remain a prevalent problem in today’s healthcare industry, but several best practices can help healthcare organizations solve those problems. Some of those best practices are:

1. Supporting a Code of Ethics
2. Offering Ongoing Education
3. Creating an Environment Where Healthcare Professionals Can Speak Up
4. Providing Ethics Experts
5. Adding Ethics Mentors to Units
6. Holding Family Conferences
7. Reaching Out to Professional Associations
8. Offering Employee Counseling Services

Key Challenges to Corporate Compliance

Within the healthcare industry, compliance and corporate responsibility are often one and the same. As the healthcare environment becomes continually enveloped in increasing regulatory issues, challenges mount. Corporate responsibility officers must ensure that they are aware of all new regulatory and legal initiatives, as well as how those issues apply to their specific organizations. This often means providing employees with specific examples of what would constitute a breach, making employees aware of the HIPAA’s wide span, and the potential impact that breaches could have on both patient care and the reputation of the organization. Corporate responsibility and healthcare compliance evolve on a continuous basis. Diligence is vital to stay on top of current laws while keeping staff educated of all changes.

In conclusion

Regardless of the profession, crime can be rife no matter the environment. Understanding the technology is just the tip of the iceberg when it comes to the healthcare sector, and as demonstrated above, the delicacy when dealing with human lives can make the situation in healthcare much more sensitive.

The top 3 takeaways from this are:

1. It is essential, if regulatory issues wish to be lessened that education regarding regulatory and legal initiatives is made available to all professionals.
2. This, in turn, will necessitate a continual upgrading of the education plans in place, as new medicines, practices are introduced every day.
3. Nation’s must fight such threats as one, not fragmented like the current form is in some countries for regulation to be effective.

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Robin Singh has worked in the Big 5 accounting firms such as Deloitte and Protiviti, managing their Forensic and Dispute service line across jurisdictions such as  India, Singapore, Middle East and Afghanistan. He carries a strong experience in Fraud Investigations, developing anti-fraud frameworks, setting up Ethics and compliance programs. He is a keen writer on the subject of ethics, Compliance and white-collar crime and has published articles across various media.