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Ethics compliance: long-term care's reform horizon

by Isabel Fawcett

Ready or not, the passage of the Patient Protection and Affordable Act (PPACA) on March 21, 2010, will turn healthcare, and long-term care in particular, on its head. Among various other legislative mandates under the new law, there is a comprehensive ethics program mandated for nursing homes. Its implementation is legislatively mandated within 2 years of the PPACA's enactment. Fortunately for nursing homes there are many historical best practices in business on which such compliance programs might be modeled without anyone needing to reinvent the wheel.

Private Sector's Notably Infamous Legacy: Enron

In the millennium, even on the heels of an economic recession and financial institutions' scandal, not many individuals will forget Enron Corporation's news, trial, suicide, mayhem and ethics scandal. In 2006, Enron's former Chief Financial Officer, (CFO) Andrew Fastow, was sentenced to 6 years in prison. Enron's corporate fraud came to light circa 2001 and cost its shareholders billions of dollars. Accounting fraud brought a once-mighty corporation to its knees.

There were many lessons learned in business on the heels of Enron's scandal, including a need for greater accountability in business, better audit controls, and abundant ethics lessons. In July 2002, The Sarbanes-Oxley Act of 2002 was enacted under the law. SOX as it was dubbed by some accountants, set new accounting compliance and reporting standards for public accounting businesses, management and boards of directors.

When I first read SOX as a former human resources manager, I remember thinking that SOX's inherent best practice ethics standards should be integrated into chief financial officers', human resources directors' and audit management positions in all businesses- whether or not the business was covered under the law. That, of course, was my own human resources management consulting recommendation relative to SOX, and not necessarily the prevailing legal counsel, executive and senior management philosophy of the time.

Fast-forward to 2010, post U.S. economic recession. I am more convinced than ever that there are overarching tenets in SOX that are not limited to accounting management professionals and board members. If I were employed as a human resources manager in long-term care in 2010, I would make the same out-of-the-box human resources management consulting recommendation to my nursing home administrator superiors and corporate executives.

Whether or not Enron's former CFO deserved to be convicted, or not, he surely deserved to be held fully accountable as did Enron's former CEO who reportedly committed suicide as the scandal unfolded. The ethics buck starts at the top, and reverts to the top when there are systemic ethical breaches. For an ethics program to be successful in any organization, the approach and reach must be interdisciplinary, not limited in scope to a single profession or area of the industry, organization or a single business facility.

Historical Business Precedent Born in Texas' Public Sector

In 2004, by state-issued Executive Order, State of Texas agencies were required to prevent, detect and eliminate fraud, waste and abuse. The language in the gubernatorial Executive Order (RP36) is consistent with the overarching nature of ethics compliance, not limited to accounting practices.

Texas' RP36 Executive Order specifically presents fraud in healthcare as an interconnected whole, as it should be, in my personal opinion. More specifically, the Executive Order identifies potential for fraud, not limited to the areas listed below, up to and including treatment and healthcare personnel.

  • Increased healthcare costs to all consumers, whether in state programs or in private industry
  • Fraud and abuse by contractors and health care professionals
  • Identifying best practices for treatment and billing procedures
  • Coordination between and among the health professions and licensure boards, insurance carriers, employers, patients and regulatory programs in the public sector
  • Increased effectiveness in investigation and prosecution of fraud and abuse committed by health professionals participating in state and federal health programs.

In healthcare as in other industries, each business decision and transaction has ethical implications. The ethics of finance should never be considered apart from the ethics of performance and human resources management, including staffing decisions, and applicant and employee credentials for positions in the organization. In healthcare there are major ethical considerations regarding whether and how to treat patients' medical treatment decisions.

Federally-Mandated Patient Protection and Affordable Act Provision

Although the PPACA's timeline for nursing facilities to implement the comprehensive ethics program provisions in Title VI, Subtitle B, Part 1 of the Health Reform Bill provides that the compliance and ethics program regulations must be in place not later than 2 years after the enactment of the Bill, the time for nursing home owners, executives, management, administrators and Center for Medicare and Medicaid Services (CMS) to start planning a fully integrated strategy is now.

One of the strongest components under PPACA is the requirement that specific high-level employees have the overall responsibility to oversee compliance of the ethics provisions under the law. Ethics is everybody's business though it necessarily starts at the top. It just as quickly reverts to executive ranks where it speaks to issues of leadership and organizational accountability, or lack thereof.

I'm looking forward to seeing how this all rolls out. For sake of all aging Baby Boomers, including myself, I'm hoping this is more than paper reporting and compliance. If taken seriously, the additional checks and balances could serve to improve the nursing homes' public image issues. We'll all have to wait and see what happens. Until then, this is promising news in long-term care and for us Baby Boomers.