Incentives: Do we need to pay attention to this in healthcare compliance programs?

We know that covering incentives is a core element of compliance programs, as spelled out in standards like the US Sentencing Guidelines, and as emphasized by the US DOJ.  But in the area of healthcare, where compliance programs have been emphasized by the Department of Health and Human Services, is coverage of incentives essential, and if so, how are we to do this?

Recently the HHS Office of Inspector General issued a comprehensive guide on compliance programs, and on pages 54-55 provided answers on this topic. (Department of Health & Human Services, Office of Inspector General, General Compliance Program Guidance (Nov. 2023))

Your program should include incentives

The first and most obvious answer is that incentives are an expected part of compliance programs, following the consistent message from other government offices.  The opening language is very clear:

“Entities also should develop appropriate incentives to encourage participation in the entity’s compliance program. The compliance officer, Compliance Committee, and other entity leaders should thoughtfully consider the compliance performance or activities they would like to incentivize, both across the entity and within specific departments or positions. Excellent compliance performance or significant contributions to the compliance program could be the basis for additional compensation, significant recognition, or other, smaller forms of encouragement.”

Note that they are talking about recognizing activities that support or contribute to the program.  As is true for all other authorities speaking on this topic, people are not rewarded just because they did not break the law; in discussing incentives they are looking for actions that help promote an environment that supports compliance.  If someone raises a substantial concern, for example, this should be recognized in the person’s performance review.   

Activities to recognize

OIG goes on to note “Other behavior that entities may want to incentivize could include:

• the achievement of compliance goals that are specific to a department or a specific position description;
• achievements that reduce compliance risk (e.g., a team that develops a process that reduces compliance risk or enhances compliant outcomes, or an individual who suggests a method of attaining a strategic goal with less risk); or
• performance of compliance activities outside of the individual’s job description (e.g., mentoring of colleagues in compliant performance or performing as a compliance representative within their department or team).”

Have a voice in the entity’s incentive/compensation plans

OIG insightfully notes another key point that has been clearly highlighted outside of healthcare, most notably in the Well Fargo fake sales debacle where a bizarre, ill-conceived incentive structure drove improper sales activities. OIG advises that those in the compliance program:

“should review whether the entity’s other incentive plans can be achieved while operating in an ethical and compliant manner. The Compliance Committee should ask whether, for example, sales goals or admission goals may inadvertently encourage risky or noncompliant behavior . . . .  The Compliance Committee also should examine whether setting certain performance goals may have unintended consequences, such as falsifying documents or covering up incidents that would detract from goal achievement.”

Don’t shortchange compliance incentives

On its concluding note, OIG advises that

“Achievements in compliance should be treated commensurately with achievements in other areas valued by the entity. Through the thoughtful and deliberate use of incentives, an entity may reduce its compliance risk, enhance adherence to the entity’s compliance program, and develop a positive association with the entity’s compliance culture.”

Compliance practitioners in any area could learn from OIG’s advice on using incentives in their compliance programs.  Those in healthcare have been clearly warned that incentives need to be part of their compliance programs when the time comes to try to convince OIG that the entity really had a commitment to compliance and ethics.