October 12, 2016

Conflict-of-Interest Disclosure and Management – A Key Component of an Effective Compliance Program

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One of the more complicated administrative matters many hospitals, medical schools, and large physician groups deal with is how to implement and manage a conflict-of-interest disclosure program in their organizations. In healthcare, a potential conflict of interest can be broadly defined as any situation in which a decision-maker or one or more of their immediate family members has a financial or other interest in, or relationship with, an entity or person with whom they or their organization does business. The requirements to capture, manage, monitor, and ultimately make a good decision about potential conflict-of-interest disclosures can be challenging.

Potential conflicts of interest are apparent in our everyday lives. They are unavoidable; examples can be found in areas ranging from youth sports, whereby a parent/coach always has their child in the game while other children ride the bench to politics, wherein elected officials can appear to have unique ties to special interest groups.  

In healthcare, we may need to vet a physician who participates in a clinical trial with their patients while also being on the speaker’s bureau of the sponsoring firm, or we may need to vet a prospective hospital COO who has a financial interest in a new private laboratory actively involved in presenting a protocol to the hospital’s institutional review board. We may also need to vet the physician on the hospital pharmacy and therapeutics committee who recommends products from a company from which he receives compensation for frequent speaking engagements.  

Each of these situations can be difficult for some organizations, absent a well-defined process and independent review of all the facts and 100-percent clarity, whether or not a disclosed COI is a potential problem for the organization.  

While vetting a potential conflict-of-interest disclosure, an organization should define, via policies and procedures, how reported disclosures will be managed and reviewed. The absence of a succinct policy and associated practice can open an organization up to potential accusations of inconsistent treatment, bias, and unethical business practices with business partners, employees, and physicians. When developing policies, the identification of factors by which reported disclosures will be vetted should include, but not be limited, to the following: 

  • Is there any potential to influence medical judgment?
  • Is any compensation received not fair market value?
  • Is the compensation being reported associated with bona fide work?
  • Is any part of the compensation or benefit being reported linked to an expectation of referrals?
  • Is someone receiving a benefit beyond what would be normally expected?
  • Does the relationship impact the reporting party or organization’s ability to be independent in their decision-making?
  • Have any organizational policies been violated?
  • Is someone receiving a benefit beyond what would be expected in their normal functions within the organization?
  • Is this relationship not in the best interest of the organization, or would public disclosure present potential reputational risk?
  • Has the reporting party’s supervisor approved the matter?

Here are some key recommendations to ensure that the conflict-of-interest management disclosure process has policies for vetting issues effectively:

  • All parties identified to complete the conflict-of-interest disclosure statement should certify their agreement with this requirement. This acknowledgement could be included within the organization’s code of conduct, employment contracts, vendor agreements, hospital orientation, etc.
  • Expectations must be clear so they can be followed, and anyone who does not disclose should be subject to potential serious disciplinary actions.
  • What is required to be disclosed by reporting parties as a potential conflict needs to be clear, set down with examples and definitions, including descriptions of any relationship between a vendor or referral source and reporting parties and members of their immediate family.
  • The value of benefits received by any reporting party, which need to be reported, should be defined.
  • An easy methodology should be in place to allow disclosures to be made. This allows reviewers to render a decision or determine if the relationship reported needs to be advanced to others (a conflict-of-interest disclosure review committee, as an example) to opine and ultimately manage the potential conflicts in the organization.
  • All organization contracts and arrangements with identified companies should be easily available and apparent for all reviewers to analyze via an automated review process. Organization-wide, all contracts should be housed in one overarching contract, with a management database that linked to automated disclosures to facilitate the process.
  • Anyone reviewing a disclosure should be able to make an independent judgment on the topic. If a reviewer assigned a disclosure has a conflict (family member, referral relationship, financial relationship, partner, etc.), they should immediately recuse themselves from the review.
  • Results of the disclosure review should be shared with all interested parties, and the results should explain the decision and the necessary actions to be taken.

As mentioned above, an organization’s conflict-of-interest policy must define exactly what needs to be disclosed. Many healthy, compliance-focused organizations have developed an approach of maximum transparency. Others have adopted a zero-tolerance expectation, thus deeming anything of benefit received as a violation, resulting in minimal disclosures of potential conflicts of interest.

The important thing for an organization to assess, in regards to a conflict-of-interest disclosure policy, is this: can you manage your program within expectations, and if necessary, enforce regulations?  

It is important in your policy to reinforce the following:

  • Identify acceptable behavior/relationships.
  • Establish specific limits for goods/services to be reported.
  • Provide examples of potential conflicts.
  • Discuss consequences of failure to disclose.
  • Incorporate standards into the medical staff bylaws.
  • Discuss the organization’s commitment to review and act upon disclosures in a timely manner.
  • Ensure that all identified reporting parties are required to submit their disclosures and certify accuracy, even if they are reporting that there is no disclosure to be made.
  • Identify required frequency of disclosures.
  • Require updates if anything changes or becomes new for the reporting party.
  • Ensure confidentiality with the handling of documents.
  • Reinforce that the organization is looking for relationships that may be problematic to its best business practices, as delineated in the code of conduct, while not trying to negatively impact necessary business relationships.
  • Refer to applicable policies at the beginning of the disclosure document/electronic form. 

Done properly, the effective organization and management of a conflict-of-interest disclosure program will represent a strong foundation for an organization’s compliance efforts. Adhering to an organized and automated process will help insulate an organization from being surprised by questionable relationships that had not been previously vetted and already managed proactively.

About the Author

A veteran in healthcare compliance (since 1997), Bret Bissey has served as senior vice president and chief ethics compliance officer at UMDNJ in Northern New Jersey. The author of the Compliance Officer’s Handbook, he has been a thought leader and popular speaker at industry conferences and meetings.  Bissey has more than 30 years of diversified healthcare management, operations, consulting, and compliance experience.

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Bret Bissey, MBA, FACHE, CHC

A veteran in healthcare compliance (since 1997), Bret Bissey has served as senior vice president and chief ethics compliance officer at UMDNJ in Northern New Jersey. The author of the Compliance Officer’s Handbook, he has been a thought leader and popular speaker at industry conferences and meetings for many years. Bissey has more than 30 years of diversified healthcare management, operations, consulting, and compliance experience.

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