infirmary health systems, inc. $25 million stark violation
TRANSCRIPT
HCCA Clinical Practice Compliance Conference October 11-13, 2015
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Physician/Hospital Arrangements –
Strategies to Reduce Compliance Risk
Bret S. Bissey, MBA, FACHE, CHC, CMPE,
Senior vice president, Compliance Services, MediTract
Michael P. Mckeever, CPA, CHC, CHRC
Director, Internal Audit, Saint Peter’s Healthcare System
Agenda
1. Speaker introductions
2. Industry update: physician arrangements
3. Physician arrangement overview/Focus
Arrangements
4. Best practices to reduce risk
5. Stark and Anti-Kickback Statute
6. Contract review
7. Q&A
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Introduction
Michael P. McKeever, CPA, CHC, CHRC
Director, Internal Audit, Saint Peter’s Healthcare System
• Over 28 years of healthcare experience.
• Former Director, Compliance Operations for UMDNJ/Rutgers.
o Responsible to the Senior Vice President, Chief Ethics and Compliance Officer.
o Oversaw operations of the compliance functions of a health sciences university under a CIA.
• Former Chief Compliance Officer, Deborah Heart and Lung Center.
• Former Director of Finance, Deborah Heart and Lung Center, Wills Eye Health
System.
• Intricately involved in the first Voluntary Disclosure to the OIG (1998) and an Advisory
Opinion related to AKS.
• Director of New Jersey HFMA.
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Introduction Bret S. Bissey, MBA, FACHE, CHC, CMPE
Senior vice president, Compliance Services
• 30 years of diversified healthcare management, operations and compliance
experience.
• Former SVP, chief of ethics and compliance officer at UMDNJ.
o Credited with re-engineering the compliance program of the nation’s largest free-standing public
health sciences university.
o Successfully led the compliance program to adhere to CIA with DHHS/OIG that occurred
following a Deferred Prosecution Agreement.
• Chief compliance and privacy officer at Deborah Heart and Lung
Center.
o Three-year CIA, first settlement of Voluntary Disclosure Protocol.
o Compliance program recognized by HCCA as a “Best Practice.”
• Certified in HCCA and the Medical Group Management Association.
• Author of The Compliance Officer’s Handbook.
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• Federal claims for services (hospital, physician, etc.).
• Physician arrangements with hospitals.
• Contracts with ancillary services tied to referrals.
• Quality – accurate measurement and honest information.
• Regardless of federal or private payors, risk remains.
Compliance Risk Areas of Concern for Governance
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Peter Drucker on Healthcare:
“Even small Healthcare institutions are complex, barely
manageable places… Large Healthcare institutions may
be the most complex organizations in human history.”
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• Targeted at physicians and directs that all compensation
arrangements need to be fair market value and reflect payment for
bona fide services that have been provided.
• If any purpose of the arrangement is to compensate a physician for
past or future referrals, the potential does exist for violation of the
Anti-Kickback Statute.
• This could result in possible criminal, civil or administrative
sanctions, including but not limited to exclusion from the federal
healthcare programs and potential draconian penalties via the False
Claims Act.
June 2015 – OIG Fraud Alert focuses on Physician Compensation Arrangements
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Regulatory Sanctions
• Many times Regulatory Sanctions, such as:
Fines, Penalties, Corporate Integrity Agreements, etc… have
nothing to do with “Intentional” actions.
• Rather they are due to Best Practice business processes not being
established to mitigate risk and to enhance efficiencies.
• You didn’t know about the risk or didn’t have the resources to
adequately address the risk and are not advised of actions to take in
this high risk area.
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Why Do We Need to Discuss Relationships in 2015?
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• Hospital gives physician free office spaces.
• Hospital pays physician under suspect arrangement, i.e., medical
directorship or consulting agreement.
• Referring physician has a interest in a company that hospital is
doing business with.
• Referring physician has an immediate family member that has a
interest in a company that hospital is doing business with.
• Hospital stocks ambulances with supplies, provides transporters
with free food, or other “benefits”.
• Contract never makes it completely through the hospital review
process… (time sensitive / forego the bureaucracy of the “suits”).
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What Investigators are looking for: Common Kickback Scenarios
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According to BNA’s Health Care Fraud Report, the following are the top
issues to watch in 2015:
1. Increase in False Claims Act cases involving Stark issues, Medicare
Advantage and managed care and pharmaceuticals.
2. Increase in prosecutions of healthcare executives.
3. Increase in cases alleging fraud within the insurance exchanges.
4. Expansion of fraud enforcement into Medicare Part C and Part D.
5. Increased scrutiny of Open Payments data and the CMS Part B
database.
Source: http://www.bna.com/look-crystal-ball-b17179921946/
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Top Five Health Care Fraud Issues in 2015 BNA’s Health Care Fraud Report
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$85 million – Halifax Hospital Medical Center.
• Allegedly violated Stark Law by executing contracts giving incentive bonuses with physicians.
• Incentives inappropriately covered the value of prescription drugs and tests that physicians ordered and billed to Medicare.
$237 million – Tuomey Healthcare System
• The hospital offered 10-year employment contracts to 19 specialists in exchange for performing all outpatient procedures at Tuomey Hospital or its other facilities.
• Referring physicians would shift outpatient procedures from the hospital to their own practices or an ambulatory surgery center.
• Compensation was based on net cash collections for outpatient procedures and productivity bonus that was found to be above fair market value.
Recent Stark and AKS Settlements
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Federal whistle-blower lawsuit that claimed its clinics routinely
overpaid doctors to refer their radiology patients to hospitals.
• Whistleblower was a physician (2008), who received $4.4 million.
• Case centered upon incentives paid to physicians for referrals.
• Signed Corporate Integrity Agreement:
o Five-year commitment.
o Legal IRO required.
o Focus Arrangement obligations.
Physician Arrangements Infirmary Health Systems, Inc. $24.5 million violation (July 14)
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Sources: http://oig.hhs.gov/fraud/cia/agreements/Infirmary_Health_System_07182014.pdf
• Healthcare organizations must ensure professional services agreements with
physicians, medical groups, physician-owned entities and other focused
arrangements, including laboratories, ambulance companies and research, are
in compliance with applicable laws.
• These laws are broad in reach and complex in nature and require consistent
policies and procedures to address risks.
• Physician Financial Relationships set forth basic expectations for such
organizations’ policies and procedures.
• Federal laws applying to physician financial arrangements include:
o Stark Law.
o Anti-Kickback Statute.
o Civil Monetary Penalties Law.
o False Claims Act.
Physician Financial Arrangements Overview
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You need to identify which of your contracts are focus
arrangements. CIAs define “focus arrangements” as:
• Between entity and actual source of healthcare business or referrals
to medical center and involves, directly or indirectly, the offer,
payment or provision of anything of value;
• Between entity and any physician who makes a referral to medical
center for designated health services; or
• Between entity and any physician (or a physician’s immediate family
member) or medical practice that involves, directly or indirectly, the
offer, payment or provision of anything of value in anticipation of that
physician becoming an actual source of healthcare business or
referrals (e.g., for purposes of recruitment).
Focus Arrangements
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• Accreditation services.
• Affiliation agreements.
• Ambulance service agreements.
• Billing and collection agreements.
• Biomed services agreements.
• Blood and plasma agreements.
• Chaplain services agreements.
• Clinical services agreements.
• Coding services agreements.
• Compliance services agreements.
• Software license with PHI agreements.
• Software or hardware maintenance or support with PHI
agreements.
• Consignment agreements.
• Consulting services – clinical agreements.
• Contract labor agreements Contract management
agreements.
• CRNA services agreements.
• Document shredding agreements.
• Durable medical equipment agreements.
• Equipment lease or rental – medical agreements.
• Equipment maintenance or support – medical agreements.
• Housekeeping services agreements.
• Interpreting services agreements.
• Laboratory services agreements.
• Laundry services agreements.
• Linen supply agreements.
• Lithotripsy services agreements.
• Management agreements.
• Massage therapy services agreements.
• Master services agreements.
• Medical director agreements.
• Medical records services agreements.
• Music therapy agreements.
• Nurse practitioner services agreements.
• Pharmacy services agreements.
• Physician assistant services agreements.
• Physician medical director agreements.
• Physician on-call agreements.
• Physician services agreements.
• Purchasing agreements.
• Quality improvement services agreements.
• Residency program agreements.
• Safe child services agreements.
• Services – nutrition agreements.
• Telemedicine services agreements.
• Therapy services agreements.
• Transcription services agreements.
• Utility services agreements.
• Others.
Could These Types of Contracts be Focus Arrangements in Any Organization?
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Contracting Best Practices
• Realize the threat of whistleblowers.
• Who might be a whistleblower?
• Application of False Claims Act.
• You cannot afford not taking appropriate steps to try and minimize this risk.
• Consider compliance actions to take.
• In writing, signed by both parties.
• In a database or contract management system.
• No relationship to referrals.
• Documentation related to FMV determination.
• Job description.
o Perform evaluation of performance.
• Position or activity justification.
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• Create and maintain a database of all existing and new or renewed
physician arrangements, and establish detailed procedures when
arrangements are initiated.
o Only one contract database should be maintained.
o Database should implement the requirements recommended by the OIG
in CIAs.
o The contract database should be reconciled to payments made or
received under the physician arrangements at least quarterly (i.e., test of
completeness and accuracy of the contract database).
• Keep documentation that the contract work is necessary and at fair
market value.
Compliance Best Practices
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• Implement or maintain a process that covers the initiation,
development, review, approval and performance (i.e., the life cycle).
o Needs assessment (justification).
o Fair-market-value documentation.
o Legal review by experienced counsel with expertise in the Anti-Kickback
Statute and Stark Law.
o Approval by appropriate members of management and governing bodies.
o Payment and performance review and approvals.
o Documentation of all internal controls, the purpose of which is to ensure that
all new and existing or renewed arrangements do not violate the Anti-
Kickback Statute and Stark Law.
o In writing, signed by both parties.
Compliance Best Practices (Continued)
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• If being paid for time related to activity, ensure that system is in place to track, monitor and report time and effort.
o Ensure checks and balances are in place.
• Track nonmonetary compensation.
• Conflict of interest disclosure.
• Keep documentation of negotiations.
• Proactively manage any complaints and concerns.
• Organize your data.
• Detail tracking of remuneration to and from all parties to arrangements.
o If the arrangement involves services, then track service and activity logs.
o If the arrangement involves space or equipment, then monitor the use of leased space or equipment.
• Require all “covered persons” to sign an agreement agreeing to abide by the organization’s code of conduct in connection with arrangements.
Compliant Best Practices (Continued)
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• Compliance oversight.
o Have the compliance officer review the arrangements database, contract
approval process and other arrangement procedures.
o Provide a report of the results of such review to the compliance
committee.
o Implement effective responses, including investigation, corrective action
and disclosure when suspected violations are discovered.
Compliant Best Practices (Continued)
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How to Contract for Success
Initiate
Contract Requisition
Negotiate
Author Review and Approve
Sign and Activate
Monitor
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• The regulations at § 411.357(k) and (m) set forth exceptions to the
physician self-referral prohibition for certain non-monetary
compensation and certain medical staff incidental benefits, respectively.
Under both exceptions, the compensation limits are adjusted each
calendar year to the nearest whole dollar by the increase in the
Consumer Price Index-Urban All Item (CPI-U) for the 12-month period
ending the preceding September 30, 2015 - Limit is $392.
• The percentage increase in the CPI-U for the 12-month period ending
September 30, 2014, is +1.7 percent. Thus, for the calendar year
beginning January 1, 2015, the compensation limit for the exception at
§ 411.357(k) is $392, and the value of any medical staff incidental
benefits to be furnished in compliance with the exception at §
411.357(m)(5) is less than $33 per occurrence of the benefit.
Non-Monetary Compensation
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Stark Law and the Anti-Kickback Statute (AKS)
Always seek the advice of skilled healthcare counsel.
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Prohibits self-referrals for Medicare or Medicaid business, 42 U.S.C. § 1395nn/
• Must involve physician (or immediate family); referral for:
o Designated Health Services (DHS).
o Ownership interest or compensation arrangement.
• State law may limit other business agreements.
Strict liability – intent not required.
• Agreements must fully satisfy statutory or regulatory exception.
• Enhanced penalties available for knowing violations.
Remedy is payment disallowance.
• Exclusion and administrative liability.
• Can be violation of False Claims Act (FCA).
Stark Law
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Criminal statute, 42 U.S.C. § 1320a-7b(b).
• Prohibits knowingly and willfully soliciting or receiving, or offering or paying,
any remuneration, directly or indirectly, covertly or overtly, in cash or in kind
(illegal inducement)…
• In return for recommending or arranging for items or services under federal
programs.
o Includes nonclinicians.
o Inducement does not have to be primary focus of arrangement.
o Liability can attach to both sides of arrangement or just one side.
The Anti-Kickback Statute (AKS)
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• Coordinate with legal counsel, compliance and key stakeholders.
• Consider the protection of attorney-client privilege.
• Document the business controls in effect around the development,
documentation and approval processes for all contracts with referral
sources.
• Determine how your entity tracks contracts and related payments and
receipts.
o Centralized database or by department or division.
Planning for Review of Risk
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Determine how the entity tracks both contracts and payments.
• Centralized database.
• If not, identify responsible parties and departments:
o Medical staff office.
o Legal.
o Operations.
o Clinical departments.
o Etc.
Planning and Approach
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Determine if all contracts that meet the definition of a Focus Arrangement
are in the database.
• Every payment should be able to be matched to a contract, as well as
documentation required.
• Certain payments without a corresponding contract need to be documented and
investigated.
• Follow the money…
Completeness of Database
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Potential sources of payments related to Focus Arrangements.
• Certain G/L accounts.
• Accounts payable distribution reports.
• Payroll and W-2s.
• 1099s.
Potential sources of revenues related to Focus Arrangements.
• G/L rent, lease and miscellaneous revenue accounts.
• Rent or lease files maintained by plant and facilities.
• Medical office building records.
Sources of Information
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• Are all parties to the contract listed?
• Is the contract signed by all parties?
• Are the responsible parties identified?
• Does the contract include effective and termination dates?
• Does the contract contain an auto renewal provision?
• Is the contract type specified?
• Is the location, department or division specified?
Questions to Ask – All Contracts
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• Does the contract specify the amount of compensation to be paid and the
means by which it will be paid?
• Does the contract include certification by the parties that they will not violate
the Stark Law and Anti-Kickback Statute?
• Does the contract reference the entity’s Code of Conduct and related
policies and procedures?
• Does the contract certify that the compensation paid is not determined
based on the volume or value of any referrals?
Questions to Ask – All Contracts (Continued)
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• Is there evidence of a final legal review?
• Have all necessary approvals been documented?
• Is there documentation related to the FMV analysis?
• Was an analysis performed establishing that the arrangement was
commercially reasonable?
• How closely is compensation tracked?
• Is there documentation that the agreement meets the requirements of a
Stark exception or AKS safe harbor?
Questions to Ask – All Contracts (Continued)
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Are applicable terms contained within the contract properly defined?
• Designated Health Services (DSH).
• Commercially Reasonable.
• Fair Market Value (FMV).
• Immediate Family Member.
• Referral Source.
• Remuneration.
Personal Service Agreements (PSAs)
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• Is the need for the arrangement identified?
• Are the services to be performed defined?
• Does the agreement address quality?
• Are payments consistent with the written agreement?
• Does the agreement require additional services be memorialized in an
amendment?
• Are time and effort reports required?
• Are space and equipment use monitored?
PSAs (Continued)
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• Has need been documented?
• Are administrative duties properly identified in the agreement, and are they
being performed?
• Does the agreement require submission of formal time and effort reports prior to
payment, and are they properly authenticated?
• Are the documented hours as initially envisioned?
• Does the agreement specify performance measures such as JCAHO, etc., by
which the department is to be managed?
Medical Director Agreements
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• Is the space or equipment specified in the agreement?
• Is the space or equipment reasonable and necessary for the business purpose?
• How has the FMV been established?
o Commercial real estate appraisal?
o Independent equipment appraisal?
• If the agreement is for the part time use of space, are the specific times
identified?
Lease of Space or Equipment
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• Is a range, not a specific amount.
• Should be predicated on readily available independent data.
o MGMA, Sullivan Cotter, etc., for PSAs, Med Dir.
o Independent appraiser who specialize in healthcare.
• Question: Is the methodology appropriate to the agreement?
• Should be updated regularly – every two to three years in some circumstances.
Fair Market Value
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• The 50 percent percentile is ideal, but what if proposed compensation is greater
than or less than the benchmark?
o Nature of service or provider in the marketplace could demand greater remuneration.
o Always keep in mind that FMV is a range.
o Entity’s risk tolerance may enter thought process.
• Proper documentation of the reason specific compensation deemed to be within
the range of FMV is essential.
Fair Market Value (Continued)
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• Agreements need to be commercially reasonable without consideration of the
volume or value of resulting referrals.
• A valid business plan can provide documentation of commercial
reasonableness.
• Necessary to define the need for the service and how it will be provided.
• Establishing commercial reasonableness is a necessary first step to the
process.
Commercial Reasonableness
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• Needs to be for a period of at least one year.
• Should specify if auto renewal or not.
o Caution with auto renewal (evergreen) contracts – analyses could become stale.
o Update FMV and review need for arrangement.
• Stark and AKS allow for a six-month holdover period, as long as the terms
remain constant.
Contract Term
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Does the contract dictate how compensation will be paid?
• Are time and effort reports required?
• Define information required.
• Include template as an attachment.
• Define who will authorize payment.
Compensation
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• Payments for services not contained in a written agreement.
• Lack of documentation of required approvals.
o Contract process.
o Time and effort reporting.
o Payments.
• Expired agreements.
o Holdover period.
• Stale FMV and commercial reasonableness analysis.
Possible Findings
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• Revise and implement written policies and procedures to guide contracting
process.
• Communicate to all stakeholders the inherent risks in agreements with other
providers.
o Federal and state laws and regulations.
• Annual education for those involved at all levels of the contracting process.
o Don’t forget administrative staff.
Corrective Action
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COMPLIANCE
OFFICER &
PROGRAM
OVERSIGHT
1
POLICIES &
PROCEDURES
2
EDUCATION
3
AUDIT
4
CORRECTIVE
ACTIONS TO
IDENTIFIED
PROBLEMS
5
OPEN COMMUNICATION
6
ENFORCE
VIOLATIONS
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Compliance Is Pretty Basic
Seven Elements of the OIG Model Compliance Program:
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If an organization is found guilty
of a violation of state or federal
laws, the government may offer a
reduction in penalties if an effective
compliance program is in place.
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HCCA Clinical Practice Compliance Conference October 11-13, 2015
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Q&A
© 2015, MediTract. All Rights Reserved.
This document contains general information only, and MediTract is not, by means of this document, rendering accounting, business,
financial, investment, legal, tax or other professional advice or services. This information is not a substitute for such professional advice or
services, nor should it be used as a basis for any decision or action that may affect your organization. Before making any decision or
taking any action that may affect your organization, you should consult a qualified, professional advisor. MediTract shall not be
responsible for any loss sustained by any person who relies on this information.
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MediTract — Risk and Compliance Experts
You don’t have to face compliance requirements alone.
Anti-Kickback Conflict of interest False Claims Act HIPAA
OIG CIA Stark Law Sunshine Act The Joint Commission Standards (LD)
We know healthcare.
Our mission is to minimize
risk through better contract
compliance solutions.
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CONTACT Phone: 423-693-0131
Email: [email protected]
PROFILE Provides compliance expertise to
hospital and healthcare
organizations.
EDUCATION &
HONORS
BS – Business Administration,
Shippensburg University
MBA – Marketing and
Healthcare Administration,
Wilkes College
Health Care Compliance
Association Certified
Medical Group Management
Association – CMPE
Fellow of the American College
of Healthcare Executives
BRET S. BISSEY MBA, FACHE, CHC, CMPE
Senior Vice President, Compliance Services
BACKGROUND •Bret has more than 30 years of diversified healthcare management, operations and compliance experience, and presented at
more than 100 regional and national industry conferences and meetings on numerous compliance topics.
•He joined MediTract in September 2013 as a senior executive.
•Bret is a fellow of the American College of Healthcare Executives.
•From 2010 to 2013, he was the Senior Vice President, Chief Ethics and Compliance Officer of the University of Medicine and
Dentistry of New Jersey (UMDNJ). There he successfully re-engineered the nation’s largest sector compliance and ethics
program under a rigorous Corporate Integrity Agreement (CIA) with the HHS OIG.
•Bret has taught undergraduate and graduate courses as an adjunct faculty member at College of St. Francis, Joliet, Illinois and
Allentown College of St. Francis De Sales, Center Valley, Pennsylvania.
•He is certified in the Health Care Compliance Association and the Medical Group Management Association. He is a past
president (2001-2003) for Region 2 of the HCCA.
•Bret is the author of The Compliance Officer’s Handbook, which was published in 2006.
PROFESSIONAL & INDUSTRY EXPERIENCE •At MediTract, Bret is responsible for thought management, enhancing product development, managing consulting engagements
and providing compliance expertise to more than 1400 hospital and healthcare clients.
•At UMDNJ, the largest public sciences university in the country, Bret reported to the Chairman of the Audit Committee of the
Board of Trustees and University President. There he managed 40 compliance, ethics and investigations professionals and an
annual operating budget of $5.2 million.
•Bret improves compliance through the development and implementation of departmental and institutional processes and
programs. He once developed a formal compliance process for a $1.7 billion international public company.
•Bret was responsible for the development and ongoing management of the Corporate Compliance Program, which resulted from
the nation’s first Voluntary Disclosure Settlement (October, 1998) at a specialty hospital with more than 90 employed physicians.
HCCA recognized the compliance program as a “Best Practice.”
•Bret uses his management leadership and direction to increase revenue. He once increased annual consulting revenue from $6
million to $11 million in one year. With his guidance, they signed contracts with many prestigious healthcare organizations and
physician groups and gained recognition as one of the top 100 fastest-growing private companies in America as reported by Inc.
Magazine (January 1998).
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