by Ben Vernia | May 21st, 2010
In most large healthcare settlements, HHS’s Office of Inspector General (OIG-HHS) imposes a Corporate Integrity Agreement (CIA) which requires the settling company to employ an Independent Review Organization (IRO) to audit the company’s compliance in areas which had been the subject of the government’s investigation. As part of the process, an IRO must certify that, after evaluation, it is professionally independent and objective. The OIG-HHS released a memorandum and a FAQ sheet on May 19 outlining the standards it will use to determine whether these IRO certifications are accurate.
The report states (referring to the General Accounting Office’s Government Auditing Standards (July 2007 Revision) (the “Yellow Book”):
According to the Yellow Book, when assessing independence, the two overarching principles that must be considered are that: (i) audit organizations must not provide nonaudit services that involve performing management functions or make management decisions; and (ii) audit organizations must not audit their own work or provide nonaudit services in situations where the nonaudit services are significant or material to the subject matter of the audits. The Yellow Book includes guidance regarding three categories of nonaudit services: those that do not impair the audit organization’s independence, those that require the audit organization to implement supplemental safeguards in order to not impair the audit organization’s independence, and those that do impair the audit organization’s independence, regardless of the organization’s compliance with the supplemental safeguards.
The OIG-HHS report goes on to describe services which would not, and those which would typically call the IRO’s independence and objectivity in question.
With the increasing number of companies operating under CIAs, and the government’s demonstrated willingness to use the False Claims Act and other laws to police companies’ full compliance, adhering to the OIG-HHS’s standards on IRO selection and conduct is likely to prove critical to successfully completing a CIA term.
