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Implementing a Medicare Compliance Program

Implementing a Medicare Compliance Program. Implementation of Medicare Compliance Program. Rules & procedures to reduce chance of wrongdoing High level manager to oversee the program

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Implementing a Medicare Compliance Program

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  1. Implementing a Medicare Compliance Program

  2. Implementation of Medicare Compliance Program • Rules & procedures to reduce chance of wrongdoing • High level manager to oversee the program • Procedures in place to preclude delegating responsibilities to person who has previously engaged in known illegal activities

  3. Implementation of Medicare Compliance Program • Effective employee communication regarding their obligations • Monitoring, audit systems, & private reporting mechanisms to achieve compliance • Consistent enforcement & discipline

  4. Implementation of Medicare Compliance Program • Appropriate, consistent, & documented responses to compliance violations • Documented sanctions for failure to detect violations • Documented program revisions to preclude future violations

  5. ERISA Employee Retirement Income Security Act

  6. Purpose of ERISA • To protect participant & beneficiary rights & interests in benefit plans

  7. Responsible Parties in Managing a Retirement Program • Plan Administrator • Multiple duties • Trustee • Makes investment decisions in terms of company to utilize

  8. Responsible Parties in Managing a Retirement Program • Investment Manager • Makes investment decisions for plan assets assigned to it • Board or Plan Sponsor • The employer organization has multiple responsibilities

  9. Definition of Retirement Plan Assets • Employer contributions • Employee contributions

  10. Definition of Retirement Plan Assets • Types of plan assets • Publicly traded securities • Securities representing investment in registered investment company • Securities representing investment in an operating company • Equity interest in an entity

  11. Fiduciary Duty of Responsible Parties • Pertains to decisions made with respect to investment of plan assets

  12. What is a Fiduciary • Person carrying a duty of trust • Discretionary authority-management • Providing investment advice • Administration

  13. Who are the Fiduciaries to an ERISA Plan • Trustees of plan • Persons active in administration of plan • Investment managers • Investment advisors • Persons who select these parties • Board of Directors

  14. Four Duties of Fiduciaries • Exclusive purpose rule • Prudent person rule • Prudent diversification rule • Section 404c of ERISA code • Cash, income, growth, & aggressive growth • Adherence to plan document rule

  15. Investment Responsibilities of Fiduciaries • Appropriate consideration • Performance monitoring • Right to delegate

  16. Fiduciary Liability: Breach of Duty • Breach causes loss to the plan • Breach allowed fiduciary to profit from use of plan assets • Court determines remedial relief is appropro

  17. Fiduciary Liability: Breach of Duty • Co-fiduciary liability • One fiduciary conceals wrong doing of another fiduciary • One fiduciary enables another to breach duty • One fiduciary knows of another’s breach • Liability of co-fiduciaries is joint & several

  18. ERISA Provisions Reducing Fiduciary Liability Exposures of Trustees • Appoint an investment manager • Investment direction provided by named fiduciary • Written statement of duties of each fiduciary • Written statement of duties of each non-fiduciary

  19. ERISA Provisions Reducing Fiduciary Liability Exposures of Trustees • Establishment of separate trusts for separate management of assets • Indemnification of fiduciaries by plan sponsor • Guarantee of participant directed investment choices • Section 404c, ERISA

  20. Safeguards to Reduce Liability Exposure • Communicate funding policy to persons responsible for asset management • Document all decisions in writing • Set deadlines for actions & monitor progress • Retain experts for input & advice

  21. Safeguards to Reduce Liability Exposure • Set goals & objectives for evaluation • i.e. percent return for investments • Periodically review performance of persons responsible for investments • Appoint outside expert to conduct audit

  22. Safeguards to Reduce Liability Exposure • Document all fiduciary & non-fiduciary appointments & terminations • Review all proposed transactions to assure they are not prohibited • Keep records of all votes by trustees

  23. Safeguards to Reduce Liability Exposure • Assure that the only expenses paid out of plan assets are plan investment & plan administration expenses • Assure that appropriate information in being provided to participants & beneficiaries • i.e. annual reports, benefit statements, plan description

  24. Prohibited Transactions • Extensions of credit between parties in interest (fiduciaries) • Investing in non-qualified assets • i.e. employer owned property • Self-dealing • Conflicting interests

  25. Fiduciary Liability Insurance & Bonding • Fiduciary liability insuranceavailable • Only on claims made basis • Only available in limited amounts • Employer (plan sponsor) can indemnify plan fiduciaries with employer’s assets

  26. Fiduciary Liability Insurance & Bonding • Bonding required by ERISA • Protects plan against fraud & dishonesty by plan official • Every fiduciary must be bonded • Amount of bond must be 10% of amount of funds handled but not more than $500K

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