Avoiding Conflict of Interest
A conflict of interest occurs when an individual has multiple interests, one of which could motivate the individual to act in a manner that negatively impacts the other interest. A conflict of interest is not always easy to identify and can be created unintentionally. This means that an action can create a conflict, even when that is not the intended outcome. Sometimes, situations that involve a conflict of interest fall within the undefined grey area between right and wrong. The following scenarios are examples of situations that create conflicts of interest and should be avoided.
Bonuses for Marketers
The federal Anti-Kickback Statute [1] prohibits any individual from knowingly and willfully soliciting, receiving, offering or paying anything of value directly or indirectly, overtly or covertly, in cash or in kind to any person to persuade another person to refer a resident to the Facility. Penalties for violation of this statute include penalties of up to $25,000, imprisonment for up to five years, or both. The Anti-Kickback Statute raises serious concerns in giving bonuses to employees in a position to obtain referrals for the Facility.
Bonuses or other material rewards can be seen as incentives for a marketer to take on higher risk in their dealings with potential referral sources. The conflict of interest in this scenario is based on the employee’s motivation to reach a specified benchmark to obtain a bonus or bonus in kind. This type of bonus program is perceived to increase the likelihood that the employee will participate in behavior that may be unethical or illegal to obtain referrals in order to receive that bonus. Here, the conflict is between strictly following the regulations that govern marketing practices and bending the rules to meet bonus benchmarks.
Bonuses for MDS Coordinators
The False Claims Act [2] prohibits any person from knowingly presenting a false or fraudulent claim for payment. In this scenario, an MDS assessment that was altered to receive a higher RUG score would be considered a false claim. Therefore, any bonuses provided to an MDS coordinator, or other employee who is similarly positioned to affect payment, is high risk. It is important to ensure that any bonus given to an MDS Coordinator is in no way related to the RUG scores. Correlation between RUG scores and bonuses may raise suspicion with the government because the bonus could be perceived as incentivizing the MDS Coordinator to make misrepresentations to government to obtain higher paying RUG scores.
Avoiding Conflicts of Interest
All bonus arrangements should be reviewed for potential conflicts. It is important that bonus arrangements meet the following criteria:
The employee’s job description is consistent with the performance being rewarded;
Performance bonuses are part of a formal and documented employee evaluation; and
The bonus arrangement does not provide an incentive for the employee to participate in unethical or illegal behavior.
A good test to determine if a conflict of interest exists is to review the situation from the government’s perspective. If the government could make a case that a benefit provided to a staff member could potentially increase the likelihood of unethical behavior, then you should steer clear of that particular arrangement. In dealing with a conflict of interest, perception overrides intention.
If you have bonus arrangements that you are concerned about or would like to have reviewed, please contact us.
References
[1] Kickback Statute Citation – 42 U.S.C. § 1320a-7b
[2] False Claims Act Citation – 31 U.S.C. § 3729
