Healthcare Compliance Due Diligence for Private Equity Transactions

In recent years, the healthcare industry has proven to be a fertile area for Private Equity activity. Healthcare is vast section of the economy offering high transaction multiples and robust profits. Of course, ordinary legal, corporate, and financial due diligence are critical to any acquisition. But now, many PE companies are learning that healthcare regulatory compliance due diligence is as important to a successful deal as negotiating the transaction price.

It’s Complicated

That’s where HCN fits in. Healthcare is one of the most highly regulated industries. It’s complex, detailed and frequently shifting. Our three-plus decades on the frontlines of physician and medical organization regulatory compliance has given us the experience to assist PE firms with understanding risks and value in the due diligence process.

Due Diligence, Through Post-Acquisition Services

HCN compliance specialists help investors identify compliance issues that may impact valuation and bring them to light early in the acquisition process. We expose things like billing and coding inaccuracies which can affect the purchase price, risks of penalties, exclusions and sanctions, and other compliance issues that may impact the organizations’ bottom line. We can also determine the adequacy and sustainability of the companies’ overall culture of compliance which, from a due diligence perspective, is a critical indicator of business continuity post-closing.

Considering post acquisition, HCN has developed specific programs like our unique Compliance as a Profit Center™ (CapC), which uses our compliance initiatives to uncover new sources of profit and bottom line growth, as well as increase margins and EBIDTA at acquired companies.

We offer a wide range of programs and services to help PE firms protect and grow the value of their investments.

Private Equity Programs and Services

Pre-Close Due Diligence
Confidence to proceed with a deal at the correct value

Coding Compliance Chart Audit

Performed by a certified coder, HCN will validate the accuracy of the target organization’s coding, documentation, and billing practices.

Our review will encompass the following compliance and billing considerations:

CPT (procedure) code and modifier assignment

National Correct Coding Edits (NCCI) for bundling/unbundling issues

CMS National Coverage Determinations

Local Medicare Coverage Determinations

Review of orders for completeness and to determine if the order matches the tests performed

Assignment of appropriate ICD-10 (diagnosis) codes

Due Diligence Compliance and Document Review

HCN will provide an in-depth analysis of the current state of compliance as it relates to the acquisition target organization. This assessment provides an analysis of the current state of the organization related to their Compliance Program, HIPAA Privacy and Security, and OSHA compliance.

The audit will assess compliance with the following provisions:

The privacy and security of client information based on the Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security standards including related Policy and Procedure review.

Occupational Health and Safety Administration requirements related to Title 29 of the Code of Federal Regulations

Health Care Compliance Program requirements under Section 6401 of the Affordable Care Act and under the Federal Sentencing Guidelines.

Patient Protection and Affordable Care Act of 2010 (PPACA)

Confidentiality of Substance Abuse Disorder information under 42 CFR Part 2 (as applicable)

General Data Protection Regulation OJ L 119, 04.05.2016; cor. OJ L 127, 23.5.2018 (as applicable)

Post Close Compliance Continuity

Maximizing investment value and protecting assets

Compliance as a Profit Center

Excellent compliance is a critical cost for Healthcare Organizations wishing to avoid expensive penalties. But now, through our innovative CapC process we have been able to turn the tables on that corporate cost, by using compliance initiatives to uncover new sources of profits and bottom-line growth.

Get full payment for billed services

Fully bill for all delivered services

Evaluate and act on new opportunities to participate in value-based care and at-risk plans

Co-Sourced Compliance Officer Partnership (CCO)

Our Co-Sourced Compliance Officer can work with a healthcare business to build, implement, manage and maintain an effective compliance program. We partner to develop and integrate all elements of the compliance program through our team of experts to bring a program to standard quickly and ensure it operates consistent with regulatory and program standards.

The co-sourced compliance officer assigned will help develop and integrate all the elements of the compliance program, including but not limited to:

Provide overall compliance program direction

Develop a culture of compliance and maintain compliance awareness

Develop and implement compliance operations policy and procedures

Prepare annual risk assessment and annual audit workplan

Oversee auditing and monitoring activities

Confirm contract compliance

Develop and maintain a compliance reporting system and investigations

Provide changes and updates on the regulatory environment to executives and compliance personnel

Report on program progress to corporate officials including the board and the compliance committee

Exclusion checking

Monitor new services and workflow changes for risk

Business Associates – Vendor tracking/BAA

Monitor billing compliance activities

FWA, HIPAA, OSHA and Harassment Training – new employee and annual

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