Handling Contract Compliance Management in Healthcare

The value of the global healthcare industry will reach nearly $12 trillion by 2022. The huge number of transactions in the healthcare industry represents one of the largest paperwork loads of any industry in the world – and much of that paperwork revolves around the management of contracts and supporting documents.

With so many contracts to manage on a daily basis, how does the average healthcare organization ensure compliance with all the various industry, legal, and internal rules and regulations? Contract compliance management in healthcare is a tremendous challenge – and one that all healthcare organizations need to master.

Key Takeaways

  • Contract compliance ensures that your organization conforms to governmental and industry regulations
  • It’s also important that contracts comply with all internal compliance requirements and standards
  • Noncompliance can result in hefty fines, lawsuits, the loss of licenses, and other risks
  • Best practices for contract compliance management include creating a database of pre-approved clauses and templates, clearly defining individual roles, and conducting regular audits
  • Contract compliance can also be ensured by the use of contract lifecycle management (CLM) software

What is Contract Compliance in Healthcare?

Contract compliance is the process of ensuring that a contract conforms to all relevant governmental and healthcare industry regulations. Contracts also need to comply with all of the norms and standards established within your organization – that is, all your contracts need to use similar language, and not conflict with those terms and conditions set by precedent or management. The process for approving contracts at their various stages also needs to follow your business rules. 

By focusing on contract compliance, your organization can reduce legal, financial, and brand risk associated with missed obligations and noncompliance with regulatory requirements. Contract compliance is not only in the best interests of your organization, it also serves to protect your patients, providers, payers, and suppliers.

How Noncompliance Occurs

There are many ways that noncompliance can occur in healthcare organizations, whether by mistake, bending the rules, or intentional deception. Probably the most common cause of noncompliance, however, is human error – that is, not knowing regulatory requirements or not adhering to them due to poor controls and processes. 

When staff working on contracts are unaware of specific legal, industry, or company requirements, they are apt to create language, terms, or conditions that can throw your organization into noncompliance and expose you to substantial fines. In addition, if they using manual approaches to contract management they run the risk of missing checkpoints or not complying with your business rules.

Complying with Governmental Regulations

Healthcare providers are subject to a number of key regulations. Some of the most important ones include:

Healthcare organizations must also comply with workplace regulations established by OSHA and the EEOC. Also relevant is the False Claims Act, designed to protect against fraudulent medical claims made to government entities. 

Complying with Company Standards

Equally important is the need for all contracts to comply with standards established within your organization. You may have certain limits you never want to exceed, terms and conditions that must be adhered to, or contract language your legal department insists upon. You don’t want rogue or uninformed staff or departments creating their own contracts or circumnavigating necessary approvals and not following established standards. Internal compliance is key. 

Why Contract Compliance Matters in Healthcare

Contract compliance is important for all companies to operate legally, effectively, and efficiently. Compliance not only guarantees that all regulatory requirements are met, but also ensures that operations run smoothly and that everyone concerned follows your organization’s established procedures. 

Compliance is even more important in the healthcare industry. First, there are more regulations than in many other industries, and those regulations are tightly enforced. Violations of these healthcare regulations can result in substantial fines, lawsuits, and even the loss of licenses. 

Second and equally important, if staff don’t follow proper procedures, patients or staff members could be injured or receive inadequate or improper care. To provide safe, high-quality patient-centric care, healthcare organizations need to comply with all applicable regulations and procedures. 

Why contract compliance is important
SOURCE: SCHGroup.com

6 Best Practices for Contract Compliance Management in Healthcare

To ensure contract compliance in your healthcare operation, follow these best practices. 

Create a Database of Pre-Approved Contract Templates

To ensure internal compliance, don’t let your staff create their own contracts from scratch. Create a library of contract clauses templates with pre-approved language, terms, and formats that can be used as the basis of all new contracts. Make sure that all these templates comply with both internal expectations and healthcare industry regulations. CLM software makes creating and maintaining clause and template libraries efficient and accurate.

Clearly Define Individual Roles

It’s important that you make clear just who in your organization can initiate and approve new contracts. Establish clear roles for all parts of the contract management process – and make sure that all contracts receive the necessary review from legal and regulatory staff. Assign a person or department to be responsible for contract compliance. Contract management software plays a vital role in ensuring compliance by automating the routing of contracts for approval through automated workflows. This eliminates any deviation from your business process. 

Conduct Regular Audits

It’s important that you regularly review your contracts and contract processes. You want to ensure that nothing important is overlooked, especially when it comes to compliance. If something is amiss with your process, regular audits will help you catch it before it becomes a widespread problem. When managing a contract’s lifecycle in contract management software, you have a complete and auditable history of all activities associated with it. This makes auditing fast and easy. In addition, data-driven CLM solutions like Contract Logix allow you to search and report on all your contract data in real-time, again facilitating your audit needs.

Regularly Review Compliance Needs

It’s also essential to stay on top of any changes in the regulatory environment. You want to make sure that all of your contracts are up-to-date in terms of new requirements, terms, and other legal obligations pertaining to the healthcare field. 

Centralize and Secure All Contracts

Patient privacy is at the heart of many healthcare industry regulations. To that end, you need to create a central repository for all your contracts and fully secure that repository. This is most easily done by using a data-driven CLM solution that stores all your contracts in secure digital format. Some solutions like Contract Logix further enable security with role-based and feature-based permissions ensuring appropriate access to all your sensitive contract information. It’s also important that your CLM software is SOC 2 Type II and HIPAA compliant.

Closely Track Dates, Milestones, and Other Obligations

If important contractual dates, milestones, and other obligations are missed then the result usually involves some form or risk and noncompliance to contractual terms. That’s why it’s critical to closely track these important data points and monitor your adherence to them. With CLM software, you can automate alerts and notifications to completely eliminate missed obligations to drive compliance and mitigate risk. This takes the guesswork and human element out of contract compliance management in healthcare.

Let Contract Logix Help Ensure Contract Compliance in Your Healthcare Organization

Contract Logix offers robust CLM solutions designed especially for healthcare organizations. Our contract management software can ensure that your organization meets all contract compliance requirements – and help automate the entire contract management process.

Contact Contract Logix today to learn more about CMS solutions for your organization.