Chilton Shelby Mental Health Center Internal Compliance Plan

Date of Origin: 6-14-00 Date of Board Approval: 9-14-05 Chief Executive Officer Approval:

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Introduction

The Mental Health Board of Chilton and Shelby Counties, Inc. (Chilton Shelby Mental Health Center, hereafter CSMHC), because of its contractual relationships with federal, state and local entities, must take any and all actions necessary to assure that the professional and business aspects of the organization are consistent with the highest standards of ethical conduct. CSMHC supports a compliance program as a commitment that comes from the highest levels. It is designed to detect, prevent, and correct any violations of the law or center policies and procedures, as well as minimize organizational risk. The compliance program will instill a corporate culture that promotes integrity and ethical behavior.

A. COMMITMENT TO COMPLIANCE WITH APPLICABLE LAWS - STANDARDS OF CONDUCT

CSMHC’s policy is to comply with all applicable laws and regulations of the United States and all state and government subdivisions where business is conducted. Management is committed to establishing effective programs to ensure compliance and will report any known misconduct to the appropriate authorities. All employees are responsible for understanding and complying with laws and regulations which relate to their jobs, and supervisors are responsible for ensuring that each employee, for whom they supervise, is given the information to comply with such legal requirements.

Each employee is accountable for his or her actions. Consequently, any violations of the law or of the policies and principles set forth in this Plan will not be excused or tolerated for any reason. In addition, employees are reminded that they must follow all policies and procedures set forth by CSMHC. It is CSMHC’s policy to investigate (on a confidential basis) suspected violations of applicable law and to voluntarily report the suspected violation to the appropriate authorities for investigation, if it is concluded that a violation has occurred. It is CSMHC’s policy to fully cooperate with any government investigation of alleged violations. All employees are required to read, acknowledge understanding, and refer to CSMHC’s Internal Compliance Plan. Compliance with the policies cited within this Plan is required of all CSMHC employees. Any violation of this Plan will be deemed serious in matter and can lead to immediate suspension or termination.

B. INTERNAL COMPLIANCE PROGRAM

This Internal Compliance Plan sets forth the expected conduct of all employees of CSMHC. It is CSMHC’s policy to prevent the occurrence of unlawful or unethical behavior, to stop any such behavior as soon as reasonably possible after it is discovered, provide disciplinary action to the individual and/or individuals involved (including any individual responsible for any failure to detect a violation), and to implement changes in policy and procedure necessary to avoid a

1 recurrence of such violation. The Internal Compliance Plan provides a detection and reporting system designed to implement and enforce the Plan. Moreover, CSMHC is committed to preventing unethical or unlawful conduct, but in the event that such conduct occurs, CSMHC is also committed to detection and self-reporting of such violations.

Set forth below are some of the major federal statutes specifically applicable to health care providers. This outline is not intended to identify all applicable laws, and as described below, CSMHC employees should consult with their supervisors or the Chief Executive Officer with specific questions.

1. Fraud and Abuse Laws

(a) Civil and Criminal False Claims (42 U.S.C. S1320a-7b (a)). CSMHC employees shall not knowingly or willfully make or cause to be made any false statement or representation of material fact in any claim or application for benefits under any federal health care program or health care benefit program. In addition, CSMHC employees shall not, with knowledge and fraudulent intent, retain federal health care program or health care benefit program funds, which have not been properly paid.

Examples of prohibited conduct include, but are not limited to, misrepresenting services which were rendered, falsely certifying that services were necessary, billing for services not actually rendered, making false statements to governmental agencies about CSMHC’s compliance with any state or federal rules, making false statements concerning the condition or operation of CSMHC for which certification is required, charging rates in excess of applicable federal/state established rates, repeatedly violating the terms of a participating subcontracting service provider, and failing to refund overpayments made by a federal or state (Medicaid, Part C, DD, etc.) program.

(b) Anti-Kickback Act (42 U.S.C. S1329a-7b (b)). CSMHC employees shall not knowingly or willfully solicit, offer to pay, pay, or receive, any remuneration, either directly or indirectly, overtly or covertly, in cash or in kind, in return for: (1) Referring an individual to a person for the furnishing, or arranging for the furnishing, of any item or service for which payment may be made, in whole or in part, under any federal or state funded program; or (2) Purchasing, leasing, ordering, or arranging for, or recommending the purchasing, leasing or ordering of any good, facility, service or item for which payment may be made in whole or in part under any federal or state funded program.

Remuneration may include kickback payments, bribes, or rebates. Certain safe harbors, such as group purchasing agreements and price reductions to health plans, among others, are excluded from this prohibition and recognized by CSMHC.

(c) Civil Monetary Penalties Act (42 U.S.C. S1320a-7a). CSMHC employees shall not knowingly present a claim to any federal or state funded program for an item or service the person knows or should have known, was not provided, was fraudulent, or was not medically necessary. No claim for an item or service shall be submitted that is based on a code that the person knows or should know will result in greater payment than the code the person knows or should know is applicable to the item or service actually provided. CSMHC employees shall not give or cause to be given any information with respect to payment/rates for client services which that person knows is false and could influence the decision regarding services to that individual.

2 CSMHC employees shall not offer to transfer, or transfer, any remuneration to a beneficiary under a federal or state funded program, that the person knows or should know is likely to influence the beneficiary to order or receive any item or service from a particular provider, practitioner or supplier, for which payment may be made, in whole or in part, under a federal or state funded program. Remuneration includes any type of payment or benefit resulting from the transaction.

(d) Health Care Fraud (18 U.S.C. S 1347). CSMHC employees shall not knowingly or willfully execute or attempt to execute, a scheme or artifice to: (1) defraud any service provider entity/program; or (2) obtain, by means of false or fraudulent pretense, representation, or promise any of the money or property owned by or under the custody or control of any service provider entity/program, in connection with the delivery of, or payment for, items or services.

2. False Statements and False Claims Laws

(a) Criminal False Statements Related to Health Care Matters (18 U.S.C. S1035). CSMHC employees shall not knowingly or willfully make or use any false, fictitious, or fraudulent statements, representations, writings or documents, regarding a material fact in connection with the delivery of, or payment for items or services. CSMHC employees shall not knowingly and willfully falsify, conceal or cover up a material fact by any trick, scheme or device.

(b) Civil False Claims Act (31 U.S.C. S3729 (a)). CSMHC employees shall not: (1) knowingly file a false or fraudulent claim for payments to a governmental agency or federal/state funded program; (2) knowingly use a false record or statement to obtain payment on a false or fraudulent claim from a governmental agency or federal/state funded program: or (3) conspire to defraud a governmental agency, or federal/state funded program by attempting to have a false or fraudulent claim paid.

Examples of a false or fraudulent claim include, but are not limited to, double billing, billing at a rate above the established rate, submitting or processing claims for items or services not provided and submitting or processing claims for items or services not necessary.

(c) Criminal False Claims Act (18 U.S.C. S 286, 287). CSMHC employees shall not knowingly make any false, fraudulent, or fictitious claim against a governmental agency or federal/state funded program. Conspiring to defraud a governmental agency or federal or state funded program is also prohibited.

(d) Criminal Wire and Mail Fraud (18 U.S.C. S 1341, 1343). CSMHC employees shall not devise a scheme to defraud a governmental agency or federal/state funded program, which uses the U. S. Postal Service, private postal carriers, or telephone lines to perpetrate the fraud.

(e) Criminal False Statement Act (18 U.S.C. S 1001). CSMHC employees shall not knowingly or willfully falsify or make any fraudulent, false, or fictitious statement against a governmental agency or federal/state funded program.

3 (f) Theft or Embezzlement in Connection with Health Care (18 U.S.C. S 669). CSMHC employees shall not embezzle, steal or otherwise, without proper authority, covert to the benefit of another person, or intentionally misapply money, funds, securities, property, or other assets of a federal/state funded program.

(g) Obstruction of Criminal Investigations of Health Care Offenses (18 U.S.C. S 1518). CSMHC employees shall not willfully prevent, obstruct, mislead, delay or attempt to prevent, obstruct, mislead or delay the communication of information or records relating to a violation of a federal health care offense to a criminal investigator.

3. Conspiracy Laws

(a) Criminal Conspiracy (18 U.S.C. S 371). CSMHC employees shall not conspire to defraud any governmental agency or federal/state funded benefit program in any matter or for any purpose.

(b) RICO and Money Laundering Acts (18 U.S.C. S 1956, 1961 et.seq.). CSMHC employees shall not use any income obtained from mail or wire fraud to operate any enterprise. In addition, CSMHC employees shall not use the proceeds of wire or mail fraud in financial transactions, which promote the underlying fraud.

C. OVERALL COMPLIANCE PROGRAM OVERSIGHT

The Board of Directors is ultimately responsible for the overall compliance oversight of the organization. They have appointed the Chief Executive Officer as the Compliance Officer for this Plan, with the responsibility to oversee compliance with all applicable standards and procedures. Any and all issues that may result in noncompliance that are brought to the Chief Executive Officer’s attention will be reported to the Board President, or the Board Vice President should the President not be available, immediately, but always within 24 hours. During the absence of the Chief Executive Officer, it will become the responsibility of the Chief Operations Officer to oversee compliance. All matters discussed with the Chief Executive Officer, the Chief Operations Officer, or with any member of the Board are subject to the strictest confidentiality and will only be discussed with those who have a specific need to know in order to protect the integrity of the investigation and employee. Each employee has the responsibility to recognize potential problems as they arise and to consult with the Chief Executive Officer before he or she acts.

D. REPORTING VIOLATIONS AND ANSWERING QUESTIONS

The Chief Executive Officer has been appointed as a resource to field questions concerning interpretation of the guidelines within this Plan, but if a question arises, an employee should speak with another superior. Any of these personnel with whom an employee speaks are bound by the same standards of confidentiality as the Chief Executive Officer, and are required to bring matters to the attention of the Chief Executive Officer, or Board of Directors President if the violation directly involves the Chief Executive Officer.

If an employee becomes aware of any illegal conduct or behavior in violation of this Plan by anyone working for or on behalf of CSMHC, they should report it immediately, fully and objectively to the Chief Executive Officer, or to their respective supervisor, who, in turn, will report to the Chief Executive Officer. Every effort will be made to protect the confidentiality of

4 the situation. Likewise, the employee will not be reprimanded or subject to any retaliation for making a truthful and accurate report. CSMHC has established an “Anonymous” reporting procedure that permits the reporting of unlawful conduct or activity, without having to reveal the name of the person making the report. This procedure requires that the information be detailed and placed in a sealed envelope addressed to the Chief Executive Officer with the lettering “CONFIDENTIAL” written on the front and back of the envelope. This envelope can only be opened by the Chief Executive Officer or the Board President if the violation directly involves the Chief Executive Officer.

E. DUE CARE IN DELEGATION OF AUTHORITY

It is the organization’s position to exercise due care in delegating substantial discretionary authority to carry out the Internal Compliance Plan. No individual, who has a propensity to engage in illegal activities shall be hired by the organization and those who may be hired and criminal activities are noted at a later date, will be terminated only after a full audit/investigation of his or her job responsibilities is completed. Individuals employed with the agency and engaged in illegal activities that are detrimental to the organization and its purpose will be suspended immediately and discharged once the findings are substantiated. Criminal charges will be brought against the individual(s) if warranted. CSMHC will conduct appropriate background checks on all employees hired. CSMHC began conducting criminal background checks on February 13, 1998. CSMHC reserves the right to conduct a background check on any employee should circumstances and/or suspicions so warrant.

F. TRAINING AND EDUCATION OF EMPLOYEES

All employees will receive training based on their initial hiring and as often as needed, but at least annually thereafter. Such training will include all areas of compliance requirements. In addition, Board members and employees will receive copies of the Internal Compliance Plan. Employees will be required to sign a statement affirming that they attended and understood the training, as well as the opportunity to request clarification on any area that may require further explanation. The statement will become part of this employee’s personnel file. Any individual in a supervisory/managerial role who fails to properly orient a new employee on this Plan, may be subject to disciplinary action.

G. MONITORING, AUDITING AND LINES OF COMMUNICATION

CSMHC is organized to allow for accountability on various levels. No two people control both accounts receivable, accounts payable or reconciliation. An independent auditor, who is a Certified Public Accountant, is engaged to audit the fiscal records of the organization each year. The fiscal period is from October 1 through September 30. Upon completion of the annual audit, the independent auditor will report to the Board of Directors at one of its regularly scheduled meetings in March, April or May. The Board of Directors is provided monthly financial reports for review and approval. The Board meets twice a year in November and May to approve/revise the annual budget.

The Chief Executive Officer will make certain that all employees receive training about the Corporate Compliance Plan of the Center as part of the initial orientation and ongoing training. This plan will be posted on the Center bulletin boards and employees will be advised that it is their responsibility to report criminal conduct by others and such reports may be done in a verbal or written format, which will be kept in strictest confidence, and anyone who attempts any type of

5 retribution because of a report made by an employee will be terminated.

Internal audit procedures are designed primarily to determine accuracy and validity of coding and billing submitted to Medicare, Medicaid, and all other federal programs and to detect any errors as quickly as possible. These procedures include the internal audits conducted by the Insurance Manager, audits of the reason for claim denials and Division specific Records Review.

The Insurance Manager conducts audits for services billed to Medicaid, Medicare or third party payors. The Chief Executive Officer, Chief Operations Officer, Chief Financial Officer, Division Directors and the CQI Designee are notified of any problem areas that are identified during this process. The appropriate Division Director then develops an action plan for improvement. This action plan may include supervision and/or disciplinary action as warranted. The internal audits and the action plans for improvement will be reviewed monthly at the Continuous Quality Improvement Committee meeting. At the next visit, the Insurance Manager will check any deficit areas for improvement. Random samplings of records drawn from a cross section of each department will be conducted monthly or more frequently as necessary.

Any claims denials and frequent billings of certain procedure codes will be reviewed and analyzed by Accounting II staff to determine any inappropriate conduct. The Accounting II staff will provide a monthly report to the Chief Executive Officer. The Chief Executive Officer will review the report and assign appropriate staff to develop action plans for improvement as needed.

The Substance Abuse, Mental Retardation and Mental Illness Divisions conduct monthly Clinical Records Reviews on a random sampling of records. The report from each review is monitored each month during the Continuous Quality Improvement Committee meeting. Appropriate staff is then assigned the task of developing any needed action plans for improvement.

Any internal audit procedures are utilized to review the billing process, policies and practices of CSMHC to ensure accurate billing and documentation processes and to submit a report of any suspected incidents of non-compliance to the Chief Executive Officer.

H. SUMMARY OF BILLING PRACTICES

Within CSMHC, the primary funding sources are the Alabama Department of Mental Health and Mental Retardation, Medicaid, Medicare, Shelby County Health Foundation, Chilton County Commission, Chilton County United Way and local contracts. Essentially, any misrepresentation, which is a part of a scheme, calculated for the purpose of obtaining money or property and which uses the mails or wires (telephone lines) to carry out the scheme violates federal laws. Violation of these laws carries criminal penalties which can include imprisonment. False billings by any means, not only violates the policy of CSMHC, but it also violates several federal criminal laws, and could lead to fines for CSMHC and imprisonment for the individual(s) who are involved as so stipulated in the United States Sentencing Commission Guidelines Manual, November 1, 1977.

I. STATE ETHICS LAW

CSMHC employees and volunteers, in fulfilling their responsibilities as so stipulated in the Articles of Incorporation, Bylaws, Policies and Procedures, and other guiding/governing principles, are subject to State of Alabama Ethics Laws, as administered by the Alabama Ethics Commission.

6 J. PERSONAL FINANCIAL GAIN AND OUTSIDE ACTIVITIES

CSMHC recognizes and respects the right of its employees and agents to engage in outside financial, business and other activities as long as these activities are legal and do not impair or interfere with the conscientious performance of organizational duties. Also, outside activities must not involve the misuse of CSMHC’s name, reputation, influence, facilities or other resources. While specific provisions cannot be made for each situation that might confront an employee, the following matters are of particular concern:

No Board member or employee of CSMHC shall have any position with or a substantial interest (which does not have to be a controlling interest) in any other business enterprise which would or might conflict with the proper performance of his/her duties or responsibilities at CSMHC, or which might tend to affect independence of judgment or action with respect to transactions between CSMHC and the other entity, without full and complete disclosure of the interest to CSMHC.

No Board member or employee of CSMHC should derive personal economic gain from a transaction to which CSMHC is a party unless CSMHC is advised of the employee’s potential to benefit from the transaction. Reference CSMHC’s policy regarding Outside Employment found in the Personnel Section of the Policies and Procedures Manual.

Any Board member or employee who has such a conflicting or possibly conflicting interest with respect to any transaction which is known to be under consideration by CSMHC, is required to make timely disclosure of the interest so it may be part of CSMHC’s consideration of the transaction.

No Board member or employee shall accept gifts or gratuities if the acceptance of the gift or gratuity may interfere with or influence independent decision making by the Board member/employee in the best interest of CSMHC.

Placement of business with a company owned or controlled by a Board member, employee, or an employee’s relative, without bringing the matter to the attention of the Chief Executive Officer first, is prohibited.

Board members or employees shall not take, use or appropriate CSMHC property for personal use without prior approval of the Chief Executive Officer.

Board members and employees shall not take personal advantage of a business opportunity, either contractual or subcontractual, that belongs to CSMHC.

Employees shall not undertake any outside interests that materially affect or encroach upon the time or attention, which is to be devoted to CSMHC.

K. ENFORCEMENT OF STANDARDS

Any employee, or Board member, who is guilty of a criminal act or noncompliance with a specific standard, or who fails to report a known criminal act or noncompliance with a specific standard, that may prove detrimental to the organization or individuals served, may be subject to a reprimand, suspension without pay or dismissal, depending on the severity of the offense.

7 Disciplinary action will not occur until after a thorough investigation has been completed. Criminal activity may result in the offense being turned over to a civil court for prosecution. Investigations will be authorized and carried out by the Chief Executive Officer or his or her designee. The Board may wish to appoint an independent investigator should circumstances so warrant.

L. CORRECTIVE ACTION INITIATIVES

It will be the responsibility of the Chief Executive Officer to approve a corrective action plan to prevent recurrence of any and all offenses. The corrective action initiatives will address the type of offense, date or dates of occurrence, person or persons involved, impact to include fiscal loss, if applicable, and if it was detrimental to the organization or any individual, and an action plan that outlines internal prevention measures to detect and prevent recurrence.

M. REVIEW OF PLAN

The Internal Compliance Plan will be reviewed annually and updated as required. The responsibility for reviewing the Plan is that of the Board of Directors in September of each fiscal year. The updating of the Plan rests with the Chief Executive Officer, with approval by the Board of Directors.

SUMMARY

It is not feasible or practical to describe in this Internal Compliance Plan every type of business practice that may raise problems under the areas discussed. The Board of Directors and Management is committed to enforcing this Plan and expects all employees to abide by them. In the event of any questions about particular situations, concerning how the organization should react to a certain situation or how this Plan will be interpreted, contact the Chief Executive Officer. Likewise, in the unlikely event of a violation of this Plan, report the violation to a supervisor, the Chief Executive Officer, or to the Board President if the violation directly involves the Chief Executive Officer. To the greatest extent possible, the identity of a reporting employee will be kept confidential. Compliance with this Plan is the responsibility of every employee of Chilton Shelby Mental Health Center.

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