ABA Section of Business Law
ABA Section of Business Law
Business Law Today
September/October 2000
Preparing a due-diligence request list
The following is a recommended due-diligence request list that should be prepared in addition to your regular due-diligence checklist.
Regulatory compliance
Provide all documentation showing that the hospital and its facilities have addressed federal compliance initiatives including, but not limited to, the following:
• documents describing corporate compliance program infrastructure,
• resolution of board of directors to adopt compliance program,
• job description of compliance officer and other compliance-related responsibilities,
• listing of compliance committee members and their respective positions in the organization,
• compliance committee-meeting minutes,
• table of contents of written policies and procedures, including those that address documentation and financial reporting requirements, records management, proof of medical necessity, doctor orders, cost reporting, billing, coding, patient transfers, reporting credit balances, conflicts of interest, etc.
• code of conduct
• compliance training and education initiatives or programs
• job descriptions that include compliance-related responsibilities
• discipline policy and procedures
• compliance auditing and monitoring protocols, including hotline and investigation protocols
• corrective action policy and protocols
Contracts and arrangements
Provide copies of all persons and entities with which the hospital has a contract or arrangement, including, but not limited to the following:
• all employment contracts with senior staff and doctors,
• all medical-director agreements between hospital and medical directors,
• listing of all managed-care contracts and summary of terms of such contracts and length of contracts,
• copies of all service contracts between hospital and other health-care providers including: transfer agreements, emergency medical services agreements, rehab companies, skilled nursing facilities, ambulance companies, pharmaceutical companies and rebate programs, laboratories, consultants, lawyers, information system vendors, and
• copies of all leases or lease agreements including but not limited to leases for real estate, equipment and services.
Medicare/Medicaid liabilities
Provide all documents related to any liabilities or obligations of the hospital or its entities with Medicare, Medicaid or any other third-party payor program, including, but not limited to the following:
• all rights to settlements and retroactive adjustments, if any, for cost-reporting periods ending on (insert date), whether open or closed, arising from or against the Medicare, Medicaid, CHAMPUS or other third-party payor programs; and
• liabilities or obligations of hospital or its entities arising under the terms of the Medicare, Medicaid, CHAMPUS or other third-party payor programs, including, without limitation, any claim, penalty or sanction relating to any claim for overpayment.
Medicare participation/JCAHO accreditation
Provide all documents related to and that indicate that the hospital or its other entities are qualified to participate in Medicare and are accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). These documents should include the following:
• current and valid provider contracts or agreements with the Medicare and Medicaid,
• all documents related to compliance with Medicare’s Conditions of Participation for Hospitals,
• all documents related to accreditation by JCAHO for the past three years, and
• notices from either Medicare, Medicaid or JCAHO of any pending investigation or survey.
Correspondence with regulatory agencies
Provide all correspondence and related documents related to correspondence with all federal, state and local governmental agencies including, but not limited to, the Department of Health and Human Services, the Healthcare Financing Administration, the Office of Inspector General, the Department of Justice, the Internal Revenue Service and the state Medicaid department.
Medical staff matters
Provide correct and complete copies of the bylaws and rules and regulations of the medical staff at the hospital, including credentialing processes. Also include documents related to all pending or threatened disputes with applicants, staff members, or health-professional affiliates at hospital, including the appeal periods for any medical staff member or applicant against whom an adverse action has been taken.
Information security and systems
Provide copies of the following documents related to the hospital’s information security and information system:
• agreements or arrangements that the hospital has with information vendors and consultants,
• information protection and security policies and procedures,
• training procedures or policies related to information protection, security and confidentiality, and
• job descriptions related to the hospital’s information-system officer and the employees in his or her department
Risk management
Provide copies of all insurance policies over the past five years, including general and professional liability insurance. Also provide copies of all risk-management reports relating to any patient injury or malpractice claim.
Licenses, permits and approvals
Provide copies of licenses, permits and other government approvals held by the hospital (including its ancillary departments) and its entities that are required to be licensed by the appropriate state agencies including, but not limited to the following:
• certificates of need and certificate-of-need applications,
• pharmacy and laboratory licenses,
• DEA registration,
• trademarks and trade names,
• patents and patent applications, and
• copyrights
Employee information
Provide a list of all employees (doctors, nondoctors and independent contractors) of the hospital, including each employee’s job title, weekly hours, compensation and starting date. For doctors and practitioners, also include all information related to the following:
• any disciplinary action taken by the hospital, state licensing board or any federal, state or local agency,
• any litigation, threats of litigation, disputes or claims against any doctor or practitioner,
• any termination or suspension of a doctor or practitioner’s license, credentials or privileges, and
• any background checks or other similar information obtained on any doctor or practitioner.
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