BDO Knows Healthcare Newsletter - Winter 2017
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In the winter 2017 edition of the BDO Knows Healthcare Newsletter, we explore three industry developments that, under a value-based system, present a higher risk for fraud in the industry as policies race to catch up to changing business models. The rise of connected devices, or the Internet of Things (IoT), while it presents a wealth of opportunity to make care more effective and efficient, requires tighter internal controls related to cybersecurity and the False Claims Act. The use of non-GAAP metrics in financial reporting, if done in a misleading way, could attract shareholder litigation and even enforcement actions under anti-fraud provisions of securities laws. The 21st Century Cures Act, recently signed into law by President Obama, provides a springboard for bolstered innovation in healthcare, but it also requires providers to update internal controls and due diligence processes around third-party vendors.
Just before leaving office, President Obama signed the bipartisan 21st Century Cures Act into law, underlining the government’s focus on streamlining the development of cures for serious diseases that are not only devastating to patients, but also add up to significant healthcare costs. Organizations should review the details of the law sooner rather than later, ensuring policies, procedures and internal controls to mitigate fraud are up-to-date, while also updating due diligence procedures around third-party drug and medical device vendors.
The market for the Internet of Things (IoT) is booming, and healthcare is no exception. Healthcare IoT is poised to reach $117 billion by 2020. But with the greater opportunity to improve the quality and efficiency of care for patients comes increased regulatory scrutiny in the areas of cybersecurity and the False Claims Act. This increased scrutiny calls for greater internal compliance controls around the cybersecurity of connected medical devices.
The transition to value-based reimbursement has unleashed a revolution in healthcare, changing the way providers work together across the care continuum and increasing the risk for fraud (whether intentional or not). Organizations would do well, though, to also pay attention to a risk increasingly on the minds of regulators: the use of non-GAAP reporting measures in financial reports.