Looking Beyond Your Employees: The Importance of Checking Third Parties

When establishing compliance and safety guidelines for their organization, the majority of businesses focus primarily on their employees. Human resources departments invest time verifying new hires through background checks, reference checks and license checks.  Unfortunately, many business owners fail to recognize a significant oversight—third party contractors. If you do not have a strong vendor screening process in place, then vendor compliance is no different than having a strong screening process for your staff.

Consider how important all of the outside vendors you use to operate your business on a daily basis are. For example, if you own a hospital, you may hire a staffing agency to provide nurses on a temporary basis. You may also utilize an outside vendor for the disposal of your medical waste and for maintenance of your computer system. Each of these vendors interacts with your organization daily, making them a potential source of risk. Failure to conduct an appropriate exclusion screening on them can place your entire business operation at risk.

The government has very clear rules regarding this issue. If your health care company receives funds from Federal Programs like Medicare; you cannot do business with any person or company that has been OIG excluded. It does not matter if they are your direct employees or independent contractors. For instance, if you hire a cleaning company and the owner is banned by the government, then your company will also be liable for payment and fined significantly.

Because the financial liability of ignoring your outside partners is immense, you cannot take for granted that your outside vendor relationships will be positively affected. Implementing an effective vendor screening policy means that you are reviewing the names of your contractors (including their owners and managing executives). Prior to entering into any contracts with these vendors and prior to making any payments to them, you need to confirm that those vendors are eligible to participate in Federal Health Care Programs .

Doing this manually can be a huge headache, especially if your business uses dozens of different suppliers. Fortunately, just like with employee checks, you can use technology to streamline your exclusion screening tasks. Many companies use automated platforms that safely monitor their entire list of suppliers every single month. If one of your suppliers suddenly becomes OIG excluded, the system will immediately send you a warning alert. This allows you to stop payments and cut ties with that company before you get into trouble.

Including clauses in your business contracts about this matter is recommended. Your contracts should provide that the third party will provide you with immediate notice if they become OIG excluded at any time during the course of your business relationship. Although this doesn't replace your own internal screening procedures, they will serve as an added layer of legal protection.

Ultimately, your company's safety depends on the people and business partners that you select. It is worth investing time into developing a consistent vendor screening program to protect you from unexpected fines and legal issues. If all entities that you pay have gone through an extensive screening for exclusion, it should provide you with the ability to grow your company confidently and without worry.