Understanding the Pitfalls of Policy

Policies have the potential to be quite a double-edged sword. Generally speaking, managers love policies, and I think there are several reasons for this.

Perhaps the biggest: when you follow a policy, it is less likely someone criticizes you personally. The policy serves as a shield of sorts from criticism from supervisors and supervisees.

If a supervisor says, “You should have handled that differently,” you can say, “Hey, I just followed the policy.” It also provides a convenient foil when you have to enforce the policy. You can say, “Don’t blame me; it’s the policy.” Given the amount of conflict avoidance in the world, I understand why people default to policies. 

It also tends to encourage uniformity, and many think that consistency in application of rules is fair, even if it results in some unfair outcomes. The practical import of this is that policies tend to proliferate.  

But I have a much less favorable view of policies, largely because I have a strong bias towards discretion. Facts and circumstances matter. A person who is late three times because they stopped to provide CPR on the side of the road is different from a person who is late because they are disorganized.

It is incredibly difficult to imagine every possibility, so policies often inadvertently create an unfair result. And employment lawyers will say that once you make exceptions under your policy, it is basically useless anyway. 

But that is not my only beef with policies. I have seen too many situations in which a company policy that is intended to lower an organization’s risk has the opposite effect. A classic example would involve a policy related to Local Coverage Determinations (LCDs).

Perhaps your organization is going to choose to follow an LCD because it wants to avoid having to go through the appeals process and risk providing a service for which it will not receive reimbursement. So, you establish a tight policy mirroring the LCD.

But some professionals opt to treat patients, perhaps unaware of the policy, or maybe prioritizing the patient’s need. The government learns of this development and begins a False Claims Act (FCA) investigation. I meet with the government representatives and explain why LCDs are not binding.

The first thing the government will say is that the organization seems to disagree with me, because they have a policy prohibiting the practice. My ability to defend the organization’s practice is being undercut by the existence of the policy.  

There are ways you can draft a policy to minimize this negative side effect. For example, if the policy overtly indicates that it is legal to submit claims in situations where the LCD suggests the absence of coverage, and the company knows it is being more restrictive than the law, that actually would aid in the defense.

The presence of the careful analysis could effectively help demonstrate good intent by the organization. So, I am not asserting that all policies are inherently bad.

But I will repeat that it is extraordinarily difficult to draft a good one. I certainly do not trust myself to do it. I am a fan of policies only for situations in which people are likely to actually consult the policy. The truth is that most policies go unread. And the more policies you have, the more likely they are to remain unread. 

But having a policy for a situation in which a person might actually look for one, and it can help you avoid a mistake, can be a good idea. One great example: have a policy about what to do when Medicare surveyors show up.

And in that policy, make it clear that no one should use the phrase “manager” when talking to the surveyors – and that surveyors should never be sent away without first checking with someone in the legal department.  

A well-crafted policy can truly lower an organization’s risk. But most policies actually do the opposite. I recommend that organizations have a small number of carefully drafted policies targeted at areas where people will actually read them.