Corporate Compliance

1. OIG audits Rhode Island hospital over outliers
2. Tenet adopts new outlier policy
3. Pay-per-view article: Tips for effectively using samples in your audits
4. California physician pleads guilty to lab fraud
5. Tip: A quick test for compliance effectiveness

Compliance Monitor, January 8, 2003

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1. OIG audits Rhode Island hospital over outliers

A Rhode Island hospital's outpatient outlier payments were the focus of a recent Office of Inspector General (OIG) audit.

The OIG looked at 35, or fewer than 2% of Rhode Island Hospital's outlier claims under the outpatient prospective payment system (OPPS), and found that 21 of them represented overpayments totaling $13,275. The hospital's improper billing of observation services was to blame, according to the OIG.

In some cases, observation services were unsupported, not medically necessary, or excessive, according to the audit report.

The hospital generally agreed with the findings, but indicated that the sample claims the OIG chose seemed to represent accounts in which overpayments were likely to be the highest, according to a letter from Thomas P. Igoe, Rhode Island Hospital's compliance officer. Igoe indicated that the sample claims were not indicative of all outlier claims at the hospital.

The OIG recommended that Rhode Island Hospital do the following:

  • Review documentation requirements with the hospital's staff to ensure that services are documented appropriately, with an emphasis on documenting physician orders
  • Control billing processes better than before to ensure that observation services are medically necessary and documented properly
  • Review all OPPS outlier claims from August 2000 to March 2002
  • Reimburse Medicare for the $13,275 identified as overpayments in the audit, and for any subsequent overpayments discovered in the hospital's internal review

Click here to read the entire audit report for Rhode Island Hospital.


2. Tenet adopts new outlier policy

Tenet Healthcare Corporation will change the way it computes its outlier payments following criticism from shareholders and a high-profile investigation of its hospitals. The move will reduce Tenet's monthly outlier reimbursements by $57 million, according to a company announcement on January 6.

Tenet will revamp its outlier policy in anticipation of a rule change by the Centers for Medicare and Medicaid Services (CMS), the announcement said. On December 2, 2002, CMS announced plans to change outlier payment rules. The agency has expressed its dissatisfaction with several areas of the outlier formula, and has vowed to prosecute any hospitals that improperly use outlier payments to increase revenues.

Tenet will change two components of its outlier formula:

  1. It will use the most recent cost reports, instead of older cost reports, to calculate the ratio of cost-to-charges used to calculate outliers
  2. It will eliminate the "statewide average" method of calculating outliers

Tenet maintains that its hospitals have always followed current rules in calculating outlier payments. The Department of Justice (DOJ) is investigating Tenet's outlier payments.

Click here to read the December 2 announcement from CMS about outlier payments.


3. Pay-per-view Article

Tips for effectively using samples in your audits

If you want reliable audit results, you need to choose an effective population sample. This is one of the most critical steps in every audit, because sample selection influences the findings by outlining which records you will review.

Choosing a sample isn't as easy as closing your eyes and grabbing random medical records. You can make mistakes during the sample selection process that can materially distort or even invalidate the sample results, particularly if the mistake is not detected.

Go to "Tips for effectively using samples in your audits" for the rest of this article. The cost is $10. Health Care Auditing Strategies subscribers have free access via their online subscriptions. Subscribers to the print edition can find this article in their December issues.

A $30 steal!

You can read this article—and much more—in the entire December issue of Health Care Auditing Strategies. Your cost: Five stories for only $30! You'll find tips about how to conduct your audits using the 2003 OIG Work Plan as a guide. You'll also learn how strategic initiatives can add value to your audits. Choose between a PDF and HTML version for just $30. Online subscribers have free access to this issue; print newsletter subscribers can find it in their mailboxes.


4. California physician pleads guilty to lab fraud

A California physician pleaded guilty on January 6 to felony charges of conspiracy and tax evasion in connection with an alleged scheme to defraud California's Medi-Cal program, according to the Los Angeles Times.

Surinder Singh Panshi could face 11 to 16 years in prison if convicted. He was charged on June 26, 2002, along with 28 other defendants who allegedly billed Medi-Cal for blood tests that were never given from 1997 to 2000. They allegedly used stolen physician provider numbers to file the claims. In the cases when blood tests were actually performed, the defendants bought blood from drug addicts and homeless, according to California Attorney General Bill Lockyer.

Panshi has already spent five years in prison for defrauding New York's Medicaid program of almost $3.6 million in a similar case.

Two of the other defendants, Biall Ahmed and Saeed Ahmed, were sentenced January 3 to three years and sixteen months in prison, respectively.

Panshi will be sentenced on May 23.


5. A quick test for compliance effectiveness

A good way to begin the New Year is to find out whether your compliance program is working. One way is to poll employees about what they think of the compliance program. Make a point to informally ask the next 10 to 15 employees you come across. Ask the people in line next to you in the cafeteria, or anyone else with whom you come in contact. Try to ask people who represent a cross section of your organization. Your questions can be as simple as the following:

  1. Do you know that this organization has a compliance program?
  2. Do you know that this organization has a code of ethics?
  3. Do you know that this organization has a hotline?

Hopefully, a large percentage of your interviewees will know that a compliance program exists, and how they can get in touch with the compliance office to ask questions or report problems. You can have a great auditing and monitoring program, the right committees, a super code of conduct, and an expensive hotline, but if your employees don't know the basics, then your message is not reaching its intended audience.

Of course, asking only a few employees informally will not provide completely accurate feedback on how well your program is preventing and catching compliance errors. The responses of a select few will, however, tell you whether you should dig deeper. If only half of your employees know that a hotline exists, or know where to find the code of conduct, then you may need to develop a formal questionnaire. Administer the questionnaire to a representative sample of employees at all levels.

This column was written by Hank Vanderbeek, MPA, CIA, CFE. IRP, Inc.



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