1. CMS finalizes outlier rule
2. Hospital CEO indicted on kickback allegations
3. Pay-per-view article: Find coders through conventional and unconventional methods
4. CO Health system settles for $2.3 million
5. Tip: Assessing internal audit effectiveness

The Centers for Medicare and Medicaid Services (CMS) released the final version of a rule governing outlier payments to hospitals and long term care hospitals. The announcement appeared in the June 9 Federal Register.

CMS created the rule in response to what it believed was improper behavior by hospitals that purposely raised their rates-of-charge in relation to their rates-of-cost in order to increase outlier payments. The final rule includes most of the provisions contained in the proposed rule, which CMS issued on March 5.

Many of the rule's provisions become effective 60 days from its publication date. One exception: Hospitals must use the most recent settled or submitted cost report to calculate their cost-to-charge ratio. The requirement will become effective on October 1, 2003.

A California grand jury indicted the chief executive officer of a Tenet Healthcare hospital on June 6, alleging that he improperly paid $10 million to relocate physicians to the hospital's vicinity, according to Carol Lam, United States attorney from California.

The indictment also accuses Barry Weinbaum, CEO of Alvarado Hospital Medical Center, of targeting physicians for their ability to generate referrals to the hospital.

In a June 6 statement, Tenet Healthcare denied any wrongdoing. The company also supported Weinbaum, and said that he would fight the allegations in court.

The indictment charges Weinbaum with one count of conspiring to violate the anti-kickback statue, and seven charges of offering and paying illegal remuneration. If convicted on all counts, he could face a total of 40 years in prison and $200,000 in fines.

The nationwide coder shortage shows no signs of easing up, so recruiting skills are more important than ever. During his presentation at the American Academy of Professional Coders' recent 11th annual conference in Honolulu, J. Eric Sandham, CHC, CPC, compliance educator for Central California Faculty Medical Group in Fresno, offered his suggestions...

Centura Health Corporation (CO) agreed to repay $2.3 million on June 5 to resolve years of billing problems, including pneumonia upcoding and improperly submitted claims for laboratory work, according to John Suthers, United States attorney for Colorado, and Ken Salazar, Colorado's attorney general.

Nine Centura-owned hospitals in Colorado were accused of using two separate codes between 1991 and 1997 to bill for automated multichannel chemistry panels on the same date of service, when they should have used just one. Those hospitals were also accused of submitting claims for hematology indices that were not medically necessary.

Centura voluntarily disclosed documentation problems at another one of its hospitals.

The government concluded that the billing issues did not affect quality of care at the Centura hospitals, and that the hospital system did not intentionally defraud the government, according to Suthers.

Much has been written about assessing the effectiveness of compliance programs. Since auditing and monitoring programs are integral to effective compliance, it is important to know whether the audit function is accomplishing its goals. The Institute of Internal Auditors recommends that organizations hold a quality assurance review (QAR) every five years.

QARs are handled by outside auditors. They can provide all-important benchmarking data, as well as best practices used by internal audit departments in other organizations. The downside: External reviews can be expensive. But the Institute's QAR volunteer program makes the task affordable and relatively painless.

Volunteers who are currently working as auditors perform the QARs. Their respective organizations pay their salaries to do this. The Institute pays all other expenses. The team assembles on a Sunday afternoon for training near the customer's location, and the review begins the following day. A QAR can take one or two weeks.

The Institute contacts volunteers and checks on their availability. Then, it sends the names and biographies of volunteers to the customer for final selection. Volunteers receive copies of the Institute's Standards, the QAR Manual and the self-study, which contains information about the customer's organization and audit staff. The customer's internal auditing department provides the latter. Volunteers receive valuable experience examining another audit organizations, plus 25 hours of Continuing Professional Education credit.