Corporate Compliance

1. Validity and reliability of computer-based data
2. 12 steps for auditing inpatient bad debt
3. Gov't audit insider

Healthcare Auditing Weekly, June 1, 2003



Health Care Auditing Strategies
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Guide to Compliance Auditing: Applying OIG Techniques and Tools
Strategies for Health Care Compliance
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June 3, 2003
Vol. 1, No. 5


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In This Week's Issue

  1. Validity and reliability of computer-based data
  2. 12 steps for auditing inpatient bad debt
  3. Gov't audit insider

This Week's Headlines


1. Validity and reliability of computer-based data

When computer-processed data is critical to accomplishing an audit objective, you need to ensure that the data is reliable and relevant. For example, when the reliability of a computer-based system is your principal audit objective, conduct a system review of general and application controls. This is important, whether the data is provided to you, or you independently extract it.

Consider the General Accounting Office's (GAO) method to assess the reliability of computer-based data. The GAO's publication, "Assessing the Reliability of Computer-Based Data" (GAO/OP-8.1.3, September 1990), provides the following guidance on assessing computer-based data:

1. Determine how computer-based data will be used and how it will affect the audit objective

2. Find out what is known about the data and the system that produced it

3. Obtain an understanding of relevant system controls, which can reduce risk to an acceptable level

4. Test the data for reliability

5. Disclose the data source and how data reliability was established, or qualify the report if data reliability cannot be established

Editor's note: This is an excerpt from the book "Guide to Compliance Auditing: Applying OIG Techniques and Tools," published by HCPro. This book provides compliance officers and internal auditors with the same principles and tried-and-true techniques that the Office of Inspector General uses to conduct audits of the Medicare and Medicaid programs. Click here for more information or to order.

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AUDITING LAW NEWS FLASH!!!

To learn more about the Sarbanes-Oxley Act and how it affects internal auditors and compliance officers, order the special report "Sarbanes-Oxley Act: Impact on Health Care Organizations"



2. 12 steps for auditing inpatient bad debt

Last year, the Office of Inspector General released report after report on its audits of inpatient bad debt nationwide. The scrutiny continues this year as part of the agency's nationwide audit of inpatient bad debt. Consider the following 12 steps in your audit of inpatient bad debt:

1. Interview the cost and reimbursement accountant to evaluate procedures used to review bad debt accounts before they are listed on the cost report

2. Review procedures over the computation and recording of contractual allowances

3. Review procedures for denied claims and determine whether the organization has adequate follow-up procedures for pursuing bad debt

4. Pull a non-statistical sample of accounts and test the length of time it takes before the account is paid, the length of time it takes to collect copayments and deductibles, and the length of time to write off the account once it is determined to be uncollectible.

For the other eight steps and more on auditing inpatient bad debt, go to "Tips for auditing inpatient bad debt." The cost is $10. Subscribers to the online version of Health Care Auditing Strategies have free access to this article. Subscribers to the print edition can find it in their February issues.

You can get even more auditing best practices and how-to articles by subscribing to Health Care Auditing Strategies. Save 10% by ordering online.

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3. GOV'T AUDIT INSIDER

Medicare costs for organ acquisition

The Office of Inspector General (OIG) recently performed this audit determine whether the costs claimed by a Tampa, FL hospital for organ acquisition complied with the Medicare reimbursement criteria. The audit covered direct and indirect organ acquisition costs claimed by the hospital on its Medicare cost report for fiscal year (FY) 1999. The OIG reviewed the following as part of its audit:

  • Federal regulations related to organ acquisition costs
  • The hospital's FY 1999 cost report and related work papers furnished by the hospital's Medicare fiscal intermediary
  • The hospital's accounting records for FY 1999

    The OIG reviewed supporting documents for entries in the organ transplant fee expense accounts and for the hospital's calculation of average cost-per-organ transplant. The OIG also reviewed entries affecting organ acquisition cost centers on the Worksheets A-6, A-8, and A-8-2 of the Medicare cost report.

    For the results of this audit, plus more on how the OIG audits Medicare costs for organ acquisitions, read the OIG audit report "Audit of Medicare Costs for Organ Acquisitions at Tampa General Hospital."

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    Melissa Osborn
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