Corporate Compliance

1. Five tips for reviewing and testing controls
2. Watch for employee conflicts of interest in vendor gratuities
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
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In This Week's Issue

  1. Five tips for reviewing and testing controls
  2. Watch for employee conflicts of interest in vendor gratuities
  3. Gov't audit insider

This Week's Headlines


1. Five tips for reviewing and testing controls

Did you know that you can often evaluate the controls you use to achieve desired test results simultaneously? Doing this will help you focus your results testing and allow you to identify the corrective actions necessary to address problems indicated by the testing results, says Vickie McCormick, an attorney at Halleland Lewis, Nilan, Sipkins & Johnson in Minneapolis. She offers the following tips for controls reviews and testing:

1. Identifying controls
During your audit, check the controls for each of the standards being audited through testing. Controls can range from a checklist, to a stamp, to a sophisticated software program.

2. Reviewing controls

  • If controls appear adequate or strong, proceed with testing
  • If controls appear absent or weak, consider one of these two approaches:

    1. Test after implementing the corrective action plan to improve controls
    2. Test prior to implementing the corrective action plan to improve controls

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    2. Watch for employee conflicts of interest in vendor gratuities

    When the Office of Inspector General (OIG) released its final compliance program guidance for pharmaceutical manufacturers in April, it also put providers on notice about receiving excessive gifts and gratuities.

    Providers, according to some compliance leaders, should incorporate the government's new marketing compliance guidance into their own operations in order to legally manage their relationships with drug sales reps. Doing this will ensure that physicians receive the drug information they need without sacrificing patient care.

    "In order to help staff maintain the appearance of being above reproach, we have a corporate policy and procedure that outlines the individual and aggregate amount of gifts and gratuities that each staff member may accept," says Joseph Kuruc, CIA, CFE, corporate director of audit services for Alexian Brothers Health System. Staff members here must submit reports detailing the gifts they received from vendors. And vendors must summarize which gifts they gave us, says Kuruc.

    "Using our policy and procedures for vendor gifts and gratuities, we assess compliance by comparing what the vendors submitted and what the staff submitted," says Kuruc. "The audit staff follows up on significant variances."

    To find out how Kuruc and other audit experts audit for conflicts of interest in vendor gratuities, buy the article "Watch for employee conflicts of interest in vendor gratuities." The article costs $10. Subscribers to the online version of Health Care Auditing Strategies have free access to it. Subscribers to the print edition can find it in their June issues.

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    3. GOV'T AUDIT INSIDER

    Review of Medicare outlier payments

    The OIG performed this audit to determine whether a hospital's outpatient claims with outlier payments were billed to Medicare in accordance with applicable laws and regulations. In its review, the OIG found that the hospital incorrectly billed seven of the 35 claims it reviewed, resulting in $15,240 in underpayments.

    The OIG did the following to accomplish its objective:

  • Used CMS' National Claims History file to identify 93 Medicare outpatient payment system claims. These claims contained $699,627 in outlier payments made to the hospital for services rendered from August 1, 2000 through December 31, 2001. For each of the 93 claims, the outlier payment was $2,000 or more and represented at least 90% of the total claim paid amount.
  • Selected a judgmental sample of 35 claims from the 93 claims identified based on a risk analysis. For the 35 claims, Medicare payments totaled $316,811. Of this amount, $313,533 represented outlier payments.
  • Analyzed the hospital's procedures for accumulating charges, preparing outpatient bills, and submitting Medicare claims. The OIG limited its consideration of the hospital's internal control structure to these three controls.

    The OIG did not try to assess the complete internal control structure at this hospital.

    Click here to read the OIG audit report "Review of Medicare Outlier Payments Made to Orthopaedic Hospital for the period of August 1, 2000 through December 31, 2001.

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    AUDITING LAW NEWS FLASH!!!

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