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
Strategies for Health Care Compliance
June 24, 2003
Vol. 1, No. 8

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Compliance Hot Topics: Auditing, Billing and Coding, EMTALA, Stark, HIPAA

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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

    For the rest of these tips, plus more information on choosing when to test controls, choosing a sample size, finding and prioritizing risk areas, and offering meaningful solutions, order the special report "An inside look at compliance auditing and monitoring: Integrating government standards." The cost is $29.

    This special report also offers the following: resources and steps to track compliance, practical auditing and monitoring tips, steps for risk-based engagement planning, information on the auditor's role in compliance, sampling techniques to enhance compliance effectiveness, ways to protect privileged information, and steps to use to address your risk of HIPAA noncompliance. Click here for more information or to order.

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    Accurate medical records documentation and coding is a universal, perennial concern that's becoming all the more critical in today's environment of fraud and abuse investigations. "Coding Compliance: A Practical Guide to the Audit Process" will help you to make your medical records/coding compliance audits effective and efficient! For more information, go to Click here or call our customer service department at 800-650-6787. Be sure to mention source code EB1269B.

    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.

    Or for only $23 per month, you can get even more auditing best practices and how-to articles by subscribing to Health Care Auditing Strategies. Click here to save 10% by ordering online.

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    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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    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"

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