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Larry Elisco, CPA, ABV, CCS-P Member Weltman Bernfield LLC 847.941.0245

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Presentation on theme: "Larry Elisco, CPA, ABV, CCS-P Member Weltman Bernfield LLC 847.941.0245"— Presentation transcript:


2 Larry Elisco, CPA, ABV, CCS-P Member Weltman Bernfield LLC

3  My disclosure is in the Symposium Syllabus and in the AAOS database.  I have no potential conflicts with this presentation.

4  The Definition of Auditing*: “An official examination and verification of accounts and records, especially of financial accounts” *

5  Benefits  Internal control/safeguarding of assets  Educational to physicians  Performance measurement for employees  Possible support in the event of an OIG investigation (attorney client privilege must be considered)  Costs ◦ Significant up front work as well as ongoing time performing testing and maintaining records of results

6  Design of Accounting System  Contract Documentation  Compliant Reimbursement  Collection Performance  Safeguarding of Assets  Independent Review of Coding

7 1.Billing and Reimbursement  Contracts  Adjustments 2.Accounts receivable  Aging  Collection performance 3.Financial Auditing and Controls 4.Coding

8 Documenting system design Identify processes and parties responsible for those processes Test compliance Review a sample of transactions during a specified period Review of results by Management

9  Develop Job Descriptions  Define Functional Responsibilities ◦ Daily ◦ Weekly ◦ Monthly  Evaluate Opportunities for Errors or Irregularities  Consider implementing checks & balances Source:

10 The Billing Manager is responsible for the following:  Design of procedural systems and manuals  Monitoring accounts receivable including approval of adjustments  Monitoring accuracy of billing and reimbursement  Managing staff responsible for billing and reimbursement  Reviewing medical coding as documented by doctors  Preparing practice management reports as needed  Reporting to management on effectiveness of billing and reimbursement procedures  Preparing end of day reports and making bank deposit

11  Practice Manager prepares the end of the day deposit from the PM system.  Practice Manager makes the deposit at the bank.  Practice Manager has the ability to make adjustments to patient balances in the PM system.  Practice Manager then has the ability to divert funds to a personal account and write off the balance as a bad debt.

12  In this case, someone other than the Practice Manager should be making the bank deposit and completing the end of day report.  Preference would be having a physician making the bank deposit after reviewing the end of day report and deposit slip. Source:

13  Review written procedures in place for recording and approving adjustments (or have procedures developed)  Using payor contracts, document the details of the reimbursement terms for each contract in place for the practice and maintain in a centralized location (example to follow) on the practice’s network Include the basis for reimbursement (generally a formula utilizing the percentage of the Medicare fee schedule for each CPT code)

14 In some cases payment is made on the basis of the payor’s usual and customary reimbursement for a given CPT code, particularly for out-of-network payors where no contractual relationship exists In those cases it may be necessary to “reverse engineer” the reimbursement by comparing the reimbursement to the Medicare fee schedule to arrive at the formula

15 ◦ The payor may only be willing to provide reimbursement on a limited number of CPT codes per contact, making it difficult to establish comprehensive fee schedules for a given payor. o Focus on the CPT codes most frequently used by the practice Source:

16 Payor PlanFormula Blue Cross HMO102% of 2013 Medicare Fee Schedule Blue Choice Select105% of 2013 Medicare Fee Schedule United Health Care105% of 2013 Medicare Fee Schedule Aetna118% of 2013 Medicare Fee Schedule Blue Cross PPO115% of 2013 Medicare Fee Schedule Hospital PlanUsual and Customary(1) (1) Fee schedule derived from EOBs Source: Courtesy of Larry Elisco, CPA

17  Obtain the population of encounters paid in a given period (monthly, quarterly, annually). For each encounter:  Stratify (segregate into groups) the sample by payor and by responsible biller  Select an aggregate sample of 100 transactions*  Obtain Explanation of Benefits statements for the encounters sampled  Follow each transaction through the cycle documenting exceptions such as denials, bundling, payments less than contract * generally considered a reasonable annual sample size (per group of accounts) without doing a statistical sample

18  Trace the reimbursement from each sample to the contractual terms for the given payor  Quantify the exceptions and document the cause, e.g. bundling of procedures, denials for medical necessity  Develop a list of denial reasons and quantify by payor and overall  Document process for appealing on claim denials and note for each sample if process was adhered to  Document result of appeals process for each sample

19  Quantify the results of testing  List error rate for sample  List the result by payor to establish a pattern of improper reimbursement and/or denials  Maintain statistics on a cumulative basis for a given period

20 Total 9/12TotalBSBSUHCMEDICAREAETNA Total collected$110,000$50,000$20,000$30,000$10,000 Errors$1,000$500$0$400$100 Rate0.91%1.00%0.00%1.33%1.00% Summary: Medical Necessity$800$400 Bundling$500$100 Uninsured$200 Total$1,000$500$0$400$100 Source: Courtesy of Larry Elisco, CPA

21  In September 2012, The practice incurred an error rate of.91% on the items tested.  BCBS bundled procedures for ________ which are being appealed  Medicare denied _______ because of medical necessity, we have an ABN from the patient and will make it their responsibility  Aetna bundled ______ which was a billing error and is being written off as a contractual adjustment

22  For the entire population of collections for a given period, develop a report that lists all adjustments sorted by payor and then CPT code  Adjustments should be analyzed for outliers where the adjustment within a payor and CPT code differs from the population

23  Outliers over a certain amount require investigation and explanation  Quite often the outliers are the result of modifiers to a CPT code, which are generally acceptable.  Other causes for outliers could be  Denials  Bundling  Payor error  Bad debt write-offs  Irregularities such as writing off co-pays where employee is stealing  CCI Edits

24 PayorPatientCPT CodeBilledAdjustment BCBSSmith BCBSJones BCBSJohnson * UHCAdams UHCMiller UHCMorgan * MedicareMichael MedicareGeorge MedicareIrving * *Outlier Source: Courtesy of Larry Elisco, CPA

25  BCBS – Johnson – Reimbursement error, being appealed  UHC – Morgan - denial due to demographic error in address, being rebilled  Medicare – reimbursement error being appealed

26  Review written procedures in place for accounts receivable collection (or have procedures developed)  Develop a checklist of procedures to be performed in accounts receivable collection efforts Source:

27  Obtain end of month accounts receivable aging and identify balances greater than 60 days old  Where multiple employees are assigned to a range of balances (e.g. alphabetical assignments) stratify the balances so that each employees work is audited.  Review collection process for each item in excess of a nominal amount such as $500 and retain documentation  Based on balances sent to collection, compute monthly bad debt expense for each employee and quantify as a percentage of collections  EG – billed X wrote off Y for month and cumulatively for the year to date

28  Establish a grading system where bad debts as a percentage of collections equal a grade for purposes of employee evaluation  0% to.5% = Outstanding .6% to.8% = Good .9% to 1.0% = Acceptable  > 1% = Unacceptable  Maintain testing results for the period being tested and cumulatively report over given periods, such as month and year to date

29  Document the results of each monthly review, scan and save to practice computer network  Reference prior month’s documentation each month when discussing current status Source:

30  Radiology practice consisting of 4 physicians was disbanding, we were engaged to handle the financial affairs of the winding down of the practice  We immediately noted accounts receivable balances of approx. $1.5 million that were more than one year old (net was approximately $900,000)  When this was raised with the physicians they didn’t understand what accounts receivable were and never saw an accounts receivable aging.

31  Subsequent discussions with the billing service responsible for collections became hostile, however did yield quite a bit of action.  The practice ended up collecting approximately 40% of the old balance and writing off over $500,000 of net accounts receivable

32  For a given period, obtain a check register (listing of all checks and disbursements including automatic bill payments and wire transfers)  Scan the list to determine if any disbursement to a vendor appears unusual  Select a sample of transactions and trace the sample to:  The actual check to ensure the payee matches what is reflected on the check register (Quickbooks can be altered)  The bank statement to ensure the amount cleared agrees to the check register

33  For a given period, obtain all end of day reports for the practice  Trace the total for each day report to the cash deposit reflected in the practice’s general ledger (often Quickbooks)  Trace the amount deposited to the bank deposit slip  Trace the amount on the bank deposit slip to the bank statement  Any variances require investigation and explanation

34  For a given period, obtain the payroll journal for the period  Scan the list to ensure all employees reflected on the list are actual employees  For new and selected existing employees, review personnel files to ensure that proper documentation is in place such as:  W-4 forms  Copy of a form of Identification (driver’s license)  Election forms for retirement plans

35  Quickbooks is the most common accounting package used by medical practices.  Transactions recorded in Quickbooks can be changed/altered at a later date.  The payee on large payments made to vendors like the IRS, medical suppliers or employees can be changed after the fact  Discovery of this type of embezzlement may take an extended period of time

36  Practice processes payroll internally, does not use an outside service  Bookkeeper has a gambling problem, makes out a series of checks to a fictitious company she owns and changes the payee in Quickbooks to the IRS  Bookkeeper also opens the mail, and destroys tax notices received by the practice on the shortfalls  Practice loses over $250,000 which can’t be recovered

37  This could have been prevented by: ◦ Comparing the payee reflected in Quickbooks check register to the actual cleared check from the bank (auditing) ◦ Using an outside payroll service ◦ Having the mail opened by someone other than the bookkeeper (segregation of duties) Source:

38  Prepare these reports 1.Payor mix for a given period and compared to other periods 2.Average reimbursement rate as a percentage of Medicare by payor 3.Average days to collect charges by payor for a given period of time and compare to prior periods

39  For a given period select a sample of Encounters using CPT Codes (e.g. office visits)  Stratify the sample by physician (assuming group practice)  Obtain op reports or electronic ticket (superbill) for the charge  Physician or coder that did not perform the service should code the procedure based on the SOAP notes or op report  Independent coding should then be compared to actual coding for procedure  Results should be reported on and differences investigated and discussed with physician

40  For a given period, list CPT codes by physician (group practice)  Quantify (list) in a graphical format the codes used by each physician and compare to the overall coding results for the practice  Physicians coding significantly different from their peers and their practice as a whole, either over or under, should be discussing their coding practices with the group

41 Source: Courtesy of Larry Elisco, CPA

42  Handouts are checklists for: ◦ Billing and Reimbursement ◦ Accounts Receivable ◦ Financial Auditing and Reporting ◦ Coding

43 Larry Elisco, CPA, ABV, CCS-P Member Weltman Bernfield LLC

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