1. CIA’s - The IRO & Shadow Audits Robert F. Bacon, MHA, Director University of Pennsylvania Health System Office of Billing Compliance

2. Background False Claims Act Mail Fraud Anti-trust Regulations Qui-Tam Actions –Private citizens Balance Budget Act

3. FBI Health Care Fraud Utilization (FTE’s)

4. Source: Advance Magazine American Health Information Management (AHIMA) “It’s everybody’s responsibility now… HELP STOP Medicare/Medicaid Fraud” Over $23 billion...lost to waste, fraud & abuse..Person who reports… paid up to 25%.. If you work with a …health care provider who has committed health care fraud, please call our law firm…”

5. FRAUD HOT LINE “Who pays? You pay. Report ……. fraud by calling 1-800-447-8477. An example of fraud would be claims for ……... items or services you did not receive. If you have any other questions about your claim,…..”

6. HHS Fraud Line Established by HHS in 1995 HIPAA established incentive program for reporting fraud & abuse –10% of recovered overpayment or a $1,000 maximum Medicare received over 300,000 calls in 1999 –76,000 in 1998

7. Notices From Carriers HGSAdministrators (Pa Medicare Claims) –Formerly Xact Medicare Services –Fraud Investigation Unit –Benefit Integrity Unit Mutual of Omaha –Benefits Integrity Unit Pa Blue Shield –Benefits Utilization Management

8. Operational Concerns Organizations state of readiness – Critical need for operational policies to address organizational response to external notice(s) of investigation(s) All members of organization must know what action is required upon receipt of notification

9. Operational Concerns No individual or organization PLANS to FAIL; however, they FAIL to PLAN! Now what ?

10. Operational Concerns Identify nature of allegations (if possible) –Physician based (e.g. upcoding, TPNR, etc.) –Hospital based (e.g. DRG’s, 72 hour rule, transfers, cost report) Identify entity that authored investigation notice –Insurance carrier/ FI –OIG

11. Operational Concerns Action may differ based upon source & type of notice –Who should be notified & when (e.g. senior management, compliance officer, legal counsel, etc)? –Need for IRO

12. Operational Concerns Probability investigation could result in CIA &/or other penalties –Recoupment of overpayments –Program exclusions –Civil monetary penalties

13. Operational Concerns Burden to organization –Disruption of day-to-day operations –Financial considerations –Harm to reputation

14. Shadow Audit What is the subject matter & time period under review? –Attention to date of service vs. applicable regulations & specific coding requirements –Over 1,000 material changes in CPT for CY’s 1999 & 2000 676 in 1999 320 in 2000

15. Shadow Audit Critical need for organization to identify potential deficiencies & liabilities –Potential impact on bond ratings or stock prices Organizational & managerial ability to make informed decisions –Influence to expedite settlement negotiations –Relative cost of quick settlement vs. long term litigation

16. Shadow Audit Invoke attorney - client privilege –Protect work papers in discovery phase Ability to offer defense –Establish expected error rate & estimated potential liability –Identify errors that may result in over-payments –Identify & quantify favorable findings such as missed billings & under-coding

17. Shadow Audit Should audit be conducted with internal or external staff? –Level of required expertise –Ability to remain unbiased –Impact on targeted employees/unit –Opportunity cost –Expense of engaging IRO Consideration of joint effort with internal staff & IRO

18. Shadow Audit Expertise with local rules & regulations required –National (HCFA) vs. local carrier Organization & party conducting review must assess need for specialist

19. Shadow Audit Involvement of specialist –Attorney for interpretation of regulations –Medical specialist &/ or board certified physician to review clinical chart documentation –Accountant with expertise in reimbursement with respect to cost reports Required expertise vs. subject matter of investigation

20. Corporate Integrity Agreement Significant increase in number & magnitude of fraud allegations involving federal health care programs Represents agreement between US government & health care provider to settle fraud investigation 455 CIA’s executed as of July 1, 2000

21. Corporate Integrity Agreement Establishes compliance program Crucial to acknowledge extensive evolution & specific criteria of agreement –Terms of agreements are unique to each entity Management requirement to file annual report with federal government showing compliance with CIA

22. CIA’s & Agreed Upon Procedures AICPA issued guidance to practitioners in conducting & reporting on CIA’s –Statement of Position 99-1 –Evaluate effectiveness of CIA’s Independent assessment to determine providers compliance with CIA by IRO

23. Agreed Upon Procedures Copy of assessment & related findings filed with annual report to federal government SOP stipulates necessity to review major attributes of compliance plan to include 7 key elements

24. Seven Key Elements of a Compliance Plan Establish formal standards & procedures Appoint high level person as compliance officer Exercise care in delegation of authority Implement monitoring, auditing & reporting systems –“HOTLINE”

25. Seven Key Elements of a Compliance Plan Communicate standards & procedures to ALL employees –Mandatory training & education sessions –Written information Enforcement of standards with sanctions Appropriate response upon detection of offense