Organization. 4 Health Texas Senior Centers. VP, Internal Audit Team of 11 Auditors

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2 Organization Regional Non-Profit Acute Care Hospital System 26 Owned/Operated/Ventured/Affiliated Hospitals 21 Joint Ventured Ambulatory Surgical Centers 41 Satellite Outpatient Facilities 136 Health Texas Locations 4 Health Texas Senior Centers Role and Contact Information VP, Internal Audit Team of 11 Auditors

3 Bob Breighner Select Medical Corporation Organization 90 long term acute care hospitals 6 Inpatient Rehab facilities Approximately 950 outpatient rehabilitation clinics Provides medical rehabilitation services on a contract basis at nursing homes, hospitals, assisted living and senior care centers, schools, private homes and worksites. Joint Ventures Role and Contact Information VP, Compliance and Audit Services Compliance Officer

4 STARK and Anti-kickback Auditing Techniques and Tools Case Studies 4

5 STARK Law Anti-Kickback Statute Regulated by CMS Regulated by the OIG Prohibits referrals where financial relationship exists Prohibits payments intended to induce referrals Civil penalties only Criminal + Civil Strict liability Formally Intent Based* Applies to physicians i and their Applies to anyone who attempts, t family members accepts or gives kickbacks Mandatory exceptions Voluntary Safe Harbors * Changed under PPACA but has yet to be tested via litigation or government action 5

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7 Determine if audit needs to be under attorney-client privilege Determine the audit period Gather the following data Payments to all physicians/physician groups Contract matrix/database Payments from physicians - leases Evaluate level of risk - 100% testing vs. sampling Group types of agreements and assign work to the team 7

8 Develop testing templates containing attributes for each contract type Gather vendor files If you have employed physicians don t forget to get payroll information Determine if wire transfers are ever made to ph sicians/ph sician gro ps physicians/physician groups Consider intercompany transactions 8

9 Medical Directorship Administrative Services Professional Services Honorariums Leases Income Guarantee/Relocation ti 9

10 Analyze payments to physicians/physician groups Complete templates Summarize issues Create Audit Report 10

11 If you find an expired agreement that expired before audit period, you ll need to go back to determine total payments made under expired agreement to review entire issue Contracts may not cover services paid for so read contracts carefully, especially if paid amounts are not static Consider doing the audit of the nonmonetary compensation log at the same time 11

12 Have to consider how to handle past problems as well as getting new agreements/ amendments executed Things always take longer than you anticipate When should you self disclose always consult your general counsel 12

13 Other Key Information 13

14 Some healthcare providers use an average from three different physician surveys (current data) Other consideration local market factors physician specialty 14

15 Contract Review Payment(s) made to contracting party Memorandum of understanding Documentation to support FMV compensation Term has not expired and at least 1 year Executed before or at commencement date 15

16 Time logs support duties per agreement Medical Director signature and duties are authentic (not photocopied) Payments are consistent with contract terms. Written agreement signed by both parties 16

17 Written agreement signed by both parties Services must be performed by the physician. Incident to services performed by employees or independent d contractors of the practice are prohibited. Productivity bonuses are permitted. Measure physician productivity by relative value units (RVUs) Compensation amount set for one year Set FMV at the time each MD is hired 17

18 Written agreement signed by both parties Rental charges are set in advance and consistent with FMV. Specifies the premises it covers Term is at least one year A holdover month-to-month to rental for up to 6 months Rental payments must be made and/or collected timely 18

19 Physician cannot hire an independent contractor to perform the services. Payment should be supported by schedule. Wi Written agreement signed dby both parties Compensation consistent with FMV Term is at least one year 19

20 Employment Agreement - RVUs In 1992, the government created the resource-based relative value scale (RBRVS) as the system through which medical services are reimbursed by the Centers for Medicare & Medicaid Services (CMS). In the RBRVS system, reimbursement is determined by estimating i costs associated with ihproviding a specific service. Under this system, every procedure (CPT) code is assigned a relative value in each of three areas: The physician work involved in the service (i.e., WRVU). The WRVU reflects the relative level of time and effort associated with providing a specific service. The practice expense (PE) generated by (or attributable to) the procedure (i.e., PE RVU). The cost of professional liability needed to provide the service (i.e., malpractice [MP] RVU). The total RVU is equal to the sum of these three components and has become the basis for reimbursement from most governmental and nongovernmental payors. 20

21 Case Studies 21

22 Medical Directorship Scenario An anonymous caller reported to the Compliance Helpline that Dr. Get It Right, MD, Medical Director for Oncology, stopped practicing in the area as of November 8, Healthcare Hospital paid the physician a total of $360,000 for the period of February 1, 2009 January 31, U Can Count on Me, Director of Physician Relations, is responsible for approving the monthly directorship logs. Based on your review of contract and supporting material, document your findings and corrective action plan. 22

23 Medical Oncology Market Analysis Analysis Completed: 03/22/2010 n (size) Mean 25th % Median 75th % 90th % Sullivan & Cotter $ 268, $ 190, $ 262, $ 325, $ 397, wrvu MGMA $ 306, $ 191, $ 264, $ 364, $ 530, wrvu th % 80th % AMGA $ 273, $ 188, $ 248, $ 328, $ 417, wrvu $ 282, $ 190, $ 258, $ 339, $ 448, AVG ALL AVG ALL Numbers include: Total Compensation Medical Oncology Market Analysis Starting Salary (n) size Mean 25th % Median 75th % 90th % Sullivan & Cotter $ 258, $ 206, $ 274, $ 305, n/a 20th % AMGA 2009 n/a n/a n/a n/a n/a $ 258, $ 206, $ 274, $ 305, #DIV/0! AVG ALL 23

24 Lease Scenario Today, you are auditing the lease agreement between ABC Physician Group and Healthcare Hospital. The agreement term is July 1, 2009 December 31, 2009 for Suite 200. ABC Physician Group still has possession of the suite. The contract was approved per hospital policy. The FMV for the leased space supports monthly rent charged. Assume hospital management issued written notices per agreement terms. Determine how much ABC Physician Group owes for rent and document the corrective action plan. 24

25 Healthcare Hospital Accounts Receivable Reconciliation - ABC Physician Group For the period ending March 31, 2010 Rentable Sq Ft 1,867 Late fee 5% Interest Penalty 14% General Base Rent Operating Expenses Taxes Late Fee Interest Penalty Total Rent Due Payment applied ledger balance Auditor's comments 7/1/2009 3, , (4,767.07) 0.00 Aug-09 3, , (2,767.07) 2, Rent was received on 8/18/2009 Sep-09 3, , , Rent was not received until November 1, Oct-09 3, , , Rent was not received until November 1, Nov-09 3, , (14,301.22) (9,534.15) Dec-09 3, , (4,767.07) Jan Rent was not recorded on the general ledger. Feb Rent and other fees were not recorded on the 0.00 general ledger. Mar Rent and other fees were not recorded on the 0.00 general ledger. Rent and other fees were not recorded on the Apr general ledger. 20, , , , (26,602.43) 2, Notes: Property Management is responsible to inform the Accounting Department about: 1. Late Fee 2. Interest Penalty 3. The date tenant vacates premises Otherwise, the rent receivable account might not be accurate. Property Management discovered Tenant was still in the Suite on February 24, Notice to vacate was issued on the same day. However, the notice did not include the rent due. As the auditor, calculate total amount due from ABC Physician Group. 25

26 Employment Agreement Scenario Your manager wants to know if Dr. Employee Me, MD is being paid at FMV. Your manager also wants you to review the contract and document all issues. The total RVUs for the period of July 1, 2008 June 30, 2009 was 4,289. Based on your review of the payroll records, Dr. Employee Me received $225,000 for the first year of the contract. What is your conclusion? 26

27 Employment Agreement Scenario (cont.) Internal lmedicine i Market tanalysis Analysis Completed: 03/22/2010 (Amounts include total compensation) (n) size Mean 25th % Median 75th % 90th % Sullivan & Cotter ,075 $ 195, $ 155, $ 180, $ 216, $ 268, ,419 wrvu MGMA ,030 $ 206, $ 154, $ 191, $ 240, $ 308, ,822 wrvu th % 80th % AMGA $ 221, $ 168, $ 205, $ 264, $ 307, wrvu $ 207, $ 159, $ 192, $ 240, $ 294, AVG ALL AVG ALL Internal Medicine Market Analysis Starting Salary (n) size Mean 25th % Median 75th % 90th % Sullivan & Cotter $ 161, $ 135, $ 150, $ 180, n/a 20th % AMGA $ 145, $ 135, $ 146, $ 160, $ 170, $ 153, $ 135, $ 148, $ 170, $ 170, AVG ALL Internal Medicine Market Analysis, 1 2 years in Specialty (n) size Mean 25th % Median 75th % 90th % MGMA 151 $147,312 $125,911 $147,033 $163,451 $191,012 27

28 On-Call Services Agreement Scenario As the Compliance Officer, you are reviewing i the payment history and agreement for Dr. Call Me Anytime, MD. Staff has consistently complained about Dr. Call Me Anytime, MD, as a no show when requested to come into the hospital while on call. He sends his physician assistant as a replacement. The hospital s accountant summarized the payment history and made comments based on his review of accounts payable documents. Assume agreement was approved per hospital policy and compensation is within FMV. What is your conclusion? 28

29 Healthcare Hospital Payment Analysis - Dr. Call Me Anytime, MD Month Weekday hours OnCall Weekend Hours on Call Holidays Total Payment per Accounts Payable Records Accounts Payable Comments Jan Feb Mar No payment made Apr No payment made The physician did not provide a calendar or work shedule as May evidence of being oncall. Jun This is the month the physician used his physician assistant. The physician did not provide a calendar or work shedule as Jul evidence of being oncall. Aug-09 No payment made Sep This is the month the physician used his physician assistant. The physician worked but has not submitted a schedule for Oct payment as of today. The physician worked but has not submitted a schedule for Nov payment as of today. Dec The physician worked but has not submitted a schedule for 0 payment as of today Notes The accountant wasn't sure if the total payment was correct because he didn't have the payment terms of the agreement. Determine if the total payment is accurate per the compensation terms of the agreement. All payments were made by the 5th day of the month to Dr. Call Me Anytime, MD. 29

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