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3/17/2015 1 Coding, Billing, and Documentation Regarding Inpatient, Outpatient, Ambulatory Surgery, and Physician Patient Accounts Mark J. Eddy, CPA Vice President HCA Internal Audit 1 HCA Headquarters: Nashville, TN 2014 Net Revenue: $36.9 billion Hospitals: 166 in 20 states and London, England Freestanding Outpatient Surgery Centers: 113 Employed Physicians: 3,500 Admissions: 1,795,300 Inpatient Surgeries: 518,900 Outpatient Surgeries 891,600 ER Visits: 7,450,700 Employees: 214,000 Internal Audit Employees: 149 2

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Page 1: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

3/17/2015

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Coding, Billing, and Documentation Regarding Inpatient, Outpatient, Ambulatory Surgery, and Physician Patient Accounts

Mark J. Eddy, CPAVice PresidentHCA Internal Audit

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HCAHeadquarters: Nashville, TN

2014 Net Revenue: $36.9 billion

Hospitals: 166 in 20 states and London, England

Freestanding Outpatient Surgery Centers: 113

Employed Physicians: 3,500

Admissions: 1,795,300

Inpatient Surgeries: 518,900

Outpatient Surgeries 891,600

ER Visits: 7,450,700

Employees: 214,000

Internal Audit Employees: 149

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Page 2: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

3/17/2015

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Understand Your Structure

InternalInternal

Audit

Internal Control

Process

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Audit Purpose1. Testing Control(s)

Overall

Focused areas

2. Testing payment accuracy

3. Define an “error”

4. Define population

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Page 3: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

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Sample Selection Approach1. Haphazard

2. Targeted

3. Statistical sampling

Attribute sampling

(rate of occurrence of given condition)

Variable unrestricted dollar appraisals

(measure quantitative characteristics)

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2014 INTERNAL AUDIT PROGRAMInpatient Random

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Page 4: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

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2014 INTERNAL AUDIT PROGRAMInpatient Random

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2014 INTERNAL AUDIT PROGRAMInpatient Random

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Page 5: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

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2014 INTERNAL AUDIT PROGRAMInpatient Random

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2014 INTERNAL AUDIT PROGRAMInpatient Random

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Page 6: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

3/17/2015

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2014 INTERNAL AUDIT PROGRAMInpatient Random

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2014 INTERNAL AUDIT PROGRAMInpatient Random

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Page 7: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

3/17/2015

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2014 INTERNAL AUDIT PROGRAMInpatient Random

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2014 INTERNAL AUDIT PROGRAMInpatient Focused

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Page 8: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

3/17/2015

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2014 INTERNAL AUDIT PROGRAMInpatient Focused

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2014 INTERNAL AUDIT PROGRAMInpatient Focused

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Page 9: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

3/17/2015

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2014 INTERNAL AUDIT PROGRAMInpatient Focused

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2014 INTERNAL AUDIT PROGRAMInpatient Focused

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Page 10: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

3/17/2015

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2014 INTERNAL AUDIT PROGRAMInpatient Focused

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2014 INTERNAL AUDIT PROGRAMInpatient Focused

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Page 11: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

3/17/2015

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2014 INTERNAL AUDIT PROGRAMClinical Documentation Improvement (CDI)

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2014 INTERNAL AUDIT PROGRAMClinical Documentation Improvement (CDI)

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Page 12: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

3/17/2015

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2014 INTERNAL AUDIT PROGRAMClinical Documentation Improvement (CDI)

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2014 INTERNAL AUDIT PROGRAMClinical Documentation Improvement (CDI)

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Page 13: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

3/17/2015

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2014 INTERNAL AUDIT PROGRAMClinical Documentation Improvement (CDI)

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2014 INTERNAL AUDIT PROGRAMClinical Documentation Improvement (CDI)

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Page 14: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

3/17/2015

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2014 INTERNAL AUDIT PROGRAMClinical Documentation Improvement (CDI)

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2014 INTERNAL AUDIT PROGRAMClinical Documentation Improvement (CDI)

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Page 15: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

3/17/2015

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2014 INTERNAL AUDIT PROGRAMClinical Documentation Improvement (CDI)

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2014 INTERNAL AUDIT PROGRAMClinical Documentation Improvement (CDI)

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Page 16: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

3/17/2015

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2014 INTERNAL AUDIT PROGRAMOutpatient PPS

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2014 INTERNAL AUDIT PROGRAMOutpatient PPS

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Page 17: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

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2014 INTERNAL AUDIT PROGRAMOutpatient PPS

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2014 INTERNAL AUDIT PROGRAMOutpatient PPS

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Page 18: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

3/17/2015

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2014 INTERNAL AUDIT PROGRAMPhysicians and Mid‐Levels Coding and Billing Compliance

1. Audit team members should be evaluated to ensure their objectivity and independence is not impaired (in fact or appearance). Items to consider include: Family relationships Specific operations for which they were previously

responsible Previous accounting assistance assignmentsIf impairment exists, consult with the applicable Vice President to consider reassigning the auditor or implementing compensating controls (I.e. additional scrutiny, etc.). Document the objectivity evaluation, conclusions, and any compensating controls.

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2014 INTERNAL AUDIT PROGRAMPhysicians and Mid‐Levels Coding and Billing Compliance

2. Obtain a download of Government Payor (Medicare, Medicaid and Tricare) paid patient account data from the HCAPS data warehouse or other relative source for claims data not maintained within the HCAPS data warehouse. The time period for testing should be the most recently closed three month period in which claims have been paid.

3. Select a sample of Governmental Payor paid claims. All services provided that day, and billed by that provider, should be audited. Claims are selected 20% random, 20% top volume, and 20% risk. The number of claims is dependent upon claims volume for the practice.

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Page 19: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

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2014 INTERNAL AUDIT PROGRAMPhysicians and Mid‐Levels Coding and Billing Compliance

4. For each office where claims have been selected for testing, determine where the coding and billing functions occur for Governmental Payors. Contact the Physician Office Practice Manager and the Billing Service Center Director to inform them that claims for their office have been selected for audit and that an engagement letter will be sent detailing items needed. Based upon the sample of claims selected, work with the Internal Audit AVP to determine if the claims volume for the physician offices being audited warrants a field visit or if the review can be done as a desk review. Consider use of a control log.

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2014 INTERNAL AUDIT PROGRAMPhysicians and Mid‐Levels Coding and Billing Compliance

5. If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit.

6. Send Engagement Letter and Internal Control Questionnaire (ICQ) for the Billing Director at the Physician Practice and/or the Billing Service Center.

Request the Billing/Coding ICQ be returned completed within two weeks.

Request medical records be prepared and submitted timely based on number of records facility needs to prepare.

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Page 20: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

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2014 INTERNAL AUDIT PROGRAMPhysicians and Mid‐Levels Coding and Billing Compliance

7. Gain an understanding of the Physician practice billing and coding process and controls by review of the completed ICQ.

8. For the claims selected for review, obtain the final bill submitted, the related Medical Record documentation, and the Remittance Advice from the Governmental Payor.

9. Compare the codes submitted and paid to the Medical Record documentation to ensure the accuracy of the coding and billing using the MD Audit. Compare the codes submitted and paid to the Medical Record documentation to ensure the accuracy of the coding and billing using MD Audit. Validate the accuracy of the HCPCS/CPT codes to the medical

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2014 INTERNAL AUDIT PROGRAMPhysicians and Mid‐Levels Coding and Billing Compliance

record resulting in payment(s) according to official coding guidelines and any applicable unique payer requirements. Validate the accuracy of modifiers appended to HCPCS/CPT codes that impacts payment. Validate the accuracy of ICD-9-CM diagnosis codes to the medical record for services performed according to official coding guidelines. Compare ICD-9-CM codes to Local Carrier Determination (LCD) policies for validation.

10. List discrepancies on audit worksheets.

11. Use Regulatory Guidance to support statements made on audit worksheets.

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Page 21: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

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2014 INTERNAL AUDIT PROGRAMPhysicians and Mid‐Levels Coding and Billing Compliance

12. Communicate the results of the record review with the facility personnel. Provide the opportunity to produce any missing documentation.

13. Prepare an Interim Summary

• Summarize results from audit work.

• Identify and quantify items impacting reimbursement.

• Prepare an overall report summarizing results.

14. Submit Interim Summary to AVP/VP for review which will become the Executive Summary/Report upon approval of report.

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2014 INTERNAL AUDIT PROGRAMPhysicians and Mid‐Levels Coding and Billing Compliance

15. Subsequent to VP/Director review of the Executive Summary/Report, as applicable, document (in note format) significant changes (e.g., major issues dropped to memo-only, issue dropped, etc.) on the Interim Summary and the individual section memos. Wording or format changes do not need to be documented.

16. Issue Final Reports to appropriate corporate, division and facility management. Include a copy of final report in the work papers.

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2014 Ambulatory Surgery Division Risk AssessmentCenter Criteria1. New Center 2. Request from ASD senior leadership3. Length of time since last audit4. New Coder

Case Criteria1. Five Medicare cases for SOX testing randomly  selected from sample 

population2. Five focused Medicare cases representing the highest case volume 

procedures3. Ten focused Medicare cases representing high level of coding complexity‐

refer to focused selection criteria document4. Five focused non‐government cases representing the highest case volume 

procedures

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2014 INTERNAL AUDIT PROGRAMAmbulatory Surgery Division Coding and Billing Compliance

1. Audit team members should be evaluated to ensure their objectivity and independence is not impaired (in fact or appearance). Items to consider include: Family relationships

Specific operations for which they were previously responsible

Previous accounting assistance assignments

If impairment exists, consult with the applicable Vice President to consider reassigning the auditor or implementing compensating controls (I.e. additional scrutiny, etc.). Document the objectivity evaluation, conclusions, and any compensating controls.

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2. Consider the use of a control log.3. Create reports of high level account data for the center 

with Medicare and non‐government paid claims from the previous three month period to select 5 random cases, 15 focused cases and 5 random or focused non‐government cases from the payer specific population. In addition to the sample, additional cases will be selected for alternates as needed.

Use Business Objects to generate reports with detailed account data elements for populating review worksheets. 

Create the Excel file containing sample selection with alternates.

2014 INTERNAL AUDIT PROGRAMAmbulatory Surgery Division Coding and Billing Compliance

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4. Send Engagement Letter and Internal Control Questionnaire (ICQ) to the center requesting information necessary to perform review.

Request ICQ to be returned completed with records submitted for review.

Request records be prepared timely based on number of records center has to prepare. 

5. Gain an understanding of center’s billing and coding process and controls by review of the completed ICQ.

Summarize the results in the work papers.

2014 INTERNAL AUDIT PROGRAMAmbulatory Surgery Division Coding and Billing Compliance

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Page 24: HCA...If the facility is not on an HCA system, work with the Practice or Facility staff to obtain the required information for the audit. 6. Send Engagement Letter and Internal Control

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6. Perform detailed case review by performing the following:

Validate the accuracy of the HCPCS/CPT codes to the medical record resulting in RA payment(s) according to official coding guidelines and any applicable unique payer requirements.

Validate the accuracy of modifiers appended to HCPCS/CPT codes that impacts RA payment.

Validate the accuracy of ICD‐9‐CM diagnosis codes to the medical record for services performed according to official coding guidelines.

2014 INTERNAL AUDIT PROGRAMAmbulatory Surgery Division Coding and Billing Compliance

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Compare ICD‐9‐CM codes to Local Carrier Determination (LCD) policies to validate medical necessity requirements met.

Compare the paid services submitted on claim to the RA payment received.

Identify claim denials. 

Determine if a root cause can be identified.

2014 INTERNAL AUDIT PROGRAMAmbulatory Surgery Division Coding and Billing Compliance

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7. Communicate the results of the record review with the facility personnel.  Provide the opportunity to produce any missing documentation. 

8. Prepare an Interim Summary.

Summarize results from the audit work.  

Identify and quantify items impacting Reimbursement.

Prepare an overall report summarizing the results.

9. Submit Interim Summary to AVP/VP for review which will become the Executive Summary/Report upon approval of report.

2014 INTERNAL AUDIT PROGRAMAmbulatory Surgery Division Coding and Billing Compliance

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10. Subsequent to VP/Director review of the Executive Summary/Report, as applicable, document (in note format) significant changes (e.g. major issue dropped to memo‐only, issue dropped, etc.) on the Interim Summary and the individual section memos.  Wording and format changes do not need to be documented.

11. Issue final reports to appropriate corporate, division and facility management and include a copy of final report in the work papers.

2014 INTERNAL AUDIT PROGRAMAmbulatory Surgery Division Coding and Billing Compliance

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