CIA’s - The IRO & Shadow Audits

Robert F. Bacon, MHA, DirectorUniversity of Pennsylvania

Health SystemOffice of Billing Compliance

Background

• False Claims Act

• Mail Fraud

• Anti-trust Regulations

• Qui-Tam Actions– Private citizens

• Balance Budget Act

FBI Health Care Fraud Utilization (FTE’s)

050

100

150

200

250300

350

400

450

500

1992 1993 1994 1995 1996 1997 1998 1999

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…”

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,…..”

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

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

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

Operational Concerns

• No individual or organization PLANS to FAIL; however, they FAIL to PLAN!

Now what ?

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

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

Operational Concerns

• Probability investigation could result in CIA &/or other penalties– Recoupment of overpayments– Program exclusions– Civil monetary penalties

Operational Concerns

• Burden to organization– Disruption of day-to-day operations– Financial considerations– Harm to reputation

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

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

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

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

Shadow Audit

• Expertise with local rules & regulations required– National (HCFA) vs.

local carrier

• Organization & party conducting review must assess need for specialist

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

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

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

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

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

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”

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