Association of Healthcare Internal Auditors 2009 Annual Conference Charge Capture Auditing …. How...

Association of Healthcare Internal Auditors2009 Annual Conference

Charge Capture Auditing …. Charge Capture Auditing …. How to Uncover Revenue How to Uncover Revenue

LeakageLeakage

Bridget Johnson, CIA, CCSA, Audit SupervisorBridget Johnson, CIA, CCSA, Audit SupervisorJoanne Ouellet, CPA, CIA, Audit SeniorJoanne Ouellet, CPA, CIA, Audit Senior

The Methodist Hospital System

Association of Healthcare Internal Auditors2009 Annual Conference

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About Us:The Methodist Hospital System

Overview

• No. of Hospitals – 4• Total Net Patient Revenue - $1.2B• Employees – 12,153• Affiliated Physicians – 3,159• Licensed Beds – 1,464• Volumes:

– Inpatient Admits: 68,212 – Outpatient Visits: 498,823– International Patients: 6,500

• Primary Academic Affiliations: – Weill Cornell Medical College & NY Presbyterian

Hospital

Who We Are:TMHS Internal Audit

DepartmentTeam Profile - 9 team members

– VP, Business Practices Officer & Chief Audit Officer

– Director, Internal Audit– Audit Supervisor– 4 Senior Internal Auditors– 2 Senior IT Auditors

• Experienced: 6 - 20 years • Credentialed: 21 designations

– CIA, CISA, CCSA, CHC, CISSP, CHFP, CPA, MBA• Recognized: IIA’s Recognition of Commitment Award

Objectives of Objectives of SessionSession

• Identify Charge Capture Risks in Selected Clinical Identify Charge Capture Risks in Selected Clinical Areas from Point of Service to BillAreas from Point of Service to Bill

• Design Tests to Discover Lost Reimbursement Design Tests to Discover Lost Reimbursement OpportunitiesOpportunities

• Quantify Potential Reimbursement ImpactQuantify Potential Reimbursement Impact

Consider….Consider….

• A review of data from more than 100 hospitals, which encompassed more than 30,000 complete medical records and comprehensive billing and collection records showed that, on average, the organizations were losing 1 percent of revenue to errors in the charge master or charge capture.

• Hospitals typically are not aware of the degree to which they may be missing charges.

• Appropriate charge capture is not only important for capturing revenue but also for tracking use of resources.

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Finding the LeaksFinding the Leaks

• So how do you So how do you uncover the leaks?uncover the leaks?

• Where should you Where should you look?look?

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Where to look…Where to look…

• Start with clinical areas that should generate Start with clinical areas that should generate large amounts of revenue such as:large amounts of revenue such as:

– Emergency DepartmentEmergency Department– Cardiac Cath LabsCardiac Cath Labs– PharmacyPharmacy

• Focus on the reimbursement that matters:Focus on the reimbursement that matters:– Commercial Payers : % of Charge Commercial Payers : % of Charge

ReimbursementReimbursement– Carve-outs : Implants, High Cost Drugs Carve-outs : Implants, High Cost Drugs

(HCDs)(HCDs)

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Next Steps . . .Next Steps . . .

• Understand charge capture process in Understand charge capture process in clinical areas. Specifically…clinical areas. Specifically…– How charges are captured (i.e., manually or How charges are captured (i.e., manually or

electronically)electronically)– Charge Monitoring (i.e., reconciliations, daily Charge Monitoring (i.e., reconciliations, daily

volumes, etc.)volumes, etc.)

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Using CAATs toUsing CAATs to Uncover Leaks Uncover Leaks

• Develop tests to uncover lost Develop tests to uncover lost reimbursement. Risks to consider when reimbursement. Risks to consider when designing tests are:designing tests are:– Lost charges (i.e. Implants, ER level charges, Lost charges (i.e. Implants, ER level charges,

etc.)etc.)– Incorrect assignment of revenue codesIncorrect assignment of revenue codes– Missing modifiersMissing modifiers– Late chargesLate charges– Incomplete or no reconciliation processIncomplete or no reconciliation process

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How to Uncover Leaks How to Uncover Leaks in Emergency in Emergency DepartmentDepartment

Purpose of Test: Purpose of Test: • To identify missing ER charges. To identify missing ER charges.

Specifically,Specifically,- - ER level visitsER level visits

- Missing injection/infusion charges- Missing injection/infusion charges

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How to Uncover Leaks How to Uncover Leaks in Emergency in Emergency DepartmentDepartment

Required Info to Perform Test(s): Required Info to Perform Test(s):

ER charge data for all patients includingER charge data for all patients including

the following fields: the following fields:

- - Account NumberAccount Number - Date of Service- Date of Service

- Insurance Plan Code- Insurance Plan Code - Charge Amount- Charge Amount

- CDM Number- CDM Number - Patient Type- Patient Type

- CDM Description- CDM Description - CPT Code- CPT Code

- Modifier- Modifier - Admit Source Code- Admit Source Code

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How to Uncover Leaks How to Uncover Leaks in in ED – Missing ER ED – Missing ER

LevelsLevels Procedure Steps:Procedure Steps:

1. 1. SummarizeSummarize on account number to obtain on account number to obtain a Master File of ER patientsa Master File of ER patients

2. Using the ER Charges File, 2. Using the ER Charges File, ExtractExtract Level Level Visits using CPT Code(s) =Visits using CPT Code(s) =

• 99281 - 9928599281 - 99285• 9929199291

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How to Uncover Leaks How to Uncover Leaks in in

Emergency Emergency DepartmentDepartment

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How to Uncover Leaks How to Uncover Leaks in in

ED – Missing ER ED – Missing ER LevelsLevelsProcedure Steps (cont.)Procedure Steps (cont.)

3. 3. RelateRelate the ER patient file and ER charges file on the ER patient file and ER charges file on account numberaccount number

4. 4. AddAdd the account number field from ER Charge file the account number field from ER Charge file to the ER Patient file (Hint: Change the name of the to the ER Patient file (Hint: Change the name of the second account number field to avoid confusion.)second account number field to avoid confusion.)

5. All instances of blanks in the “second” account 5. All instances of blanks in the “second” account number field number field maymay indicate instances where an ER indicate instances where an ER level visit was not chargedlevel visit was not charged

6. Select a small sample and review medical records 6. Select a small sample and review medical records with your ED Charge Coordinatorwith your ED Charge Coordinator

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How to Uncover Leaks in How to Uncover Leaks in

ED – Infusion/Injection ED – Infusion/Injection ChargesChargesProcedure Steps: Procedure Steps:

1. Identify patient’s who were given non-self-1. Identify patient’s who were given non-self-administered drug; by RevCode = 0250 and administered drug; by RevCode = 0250 and HCPCS code = “J”HCPCS code = “J”

2. Using the ER Charges file, identify patients who 2. Using the ER Charges file, identify patients who had an infusion or injection charge using the had an infusion or injection charge using the following ACL command:following ACL command:

ER EXTRACT RECORD IF MATCH =ER EXTRACT RECORD IF MATCH =(CPT,'90772','90774','90775','90765','90766','90767','(CPT,'90772','90774','90775','90765','90766','90767','

90768') 90768') TO "ER_Drug Inj-Inf Procedures" OPENTO "ER_Drug Inj-Inf Procedures" OPEN

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ED – Infusion/Injection ED – Infusion/Injection ChargesCharges

Procedure Steps (cont.)Procedure Steps (cont.)3. 3. SummarizeSummarize on account number in each file on account number in each file

to obtain a summary file of accounts with to obtain a summary file of accounts with drug charges and a separate summary file drug charges and a separate summary file of infusion/ injection chargesof infusion/ injection charges

4. 4. RelateRelate the Drug Summary File to the the Drug Summary File to the Infusion/Injection file on account numberInfusion/Injection file on account number

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ED – Infusion/Injection ED – Infusion/Injection ChargesCharges

Procedure Steps (cont.)Procedure Steps (cont.)5. 5. AddAdd the account number field from Infusion the account number field from Infusion

Charges Summary File to the Drug Charges Charges Summary File to the Drug Charges Summary FileSummary File

6. All instances of blanks in the “second” account 6. All instances of blanks in the “second” account number field may indicate instances where an number field may indicate instances where an injection/infusion charge was missedinjection/infusion charge was missed

7. Select a small sample and review medical 7. Select a small sample and review medical records with your ED Charge Coordinatorrecords with your ED Charge Coordinator

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Emergency Emergency Department – Results Department – Results

& Next Steps& Next Steps• Results:Results:

– ER level charges – Identified accounts that were missing ER level charges – Identified accounts that were missing ER level visit charges and accounts that had multiple ER ER level visit charges and accounts that had multiple ER level visit charges.level visit charges.

– Infusion and Injection charges – Identified inconsistent Infusion and Injection charges – Identified inconsistent charging practice for infusion/injection of non-self charging practice for infusion/injection of non-self administered drugs.administered drugs.

• Next Steps:Next Steps:– Apply charges for missed ER level visit and Apply charges for missed ER level visit and

infusion/injections charges to quantify impact.infusion/injections charges to quantify impact.– Discuss with billing department whether the results Discuss with billing department whether the results

warrant re-billing accounts.warrant re-billing accounts.

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How to Uncover Leaks How to Uncover Leaks in Cardiac Cath Labin Cardiac Cath Lab

Purpose of Test: To identify missing implant Purpose of Test: To identify missing implant chargescharges

Required Info to Perform Test(s): Charge data for Required Info to Perform Test(s): Charge data for CathCath

Lab patients including the following fields: Lab patients including the following fields: - Account Number- Account Number - Date of - Date of ServiceService- Insurance Plan Code- Insurance Plan Code - Charge Amount- Charge Amount- CDM Number- CDM Number - Patient Type- Patient Type- CDM Description- CDM Description - CPT Code- CPT Code- Modifier- Modifier - UB Revenue Code- UB Revenue Code

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Procedure Steps:Procedure Steps:1.1. Identify your top 5 most costly implants. Identify your top 5 most costly implants.

2.2. Identify the CDM numbers associated with Identify the CDM numbers associated with the procedures that correspond to those the procedures that correspond to those implants.implants.

3.3. Obtain CPT codes for the procedures that Obtain CPT codes for the procedures that correspond to those implants.correspond to those implants.

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Procedure Steps (cont.)Procedure Steps (cont.)4. 4. ExtractExtract charges that match the implant charges that match the implant

procedure CDM numbers:procedure CDM numbers:Cath_Lab_Charges SET FILTER MATCHCath_Lab_Charges SET FILTER MATCH

(ChgCode,'00254607','00329086','00385153',(ChgCode,'00254607','00329086','00385153','00376079','00387969','00388918')'00376079','00387969','00388918')

5. 5. SummarizeSummarize the resulting file by account number the resulting file by account number to obtain a master file of patients that had Cath to obtain a master file of patients that had Cath Lab implant procedures performedLab implant procedures performed

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Procedure Steps (cont.)Procedure Steps (cont.)6. 6. Extract Extract all charges with a revenue code of 0275 all charges with a revenue code of 0275

or 0278 and a charge amount greater than $1500 or 0278 and a charge amount greater than $1500 from the original Cath Lab charges file.from the original Cath Lab charges file.

7. 7. RelateRelate the Cath Lab Procedure Patients file to the the Cath Lab Procedure Patients file to the Cath Lab Implants file on account number.Cath Lab Implants file on account number.

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Procedure Steps (cont.)Procedure Steps (cont.)8. 8. Add Add the account number field from Cath Lab the account number field from Cath Lab

Implant Charges file to the Cath Lab Procedure Implant Charges file to the Cath Lab Procedure Patients filePatients file

9. All instances of blanks in the “second” account 9. All instances of blanks in the “second” account number field number field maymay indicate instances where an indicate instances where an implant charge was missedimplant charge was missed

10. Select a small sample and review medical 10. Select a small sample and review medical records with your Cath Lab departmentrecords with your Cath Lab department


To Quantify the Dollar Impact:To Quantify the Dollar Impact:1. Extract accounts with missing implant charges 1. Extract accounts with missing implant charges

that are Managed Care Plan accounts eligible that are Managed Care Plan accounts eligible for carve out payments. for carve out payments.

2. Apply the CDM prices and carve out rates to 2. Apply the CDM prices and carve out rates to each account based on CDM number and each account based on CDM number and Insurance Plan Code.Insurance Plan Code.

3. Calculate a potential dollar impact and discuss 3. Calculate a potential dollar impact and discuss with billing to determine whether re-billing with billing to determine whether re-billing should occur.should occur.

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How to Uncover Leaks How to Uncover Leaks

in Pharmacyin PharmacyPurpose of Test: Purpose of Test: • To identify high cost drugs (HCDs) not billed To identify high cost drugs (HCDs) not billed

using the high cost drug revenue code (e.g. using the high cost drug revenue code (e.g. 259)259)

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How to Uncover LeaksHow to Uncover Leaks in Pharmacy in Pharmacy

Required Info to Perform Test(s):Required Info to Perform Test(s): Pharmacy charge data for all patients includingPharmacy charge data for all patients including

the following fields: the following fields:

- Account Number- Account Number - Date of - Date of ServiceService

- Insurance Plan Code- Insurance Plan Code - Charge Amount- Charge Amount

- CDM Number- CDM Number - Patient Type- Patient Type

- CDM Description- CDM Description - Quantity- Quantity

- Rev Code- Rev Code - Modifier- Modifier

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in Pharmacyin PharmacyAdditional Files Needed to Perform Tests:Additional Files Needed to Perform Tests:• Pharmacy CDM that includes all of your Pharmacy CDM that includes all of your

Pharmacy CDM numbers that are assigned Pharmacy CDM numbers that are assigned the high cost drug revenue code (i.e., “0259” the high cost drug revenue code (i.e., “0259” for your Managed Care accounts)for your Managed Care accounts)

• List of Insurance Plan Codes from your List of Insurance Plan Codes from your Managed Care department that includes High Managed Care department that includes High Cost Drug definitions (i.e., daily charge > Cost Drug definitions (i.e., daily charge > $250) and carve out payment percentages$250) and carve out payment percentages

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in Pharmacyin PharmacyProcedure Steps: Procedure Steps:

1. 1. Limit your Pharmacy Charge data to those Limit your Pharmacy Charge data to those charges whose CDM number is charges whose CDM number is not not already already associated with a HCD revenue codeassociated with a HCD revenue code

2. 2. SummarizeSummarize the extracted file on account the extracted file on account number, CDM number and date of service number, CDM number and date of service and and Totaling Totaling the Charge Amount fieldthe Charge Amount field

3. 3. SummarizeSummarize again on CDM number, again on CDM number, summing the Charge Amount field “IF” summing the Charge Amount field “IF” charge amount field does not equal zerocharge amount field does not equal zero

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in Pharmacyin PharmacyProcedure Steps (cont.): Procedure Steps (cont.): 4.4. Calculate an average daily charge by Calculate an average daily charge by

dividing the charge amount field by the dividing the charge amount field by the count field.count field.

Average Daily Charge = Average Daily Charge = Total Charge AmountTotal Charge Amount

CountCount

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How to Uncover Leaks How to Uncover Leaks in Pharmacyin Pharmacy

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in Pharmacyin PharmacyProcedure Steps (cont.): Procedure Steps (cont.): 5.5. Using your most recent file, Using your most recent file, extractextract the the

charges whose CDM numbers have an charges whose CDM numbers have an average daily charge greater than your average daily charge greater than your

facilities threshold (i.e. $250)facilities threshold (i.e. $250)

This is the file of pharmacy items that should This is the file of pharmacy items that should bebe

reviewed for HCDs – consider multi-dose vialsreviewed for HCDs – consider multi-dose vials

and ointments.and ointments.

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in Pharmacyin PharmacyTo Quantify the Dollar Impact:To Quantify the Dollar Impact:

1. 1. RelateRelate the newly created HCD CDM file the newly created HCD CDM file with your original Pharmacy Charges file to with your original Pharmacy Charges file to identify those patient accounts with HCD identify those patient accounts with HCD drug charges. drug charges.

2. 2. RelateRelate the HCD Charges file to the the HCD Charges file to the Insurance Plan Code file and extract only Insurance Plan Code file and extract only those Managed Care Plan charges that are those Managed Care Plan charges that are eligible for carve out payments.eligible for carve out payments.

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How to Uncover Leaks How to Uncover Leaks in Pharmacyin Pharmacy

To Quantify the Dollar Impact (cont.):To Quantify the Dollar Impact (cont.):3. Calculate a lost reimbursement using the 3. Calculate a lost reimbursement using the

carve out percentage chargecarve out percentage charge

4. Discuss the need to re-bill and recover 4. Discuss the need to re-bill and recover lost revenue with the Billing Departmentlost revenue with the Billing Department

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