04.10.18

Health Care Group Newsletter – Spring 2018
Laurence Sophian, Jason Flahive

How to Handle a Medicare Audit
Laurence Sophian, CPA, MBA

Generally speaking, the question isn’t if you get a Medicare audit, it’s when. Every Medicare claim undergoes statistical analysis, and Medicare compares individual claims data to all other data submitted. In addition, it now does so in real time. It’s important to understand how a Medicare audit works in order to handle it successfully.

The Two Types

Medicare audits fall loosely into two types, a prepayment review and an analysis of claims after payment. Prepayment claims are the most common type and are typically random reviews by carriers that look at just one or two of each physician’s claims. The primary purpose of such a focused review is to educate a physician about a coding problem. It could lead to a refund of a single overpayment.

On the other hand, in a comprehensive review, a carrier reviews a small sample of claims and uses the data culled to project overpayment for a period of months or years. In that context, the physician has three options:

  1. Pay the assessment.
  2. Waive appeal and provide evidence that the assessment is incorrect.
  3. Retain the right to appeal, but have the carrier review a larger sample of charts (usually the best option).

How to Deal with It

Given that some level of Medicare audit is generally inevitable, here are some suggestions on how to deal with one:

  • Contact Your Attorney Immediately
    Your attorney can advise you on the audit’s level of seriousness and how best to respond to it. Don’t assume that it’s routine — treat all requests for information seriously.
  • Read the Audit Letter Carefully
    Make sure to provide all of the requested information when responding.
  • Submit a Copy of the Complete Record
    This includes not just records from the date of service in the audit letter, but chart information as well.
  • Ensure all Medical Records and Copies are Legible
     If the records aren’t clearly readable, have the illegible record transcribed and included with the copies of the original records. Make sure no information has been cut off.
  • Include related X-rays or Other Diagnostic Studies
    It’s important to include everything that’s part of the patient’s records.
  • Do Not Alter Medical Records After Receiving the Audit Notice
    But, if there are orders, consults or other materials that haven’t yet been filed, file them as you normally would.
  • Place a Brief Summary of the Patient’s Care with Each Record
    This doesn’t replace the record, but helps any auditors not familiar with your specialty.
  • Insert an Explanatory Note or Supporting Guidelines
    These may involve local coverage determinations or medical literature to support unusual procedures or billings.
  • Don’t Delay
    Submit the materials before the deadline.
  • Follow Up
    If you communicate with the auditor via telephone, follow up with a letter confirming the communication.
  • Send All Communications by Certified or Express Mail
    Request return receipt. In addition, make complete, legible copies of all correspondence and documents you submit. It has been suggested that you maintain one copy for yourself, one for the auditor, one for legal counsel, and two for your future expert witnesses (if necessary).
  • Label Accurately
     Label each copy of the medical record you submit, including page numbers.

Know the Steps to Take

In most cases, a Medicare audit is routine and minor. At worst — especially if delivered by an FBI agent or government official — the audit could lead to charges of fraud and hundreds of thousands of dollars of repayment. The key is to stay cool, document everything — and immediately consult with your attorney and financial expert.

For more information, contact Larry Sophian at lsophian@orba.com or  312.670.7444. Visit ORBA.com to learn more about our Health Care Group.
©2018


Pay for Quality Versus Pay for Volume: How Should Physician Compensation be Determined
Jason Flahive, CPA

Increasingly, hospitals, health systems and the federal government are pushing for pay for quality or pay per performance over the more traditional pay for volume as the underlying structure for physician compensation.

Examples of Changing Compensation Models

Recently, several medical groups and hospitals have shifted the payment emphasis to the quality model. An example of which could be compensation based on how patients choose their physician or whether or not they felt as though they were getting quality service — a sort of popularity contest based on patient referrals and online reviews. Historically, it was common for the majority of physician pay to be based on the volume of relative value units (RVUs). Recently other quality based, or perceived quality based factors have had an increasing influence on physician compensation.

Other examples include eliminating physician bonuses entirely, by way of increasing base salaries to that of the national average for their areas of expertise. Elimination of performance bonuses is done so with the aim that physicians focus solely on the quality of care delivered, rather than the volume of patients served or procedures performed. Further examples include a percentage of physician compensation tied directly to quality, cost and satisfaction measures.

Some Issues

Quality and patient satisfaction are important and need to be weighed in physician compensation models. But, decreasing the number of diagnostic tests performed, reducing the number of procedures performed and shrinking hospital stay periods doesn’t necessarily equate to improved quality or improved patient care. Such measures clearly decrease costs, but whether they amount to better patient care is less clear.

One of the basic tenets of productivity management is a reliance on RVUs, a system Medicare uses to determine how to reimburse physicians for the 9,000 or more services and procedures covered under its Physician Fee Schedule. The dollar amounts are linked to the Current Procedural Terminology (CPT) codes, and the three components of the dollar amount are calculated based on a physician’s work, practice expenses and malpractice insurance. A physician’s work is broken into the following subcomponents:

  • The time needed to perform the service;
  • The technical skill and/or physical effort to perform the service;
  • The amount of mental effort and judgment involved; and
  • The stress related to potential risk to the patient.

But quality is a far more ephemeral issue. Some hospitals conduct patient surveys after every visit, with a link to the survey emailed to the patient. Some pay a portion of physician compensation based on online reviews and patient referrals. Many of what are being called alternative payment models (APMs) are based on various metrics, such as the Medicare Access and CHIP Reauthorization Act (MACRA), which often take data from population data sets and then compare that data to individual physician and patient interactions.

Problems with that approach include difficulty comparing large patient populations to small patient populations or individuals, data sources aren’t comprehensive, and information systems aren’t standardized. These are technical issues. Political issues can involve physician stakeholder wariness and a lack of consensus over the appropriate quality metrics and how to report them to and from consumers.

At heart, the issue is that, while methods for objectively evaluating the amount of care are straightforward and well documented, benchmarks for value aren’t well documented.

Six Domains of Health Care Quality

The Institute of Medicine (IOM) developed one of the most influential measures of quality in health care, citing six medical service aims related to quality:

  1. Safety
    Services shouldn’t harm patients.
  2. Effectiveness
    Services should be based on scientific knowledge. Health care providers should avoid providing services to patients who aren’t likely to benefit from the care.
  3. Patient-Centeredness
    Care should be both respectful of and responsive to an individual patient’s preferences, needs and values — and those values should guide all clinical decisions.
  4. Timeliness
    Wait times and delays for both patients and health care providers should be shortened.
  5. Efficiency
     Nothing should be wasted, whether it’s time, equipment, supplies, energy or ideas.
  6. Equity
    Care should be the same for everyone, regardless of personal characteristics such as gender, ethnicity, geographic location and socioeconomic status.

Data Matters

The risk, of course, is that the patient could get lost in all the data-crunching, and/or that insurers and government agencies could be less interested in quality patient care than in driving down costs and reimbursements.

As health care systems experiment — and this is clearly an ongoing, long-term process — more data will become available about how these different models work, at least in terms of how much money they save and how they affect productivity. Until everyone agrees on what “value” is and how to measure it, the results are likely to be a constant topic of debate. Although patient surveys or referral rates don’t seem to be entirely objective metrics for value, they probably indicate a portion of value.

Going Forward

Experiments in physician compensation based on value are likely to always have critics. They may be meaningful for some types of care and not for others. Patient noncompliance and other factors beyond the control of a physician, such as emergencies that throw off scheduling, can have a negative impact on patient surveys. Perhaps the search for value metrics is really a Holy Grail — and the experiments will only continue.

For more information, contact Jason Flahive at jflahive@orba.com or call him at 312.670.7444. Visit ORBA.com to learn more about our Health Care Group.
©2018

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Firms News

09.12.18

ORBA Welcomes New Hires to Tax, Audit and Human Resources
Ostrow Reisin Berk & Abrams, Ltd. (ORBA), one of Chicago’s largest public accounting firms, is pleased to welcome Joshua Goldschmidt and Joshua Rincy to its Tax Department, Roxana Stupar to its Audit Department, and Andrew J. Butkus, Jr., PHR to its Human Resources Department as an HR Specialist/Recruiter.

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Media Mentions

09.13.18

Various Media – ORBA Welcomes New Hires to Audit, Tax, HR

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