Quantifying CDM Audit Results

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1 By: Rsemary Hlliday, MHA Principal, Hlliday & Assciates March 13, 2012 Quantifying CDM Audit Results D yu have a strategy fr the day yu re asked t estimate the impact f a Charge Master audit? As a savvy CDM leader: Yu recgnize that Charge Master issues may, r may nt, have reimbursement implicatins. Yu realize that many audit findings have multi layered peratinal implicatins. Yu understand that plitically, it is critical t represent charge data issues with realistic estimates. This article is designed t prvide a straightfrward methd fr quantifying CDM audit findings. This apprach is presented in five basic steps: Develp a quantificatin wrk plan. Identify resurces t ensure crrect assumptins. Cllabrate with team members n detailed issues. Create prfessinal and meaningful reprts. Present findings & clearly and cncisely. Page 1 Hlliday & Assciates (800) rhlliday@cdmpi.rg

2 DEVELOP THE PLAN Charge Master impact analysis may sund straightfrward, but can be fraught with misunderstanding, misinterpretatin, and misdirectin. Crrect quantificatin requires a practive actin plan. Here are several imprtant cnsideratins: Define the quantificatin gals, bjectives and scpe. Define what yu are ging t analyze, hw yu are ging t g abut it, and wh will be invlved. Cnfirm hw the quantificatin analysis fits in with yur prcesses f verifying CDM issues, implementing crrectins, and researching utstanding issues. Cnfirm the level and scpe f quantificatin desired by hspital leadership, and identify any mandated reprting parameters. General frecasting techniques may be sufficient in many circumstances. Specific and detailed reprting may be necessary fr investigatry, enfrcement r ther respnse based issues. Identify a timeframe fr yur analysis. If finishing a CDM Review r targeted audit, identify the date f the data that was assessed. Typically, a versin f the hspital CDM is exprted and cnsidered frzen fr auditing data integrity. Once file updates and crrectins have been implemented, the team will need t identify the desired date t pull current CDM data fr the quantificatin wrk. Determine the mst meaningful perid f Revenue & Utilizatin (R&U): Ensure the R&U perid is sufficient fr: evaluatin f histric usage prjectin f utilizatin based n trends Cnsider that R&U crssing a calendar year r quarter will reflect multiple perids f cding, regulatry and reimbursement data. Determine whether R&U f zer fr yur selected perid will cause the issue t be remved frm yur quantificatin study. Refine the list f charges fr quantificatin. Whether wrking n quantificatin fllwing a brief audit r in depth CDM Review, ensure that findings have been verified by the applicable departments r parties. Categrize the audit issues with simple and understandable shrt labels. (H&A CDM Reviews include nte categries such as INVALID CPT/HCPCS, CPT/HCPCS ERROR, REVENUE CODE ERROR, MULTIPLIER ERROR etc. These help ur custmers with priritizing issues and delegating tasks.) If yur audit didn t include such categries, this is a beneficial field t add t yur itemized issues list. Priritize the issue types (nte categries) in rder f imprtance t yur quantificatin. Fr example: A1 INVALID CPT/HCPCS, CPT/HCPCS ERROR, MULTIPLIER/DIVISOR ERRORS A2 REVENUE CODE ERRORS, MODIFIER ERRORS, A3 OPPS ISSUE B1 DATA ERRORS B2 CONFIRM COVERAGE Page 2 Hlliday & Assciates (800) rhlliday@cdmpi.rg

3 C1 CLARIFY CHARGE DESCRIPTION C2 VERIFY USAGE Based n categries and pririties, extract charge items that are imprtant fr the quantificatin assessment. Imprt all applicable CDM sectins and specific charges fr quantificatin. At this pint, freeze the analysis file and dcument the date f the exprt data. Develp a reimbursement reference tl fr the quantificatin. Cnfirm patient types fr quantificatin. Determine payers fr quantificatin. Identify the reimbursement methdlgy fr each majr payer. Narrw dwn yur impact analysis list. Determine whether quantificatin shuld be 100% f findings r a select sampling. Determine which charge items were mst likely crrected by billers prir t claims prcessing. Cnsider status, pricing, r payment indicatrs assciated with each charge item being analyzed. Determine whether packaged services and items are f interest. (OPPS SI N). Cnditinal packaged items assigned SI Q1, Q2, Q3 need t als be cnsidered in the cntext f hw they were billed. Determine whether yur analysis shuld include nn cvered r nn reprtable cdes (OPPS SI E, B, M). Cnfirm whether yur hspital is licensed t ffer services represented by specific indicatrs (DME, Partial Hspitalizatin, etc.). Identify services in yur analysis that are reimbursed based n Medicare fee schedule (PT, OT, ST, Labratry, Prfessinal Fees, Prsthtics/Orthtics, etc.). Determine which services are paid by ther prspective methds and identify the assciated payments. Cnfirm whether there are special cnsideratins fr pricing such as: markup methds fr supplies, drugs, implants, etc. tests that must be priced at cst by state r ther regulatin hspital specific markup frmulas Define ther payment r pricing cnsideratins that may be imprtant fr the quantificatin analysis. Page 3 Hlliday & Assciates (800) rhlliday@cdmpi.rg

4 DEFINE RESOURCES Identify data needed fr yur assessment, and cnfirm hw it will be accessed. Internal data may be available frm multiple Hspital Infrmatin System applicatins. External data (such as cding, regulatry and payment references) will be available thrugh Charge Master sftware tls, cnsulting deliverables, r reference surces. Determine whether masterfile data frm applicatins r systems ther than the Charge Master file* are needed. (Pharmacy, Labratry system, Radilgy system, Order Entry, Materials Management, etc.) *Sme H.I.S. vendrs may have differing file structures and naming cnventins. Identify the Charge Master data elements f value t yur assessment. Examples include: Charge number Charge descriptins (billing descriptin as well as technical descriptins are valuable, if available) CPT/HCPCS cde fields Mdifier fields Multiplier r Divisr Price Revenue Cde Identify CPT r HCPCS Level II cde descriptins fr the assciated cdes (frm CDM Tl r ther cding resurces). Dcument the planned quarter and year fr the reimbursement data t be used. Identify surces fr the applicable payer mix and reimbursement methdlgies (frm CDM Tl r ther reimbursement references). Since sme payment rates change quarterly, decide whether quantificatin needs t be: 1) a general frecast based n ne specific rate, r 2) actual, based n the date f service. Reimbursement data includes infrmatin such as: OPPS Status Indicatr OPPS Wage Adjusted rate and Cinsurance Fee Schedules Sle Cmmunity Multiplier (r ther adjustment factrs) Other prspective rates Access revenue & utilizatin data fr the pre determined perid. (Recmmendatin fr OPPS Hspitals: Start the analysis with Medicare Outpatient Utilizatin. Next, expand t ther applicable payers.) Determine surce(s) fr accunt specific infrmatin. Data surces f interest may include: detailed charges, claims data pre and pst editing, medical recrd data, remittance advice/eobs, etc.) Identify internal lgs r date stamped reprts shwing when CDM crrectins were implemented. Page 4 Hlliday & Assciates (800) rhlliday@cdmpi.rg

5 COLLABORATE Quantificatin f CDM audits requires thrugh understanding f intricate peratinal and system details as well as high level rganizatinal issues. Varius individuals in yur rganizatin will be able t prvide insight fr certain aspects yur quantificatin prcess. This sectin lists cmmn participants fr an impact analysis prject. Peers wh will be pivtal t yur assessment tasks include: ancillary and clinical department representatives billers staff that design and manage claims edits cders IS staff/applicatins specialists finance and reimbursement staff thers Administrative leaders wh typically prvide directin and high level input include: Revenue Cycle Cmpliance CFO CREATE REPORTS Primary reprts Create wrksheets listing the charges f cncern fr ver r under payment. (This wrksheet listing des nt include charges that have been cnfirmed as: crrected by billing edits, crrected by billers, denied r returned and crrected thrugh payer edits, r charges that have n reimbursement implicatins because f the errr.) Merge yur wrksheet data (listed in earlier step abve) with reference fields that demnstrate errrs and crrectins. Department Name and Number Charge Item number Charge descriptin CPT/HCPCS Cde (errneus and crrect cde fields) Mdifier (errneus and crrect cde fields) Multiplier/Divisr (errneus and crrect cde fields) Revenue Cde(errneus and crrect cde fields) Price Payer specific utilizatin fr the usage perid selected and ther data fields deemed imprtant t yur assessment Page 5 Hlliday & Assciates (800) rhlliday@cdmpi.rg

6 Add wrksheet clumns shwing payment amunts fr the errneus data and crrect data. Fr cding errrs: btain errneus and crrected payment rates. (Cnsider that reimbursement rates may change quarterly fr CMS and ther payers. ) Fr multiplier/divisr errrs: calculate errneus and apprpriate units and multiply times the payment rates. (Cnfirm functinality f multiplier r divisr t understand hw it may impact yur analytical apprach.) Add calculated fields t shw the variance between crrect and incrrect payments. Calculate variance times the payer specific utpatient utilizatin (quantity) fr the perid f the assessment. (Even thugh this apprach reflects estimated payments, it will allw a general quantificatin that can be refined later t the accunt specific level.) Create separate wrksheet fr Revenue Cding Errrs. Include fields fr errneus and crrected cdes. Only include within this reprt the Revenue Cding errrs that may have caused incrrect payments. Create ther wrksheets fr ther critical audit issue errrs fllwing the apprach listed abve. Additinal Reprts t cnsider Create separate wrksheets f patient accunt numbers impacted by payment errrs. (This is best perfrmed after the team has determined the desired actin plan and timeline fr rebilling, disclsure, etc.) Obtain remittance infrmatin (when available) fr specific CDM errrs n each accunt. PRESENT FINDINGS Presenting t hspital leadership can be daunting fr sme CDM Crdinatrs, and requires advance preparatin. Prepare in advance by: Reviewing findings with yur superir. Ensuring that peers wh have equal stake in the CDM audit results cncur with yur methdlgy and findings. Cnfirming whether any f the invited attendees have plitical r persnal cncerns abut the impact analysis. Cnfirm the apprpriate attendees fr the presentatin. Participants may include: Administrative Representatives Select Directrs Supprt department representatives (Cding, Billing, IS, etc.) Legal Cunsel (Sme Cmpliance Officers prefer legal cunsel t stay invlved fr prjects that were perfrmed under privilege.) Cnsultants Others Page 6 Hlliday & Assciates (800) rhlliday@cdmpi.rg

7 Briefly summarize the quantificatin (and riginal audit s) scpe, timeframe, and cntext. (It is beneficial t prvide dcumentatin f this infrmatin rather than slely relying n a verbal recap.) The summary shuld include: The type f audit perfrmed and wh perfrmed it The timeline f the audit and the date span the data analyzed The quantificatin study s assumptins (Payer infrmatin, reimbursement methds, internal peratins and prcess flw, etc.) The implicatins f CDM Audit findings: Clarify what the impact data means t the hspital s revenue and cmpliance mandates. Explain that an errr in the CDM file des nt always represent an errneusly billed service. Errrs may have been crrected in multiple areas. (This is where a flw chart f charge data fr yur rganizatin is beneficial.) Explain hw yur analysis addresses different payment scenaris. Payer reimbursement may, r may nt, have been affected with errrs. Outline the prcesses and systems need t be imprved. Recmmend persnnel that may need t take increased wnership r receive educatin. Identify supprt r resurces needed fr imprved versight cntrls, and mnitring. Be prepared t prvide the status f data crrectins that were uncvered in the audit. Mst executives want t knw nt nly hw bad is it?, but als hw quickly can this be reslved?. Recap CDM audit results frm the perspective f cmpliance, peratins, and finance. It is imprtant t utline the risks and benefits frm multiple perspectives. Display results in an understandable frmat. Remember that hspital executives will nt be as interested in the minute details as they will be in the big picture. Prvide summarized ttals fr 1) pprtunities fr future reimbursement imprvements, 2) verpayment risks, and 3) audit findings that have neither reimbursement nr risk impact, but are cnsidered imprtant. Prvide a cncise Executive Summary Reprt f yur quantificatin study. Identify all issues that require administrative decisins, supprt r delegatin. Determine whether fllw up assessment r further quantificatin is needed. Wrk with the meeting attendees (r a smaller task frce) t determine the fllw up actin. Facilitate this prcess by creating an actin plan with sequenced steps, pririties, wners and timelines. In summary, after perfrming yur first quantitative analysis, yur rganizatin will have a tested and lgical apprach fr understanding the impact f CDM audits. This prject will demnstrate yur strategic and analytical skills as well as yur ability t credibly reprt CDM audit results. We welcme yur cmments and feedback n ur CDM News. Please feel free t cntact the authr, Rsemary Hlliday, r ur ffice if yu wuld like mre infrmatin abut ur next generatin CDM Management slutins. Page 7 Hlliday & Assciates (800) rhlliday@cdmpi.rg

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