Compliance Department No. COMP Title: EFFECTIVE SYSTEM FOR ROUTINE MONITORING, AUDITING, AND IDENTIFICATION OF COMPLIANCE RISKS (ELEMENT 6)

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1 Page: 1 of 9 I. SCOPE: This policy applies to (1) Tenet Healthcare Corporation and its wholly-owned subsidiaries and affiliates (each, an Affiliate ); and (2) any other entity or organization in which Tenet Healthcare Corporation or an Affiliate owns a direct or indirect equity interest greater than 50%. II. PURPOSE: Advantage Health Care Management Company (AHCM) will establish guidelines and procedures for the timely, accurate and efficient management and implementation of external audits and internal compliance and operational reviews that support the requirements of state and federal regulatory guidelines. III. DEFINITIONS: A. Abuse means the Practices that are inconsistent with sound fiscal, business or medical practices, and that result in an unnecessary cost to government programs, or in seeking reimbursement for goods or services that are not medically necessary or that fail to meet professionally recognized standards for healthcare B. External Audit means the official examination of one of Company s contracted providers, contractors, subcontractors, vendors or a related party s policies and procedures, processes, reports, systems and other documentation that supports the delivery of services to Company s members and as required by state or federal regulatory requirements. C. External Focused Audit means the official examination of a select area or activity of Company s contracted providers, contractors, subcontractors, vendors or a related party s policies and procedures, processes, reports, systems and other documentation that supports the delivery of services to Company s members and as required by state or federal regulatory requirements. D. Fraud means an intentional (willful or purposeful) deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to him/herself or some other person. E. Internal Focused Audit means for purposes of this policy, this is an informal process aimed at randomly sampling and verifying specific operational and compliance activities or processes, where the development and implementation of procedural updates is checked and signed-off by the company stakeholders.

2 Page: 2 of 9 F. Waste means the extravagant, careless or needless expenditure of funds that results from deficient practices, poor system controls or faulty decisions and results in increased costs to federal health care programs. 1. POLICY: A. External Audits: The Company s external audit program is designed to examine the full-scope of contractual obligations or delegated functions performed by Company s contracted individuals or entities that includes verification of compliant and effective internal controls. The company s external audit function seeks to provide: 1. Reasonable assurances about the effectiveness of contracted individuals or entities internal controls over required reporting, the accuracy and timeliness in processing delegated transactions, and the accuracy and completeness of required regulatory reports. 2. An independent and objective view of the Company s contracted individuals or entities, including processes relative to financial reporting. 3. Information useful to directors and management in monitoring the Company s compliance and risk management activities. B. External Audit Process: 1. Preliminary Discussion: Prior to the start of the audit, the audit team meets with the business owner of the contractual relationship of the contracted individual or entity to be reviewed to confirm the schedule and begin to outline the work to be done. 2. Audit Guide: The Audit Guide is a tool for planning an engagement and providing notice to the audited individual or entity. It includes the scope and objectives of the audit and describes the kinds of interviews, analysis, document reviews and other procedures needed. 3. Audit Notice: The audit team sends the individual or entity a notice describing the engagement and confirming timing, location and anticipated needs. The timing for the Audit Notice will be adjusted to account for any unique contractual provisions relating to reasonable notice.

3 Page: 3 of 9 4. Entrance Meeting: The audit team will meet with the primary leadership of the entity being audited to discuss scope, answer questions and begin the work. 5. Testing, Interviews and Analysis: The auditors conduct interviews, analyze data, compare viewpoints and thoroughly examine the subject. As they do so, they compare the actual practices to standards or procedures in place. They also incorporate best/good practices to help evaluate whether processes are running optimally. If exceptions are identified, (the process is supposed to work one way but works another) these observations are collected and discussed with leadership of the area. 6. Observations, Discussion, and Management Agreement: The auditor documents any observations and discusses the results with AHCM management and the audited entity. Sometimes the audited entity will clarify the observation; other times the auditor offers a recommendation for solving the issue. The auditor will ask the audited entity to commit to a course of action and a date of completion. 7. Preliminary Report: The auditor prepares a report. The report contains the purpose, scope, and results of the audit. This report will be provided to the audited individual or entity and AHCM s management for review and comment. 8. Exit Meeting: Each audit ends with an exit meeting. Comments and corrections to the preliminary report are typically discussed and concluded at the exit meeting. 9. Final Report: All final reports are copied to the audited individual or entity, as well as the Company s manager, direct reports and board. 10. Follow-up: Any deficiencies or findings noted during the audit that require remediation will continue to be tracked for full resolution. The auditors will conduct a post-remediation sampling of the deficient area to ensure that enhancements or process improvements are effective, compliant and prevent future errors from occurring.

4 Page: 4 of 9 C. Internal Focused Reviews 1. The typical internal focused review is intended to determine whether or not the area under review is following prudent business and administrative practices consistent with the mission of the organization, corporate policies, the Standards of Business Conduct, the Company s Compliance Program, and the laws, statutes or regulations of state and federal agencies, as may be applicable. 2. This procedure applies to all lines of business involving health plans. 3. This procedure provides for the identification, implementation and management of the internal focused reviews relating to the following operational or administrative processes that may be the subject of external state or federal audits and/or support Company s compliance performance under. a. Enrollment & Eligibility; b. Grievance & Appeals; c. Sales (including oversight of FMOs); d. Marketing; e. Claims Processing (including COB and MSP); f. Member communications; g. Pharmacy, including transition activities, coverage determinations and redeterminations); h. Model of Care (care management program, including HRAs) (for D-SNPs only); i. Customer Service; j. Credentialing; k. Utilization Management (prior authorizations and concurrent reviews); l. Quality Improvement Program (QIP and CCIP submissions); m. Provider contracting provisions; n. Premium billing; o. Late Enrollment Penalty processes; p. Low-Income Subsidy reviews; q. Risk Adjustment processes; r. Business Applications & Analysis (BAA) processes; s. Actuarial processes in support of annual bids; and t. Any other ad hoc reviews relating to Company LOB s operational processes.

5 Page: 5 of 9 D. Types of Reviews: 1. Operational: the review may involve any combination of the following activities: a. Interview key personnel to obtain a basic understanding of the business functions performed by the department being reviewed; b. Evaluate the effectiveness of the internal processes or systems in place, including how the processes support policies and procedures; c. Examine a representative sample of transactions, documents, or other pertinent data; and d. Prepare a report for senior management highlighting any significant weaknesses observed along with suggestions or recommendations for educational purposes, process improvements and/or corrective action. 2. Compliance: State and federal agencies have very specific rules and regulations which must be complied with, usually as a condition of receiving funding or retaining membership, and require periodic reviews to be performed. Compliance reviews are also conducted to evaluate the effectiveness of Company LOB s efforts to maintain compliance with important statutory requirements 3. Investigative. These reviews are performed to investigate incidents of possible fraud, waste or abuse (FWA). Company s review team will work closely with executive management, the company s Controller, the Human Resources Director, Corporate Compliance Officer, Medicare Compliance Officer, Medicaid Compliance Officer, and Company s staff attorney to investigate the facts and report any issues identified as FWA. a. External Investigative Reviews. Where applicable, Company will cooperate with state or federal auditors, state or federal law enforcement agencies, and/or the criminal justice system.

6 Page: 6 of 9 E. Internal Review Process 1. The Medicare Compliance Officer and/or the Company s internal compliance reviewers will present review proposals as follows: a. The department and/or activity proposed for review is discussed at either the quarterly Compliance Committee meeting or the Medicare Compliance Committee meeting. b. Upon approval, the Focused Review Proposal will be finalized and the focused review will be scheduled. Review processes are outlined in the remaining sections below. 2. The Vice President, Director and/or Manager, where appropriate, of the department to be reviewed will be contacted by the internal compliance reviewers to confirm the scheduling of the targeted review and to arrange a pre-review meeting. The Focused Review Proposal will be delivered to the Director/Manager, along with Pre-Review Information & Instructions (Attachment B), a copy of this policy, and a Focused Review Customer Satisfaction Survey (Attachment C). The Pre-Review Information & Instructions will provide the Director/Manager with basic instructions and background information about the operations to be reviewed and should be reviewed and documents gathered by the Director/Manager prior to the scheduled pre-review meeting. The Customer Satisfaction Survey offers the Director/Manager the opportunity to evaluate the review process and should be completed after the completion of the focused review. 3. The pre-review meeting will serve to allow the reviewer to describe to the Director/Manager the goals and objectives for performing the review. Any questions or concerns the Director/Manager may have regarding the review can be shared during this meeting. The pre-review meeting can also be utilized to determine the appropriate contact personnel, set-up follow-up meetings or other appointments, and determine the desired and most efficient methods of communication during the course of the review 4. One of the primary objectives of the reviewer is to gain an understanding of the Director/Manager s departmental operations. The reviewer will examine any existing written policies and/or procedures specific to the involved department and its activities or processes. Additionally, the reviewer may ask to meet with key personnel in order to develop (or update) an understanding of the operations being reviewed. Upon

7 Page: 7 of 9 completion of this stage of the review, the reviewer will prepare a response document (see Attachment D, Sample CMS Audit Tool). This document will be utilized to help assess departmental strengths and weaknesses and, where systems-related activities are being reviewed, to determine the nature and extent of additional testing to be performed, if any. 5. Systems-related test samples will serve to determine whether or not the stated controls are working effectively. The Director/Manager may be asked to provide documentation or other appropriate evidence pertinent to their departmental operations that will assist in any additional review testing. The reviewer may require assistance in obtaining documentation and in answering questions that may arise during the course of the review. Based on the review of the system processes and testing conducted, the reviewer will attempt to identify any actual or potential weaknesses and/or findings. These areas of concern will be informally communicated to the Director/Manager during the course of the review and summarized into a draft report once the focused review has been completed. 6. The reviewer will prepare a draft of the preliminary review report for the Director/Manager s review and action. The Director/Manager will have a five (5) business days to dispute any findings. This period will be shortened to three (3) business days if the finding(s) relates to a condition that requires immediate corrective action. All disputes will be expected in writing with supporting documentation as to why the business unit feels the findings should be reconsidered. The Corporate Compliance Officer or the Medicare Compliance Officer will review the dispute and communicate the decision. 7. Corrective action plans required are submitted to the Compliance Department within ten (10) business days of receipt of the final review report. 8. All findings are reported to the Compliance Committee. F. Risk Assessment Process 1. The Compliance Department conducts an annual risk assessment to determine operational areas that may be jeopardy of becoming noncompliant.

8 Page: 8 of 9 2. REFERENCES: 2. The Compliance Department works with the operational areas to address any risks found. 3. The Compliance Department reports the results of the risk assessment to the Compliance Committee. - URAC P-CP-1 - CMS Medicare Prescription Drug Benefit Manual, Chapter 9 - CMS Medicare Managed Care Manual, Chapter CFR (b)(4)(vi) - 42 CFR (b)(4)(vi) - 42 U.S.C 1395w-104

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