June 15, 2002
7 min read

Compliance plan yields improved policies, procedures

One surgical practice finds the process of compliance planning painful but rewarding.

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You are the administrator of a large ophthalmology practice. You have just discovered that a high-volume surgeon is coding some surgeries under the complex cataract code, but documentation review does not support that code. Medicare has already paid some of these claims. You have considered developing a compliance plan and initiating training for the physicians. Now you have some problem claims, so what do you do?

Eye Associates of New Mexico found itself in a similar position, although the details were different. We were seeing more publicity about hospitals and medical groups that were under investigation by the Office of Inspector General for fraud and abuse. Our administrative group began asking questions about the risk Eye Associates might have.

We had about 30 physicians and optometrists serving 12 offices at the time. Our staff had expanded to about 200 employees. With an ophthalmology practice of our size, we were no longer close to the day-to-day details and realized that our risk was increasing.

Compliance audit required

The board of directors, realizing this additional risk, authorized a compliance audit by a consultant of our choice. We interviewed and selected our attorney firm and our billing consultant. We did not fully understand the complexity of the process we were about to undertake.

We first scheduled the attorneys to interview key administrative and billing staff, physicians and others important to the documentation, charging and billing processes. They would look for signs of disgruntled employees who could be potential whistleblowers in case they uncovered fraudulent practices or significant errors. Since the entire process was under the direction of the attorneys, we would have attorney privilege if any issues were found.

Attorney interviews

The first step in this process was on-site attorney interviews. Four attorneys interviewed physicians, administrative staff and billing personnel, looking for information regarding all related entities, joint ventures, the knowledge of the staff being interviewed and any questionable practices in our review of daily procedures. From the information gathered in the interviews, they could establish the scope of the audits.

This was the most intimidating part of the process: our attorneys, auditing at our request, yet still looking for fraudulent practices and errors. We knew we were not intentionally committing fraud or billing errors, but what might be lurking under the shadows that we were not aware of? Our office visit volume was in the neighborhood of 100,000 visits per year, with approximately 20,000 surgeries.

There were many places for things to go wrong without our knowledge.

Review documents

Once the interviews were completed, we were given an extensive list of documents to provide the attorneys for review. This included organizational charts; operating and management agreements; space, employee and equipment leases; health plan contracts; contractual agreements for services; and other agreements with outside entities or personnel.

It included the physicians’ real estate ventures from which we leased offices, investments in other healthcare related entities and any arrangements with area hospitals. The list included policies and procedures for human resources, billing, cash handling, computer procedures, security and data access.

The list included items that could point out fraudulent practices, or patterns that could show willful disregard in billing errors. Policies for appointment scheduling, cancellations, no-shows and cashiering were requested, as were daily balancing and charge, payment and adjustment procedures.

Bank deposits, security of cash handling and the internal control that existed were reviewed. The attorneys asked for discount, write-off and contractual adjustment policies. They wanted refund and collection policies as well as our contracts with collection agencies.

Coding practices, account information

Physicians’ coding practices, and the group’s as a whole, were summarized and provided to the attorneys. This included utilization patterns of the eye codes, evaluation and management codes and the surgery procedure volumes.

Because we had several specialists who concentrated only in one area, the individual physician’s profiles showed higher utilization than their peers when compared to general ophthalmologists. This situation had prompted several carrier audits of charts in the past. The carrier medical director knew the physicians and the group’s specialty culture and understood why the utilization patterns were different. It still got our charts audited periodically. Did we show the same difference in patterns as a group?

Then the list asked for specific patient account information. Listing of refunds and credit balances, co-pays, explanation of Medicare benefits and health plans remittance advices were requested. The list included requests for comanagement policies, lists of referring physicians and referral volumes. Marketing materials, Web site information and newsletters were requested for review.

Voluntary additions

We chose to add several items to our audit that might not be included in all audits. We had fallen victim to the overemphasis on reducing costs and had not replaced several of the administrative staff as vacancies occurred. One of those positions was the human resources director. The policies had not been updated for a while since it was no longer anyone’s highest priority. Another position was the Office of Safety and Health Administration (OSHA) coordinator. The responsibility was added to one of the technician’s jobs.

We believed both of these positions needed more emphasis and asked that a review of these policies be included in our audit. We have since added a full-time human resources director and placed OSHA under a quality committee’s review with the responsibility for implementation falling to the clinic directors.

Patient charts

Finally, we addressed the largest piece of the audit, the request for 20 charts from each physician. Since we had 30 optometrists and ophthalmologists, this represented about 600 charts. The charts needed to contain a mix of office visits, surgeries and various offices since our physicians traveled to several offices instead of being assigned to one location.

A copy of the account history was attached to the chart for comparison with visit notes for recent visits. This was a huge task, but one of the most important parts of the audit. Barring any other fraudulent practices, did our chart documentation support the level of visits we were billing and adequately document the surgeries while carrying notations and interpretations of the testing we were billing? And finally, did our billing records show payments and adjustments accurately?

Once the charts were copied, packaged and mailed to the consultant and the other documents were supplied to the attorneys, did we just wait for the results?

No, we now had other assignments. Create policies if none existed, start developing the compliance plan from several sample documents, start thinking about how we were going to address any weaknesses that were uncovered during the interviews or the document review. While we did not have the results of the interviews or the audit, we knew we had several expired leases that needed to be renewed. Some of the documents requested were not available, so we already knew some things that needed to be done. The interview process let us know that an extensive training process was needed once the results were known.

Work to do

What did they find? Good news: There was nothing we’d go to jail for! Bad news: We had some work to do.

We found overcoding, undercoding and some inadequate documentation. The consultants recommended we standardize our specialty chart forms. We found some billing errors, but nothing that created a potentially fraudulent billing practice. The need for significant training was validated and we needed to revise many of our policies and procedures. We now knew where to concentrate our compliance plan actions and training.

We had identified one billing error that had existed for several years before the audit. The overpayment was about $2,000 total, but was made up of many small individual items. Our research was done before the audit, and we wanted the attorneys to assist us in the proper method to correct the error and refund the overpayment.

We routinely refunded individual accounts with an overpayment, but this included a lot of patients over a long period of time. How did it differ, who did we report it to, and what might the consequences be? The attorneys helped us draft the letter that was mailed with our “self-report” and refund of the overpayment. It was handled at the carrier level and we heard nothing else about the overpayment.

Developing a compliance plan

Developing the plan was not difficult, but everything included in our standards had an associated action plan that would have to be done. Now that we knew what corrective action was required, a follow-up audit would also have to be done to see if we were making improvements in documentation, coding and billing.

The pieces of the puzzle were falling into place. Audit, interview, develop the plan, train, audit, implement policies, revise forms, audit, train, audit, train and audit. The process would now be one that was ongoing with repetitive audits and training.

The billing consultant and an attorney conducted the initial training program. It covered our plan, the fraud and abuse laws, kickbacks, the Stark II prohibitions — which still at that time had no implementing regulations — and common documentation and billing errors.

Following that training, periodic training for technicians, billing staff and physicians on specific topics of interest or reinforcement were planned to be held quarterly. The initial training included 200 employees and all the physicians.

There were challenges associated with training a staff of 200 employees working in 12 locations around the state. Communication of changes could be handled through fax, e-mail and periodic meetings with the clinic directors. New employees created another challenge. Change itself is always a challenge, because we have to step away from “the way we’ve always done it” and into the new procedures.

One essential part of a compliance plan is employee discipline. Our policies were “at will” policies for our employees; the plan required a disciplinary process for the employees and for the physicians. Who would administer the discipline for physicians? Unless it was behavioral, it should not be an administrator with no medical training. The medical director was the logical choice, and policies were developed to initiate the appropriate authority.

Additional step

Eye Associates decided to take one additional step that was not required but seemed necessary. We developed an insurance specialist certification exam with training and recognition programs.

We were asking our billing staff to comply with laws, regulations, policies and procedures that were different for every payor. We heaped on them Medicare and Medicaid regulations; myriad local health plan policies and procedures; our own payment, adjustment and balancing procedures; and other seemingly arbitrary duties.

What training were we giving them to cope with this complex environment? The job of the billing staff is often misunderstood and rarely valued for what it requires. It changes so rapidly that they have to learn and relearn procedures almost monthly. Include the changing Medicare environment and requirements and their job is difficult at best. Plus, they work with all offices, all physicians and sometimes all health plans. How could we help them improve their knowledge, then recognize their effort to learn everything we threw their way?

Our patient accounting manager proposed insurance specialist certification, and today we have about 40 Eye Associates employees who are certified insurance specialists. The exam is offered twice a year, and we are now considering a second level of certification.

Would I go through the process again? Yes, I would. The review was daunting, time-consuming and intimidating. But we have improved our policies, procedures and training, and the results are worth the time and the effort. And for a short time, we had peace of mind knowing we do not have major compliance problems.

Now we have new physicians and new staff members. So we audit, train, audit, train and audit again. The peace of mind is fleeting.

For Your Information:
  • Carole Jean Wright, BSBA, CMPE, COE, is chief administrative officer of Eye Associates of New Mexico Ltd., 8801 Horizon Blvd. NE, Suite 360, Albuquerque, NM 87113; (505) 768-1335; fax: (505) 244-9566; e-mail: cjwright@eyenm.com.