Reimbursement Office business practices, Department of Public Health and Human Services : performance audit

2009·1.7 MB·English

by  Montana. Legislature. Legislative Audit Division

s
352.439
L72ROBP
2009
1
A
Report
TO THE
Montana
Legislature
Performance Audit
Reimbursement
Office
Business Practices
Department ofPublic Health and
Human
Services
September 2009
Legislative Audit
Division
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3 0864 1005 8606 7
Performance Audits
Legislative Audit
Committee Performance audits conducted by the Legislative Audit Division
are designed to assess state government operations. From the
Representatives audit work, a determination is made as to whether agencies and
programs are accomplishing their purposes, and whether they
Dee Brown
Betsy Hands can do so with greater efficiency and economy.
Scott Mendenhall
Carolyn Pease-Lopez We conducted this performance audit in accordance with
Wayne Stahl generally accepted government auditing standards. Those
Bill Wilson standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for
Senators our findings and conclusions based on our audit objectives. We
Greg Barkus believe that the evidence obtained provides a reasonable basis for
John Brenden our findings and conclusions based on our audit objectives.
Taylor Brown
Mike Cooney
Members of the performance audit staff hold degrees in disci-
Cliff Larsen
Mitch Tropila plines appropriateto the audit process. Areas ofexpertise include
business and public administration, journalism, accounting,
economics, sociology, finance, political science, english,
anthropology, computer science, education, international
Audit Staff
relations/security, and chemistry.
Performance
Lisa Blanford PerformanceauditsareperformedattherequestoftheLegislative
KORI MiNCKLER
Diedra Murray Audit Committee which is a bicameral and bipartisan standing
committee ofthe Montana Legislature. The committee consists
Financial-Compliance of six members of the Senate and six members of the House of
Jennifer Erdahl Representatives.
Geri Hoffman
Information Systems
Kent Rice
Nathan Tobin
Fraud Hotline
Help eliminate fraud,
waste, and abuse in Directcommentsorinquiriesto:
state government.
LegislativeAuditDivision
Call the Fraud
Room 160, State Capitol
Hotline at: P.O. Box20170S
MT
(Statewide) Helena, 59620-1705
1-800-222-4446 [phone]
(in Helena) Reports can be found in electronic format at:
444-4446 http://leg.mt.gov/audit
LEGISLATIVE AUDIT DIVISION
Tori Hunthausen, LegislativeAuditor Deputy Legislative Auditors
Monica Huv2, LcmI Counsel James Gillett
Angie Grove
September 2009
The LegislativeAudit Committee
ofthe Montana State Legislature:
This is ourperformance auditofthe Reimbursement Officemanaged bythe Business and
Financial Services Division ofthe Department ofPublic Health and Human Services.
This report provides the legislature information about the reimbursement ofexpenses
for housing and treating residents at the five department-operated facilities. This report
includes recommendations for improving overall program management, security of
private health information, the process for collecting data to conduct billing, the process
for billing insurers and private-pay residents, resolution ofunpaid resident accounts, and
accounting practices.
We wish to express our appreciation to department personnel for their cooperation and
assistance during the audit.
Respectfully submitted,
Tori Hunthausen, CPA
LegislativeAuditor
Room 160 • StateCapitol Building• PO Box201705 • Helena, MX• 59620-1705
Phone (406) 44'i-3122 • FAX[phone] • E-Mailladgmt.gov
Digitized by the Internet Archive
in 2011 with funding from
IVIontana State Library
http://www.archive.org/details/reimbursementoff2009mont
Table of Contents
Figures and Tables iii
Appointed andAdministrative Officials iv
Report Summary S-1
CHAPTER -INTRODUCTION
I 1
Introduction
1
Audit Scope 1
Audit Objectives 2
Audit Methodologies 2
File Review 2
Management Memorandum 3
Report Contents 3
CHAPTER - BACKGROUND
II 5
Introduction 5
Services Providedat Facilities 5
Cost ofProviding Services 5
Reimbursement Process 6
Processing Service Documents and Generating Claims 7
Management Information and Cost RecoverySystem (MICRS) 7
CHAPTERIII-RESIDENT INFORMATIONAND SERVICES 9
Introduction 9
Obtaining ResidentThird-Party Payerand Financial Information 9
InconsistenciesAmong Financial Investigator Files Exist 10
Controls Could Be Strengthened to Ensure Consistency 11
Transferring Service Data From Facilities to RO 12
Transfer ofResident Bed Charge Data 12
Transfer ofMedical Service Data 12
ReviewofMedical Service Documents 13
RO Lacks Controls to EnsureAll Medical Service DocumentsAre Received 13
Timeliness ofData Input Into MICRS 15
Controls Over Submitting Medical Service Documents Could be Improved 16
CHAPTERIV- PROCESS FOR FILING CLAIMSAND SUBMITTING BILLS 19
Introduction 19
Manual ReviewofClaims 19
Review ofUnbilled Claims 20
Addressing Unbilled and Denied Claims NotTimely 21
CHAPTERV- RESOLVING RESIDENTACCOUNTS 23
Introduction 23
Resolving UnpaidAccount Balances 23
Reductions to Unpaid Account Balances 23
ARM
Care and Maintenance Write-offs Not Allowed By 23
Inconsistent Write-OffMethods and Amounts for UnpaidAccounts 24
RO Turns Over Delinquent ResidentAccounts to the Department ofRevenue 25
CurrentAccounting Practices Could Provide More Complete Records 26
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Montana Legislative Audit Division
CHAPTERVI- OVERALL PROGRAM MANAGEMENT 27
Introduction 27
Long-Term PlanningNeeded 27
Program Performance Measures and Management Information Needed 29
Human Resource Management Is Critical to Efficiency and Effectiveness 31
SecurityofConfidential Health Information 33
Protected Health Information and Safeguard Requirements 33
Protected Health Information NotAlways Safeguarded 34
Controls Should Ensure PHI Is Protected 35
DEPARTMENTRESPONSE
A-1
DepartmentofPublic Health and Human Services A-3
Ul
Figures AND Tables
Tables
Table 1 Total Cost ofServices Submitted for Billing and Dollars Reimbursed 6
Table 2 Reimbursement Office Financial Investigators Staffing 10
Table 3 Medical Service Documents Sent to the Reimbursement Office By Facility 13
Table 4 Timeliness ofService Information Input Into MICRS 16
Table 5 Reimbursement Office's Timeliness ofProcessing Claims 20
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IV Montana Legislative Audit Division
Appointed and Administrative Officials
Department ofPublic Health Anna Whiting Sorrell, Director
and Human Services
Laurie Lamson, Operations Services Branch Manager
Marie Matthews, Administrator, Business and Financial Services
Division
Bill Kloker, Chief, Fiscal Operations Bureau
Bill Alger, Chief, Business Services Bureau
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Report Summary
Reimbursement Office
The Department of Public Health and Human Services spent S68.9 million for
services received at its facilities in fiscal year 2008, ofwhich $26.6 million (39 percent)
was recovered by the Reimbursement Office; by strengthening business practices and
internal controls the Reimbursement Office could increase the amount of money
recovered.
Audit Finding
s
The Reimbursement Office (RO) is managed by the Department ofPublic Health and
Human Services (department). The office is responsible for securing reimbursement
of expenses incurred
Total Cost ofServices Submitted for Billing and Dollars Reimbursed by the state by billing
Fiscal Year 2008
for services provided to
Reimbursements residents residingat the
Costof
Facility Services Amount Percent department's facilities.
MontanaStateHospital $34,308,892 $9,003,703 26% There are four sources
MontanaVeterans' Home $7,022,589 $4,672,191 67% of reimbursement
MontanaDevelopmentalCenter $15,443,113 $9,224,076 60% including Medicaid,
MontanaChemicalDependencyCenter $3,891,867 $93,880 2% insurance proceeds,
MontanaMental HealthNursingCareCenter $8,282,525 $3,600,234 43% payments by residents
Total $68,948,986 $26,594,084 39% or persons legally
Source: Compiled bythe LegislativeAuditDivision from ManagementInformation responsible for them,
and Cost RecoverySystem(MICRS)data. and Medicare. As
seen in the table, total
charges submitted to
the RO for fiscal year 2008 were $68.9 million. The RO secured reimbursement of
$26.6 million (39 percent) of the expenses incurred by the facilities. The remaining
61 percent, or $42.4 million, is absorbed primarily through the general fund.
Audit objectives addressed whether controls exist to ensure:
Residents' financial information and service documents are collected and
transferred to the RO.
Medical claims and resident bills are processed efficiently and accurately.
Resident accounts receivable balances are addressed and resolved in a timely
manner.
Management controls are effective to guide operations.
Personal health data is secure and protected.
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To answer the above objectives, we conducted interviews with department staff and
performed file review of 180 financial investigator resident files and over 300 medical
service documents. Through file review, we identified the department has controls in
place over bed dayservice documents; however, the department does nothave controls
to ensure all medical service documents are received by the RO. Additionally, we
identified 53 percent of all services provided in calendar years 2007 and 2008 were
unbilled. Of these services, we identified 12,146 of these unbilled services could be
denied for untimely filing. During our interviews and observations, we identified
improvements could be made in the overall management ofthe RO.
Audit Recommendations
Audit recommendations address improvements in business practices and internal
controls to increase the RO's efficiency and effectiveness ofcollecting reimbursements.
Twelve recommendations are made to the department. Recommendations include the
following:
Establish policy and procedures for financial investigator's activities
Complywith state accounting procedures
RO
Ensure all medical service claims are sent to the within set timeframes
Ensure unbilled and denied claims are processed
Develop an overall management plan
Establish controls to ensure confidential information is secure and
protected.