Palomar Pomerado Health - Palomar Health

Palomar Health

Board Audit and Compliance Committee

Agenda

Thursday, September 20, 2012 456 E. Grand Avenue 5:15 – 7:15 P.M. Conference Room — 1st floor Escondido, CA 92025

Call to Order

Public Comments

Item

Presenter Page Mins

1.

2.

3.

4.

5.

6.

7.

8.

9.

* Meeting Minutes – June 21, 2012 Compliance and Ethics Committee Reports (standing item for September) Compliance Program Overview (standing item for July) Compliance Program Assessment (standing item for July) Report of District Audit Officer’s and Compliance Officer’s Independence (standing item for July)

Conflict of Interest survey (standing item for July)

Review of Internal Audit Activities (standing item for August)

Date/Time/Location of Next Meeting – October 18, 2012 Final Adjournment

N. Bassett

M. Neu

M. Neu

M. Neu

M. Neu

M. Neu/T. Boyle

T. Boyle

N. Bassett

N. Bassett

5

10

20

10

5

10

20

5

5

*NOTE: Asterisks indicate anticipated action; action is not limited to those designated items.

“In observance of the ADA, Americans with Disabilities Act, please notify us at (858) 675-5230, forty-eight hours prior to meeting so that we may provide reasonable accommodations”.

Nancy Bassett, R.N, Chairman Michael Covert, CEO

Richard Engel, M.D.

Ted Kleiter, Director Janine Sarti, General Counsel Lachlan Macleay, M.D.

Bruce Krider, Director Bob Hemker, CFO Roger Acheatel, M.D.

Linda Greer, R.N., Director (Alternate) Tom Boyle, District Audit Officer Hue, Le, Admin Fellow

June 21, 2012 Audit and Compliance Board Meeting Minutes

Palomar Pomerado Health AUDIT & COMPLIANCE

BOARD COMMITTEE MEETING 456 E. Grand Ave.

1st Floor Conference Room June 21, 2012

AGENDA ITEM/ PRESENTER

DISCUSSION CONCLUSIONS/ACTION

CALL TO ORDER 5:30 P.M. by Director Bassett. Present: Nancy Bassett, Bruce Krider, and Ted Kleiter. Also attending: Lachlan Macleay, Tim Nguyen, Stephanie Love, Tom Boyle, Mark Neu, Michael Covert, Mark Kawauchi, Cecile Galvez, and Lucy Maxwell.

NOTICE OF MEETING Notice of Meeting was posted consistent with legal requirements.

PUBLIC COMMENTS There were no members of the public present.

APPROVAL OF MINUTES

April 19, 2012

MOTION: by Director Bassett, 2nd by Director Kleiter and carried to approve the minutes of April 19, 2012 as submitted. All in favor. None opposed.

ENTERPRISE RISK MANAGEMENT

Tom Boyle provided background information about Enterprise Risk Management (ERM) and indicated the reasons of having Deloitte personnel talking about it at this meeting. Cecile Galvez from Deloitte delivered a power point presentation focused on ERM, which enables a coordinated and actionable dialogue on the key risks for Palomar Health, the benefits of the process, the internal




and external drivers, an overview of the framework, key process steps, risk identification, risk prioritization and assessment, risk response and ownership, and risk reporting and monitoring. Tom Boyle asked Deloitte about the top 5 risks in the Healthcare industry. Cecile Galvez indicated as follows:

Regulations and impact in the organization. i.e. ICD-10, Meaningful use, etc.

Security and protected Health Information.

Revenue Cycle, charges, clinical documentation.

Physician relationship.

Coding. Nancy Bassett indicated that Palomar Health is currently focused on Compliance and ERM might be the next topic to be considered.

AUDIT PLAN

Mark Kawauchi from Deloitte presented information about the Deloitte’s audit approach, areas of audit focus, planned procedures, fees, audit timing, and communication process for the review of the Palomar Health’s financial statements for fiscal year 2012. This review will also include a testing of prior year’s consolidation of Arch Health Partners’ financial statements. An audit is also being performed at the Palomar Health Foundation, which is covering FY 2011 and 2012.

REVIEW OF INTERNAL AUDIT ACTIVITIES

Tom Boyle presented a status report of internal audit projects, which included financial, information technology, and construction audits, and also operational support activities for the department. Additionally, Mr. Boyle delivered the results of the latest




customer satisfaction survey performed for his department during the Spring of 2012.

INTERNAL AUDIT SERVICES FINANCIAL AND INFORMATION TECHNOLOGY AUDITS

Obtained Management Response to the Cost Reporting Audit. 10 out of 10 observations accepted by Management.

Assisted External Auditors Deloitte during the planning of the Information Technology Audit as part of the review of Financial Statements for FY2012.

Performed Payroll and Human Resources Audit by using a traditional approach.

Currently performing testing and analysis of the Payroll activities by using an automated approach with the ACL analysis tool.

INTERNAL AUDIT SERVICES OPERATIONAL SUPPORT

Porting over of AuditExchange to the new virtual server.

Ongoing verification of non-use of excluded entities at Palomar Health, for Compliance.

Ongoing POM ICU census trends to Chief Medical Quality Officer.

Ongoing support of Finance’s unclaimed refund process.

Ongoing support of Case Management’s Medicare daily patient census and discharges.

Ongoing support of Accounts Payable CCM’s.

Developing application(s) to monitor charge capture and billing for Revenue Cycle process.

Development of a new ACL data repository.

Learning optimal uses of the new ACL-AX system.

INTERNAL AUDIT CONSTRUCTION AUDIT PLAN 2012

Provided status of the construction audit as of June 1, 2012, identifying the different reviews performed and the corresponding status (Planning, as planned, priority, and




critical).

REVIEW OF INTERNAL CUSTOMER SATISFACTION SURVEY (Q6) FOR AUDIT

Tom Boyle presented a comparison of the results of the customer satisfaction survey performed both in April and October 2012. The survey illustrated the departments receiving services from IAS as of September 2012. The participating departments provided feedback on:

Attitude.

Communication.

Timeliness.

Accuracy.

Effectiveness.

COMPLIANCE AND ETHICS COMMITTEE REPORTS

Mark Neu presented a status update regarding the last meeting sustained by the Compliance and Ethics committee, in which the following topics were addressed:

Revenue Cycle.

False Claims Reporting Policy.

Work Plan Initiatives 2012.

Roundtable Discussion.

Mark Neu indicated that follow up needs to be performed for some of the topics above and a new update will be provided at the next Compliance and Ethics committee meeting.

REVIEW OF INTERNAL CUSTOMER SATISFACTION SURVEY (Q6) FOR COMPLIANCE

Mark Neu presented a comparison of the results of the customer satisfaction survey performed both in April and October 2012. The survey illustrated the departments receiving services from the Compliance department as of September 2012. The participating departments provided feedback on:




Attitude.

Communication.

Timeliness.

Accuracy.

Effectiveness. Mark Neu recognized all the great work performed by Tom Boyle and Janine Sarti, who were acting on the compliance responsibilities before Mark Neu came on board to Palomar Health.

DATE/TIME & LOCATION OF NEXT MEETING

The next meeting of the Internal Audit and Compliance Committee is scheduled to be held on Thursday, July 19,

2012 at 5:15 p.m. in the 1st Floor Conference Room At 456 E. Grand Conference Room.

ADJOURNMENT The meeting was adjourned at 6:48 P.M. Director Bassett moved to adjourn.

SIGNATURES

Committee Chairperson

Secretary to

Committee

________________________ [Nancy Bassett, R.N., M.B.A.] ________________________ [Ruhina Livingstone / Lucy Maxwell]

Palomar Health

Compliance and Ethics Committee Activity Report

September 6, 2012

Compliance Program Overview – Presentation and discussion regarding the Seven Elements of an

Effective compliance program. The 7 elements are 1) written standards, 2) a Compliance Officer, 3)

Education and Training, 4) a hotline, 5) response system to allegations that includes appropriate

disciplinary actions, 6) audits and monitoring to reduce problems, and 7) investigation and

remediation of problems and the non-employment of sanction individuals. The District has all of

these elements.

Compliance Program Assessment – Discussion continued his discussion regarding how the District is

compliant when is delivers healthcare that is medically necessary, meets professionally recognized

standards, is charged and billed correctly, provided without financial incentives, promotes patient’s

rights, and is provided by qualified caregivers in and approved facility.

Revenue Cycle Report – The report was created for the Utilization Review Committee by Melissa

Wallace, Manager of Revenue Cycle Analytics. The report is a “big picture” so staff and physicians

would become accustomed to using the same dashboard. Speaks to Observation cases, as well as to

Medicare RAC denials, both Medical and Surgical. #3: Credit balances are also another problem on

which there should be a drill-down. Addition compliance-related dashboard elements will be added

from appropriate departments.

Privacy Report - The Privacy Report was published in the packet but was not discussed due to time

constraints. No significant issues raised.

Work Plan Initiatives 2012 –

o Clinical Resources Management - 1.1a Create a process to improve patients with correct

status designation for minor procedures and observation status. Six elements are being

addressed by way of #1: new position and changed hours for PAL ED from 7am to midnight,

with 10-hour and 8-hour shifts. Also re-designating priorities for POM staff. #2: Education

and training under development for the Code 44 process; training is scheduled for October.

#3: An Observation report is created and distributed to physician’s daily and improved

communication.

o CEC – Billing and Compliance - 0% clean claim rate in January meant that all bills were being

stopped, and billers were looking at 100% of claims before they went out which caused

delayed cash flow. As of July, it had improved to 53%. Also reviewing the top claim edits

by volume and by dollar to determine what can be done in the system before that claim is

created and/or before the patient is discharged to avoid having to do an edit

o Project: Data Security – Encryption - This project was on hiatus prior to the new hospital

opening, as the PC Techs were all working on getting equipment installed and running there,

but it has now been reinvigorated. There are about 250 laptops that are so old they cannot

accept the encryption, but a number of those may not need to be replaced

o Project: Conflict of Interest 2012 - electronic survey out via Survey Monkey in July to

Supervisors and above. 12% of respondents reported a potential conflict, and are in the

process of being reviewed.

o Project: Identify Financial Relationships with Referral Sources - this Work Plan had been

completed with the exception of some need to identify methods for education

o Project: Information Privacy Breach - Privacy Dashboard presented at CEC. This project still

in progress.

o Project: Information Privacy – Faxing - this Work Plan had been completed

o Project: Medically Unnecessary Admissions - This project still in progress.

o Project: Medicare Billing Regulations – New staff position identified to complete this task.

This project still in progress.

o Project: Patient Grievance - This project still in progress.

o Project: Public Contracting Responsibilities - this Work Plan had been completed

o Project: Sepsis - This project still in progress. Exceptional PEPPER data will be reviewed at

CEC as a routine agenda item.

Report to The Palomar Health

Audit and Compliance Committee September 20, 2012

Compliance Overview and Assessment

A comprehensive compliance program should include:

• The development and distribution of written standards of conduct, as well as written policies and procedures that promote the hospital’s commitment to compliance (e.g., by including adherence to compliance as an element in evaluating managers and employees) and that address specific areas of potential fraud, such as claims development and submission processes, code gaming, and financial relationships with physicians and other health care professionals;


• The designation of a chief compliance officer and other appropriate bodies, e.g., a corporate compliance committee, charged with the responsibility of operating and monitoring the compliance program;


• The development and implementation of regular, effective education and training programs for all affected employees;


• The maintenance of a process, such as a hotline, to receive complaints, and the adoption of procedures to protect the anonymity of complainants and to protect whistleblowers from retaliation;


• The development of a system to respond to allegations of improper/ illegal activities and the enforcement of appropriate disciplinary action against employees who have violated internal compliance policies, applicable statutes, regulations or Federal health care program requirements;


• The use of audits and/or other evaluation techniques to monitor compliance and assist in the reduction of identified problem area;


• The investigation and remediation of identified systemic problems and the development of policies addressing the non-employment or retention of sanctioned individuals.

Health Care is Compliant when it:

Is Medically Necessary and Meets Quality Standards

• Inpatient - Interqual

• Outpatient – Advance Beneficiary Notice (ABN) screening

• Does care meet professionally recognized standards? i.e. Falls, Retained Foreign Objects, wrong site surgery, etc.

Health Care is Compliant when it: Is Documented, Charged, Billed and Reimbursed correctly • Palmetto’s Local Coverage Determination (LCDs)

and the National Coverage Determination (NCDs) • Does the documentation support the charges? • Credit balances returned within 60 days (Reverse

false claim) • Medicare as Secondary Payor? • Coding accuracy • Cost report accuracy • Billing accuracy – internal and contracted


Is provided without Financial Incentives

• Stark – “Everything in writing, nothing for free”

• Non-Monetary Compensation log ($373)

• Fair Market Value (FMV)

• Anti-Kickback Statute (AKS) – “Quid pro quo”

• Patient Inducement prohibition ($10/$50)

• Patient gift tracking (Service Recovery?)

• Local / Courtesy transportation


Promotes Patient Rights

• Privacy

• EMTALA

• Restraints

• Grievances


Is provided by Qualified Caregivers in an Approved Facility • Excluded parties screening – OIG and GSA’s Excluded Parties List

System, Medi-Cal’s Suspended and Ineligible Provider List (S & I List) • Criminal background screens • Appropriate privileging • Clinical staff licensing • Licensed appropriately? • Do the services listed on the license match the services being

provided and billed? • Do the beds/bed types on the license match the actual use? • Does the address on the license match the physical location?

Conclusion

• Structure in place

• Continue to foster a culture of collaboration

• Next steps

– Dashboards / short lists to CEC

– Contemporaneous compliance review

– Targets and milestones

Report to The Palomar Health

Audit and Compliance Committee September 20, 2012

Annual Conflicts of Interest review

Conflicts of Interest

• Free items and gifts can create an unconscious sense of reciprocal obligation

• “Annually each employee of PPH with the position of supervisor or above will complete and return to the CEO or his designee a conflict of interest disclosure form. Contractors will complete this same form prior to beginning their work for PPH. Any individual completing this form will have an on-going duty to provide further disclosure to the CEO or his designee in a timely way if the information reported changes.”

• Eight questions via electronic survey

• 263 Supervisors and above

Question One

• Ownership in or representation of an entity that does or would like to do business with PPH , Medicare, Medicaid, Title V (Maternal and Child Health Services Block Grant) or Title XX (Grants to States for Aid to the Blind)

QuestionTwo

• Ownership in or representation of an entity supplying goods or services to any competitor of PPH:

Question Three

• Ownership in or representation of, or employment by, any insurer, health plan, insurance agency or brokerage firm.

Question Four

• Ownership in any mortgage, deed of trust, note or other obligation provided, obtained, or secured by PPH:

Question Five

• Arrangement with PPH to purchase goods, services (excluding personal health services), or assets:

Question Six

• Leases, contracts, loans, or other agreements with PPH:

Question Seven

• Officer, director, manager or other responsible position with any vendor or competitor of PPH:

Question Eight

• During the current fiscal year (July 1, 2011 to present) I have accepted the following gifts, hospitality and/ or entertainment from companies that do or may want to do business with PPH (list each gift or instance of entertainment and its approximate value, including gifts, hospitality and entertainment received on behalf of individuals that report to you):

Conclusion

• 88% of respondents denied any potential conflicts of interest

• 12% of respondents submitted appropriate disclosures

• Next steps

– Additional COI education in annual training

– Development of FAQ

– Completion in Xpand

Report to

The Palomar Health

Audit and Compliance Committee

September 20, 2012

2

Audit Activity Impact

1 Construction Audit – PMC West and other Master Facility Plan projects Financial

2 Revenue Cycle Activities (CDI, CDM, Coding, Collections) Financial

3 Payroll - Continue to develop and maintain Continuous Control Monitoring (CCM) system

Financial

4 Accounts Payable - Continue to develop and maintain CCM system Financial

5 General Ledger - Develop and maintain CCM system Compliance

6 Compliance - Continue to administer Hot Line and maintain CCM system OIG/CMS Compliance

7 Medical Staff Physician Credentialing Quality

8 Information Technology Compliance

9 Develop and Implement Leadership Audit Training (Operational Controls Quality

10 Perform Annual Audit Risk Assessment Quality

11 Coordinate External Quality Review of Internal Audit function and construction audit Quality

12 EMT Expense Reimbursement – Required annually Quality

13 Follow Up to prior audits; (Pharmacy, Cost Report, Information Security, +) Financial

High FINANCIAL Low High COMPLIANCE Low High QUALITY Low

PPH Internal Audit Plan 2012

3

Audit Activity Resource %*

1 Construction Audit – PMC West and other Master Facility Plan projects 25-30

2 Revenue Cycle Activities (CDI, CDM, Coding, Collections) 10-15


6-8

4 Accounts Payable - Continue to develop and maintain CCM system 6-8

5 General Ledger - Develop and maintain CCM system 6-8

6 Compliance - Continue to administer Hot Line and maintain CCM system OIG/CMS 8-10

7 Medical Staff Physician Credentialing < 5

8 Information Technology < 5

9 Develop and Implement Leadership Audit Training (Operational Controls 5-10

10 Perform Annual Audit Risk Assessment < 5

11 Coordinate External Quality Review of Internal Audit function and construction audit < 5

12 EMT Expense Reimbursement – Required annually < 5

13 Follow Up to prior audits; (Pharmacy, Cost Report, Information Security, +) < 5

* Estimated allocation of departmental resources based on full staffing


4

Audit Activity Scope *

1 Construction Audit – PMC West and other Master Facility Plan projects Recurring

2 Revenue Cycle Activities (CDI, CDM, Coding, Collections) New


New

4 Accounts Payable - Continue to develop and maintain CCM system Recurring

5 General Ledger - Develop and maintain CCM system Recurring

6 Compliance - Continue to administer Hot Line and maintain CCM system OIG/CMS Recurring

7 Medical Staff Physician Credentialing Carry Over

8 Information Technology Recurring

9 Develop and Implement Leadership Audit Training (Operational Controls New

10 Perform Annual Audit Risk Assessment Recurring

11 Coordinate External Quality Review of Internal Audit function and construction audit New

12 EMT Expense Reimbursement – Required annually Recurring

13 Follow Up to prior audits; (Pharmacy, Cost Report, Information Security, +) New

* Scope includes annually recurring audit activities, continuation of projects in process and new or revised projects.


Cost Report Pharmacy IT Audit

Continue to administer Hot Line and maintain CCM system OIG/CMS

5

Internal Audit Project as of Sept 13,2012

2012

Construction

Revenue Cycle

Payroll

Continuous

Monitoring

General Ledger/

Cost Reporting

Compliance

Medical Staff

Physician

Credentialing

Information

Technology

Leadership Audit

Training

Risk Assessment

External QAR

External QAR of

Construction Audit

Follow Up

EMT Expense

Reimbursement

* Independent

Contracting

Pharmacy Follow up

Postponed due to resources and priority projects

Payroll HR Audit

This is a schedule audit in the audit plan reviewing the payroll process controls and verifying the authorization of payments and deductions.

Fieldwork is complete; a draft report has been issued to Finance and Human Resources management.

No material findings have been discovered.

Exit meeting with management for the formal delivery of the audit report has been scheduled for 10/19/12.

Pharmacy Follow Up Planning phase for the Follow Up review of the Pharmacy audit performed

in 2010.

Entrance meeting has been scheduled with the Pharmacy management on 9/20/12.

External Quality Assessment Review An internal self assessment was performed and reported during fiscal

year 2012.

Requests for proposals are being sent to several external firms to perform an impede dent review of the internal audit function.

Executive Expense Reimbursement

This is a planned annual review of expense reimbursements to the executive management team expanding the scope to include credit card usage by all corporate cardholders.

Final analysis is being completed.

Acl analytics will be developed to monitor and report exceptions on a recurring basis.

Summary of Operational Support Activities 4 Reporting processes for Patient Financial Services were converted to

ACL for improved efficiency.

A system upgrade was completed which included the migration of data and ACL software to a new virtual server environment and enhanced functionality.

Training/study of changes in server implementation by Microsoft in order to maximize use of AX server.

Continued support of ongoing reports and CCM’s.

Revised format of daily census report for Performance Excellence to accommodate changes resulting from West go-live.

Enhanced ACL scripting methodology.

Evaluation of Audit work paper Technology to replace higher priced c360 currently used.

Modified excluded provider test to comply with OIG data changes.

Construction Audit Activity Critical audit objectives were achieved by completing invoice reviews and

billing reconciliation for PMC West to coincide with the close out schedule for the 4 major trade.

Construction Audit Activity Continued retrospective reviews of trade billings and management of

owners construction insurance program will continue through the fiscal year. (right to audit clause extends to 36 months after project completion.

Planning has commenced with facilities management for updating the scope and priority of current and proposed construction activities.

Palomar Pomerado Health

Internal Audit

Construction Audit Plan 2012

Co

ntr

actu

ally

Req

uir

ed

Peri

od

ic A

ud

its

General Scope and Objectives

Recurring Planned Projects

Berg Electric x Electrical Contractor - Cost Reimbursable with Risk and Incentive based on Target Price. 25%

of Savings between Actual Cost of Work and Target Price

DPR Drywall Construction x Drywall Contractor - GMP with Risk and Incentive. 25% of Savings in GMP

University Mechanical & Eng.

Contractors x

Mechanical & Plumbing Contractor - Cost plus Fee with Risk and Incentive based on Target

Price. 25% of Savings between Actual Cost of Work and Target Price

Planned Projects

Change Order Process Assess the appropriateness and controls in the change order process maintained by the

Construction Manager, DPR.

DPR Site Requirements Cost Reimbursable

DPR - Construction Management Construction Manager - Review compliance to contractual obligations

Co-Architects

Primary Architects - Fee for Service

Medical Equipment Purchasing Process Review

RTKL Contract review for Equipment Procurement Consultant

Owners Construction Ins. Program

(OCIP) Confirm proper accounting for mandatory insurance program for all Trade Contractors

Trade Contractors Various Trade Contractors - Lump Sum Contracts: Review Change Orders

Ramona Clinic Pre-Construction Contract Review

Rehabilitation Hospital Pre-Construction Contract Review

Risk Assessment x Continue to evaluate emerging exposures and construction risks

NOTE: This plan is intended to be a dynamic instrument, by which the priorities, scope, objectives, timing, and resources are subject to change based on changing conditions to

include environmental, business operations, and availability of resources. As a result, updates to this plan will be periodically created and distributed as needed. The descriptions of

each project are general in nature, with the specific scope and objectives to be developed as part of each project, usually with the cooperation of subject matter stakeholders.

Tom Boyle

District Audit Officer

Steve Barrett

Senior IT Specialist

Lucy Maxwell

Senior Internal Auditor

Robert Schirripa

Construction Auditor

Chris Udell

Construction Auditor

Ruhina Livingstone

Administrative Assistant


Internal Auditor

Eliminated

Tom Boyle

District Audit Officer

Lucy Maxwell


Steve Barrett

Senior Audit IT Specialist


Internal Auditor

Eliminated to Executive Assistant

for Audit, Compliance and Legal

Documents

Palomar Pomerado Health - Palomar Health