The document discusses compliance and accounts receivable risk areas for skilled nursing facilities. It identifies five main risk areas for bad debt and lost revenue: bad debt, compliance issues, inefficiencies and waste, cash flow problems, and theft. It also provides tips for minimizing these risks through best practices in admissions, compliance processes, personnel management, billing and collection standards, and oversight and monitoring.

1. COMPLIANCE
WHAT YOU DON’T KNOW CAN
HURT YOU !
Presenters: Jennifer Richter CPA
Carolyn Lookabill

2. Notice of Disclosure
Richter Healthcare Consultants has produced this material as an
informational reference. Richter Healthcare Consultants employees,
agents, and staff make no representation, warranty, or guarantee that
this compilation of information is error-free and will bear no
responsibility or liability for the results or consequences of the use of
this material. Although every reasonable effort has been made to
assure the accuracy of the information within these pages at the time of
publication, the healthcare environment is constantly changing, and it
is the responsibility of each individual to remain abreast of the
regulatory and reimbursement compliance. Any regulations, policies
and/or guidelines cited in this publication are subject to change without
further notice. Current Medicare regulations can be found on the
Centers for Medicare & Medicaid Services (CMS) Web site at
http://www.cms.hhs.gov.

3. 3
Objectives for the Day
Participants will be able to:
 Describe the components of a compliance program
 Name at least three accounts receivable risk areas
 List and explain at least three performance indicators to
help ascertain the monthly efficiency of the SNF Business
Office
 List the sequential steps of the Triple Check process
 List and describe at least one of the compliance audit
programs
 Delineate the steps for denial management by Business
Office staff

4. 5 A/R Risk Areas
 Bad Debt/Lost Revenue
 Compliance
 Inefficiencies and Waste
 Cash Flow
 Theft

5. Risk #1- Bad Debt and Lost Revenue
 Bad Debt
 Timely filing
 Poor admissions processes
 Lack of technical knowledge
 Lack of documentation
 Denial Management and Collections
 Inadequate software

6. Risk #1- Bad Debt and Lost
Revenue
 Lost Revenue
 Poor clinical documentation and MDS process
 Technical knowledge
 Charge tracking
 Software inadequacies

7. Risk #2- Compliance
 Audit programs
 Lack of audit readiness
 Insufficient documentation of medical necessity
 Inadequate training and education
 Poor internal monitoring

8. Risk #3- Inefficiencies and Waste
 Increased salaries and contract staff
 Poor productivity and performance
 Lines of credit-interest
 Consolidated billing

9. Risk #4- Cash Flow
 Inability to cover expenses
 Late fees and penalties
 Interest and penalties
 Inability to reinvest in the business
 Community image
 Industry relationships
 Inability to obtain financing

10. Risk #5- Theft
 Employee embezzlement
 Overt/covert
 Theft of time
 Theft of supplies
 Any theft represents a theft of trust and
security…the foundation of your operations and
the premise of your branding…advertising

11. How Can We Minimize Risk?
 Admissions-Best Practices
 Compliance Processes
 Personnel Management
 Billing and Collection Standards
 Oversight and Monitoring

12. Admissions
 Best Practices-
 Communication/education with family
 Admissions staff, Nurse liaison
 Exchange of information
 Verifications
 Medicare, third party insurances, prior SNF stays
 Paperwork
 Hospital, Physician, resident Medicaid evidentiary
 Contracts
 Inclusions/exclusions, pre-authorization requirements, billing &
documentation requirements
 Deal directly with carriers or use a service such as MNS
 Costing of care
 Integration of Electronic Data with other providers

13. Admissions
 Admissions is not about filling beds
 Admissions is about filling beds and then getting
paid for those beds
 Admissions is not a person or a department
 Admissions is a process…one that is impacted by
everyone in the facility
 Admissions practices from the inquiry forward
impact receivables

14. Compliance
 Legislations and Programs
 Recent Compliance Changes
 Developing a compliance program
 Preparing for a compliance audit
 Compliance best practices

15. Compliance
 Under the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (MMA), CMS was required to take steps
to streamline the claims processing and review process:
 CMS was required to replace the current Medicare Fiscal
Intermediaries (Part A) and Carriers (Part B) contractors with
Medicare Administrative Contractors (MACs)
 After setting up the new MAC regions, CMS created new
entities, called Zone Program Integrity Contractors (ZPICs)
 ZPICs have been taking over the Program Safeguard Contractor
(PSC) audit and enforcement activities across the country.
 The change from PSC to ZPIC is mostly transparent
 The major difference is in the level of referrals for civil and
criminal referral

16. Compliance
 Entities charged with responsibility for Billing
Compliance oversight
 HHS-OIG (Office of the Inspector General)
 CMS (Center for Medicare & Medicaid Services)
 Medicare
 Comprehensive Error Rate Testing (CERT) Program
 Zone Program Integrity Contractors (ZPICs)
 Recovery Audit Contractor Program (RAC)
 Medicaid
 Medicaid Integrity Contractors (MICs)
 Medicaid Recovery Audit Contractor Program (MDRAC)

17. Compliance
 CERT
 Main contributors to claim error rate determination
for SNF
 Insufficient documentation to support RUG code billed
 Medical documents do not contain patient condition, type
of treatment provided, documentation of therapy notes or
progress notes submitted
 No documentation of qualifying medically necessary
three day inpatient hospital stay
 Insufficient documentation submitted to support a
medically necessary three day inpatient hospital stay or
 Not submitting an authenticated hospital discharge
summary for the dates of service in question

18. Compliance
 If a SNF has a high volume of errors or
denials, CGS will take any or all of the following
actions:
 Referral to a ZPIC
 Expanded pre-payment review resulting in payment
delays
1
8

19. Compliance
 ZPIC Actions
 Pre-Payment Audit
 Post-Payment Audit
 Suspension
 Revocation
 Referrals for Civil and Criminal Enforcement

20. Compliance
 Medicaid Integrity Audit Program
 Audit Medicaid Integrity Contractors (MICs) are
entities with which CMS has contracted to perform
audits of Medicaid providers across the country.
 Audit MICs will perform field and desk audits.
 Providers usually will be selected for audits based
on data analysis by other CMS contractors. May
also be referred by State agencies.
 CMS will ensure that it’s audits do not duplicate any
state audits nor interfere with potential law
enforcement investigations.

21. Compliance
 MIC Audit Process
 MICs have authority to request and review copies
of provider records, interview providers and
personnel and have access to provider facilities.
 Providers will generally have at least two weeks to
respond to record requests and can request an
extension, if necessary.
 MICs will contact the provider to schedule an
entrance conference. Notification letters will
identify a primary point of contact at the MIC.

22. Compliance
 RAC Program – Recovery Audit Contractor
 Provider selection is NON-subjective
 Areas of review (“issues”) approved by CMS
 Issues posted on RAC website prior to claim audit
 Two types of audits:
 Automated
 Complex review
 Post Payment Audit
 Recoupment through MAC
Review Demonstration Project findings: www.cms.hhs.gov/rac
Review the OIG and CERT reports
Office of Inspector General
OIG Reports: www.oig.hhs.gov/reports.html
Comprehensive Error Rate Testing Program-CERT
CERT: www.cms.hhs.gov.cert

23. Recent HIPAA Changes
 Redefining of the term “business associate” to include sub-
contractors that create, receive, maintain or transmit PHI on behalf of
business associate
 Requiring direct liability for business associates who fail to comply
with the HIPAA rule requirements
 Placing new limitations on the use & disclosure of PHI for marketing &
fundraising
 Restricting the sale of PHI without authorization
 Adopting a more objective breach notification threshold and new risk
assessment requirements

24. Recent HIPAA Changes
 Allowing individuals access to PHI where requested & providing
additional guidance on fee sharing
 Restricting disclosure of PHI concerning treatment paid out of pocket
 Issuing new guidance regarding disclosures of PHI after an individual’s
death
 Requiring modifications and redistribution of notice of privacy
practices and
 Incorporating the HITECH Act’s increased & tiered civil money penalty
structure
 Information provided by www.Rolflaw.com

25. Compliance for SNFs
March 2013 Mandate
 The Patient Protection and Affordable Care Act
(ACA or ACT) includes section 6102 requiring NFs
and SNFs to have in place a compliance and
ethics program effective in “preventing and
detecting criminal, civil and administrative
violations under this Act and in promoting
quality of care.”

26. 8 Requirements for SNF Compliance
Program
 The organization must have established compliance
standards and procedures to be followed by its employees
and other agents that are reasonably capable of reducing
the prospect of criminal, civil and administrative violations
under this Act.
 Specific individuals within high level personnel of the
organization must have been assigned overall
responsibility to oversee compliance with such standards
and procedures and have sufficient resources and
authority to assure such compliance.

27. 8 Requirements for SNF Compliance
Program
 The organization must have used due care not to delegate
substantial discretionary authority to individuals whom
the organization knew, or should have known through the
exercise of due diligence, had a propensity to engage in
criminal, civil and administrative violations under this Act.
 The organization must have taken steps to communicate
effectively its standards and procedures to all employees
and other agents, such as by requiring participation in
training programs or by disseminating publications that
explain in a practical manner what has happened.

28. 8 Requirements for SNF Compliance
Program
 The organization must have taken reasonable steps to
achieve compliance with its standards, such as by utilizing
monitoring and auditing systems reasonably designed to
detect criminal, civil and administrative violations under
this ACT by its employees and other agents and by having
in place and publicizing a reporting system whereby
employees and other agents could report violation by
others within the organization without fear of retribution.

29. 8 Requirements for SNF Compliance
Program
 The standards must have been consistently enforced
through appropriate disciplinary
mechanisms, including, as appropriate, discipline of
individuals responsible for the failure to detect an offense.
 After an offense has been detected, the organization must
have taken all reasonable steps to respond appropriately
to the offense and to prevent further similar
offenses, including any necessary modification to its
program to prevent and detect criminal, civil and
administrative violations under this Act.

30. 8 Requirements for SNF Compliance
Program
 The organization must periodically undertake
reassessment of its compliance program to identify
changes necessary to reflect changes within the
organization and its facilities.

31. Increased costs of SNF Compliance
 March 2013 requirement for SNFs to establish a
compliance program
 SNFS must “separately report expenditures for wages and
benefits for direct care staff.” Info must be made available
to interested parties.
 Facility must electronically submit direct care staffing
information
 SNFs must conduct criminal records, fingerprint checks
and search State-based abuse and neglect registries and
databases on all prospective employees who have
patient access

32. Increased costs of SNF Compliance
 Disclosure of ownership interests for owners of NFs
 NFs must “have reports with respect to any
surveys, certifications and complaint investigations” made
within the past three years “available for any individual to
review upon request”, must also “post notice of the
availability of such reports” in a prominent and accessible
to the public locations

33. Increased costs of SNF Compliance
 The owner, operator, employee, manager, agent or
contractor of an LTC facility that received at least $10,000
in federal funding, must report to 1 or more law
enforcement entities in the facility’s political subdivision
any reasonable suspicion of a crime.

34. Personnel Management
 Smart hiring practices
 Job descriptions and performance
measurements
 Monitoring
 Sufficient training and ongoing education
 Staffing levels based on facility size and type
 Evaluation protocol

35. Personnel Management
 Smart Hiring Practices
 Written application vs. resume only-obtain recent work references
 Look for errors, check handwriting, length of tenure at past positions, gaps in
employment without explanation
 Team or group interview
 Involve department head, co-workers in at least one stage of the interview
process
 Background checks
 Situational questions
 Skills testing
 Excel
 Sample spreadsheets

36. Personnel Management
 Job Descriptions
 Written job descriptions which include:
 Technical and skill requirements for the position
 Description of job duties and tasks
 Delineation of organizational chart or supervisory chain
 Performance measures

37. Monitoring
 Review key indicators
 Enlist third party process review
 Conduct job performance evaluations
 Follow disciplinary track
 Require minimum continuing education hours

38. Personnel Management
 Training and Education
 Orientation including 1:1 training
 Written Policies and Procedures
 In person or online tutorials & resources for
technical topics
 Medicare University
 Regional or Corporate training by the employer
 Trade or Professional association training via
seminar/webinar
 Online software tutorials e.g. Excel, billing software

39. Personnel Management
 Staffing levels
 Industry standard is one FTE in the business office
per 100-150 beds
 Not including responsibility for:
 Human Resources
 Payroll
 Accounts Payable
 Clerical Supervision

40. Personnel Management
 1:1 mentoring and supervision
 Can new employees shadow seasoned employees?
 Use of performance measures
 Timely filing deadlines
 Bad debt ratios
 Counseling and re-education if needed
 Disciplinary actions
 30 day performance improvement plan
 Provide opportunities for ongoing training as appropriate
 Trade association webinars and seminars
 List-servs
 CMS-SNF open door forums
 Vendor training

41. Billing and Collection Standards
 Software and technical resources
 Communication
 Accuracy checks and balances
 Triple Check process
 Technical knowledge of revenue and payer
requirements
 Denial management
 Lost revenue charge capture

42. Oversight and Monitoring
 Aging reviews
 Performance indicators
 Internal auditing
 Process review
 Cash Monitoring
 Safeguarding A/R and cash
 Loss Prevention

43. Oversight and Monitoring
 Aging Reviews
 Regular A/R Reviews with the Business Office
 Watch for red flags
 Private Pay > 30 days
 Medicare > 30 days
 Medicaid > 30 days
 Medicaid Pending
 Managed Care > 30 days
 Co-insurance 45-60 days

44. Oversight and Monitoring
 Performance Indicators
 Days Sales Outstanding (DSO)
 Benchmark is 40 days or less
DAYS SALES OUTSTANDING (DSO) EQUATION:
GROSS REVENUE FOR 3 MONTHS DIVIDED BY DAYS
(I.E. 90-92 DAYS) = DAILY AVERAGE REVENUE
CURRENT A/R DIVIDED BY DAR(DAILY AVERAGE REVENUE) =
DAYS SALES OUTSTANDING (DSO)
 Trend Analysis
 Shows aging breakdown by payer and age
 Shows percentage of A/R from current, 30-60 day and 90 days+
 Bad debt should be less than 1% of net revenue

45. Oversight and Monitoring
 Compliance audits
 Review accuracy of claim data to the chart
 Beneficiary Information
 MDS Information
 RUG Comparison
 Dates (ARD, SOT, COT, EOT, EOT-R, etc.
 Therapy Minute
 Nursing Documentation
 Physician Orders
 Supportive of Therapy / Skilled Care Continuation
 MARS / TARS

46. Process Review
 Charge capture
 Verify reconciliation to source documents and
census
 Consolidated Billing practices
 Cash processes
 Daily deposit
 Segregation of duties
 Reconciliation to source documents
 Documentation storage

47. Process Review
 Billing ( by payer)
 Medicaid
 Verification of charges and claim data
 Reconciliation of patient resources
 Medicare Part A
 Verification of charges and claim data
 Triple Check process/Compliance

48. Process Review
 Private Pay
 Pre-billing?
 Charge capture-reconciliation
 Third Party insurances/payers
 Verification of charges and claim data

49. Process Review
 Denial Management / Remittance Reconciliation
Process
 Collections
 Fair Debt / Collections Act
 Consistent Processes
 Adjustments
 Documentation / Prior Approval

50. Process Review
 Month End
 AR Reconciliation
 Revenue Test
 Checks & Balances
 Resident Trust

51. Process Review
 Documentation Review
 Questionnaire
 Review Sample of Accounts for Appropriate Billing /
Collection
 Compare Processes to Corporate Compliance Plan /
Policy & Procedure Manual

52. Process Review
 Plan of Correction
 Implementation of Corrective Action
 Creation of Compliance Plan / Policy & Procedures
 Monitoring Compliance
 Performance Evaluation

53. Oversight and Monitoring
 Cash Monitoring
 The monthly cash collections should be fairly
consistent
 Payment receipt by payer:
 Medicare- 14 days
 Medicaid- 7-10 days
 Managed Care-Electronic- 2-3 weeks
 Managed Care-Hard Copy- 45 to 60 days
 Private Pay- facility policy but should be 10-15 days

54. Oversight and Monitoring
 Loss Prevention
 Segregation of duties should require a minimum of
two staff members to complete a deposit from start
to finish
 A lockbox or scan directly to the bank is an option
to reduce the risk of lost or stolen checks
 Medicare, Medicaid and most insurance companies
have Electronic Funds Transfer (EFT)
 Checks should require more than one signature

55. Top 10 Recommendations for Compliance
1. Establish a Compliance strategy per the March 2013 mandate
2. Appoint and empower a Compliance Officer/Team
3. Get a copy of the OIG 2013 Workplan for SNFs
4. Learn about the various audit programs such as RAC, ZPIC, CERT, etc. via trade
associations, list servs, compliance training
5. Implement the Triple Check process for Medicare claims prior to submission
6. Implement an internal compliance audit process
7. Review all Business Associate Agreements for compliance
8. Review all PHI disclosures, tracking systems and privacy notice procedures
9. Provide training for staff re False Claims Act. Ensure that employees know
what and when to report…without retaliation
10. Sign up to receive any of the industry updates on compliance

56. Resources for Additional Compliance Info
 MLN Matters Articles/MedLearn - Medicare Learning Network Keeping
providers up to date on Medicare changes
 Listservs - Mailing lists where you can pick and choose which topics you’d
like to be informed about
 Open Door Forums - opportunity for live dialogue between CMS and the
provider community
 Quarterly Provider Updates – Changes to regulations, major
policies, manual instructions
 Professional Association newsletters
 Medicare Carriers Manual
 National and Local Coverage Determinations
 Medicaid Manual

57. Resources for Additional Compliance Info
• Recovery Audit Contractor Program- www.cms.gov/rac
• Office of the Inspector General- www.hhs.oig.gov
• HC Pro- www.hcpro.com

58. Resources for Additional Compliance Info
 www.hcpro.com The RAC Report
 RAC websites and list servs
 CGI- http://racb.cgi.com
 www.aapc.com
 American Association of Professional Coders
 For additional information regarding coding

59. Contact Richter Healthcare Consultants Today!
Phone: (216) 593.7140
Toll Free: 1.866.806.0799
Fax: (216) 593.7141
Email: jennifer.richter@richterhc.com
carolyn.lookabill@richterhc.com
Web: www.richterhc.com
Visit: 8948 Canyon Falls Blvd. Suite 400
Twinsburg, OH 44087