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Extracted from Consolidated Report
This investigation was originally published as part of a larger consolidated report containing multiple investigations. View the consolidated PDF for the complete document.
Los Angeles County Grand Jury
• 2013-2014
A Timely and Clean "Bill" of Health May Save $285 Million
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings 12 findings
F1
Page 67
Medi-Cal accounts represent the majority of write-offs for the Untimely Billing write-off sub-classification.
F2
Page 67
The Department does not use Affinity Adjustment Codes or Reason Codes in all “Failed to Bill” for Time Constraints (WFB) classifications uniformly, making it difficult to accurately assess weaknesses in business processes contributing to DHS write- offs. By properly assigning stipulated codes and reviewing the data on write-offs, DHS management may be able to better address recurring internal problems.
F3
Page 67
The sample of Untimely Billing write-offs analyzed demonstrates key trends that align with reported problems in interviews. 47 2013-2014 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT A TIMELY AND CLEAN “BILL” OF HEALTH MAY SAVE $285 MILLION
F4
Page 68
Vendors are not following-up on some denials and information provided by the vendor does not enable DHS to determine causes for the denial.
F5
Page 68
Facility Patient Financial Services is not processing some accounts in a timely fashion
F6
Page 68
The Department’s Consolidated Business Office is not processing some claims in a timely fashion.
F7
Page 39
Facility Utilization Review divisions maintain a substantial backlog on patient medical records in need of review for medical necessity
F8
Page 79
Overall, Medicare gross charges of the Incomplete or No Medical Documentation write-offs are the highest among all payers, accounting for $101.6 million in DHS gross charge write-offs between Fiscal Years 2008-09 and 2012-13.
F9
Page 79
The audit sample of Incomplete or No Medical Records write-offs demonstrated key trends that aligned with problems reported by DHS staff involved in managing and executing the patient billing processes.
F10
Page 79
Approximately $24.5 million in gross charge write-offs between FY 2009-10 and 2012-13 was attributed to physicians without National Provider Identifier numbers and required authorization with DHS for billing of services to Medicare.
F11
Page 40
Barriers or complications in coding accounts by Health Information Management divisions.
F12
Page 79
Coding backlogs in Health Information Divisions.
Recommendations 18
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R1Page 35Utilize DHS’s electronic billing system, Affinity Adjustment Codes on all accounts for classifying and better explaining the reasons for all write-offs.
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R2Page 36Update the DHS write-off procedure to include all Reason Codes, including new Codes, as they are developed.
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R3Page 36Expand the scheduled availability of Patient Financial Service Worker staff at all hospitals.
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R4Page 36Develop and track a Reason Code classifying write-offs for denied or late claims that are billed by the DHS Consolidated Business Office without Treatment Authorization Requests (TARs) or InterQual Reviews (IQRs) demonstrating the medical necessity of the services provided.
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R5Page 36Formalize the point at which Medi-Cal fee-for-service accounts are retrospectively reviewed for patients still in the Department hospitals.
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R6Page 36Conduct a Utilization Review staffing analysis at county hospitals as an increase in staff may substantially increase Department cash flow by decreasing backlogs and increasing the timeliness of billings. SECTION TWO Incomplete or No Medical Records DHS write-offs due to Incomplete or No Medical Records totaled $101,568,377 in gross charges between FY 2008-09 and FY 2012-13. During the fiscal years reviewed, write-offs of Medicare accounts totaled $57,673,677, or over 56 percent of the write-offs, because of Incomplete or No Medical Records. LOS ANGELES COUNTY 2013-2014 CIVIL GRAND JURY FINAL REPORT iv A TIMELY AND CLEAN “BILL” OF HEALTH MAY SAVE $285 MILLION The CGJ found three primary causes of Incomplete or No Medical Records write-offs:
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R7Page 37Utilize available systems and tools, and require DHS physicians to report their National Provider Identifier (NPI) number and complete the 855R form linking the NPI number to DHS, as required for Medicare billing purposes, prior to commencing work at a DHS facility.
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R8Page 37Monitor the processing of Medicare claims to ensure that the implementation of ORCHID, the Department’s new electronic health record system is aiding and providing Medicare itemized claims.
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R9Page 37Track the backlog for coding at all facilities through regular reports, similar to those produced by Los Angeles County/USC Medical Center. Aggregate and analyze coding backlog data at all facilities for resulting trends and to identify any problem areas.
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R10Page 37Perform a staffing analysis in DHS Health Information Management (HIM) divisions at all DHS facilities to assess whether additional staff might ameliorate the current HIM backlogs and delays in coding. LOS ANGELES COUNTY 2013-2014 CIVIL GRAND JURY FINAL REPORT v A TIMELY AND CLEAN “BILL” OF HEALTH MAY SAVE $285 MILLION SECTION THREE “No Authorization for Services” No Authorization for Services is the most common reason for write-offs in the “Failed to Bill for Third Party Requirements” write-off classification. Between FYs 2008-09 and 2012-13, the Department wrote off $68,247,162 in gross charges because it had not obtained authorization from the patient’s third party payer prior to providing non-emergency inpatient and outpatient services. A total of $58,567,426, or 85.8 percent of write-offs due to “No Authorization for Services” was Medi-Cal Managed Care accounts. Factors contributing to the “No Authorization for Services” write-offs include:
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R11Page 38Implement an electronic notification method for alerting physicians of the patients’ required authorization from third party payers when follow-up services are required.
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R12Page 38All physicians must be trained on the new electronic notification system and accountability measures should be implemented to ensure that physicians schedule follow-up services appropriately. LOS ANGELES COUNTY 2013-2014 CIVIL GRAND JURY FINAL REPORT vi A TIMELY AND CLEAN “BILL” OF HEALTH MAY SAVE $285 MILLION
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R13Page 38Require all DHS facilities to regularly pre-screen scheduled outpatient appointments to ensure that authorization is obtained or the patient is referred to a more appropriate provider.
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R14Page 38Evaluate effective and efficient staffing models to support the need for obtaining authorization from third party payers for inpatient services; such as a designated unit, a centralized staff, or an independent utilization review unit.
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R15Page 38Determine the cost-effectiveness of implementing third party payers’ online authorization tools to ensure timely authoriza- tion for inpatient services.
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R16Page 38Collaborate with Cerner, the Department’s vendor for its new electronic medical record system, ORCHID, to determine if enhancements in the new system could facilitate online processing of health care plan authorizations for DHS services. SECTION FOUR County Financial Incentive Policies Historically, DHS has ended a fiscal year with surplus revenue. It was able to retain these surplus funds for DHS operating expenditures in subsequent years and the county General Fund contribution to the DHS budget was not reduced in subsequent years to offset the retained surplus funds. The Board of Supervisors could vote to reduce the county General Fund contribution to the DHS budget, subsequent to fiscal years with surplus revenue, as long as the total County contribution still meets the required minimum contribution amount per its agreement with the State of California. RECOMMENDATIONS To provide financial incentives for DHS to improve revenue collections, the County Board of Supervisors should:
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R17Page 39Consider the advantages and disadvantages of adopting a formal policy to allow for a minimum level of annual General Fund contributions to the DHS budget.
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R18Page 39Allocate a portion of the funds to DHS, if additional revenue is obtained through improved collection efforts, that are beyond the required contributions by the state and irrespective of any additional revenue DHS is able to obtain through improved collection efforts. LOS ANGELES COUNTY 2013-2014 CIVIL GRAND JURY FINAL REPORT vii A TIMELY AND CLEAN “BILL” OF HEALTH MAY SAVE $285 MILLION A TIMELY AND CLEAN “BILL” OF HEALTH MAY SAVE $285 MILLION TOPIC OF INVESTIGATION The Los Angeles County Board of Supervisors approved write-offs totaling $285,421,607 in gross charges billed to third party payers by the Department of Health Services for the five fiscal years from FY 2008-09 through FY 2012-13. An average of $57,058,431 in gross charges was written off per year for the past five fiscal years. After a preliminary investigation, the 2013-2014 Los Angeles County Civil Grand Jury (CGJ) initiated an audit to investigate and analyze the Department of Health Services (DHS or Department) annual write-offs, processes, and systems used for electronic health records and billing for third party payers. These third party payers include Medi-Cal, Medi- Cal Managed Care, Medicare, and private insurance.