Audit Today, Revocation Tomorrow?

Federal regulations grant the Centers for Medicare & Medicaid Services (CMS) the authority to revoke a healthcare provider's Medicare billing privileges for submitting claims for services that could not have been provided on the purported date of service, such as billing for deceased beneficiaries. A Final Rule became effective in 2015 extending the authority of CMS to revoke a provider's billing privileges if CMS determines that the provider has a pattern or practice of billing for services that do not meet Medicare requirements. Violations under the Final Rule include situations in which a provider regularly and repeatedly submits claims for medically unnecessary services. While historically a provider's noncompliance exposed the provider to overpayment refund demands resulting from CMS audit activity, this new revocation authority emphasizes an even greater need for providers to ensure their billing and documentation practices are in compliance with Medicare reimbursement requirements.

Insurers' medical loss ratios and quality improvement spending in 2011.

The Affordable Care Act's medical loss ratio (MLR) regulation requires insurers to spend 80 percent or 85 percent of premiums on medical claims and quality improvements. In 2011, insurers falling below this minimum paid more than $1 billion in rebates. This brief examines how insurers spend their premium dollars--particularly their investment in quality improvement activities--focusing on differences among insurers based on corporate traits. In the aggregate, insurers paid less than 1 percent of premiums on either MLR rebates or quality improvement activities in 2011, with amounts varying by insurer type. Publicly traded insurers had significantly lower MLRs in each market segment (individual, small group, and large group), and were more likely to owe a rebate in most segments compared with non-publicly traded insurers. The median quality improvement expenditure per member among nonprofit and provider-sponsored insurers was more than the median among for-profit and non-provider-sponsored insurers.

A medical malpractice understanding to FASB ASU no. 2010-24.

FASB ASU No.2010-24, Healthcare Entities (Topic 954): Presentation of Insurance Claims and Related Insurance Recoveries changes how healthcare entities present medical malpractice liabilities on financial statements. Healthcare CFOs may need the assistance of their auditors and actuaries to ensure that ASU 2010-24 is appropriately implemented. Actuaries need to estimate the recoverable asset, using methods such as historical loss experience, increased limits factor, and commercial premium.

Future pension accounting changes: implications for hospitals.

Proposed rules in accounting for defined benefit plans may affect hospitals' statement of operations and affect the time, effort, and cost to comply with periodic financial reporting requirements. The new standard would require immediate recognition of the full amount of plan amendments in determining operating income. Hospitals should consider the role of pension plans in their compensation programs.

White-collar crime: corporate and securities and commodities fraud.

In this era of increased interest in white-collar crime, forensic psychiatrists are in a key position to study the individual characteristics of offenders. While a comprehensive theory of high-level white-collar crime should consider societal and organizational contributions, there is value in understanding the personal traits that place an individual at high risk for offending. As the impact of the criminal acts of this group has been increasingly felt by larger groups from all socioeconomic strata, there is less willingness by the public to view these crimes as victimless and harmless.

Asset retirement obligations: a reporting concern for healthcare facilities.

FASB statements and SEC guidelines give direction as to how healthcare organizations should account for their asset retirement obligations (AROs) where environmental issues are concerned. A key consideration is that current costs associated with environmental problems, such as encapsulating asbestos, are to be accounted for as part of an asset's cost and depreciated over the asset's remaining life.

Sarbanes-Oxley on the not-for-profit horizon.

These federal rules determining governance standards and transparency for corporations are bound to affect not-for-profits eventually. Proactive hospital boards know that best governance practices are their best defense.

Fairness opinions in health care transactions--cause and effect: the emergence of private equity funds as a driving force in big and small transactions and the resulting increased use of fairness opinions.

The use of fairness opinions has become increasingly common with respect to the sale or merger of any company or division in a private equity funded or sponsored deal. The fairness opinion is often used to demonstrate that the value at which the transaction took place was a fair value to the selling company and thus did not improperly or unfairly leave the common holders with little consideration. This article covers rules and guidelines that should be adhered to in the issuance and review of fairness opinions.