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1 Christine M. Boras, CHC, CFE, MBA Laboratory Compliance Plans XYZ I. General A. The purpose of this Review is to insure that the Laboratory is adhering to their approved Compliance Policies and Procedures and to determine that these Policies and Procedures are adequate to accomplish their objectives and provide adequate internal and operational controls. See the Planning Memo at for further details. B. Obtain a copy of the Compliance Polices and Procedures referred to above, include them in the workpapers and become thoroughly familiar with them. C. Prepare an Engagement Letter and issue to the appropriate management personnel for notification of the Review. II. Planning A. Arrange a meeting with Laboratory Management to discuss the current policies and procedures used in practice, note any differences from the written policies. B. Formulate a brief narrative of the current procedures and/or processes and compare them to the written polices and procedures. Note any variations. Include the narrative in your workpapers. C. Obtain and review copes of recent audit/survey reports and consultant reports (as applicable) issued by various agencies that pertain to the department/facility. Include them in your workpapers. D. Obtain a copy of the departments/facilities respective Corrective Action Plan(s), if applicable, and discuss with appropriate management personnel its status. Include a copy of the plan(s) in your workpapers. E. Review prior year s compliance review report and workpapers, if applicable, and discuss with appropriate management personnel. Assess status of Corrective Action Plan(s) if applicable.

2 Laboratory Compliance Plans Christine M. Boras, CHC, CFE, MBA III. Observation and Prospective Compliance Testing A. Observation/Prospective Sample Testing 1. Inquire with Lab Management how physicians are made aware by the Lab that Medicare will only pay for tests that meet Medicare coverage criteria. Obtain a copy of the most recent list of tests that pertain to the above and include in workpapers. 2. Requisition Design: Inquire with Lab personnel the Lab ordering processes and include in the narrative. a. Obtain and review a blank lab requisition to ensure the following criteria are included on the order:! Patient s name! Date of order! Patient s insurance! Address! ICD-9-CM code! Test to be performed! Social Security number! Sex! Date of Birth! Review of ABN appropriateness! Review of Notices of Non-Coverage appropriateness! Physician s signature (must be legible) b. Discuss process taken in the event that there is missing information on a lab order from the criteria noted in 2.a. above (e.g., unsigned by the ordering physician). c. Inquire procedure followed in the event that an ordered Laboratory test can not be performed due to unclear physician orders, specimen integrity or insufficient quantities. d. Inquire and review processes to ensure a prospective sample is selected for compliance testing. e. Prospectively select orders to ensure the following:! All the data criteria listed in 2.a. above is documented.! Signature of Physician (or PA, NP, FNP) (Handwritten, Initials, or Electronic allowed) (No stamps permitted; No LPN or RN signatures)

3 Christine M. Boras, CHC, CFE, MBA! Diagnosis codes are linked to the service. Review Program Laboratory Compliance Plans f. Prospectively select charts to ensure the following:! A written order exists.! Services are documented and performed. 3. Inquire with Lab Management what policies and procedures have been implemented that delineates follow-up actions and resolution for incomplete, inaccurate or non-existent diagnosis information. 4. Canceled Orders: Review with Lab personnel the process of how canceled orders are handled in the Lab and how they get canceled. Inquire whether there are any written policy and procedures for canceled orders. If so, include in workpapers. a. Determine how large the pool is of canceled orders in a given period and their frequency. 5. Verbal Orders: Inquire with Lab personnel the policy and procedure regarding verbal orders and obtain the most recent copy of the written policy for workpapers. a. Inquire concerning the following:! A log or form that tracks verbal orders containing the following criteria:! Date phoned! Patient name! Tests to be performed! ICD-9 code diagnosis! Physician name and phone #! Medical Record number b. Inquire if a formal policy and procedure has been established to follow-up and monitor verbal orders to verify receipt of a written, signed order by the physician is obtained by the lab within 30 days following receipt of the verbal order, as per CLIA Regulations. c. Prospectively select Verbal orders received to ensure documentation, monitoring and follow-up procedures are adequate.

4 Christine M. Boras, CHC, CFE, MBA Laboratory Compliance Plans d. Lab Order Add-Ons (Verbal): Review the process and frequency for handling Verbal Lab Order Add-Ons from physicians and others, as applicable. a. Determine whether tracking mechanism(s) are adequate and accurate for appropriate follow-up 6. Standing Orders: a. Inquire whether written policies and procedures have been developed to ensure a tracking system to monitor standing orders has been implemented. b. Review tracking system documentation to monitor for validity parameters and expiration of the standing orders (valid for a period of six months from the date indicated on the order). c. Inquire how the physician is notified to ensure that new standing orders are provided before any testing is performed by the lab if the prior order has expired. 7. Notice to Physicians: Ensure the Lab is providing physicians/providers, annual written notice of the following:! The requirements necessary for the Lab to provide service as noted above in A.2.a.! Copy of Medicare Medical Necessity Policy.! List of individual components of each lab profile that includes a multichannel chemistry test or other automated multiple test results (e.g ).! CPT-4 or HCPCS codes which the lab uses to bill Medicare for each profile.! Medicare National Limitation Amount for each CPT-4 code used to bill Medicare for each profile and its components, if available.! Description of how the lab will bill Medicare for each profile.! Inquire procedure followed whenever any

5 Christine M. Boras, CHC, CFE, MBA information is incomplete of missing.! Ensure a monitoring control system has been developed to track physician notices adequately. Laboratory Compliance Plans 8. Physician Acknowledgment: Inquire procedure followed to ensure physician acknowledgment in A.7. of above. 9. Action Plans: Review for status and progress of action plan steps for the following, as applicable:! Program Action Plan! Improvement Action Plan! Environment Lab Plan! Lab Risk Matrix IV. Training and Education for Physician s and/or Lab Personnel: A. Inquire as to types of training and education offered to all Lab personnel & Physicians, how often; are there any Policies and Procedures in place for the following:! Standards of Conduct! Diagnosis Code Assignment (ICD-9)! Medical Necessity guidelines! Verbal Orders! Canceled Orders! Standing Orders! Unorderable tests/unacceptable Specimens! Notice to Physicians! ABN s! Notice of Non-Coverage (NNC)! Tests ordered and performed! Steps to manage Non-Compliance Physicians! Regulatory Notification (State, CLIA, Federal, etc.) V. Record Retention: A. Inquire and review the process and procedure for Retention of Records (i.e., original physician order, ABN/Waiver, 7 year period etc.) as per policy and Dept. of Health rules and regulations. Determine the adequacy for the maintenance of the records retention process/procedure.! ABN/Waiver! Notice of Non-Coverage (NNC)! Notice of Non-Coverage via Telephone! Physician Orders! Verbal Orders! Canceled Orders! Standing Orders

6 I. General Christine M. Boras, CHC, CFE, MBA! Notice to Physicians & Physician Acknowledgment! Test Utilization! Department Compliance E & T Logs, Agendas, etc.! Results of Lab Orders Laboratory Compliance Billing A. The purpose of this Review is to insure that the Laboratory is adhering to their approved Compliance Policies and Procedures and to determine that these Policies and Procedures are adequate to accomplish their objectives and provide adequate internal and operational controls. See the Planning Memo at for further details. A. Obtain a copy of the Compliance Polices and Procedures referred to above, include them in the workpapers and become thoroughly familiar with them. A. Prepare an Engagement Letter and issue to the appropriate management personnel for notification of the Review. II. Planning A. Arrange a meeting with Laboratory Management to discuss the current policies and procedures used in practice and the current polices and procedures used in the coordination of Lab Services with Nursing Homes, note any differences from the written policies. B. Formulate a brief narrative of the current procedures and/or processes and compare them to the written polices and procedures. Note any variations. Include the narrative in your workpapers. C. Obtain and review copes of recent audit/survey reports issued by various agencies that pertain to the department/facility. Include them in your workpapers. E. Obtain a copy of the departments/facilities respective Corrective Action Plan, if applicable, and discuss with appropriate management personnel its status. Include a copy of the plan in your workpapers. F. Review prior year s compliance review report and workpapers, if applicable, and discuss with

7 Christine M. Boras, CHC, CFE, MBA appropriate management personnel. Assess status of Corrective Action Plan if applicable. Laboratory Compliance Billing III. Observation and Prospective Compliance Testing A. Observation/Prospective Sample Testing 1. Tests ordered and performed: Inquire what procedure and policy is followed to monitor added and deleted tests to ensure proper billing. Also see III.A.2.c. in the Laboratory Compliance Plan review program. Review for implementation and adequacy. a. Verify monitoring process to ensure all tests ordered were performed. b. Verify monitoring process for added and deleted tests. c. Assignment of CPT-4 or HCPCS codes accurately link test ordered and performed. 2. Duplicate Charges: Inquire what procedures and monitoring controls have been implemented to ensure duplicate charges do not occur (i.e., outpatient testing once for the same date of service/ encounter). a. Verify monitoring controls, documents/logs, and procedures for adequacy. b. Prospectively select order/encounters/ requisitions or other documents as applicable for sample testing to ensure duplicate charges do not occur. 3. Venipuncture Charges: Inquire what procedures and monitoring controls have been implemented to prevent duplicate venipuncture charges and that venipunctures performed by non-laboratory personnel (if applicable) are not billed as part of the laboratory service (i.e., one venipuncture charge per patient/per date of service).

8 Christine M. Boras, CHC, CFE, MBA a. Verify monitoring controls, documents/logs, and procedures for adequacy. b. Prospectively select order/encounters/ requisitions or other documents as applicable for sample testing to ensure duplicate venipuncture charges do not occur. Laboratory Compliance Billing 4. Appropriate Prices: Inquire what procedures and policy has been developed and implemented to ensure that lab testing services that are sold directly to physician s exceeds the tests costs. c. Obtain a copy of the policy and review to ensure completeness and appropriateness. d. Review the implementation and monitoring controls of the policy for adequacy and completeness. e. Inquire and review how discounted pricing arrangements are documented, reviewed, and monitored to assure avoidance of anti-kickback issues. 5. Test Utilization Monitoring: Inquire how the lab is retaining and analyzing test utilization data from year to year by CPT or HCPCS codes for the top 30 tests performed. a. Review and verify if any tests exceeded 10% of the previous year s amount and inquire what actions and procedures were taken to ascertain the cause of the increase. b. Inquire how a Prospective review can be performed for test utilization monitoring accuracy and completeness. If possible, perform a prospective sample test. 6. Reflex testing: Inquire how reflex testing is documented (clearly stating the condition under which the reflex testing is performed) and the procedure to ensure unnecessary reflex tests are not performed as a result of the first test. a. Verify what controls are in place to ensure compliance, medical necessity, and are not excessive.

9 Christine M. Boras, CHC, CFE, MBA Audit/ Review Program Laboratory Compliance Billing 7. Unacceptable Specimens/Unorderable tests: Inquire what procedure is followed to ensure the patient is not billed for laboratory tests which:! could not be performed due to the specimen collected was insufficient or unacceptable for analysis;! test request which may be incorrect or for testing that is not offered by the lab. (Include specimens which were obtained by lab personnel, hospital staff or submitted to the lab from an outside source). 8. Co-Payments & Deductibles Inquire what procedures have been implemented to ensure that co-payments and deductibles are not routinely waived. 9. Drop-off Specimen Orders Inquire what procedure has been implemented regarding drop-off specimens from nursing homes, outpatient clinics, or an outside source ( Dr. Drops ). <note> I/A is reviewing prospective billing for outpatient clinics as a Medicaid Review-Follow-up a. Inquire how non-visit orders are processed, documented and tracked. Determine adequacy of procedures. 10. Processing Split Orders (UMA/UHSH) Inquire what procedure is followed when a portion of an individuals lab test(s) is performed by DEF s lab and another portion is performed by XYZ s lab. 11. Lab Order Results & Billing Inquire what procedure is followed to to ensure lab orders are billed based on the actual service performed and

10 resulted vs. when the lab requisition was entered into billing system. Christine M. Boras, CHC, CFE, MBA 12. Hematology, Blood Chemistry & Urine Tests Inquire what procedure is followed regarding billing of Hematology, Blood Chemistry, and Urine tests. Laboratory Compliance Billing 13. ABN Authorization for Mental Health Services Inquire what procedure is followed to obtain a verbal authorization for Mental Health Services. 14. Denied Claims: Review protocols, Action Plans (if applicable), and processes with Lab management personnel a. Obtain & Review data evidencing denied claims are worked and have been reduced within compliance. b. Obtain & Review data for amounts reimbursed as a result of the step above. c. Discuss challenges/concerns with Lab management personnel. 15. Lab Software Systems Review for Data Integrity of the Lab software system to ensure compliance. a. Review processes that flag a mis-diagnosis to a CPT code.

11 Christine M. Boras, CHC, CFE, MBA Advanced Beneficiary Notification (ABN) Laboratory I. General A. The purpose of this Review is to insure that the Laboratory is adhering to their approved Compliance Policies and Procedures and to determine that these Policies and Procedures are adequate to accomplish their objectives and provide adequate internal and operational controls. See the Planning Memo at for further details. B. Obtain a copy of the Compliance Polices and Procedures referred to above, include them in the workpapers and become thoroughly familiar with them. C. Prepare an Engagement Letter and issue to the appropriate management personnel for notification of the Review. II. Planning A. Arrange a meeting with Laboratory Management to discuss the current policies and procedures used in practice, note any differences from the written policies. B. Formulate a brief narrative of the current procedures and/or processes and compare them to the written polices and procedures. Note any variations. Include the narrative in your workpapers. D. Obtain and review copes of recent audit/survey reports issued by various agencies that pertain to the department/facility. Include them in your workpapers.

12 Christine M. Boras, CHC, CFE, MBA F. Obtain a copy of the departments/facilities respective Corrective Action Plan, if applicable, and discuss with appropriate management personnel its status. Include a copy of the plan in your workpapers. G. Review prior year s compliance review report and workpapers, if applicable, and discuss with appropriate management personnel. Assess status of Corrective Action Plan if applicable. Advanced Beneficiary Notification (ABN) Laboratory III. Observation & Prospective Compliance Testing A. Observation 1. Inquire and observe (if possible) the processes of how and when ABN s are executed BEFORE the test has been performed for the patient. If applicable, note differences for both Inpatient and Outpatient. 2. Inquire as to what happens in the event that a patient refuses to sign an ABN.! Is the test still performed?! Is it referred back to the physician? 3. Inquire as to whether the reason for the belief that payment may be denied is specified. B. Prospective Sample Testing 1. Prospectively select ABN s for those Medicare patients who have had Laboratory tests for both Inpatient and Outpatient (as applicable). 2. Ensure selection includes Laboratory tests ordered which did not have an ABN signed as well as tests which did have an ABN signed to ensure ABN are executed appropriately. 3. Prospectively select charts to ensure

13 Christine M. Boras, CHC, CFE, MBA the following:! A written order exists.! Services are documented and performed. 4. Cross-reference the laboratory test ordered with the diagnosis code on the Lab s master list of approved laboratory tests covered by Medicare; if both are listed an ABN waiver is not needed. Advanced Beneficiary Notification (ABN) Laboratory 5. If the laboratory test ordered is not covered by Medicare verify the following information is indicated on the Outpatient Laboratory Order Form under Medicare Notice of Patient s Responsibility (ABN / Waiver): a. Test Name b. Patient s signature c. Witness s signature Note that routine screening and physicals are not covered by Medicare, therefore an ABN must be signed by the patient. 6. Blanket ABN s: Verify that ABN s are NOT given to every patient and that beneficiaries are NOT asked to sign blanket ABN s. 7. Review a representative sample of denials to ensure adequate implementation of the issuance of ABN s. IV. Conclusion: Date

14 Reviewer(s) Christine M. Boras, CHC, CFE, MBA Date Corporate Compliance Officer