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Feature
Article
Dotting
your i’s and crossing your t’s
By Howard Zandman, CPA/CFF, CFFA
I was
recently retained as an expert in a litigation matter involving
a medical group, which operated the emergency facilities
of a hospital in Georgia, and the agency hired by the medical
group to perform billing and collection services. The agency
had previously provided collection services primarily for
phone and utility companies and had no prior medical billing
services experience. Agreements were signed between the
two parties for the provision of billing and collection
services (both for current and delinquent items) for a period
of one year, but the relationship continued for approximately
two years. The agency was to be compensated on a percentage
of monthly collections, with a higher rate for collection
on delinquent items. The agency purchased relevant and highly
regarded software for this purpose and hired several new
employees familiar with the software as well as the billing
process.
One
of the central facets of the case was the gaining of an
understanding of the areas of responsibility of each of
the parties. The contract terms stated that it was the responsibility
of the medical group to provide the necessary patient and
cash receipt documents to the agency in a timely manner
in order for the agency to properly bill the patients serviced.
Also, the agency relied on the medical group to inform it
of any changes to the patient’s medical insurance.
As you
may have already noted, there was an inherent conflict in
the duties of the agency. The terms of the contracts stated
that the agency was to be paid a certain percentage for
current billings and a greater percentage for delinquent
collections. Therefore, one could argue that the agency
could have intentionally not performed timely billing in
order for accounts to be delinquent, which would allow it
to collect a higher fee. However, after analyzing the data,
I was able to determine this was not the case. In addition,
per the contract, the agency was not authorized on its own
to write-off any amounts for transfer to collections. The
medical group was responsible for letting the agency know
which accounts were to be written-off as delinquent accounts
for collections.
About
a year and a half after the contracts were signed, disputes
began to arise about the responsibility of each of the parties.
The medical group sued the collections agency for failure
to perform its duties and the agency counter-sued for unpaid
fees. The medical group hired an outside consultant to analyze
the data contained in the software used for billing. The
consultant issued a summary of findings with several different
damage categories, which consisted primarily of alleged
untimely billing for Medicare, Medicaid, and Commercial
insurance. Untimely billing was defined as “nothing”
being done to that patient’s account or record for
a year or more.
Counsel
and I met with the outside consultant and received a copy
of the hard data that the consultant had extracted and converted
from the agency’s software to his proprietary software.
I sought out and hired a consultant familiar with the agency’s
software who was able to work within its direct environment.
In the end, I compared the medical group’s consultant’s
data set to data taken directly off the agency’s system.
I found files missing from the consultant’s “converted”
files that included all information on sources of payments
and interim billings. This meant that the group’s
consultant did not have critical information indicating
performance of timely billing by the agency.
The
following conclusions can be made about this case:
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It is important when beginning an engagement to understand
the issues at hand with regard to responsibilities of
the parties involved, and
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In order to avoid the loss or corruption of data, it is
best to work within the native software being used, when
possible. If not possible, attempt to perform a test to
prove that all the data was converted properly.
After
several months of analyzing data from the database, I submitted
a 26-page report with numerous supporting schedules and
reports generated from the original database. My report
demonstrated that the data offered by the medical group’s
consultant from his proprietary software was based on incomplete
data files and was therefore erroneous and unreliable. After
reviewing my report, the other side dropped the case.
For
more information contact:
Howard
Zandman, CPA/CFF, CFFA
404.814.4915
howard.zandman@hawcpa.com
Sem
Berhane, CPA, CVA
404.814.4922
semrawit.berhane@hawcpa.com
>>
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