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Report No. |
Report Date |
Name of Report |
Audit Scope
Categories |
Observations/Findings
and Recommendations
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Current Status |
Fiscal Impact/Other Impact |
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2001-003 |
Sept. 5, 2001 |
Pharmacy Inventory
Management & Charge Capture |
Financial, Compliance, Efficiency & Effectiveness Safeguarding Assets |
We were unable to confirm
that Pharmacy’s inventory variance is primarily attributable to the clinic
areas because no system reports or system data was available to calculate
shrinkage or correlate pharmacy clinic issues with clinic charges. However, the clinic process could be
responsible for some of the difference because functions are decentralized
and diverse and they do not have system reports to help monitor their
inventory variances and associated lost charges. Pharmacy was able to
identify through ad hoc reports one area within their control that may have
lost charges. They plan to review this area and implement the necessary process
improvements that they identify. The new management at
Pharmacy was also concerned about a decision made in 1997 to add 5% to the
cost of inventory when sold in order to record shrinkage throughout the
year. This had the effect of reducing
the variance reported to management at fiscal year end from the physical
inventory count. Hospital Operational and
Financial Management should work with Clinical Management to determine an
appropriate charge process for stock issues to the clinics so that charges
are captured and shrinkage is minimized to an acceptable level. Pharmacy should develop
inventory variance reports for the different pharmacy areas to use in
identifying inventory and charge processes needing improvement. Pharmacy should
discontinue adding 5% to the Cost of Goods Sold so that the shrinkage
reported at year-end is the actual annual variance. |
Increase charge capture
and reduce reported inventory shrinkage in the outpatient clinics and
pharmacy. In addition, management monitoring of annual shrinkage can enhance
accountability for charge capture and inventory shrinkage. |
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The pharmacy charge master
uses pricing formulas and the average wholesale price (AWP) of drugs to
calculate the patient charge. If the charge
master’s formulas or the AWP of drugs is not kept current, revenue losses can
occur. The new management in
pharmacy indicated that the Inpatient charge formulas were last reviewed in
1992 and the outpatient in 1996. Additionally,
the AWP for all drugs in the charge master was last updated in 1998. The charge formula should
be reviewed to determine if the formula is still reasonable based upon current pharmaceuticals cost. Average wholesale prices
should be updated with current data and updated annually thereafter. Policies should be
developed for reviewing and updating the charge master. |
In Progress |
Increase Revenue |
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A review of the cash collection
process showed that there were good cash controls at point of collection from
the patients. However, important
controls need to be implemented in the cash deposit and reporting process to
ensure that cash is safeguarded after collection. Tests of two days of cash
receipts showed that all cash collected by cashiers was accurately reported
and deposited intact by Pharmacy. We recommend the
following controls be implemented in the cash collection process: A responsible person
verifies each cashier’s report and count of cash and credit card transactions
before being released by the cashier. Any
changes to a cashier’s report be initialed and approved by the cashier. The cash handling and
reporting procedures be revised to provide for a separation of duties between
the person preparing the cash deposit and the person auditing the daily cash
report and reconciling it with the bank deposit. A review process be implemented
to determine that all reported cash and credit card transactions agree with
UTMB accounting records. Cashiers who have not
attended the required cash handling class and those needing retraining be
required to attend the classes. |
In Progress |
Prevent loss of cash
collections |
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The back up of critical
non-mainframe systems is necessary to prevent the loss of critical data in
the event of a disaster. Pharmacy relies on three
separate stand-alone systems (NarcTrak, Pyxis units, Answer System) to
account for controlled drugs and maintain perpetual inventory counts. Current
procedures are to back up data from these systems onto a single media source
maintained onsite. This process does not effectively minimize the risk of
losing both the system itself and backup media in the event of a
disaster. Best business practices
suggest back up of critical data using a grandfather, father, son, rotation
with one set of media being stored off site.
Other back up methods may also be appropriate for these critical
systems under State Department of Information Resources guidelines. Pharmacy management should
select the best back-up scheme for its stand-alone systems using as a guide
Section 3 of the Information Resources Security and Risk Management Policy,
Standards, and Guidelines which can be found at: ftp://sol.stac.dir.state.tx.us/pub/irpolicy.txt
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In Progress |
Continuity of operations
maintains revenue flow and reduces disaster recovery expenses. |
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2001-005 |
Jan. 25, 2001 |
MSRDP Expenditures |
Financial |
The policies
and procedures manual for MSRDP business operations was last revised in 1991
and contains outdated guidance.
Policies and procedures should be revised, as necessary, to
incorporate current reporting requirements, authorization requirements, items
of expense specifically allowed and unallowed, exceptions to the $40 per
person limit for event costs, appropriate documentation required for
transactions, and any other areas where revised guidance is needed. |
Implemented |
Reduces risk of
noncompliance with MSRDP Bylaws, inconsistent treatment of expenditures, and
inaccurate reporting of MSRDP activities |
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Supplemental
Retirement Payments, totaling $5.8 million in FY 00, appear to be an incentive
payment; however, they are not held to the same approval process required by
MSRDP Bylaws for incentive payments.
Management should review and clarify the definitions of Supplemental
Retirement Payments and Incentive Plan Payments to ensure that definitions
and resulting approvals conform to the Bylaws. Current or future incentive plans involving MSRDP funds should
be approved by UT System and comply with established definitions for
incentive plan payments. |
In Progress |
Reduces risk of noncompliance
with MSRDP Bylaws |
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2001-006 |
Jan. 22, 2001 |
THECB Family Practice
Residency Program |
Financial Compliance |
No institutionally or functionally significant issues. |
N/A |
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2001-007 |
Jan. 24, 2001 |
Procurement Card Control
Review |
Safeguarding Assets, Compliance, Financial |
The
Departmental Coordinator is a key control in the ProCard process because they
monitor their department's credit card purchases to determine that purchases
are supported by appropriate documentation and the items purchased are in
compliance with the program guidelines.
The Program Administrator performs a high level monitoring function
but this control does not replace the key review function performed by the
Department Coordinators. Currently,
six Departmental Coordinators have credit cards. This creates a separation of duties issue since they are in the
position to purchase and approve the purchase without any immediate
oversight. This means that
inappropriate purchases could be made without detection or timely detection. We recommend
that Departmental Coordinators relinquish their cards or that the coordinator
and cardholder responsibilities be assigned to different employees. The Program Administrator should ensure
that designated Departmental Coordinators are not credit cardholders. |
Implemented |
Prevent inappropriate
purchases from being made without timely detection |
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2001-008 |
June 7, 2001 |
Electronic Time Capture
System |
Safeguarding Assets, Financial, Efficiency & Effectiveness |
A large number
of adjustments to clock time increases the workload of the timekeepers and
generally reduces the efficiency of the time capture process. Timekeepers stated they spend
approximately five hours every biweekly pay period entering adjustments and
approving the time records. The large
numbers of adjustments appear to be attributed to
We recommend that WCR, with the Human Resource Department’s assistance,
facilitate the development of departmental policies and procedures that
address the key elements needed to manage the ETC time capture process. Additionally, WCR should consider providing
a summary report of adjustments by employee to departmental management to
help monitor and manage the time capture process. |
Reduce operational
expenses and ensure accurate time reporting and payroll expenses |
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Most timekeepers we interviewed approve their own time without
supervisory overview or monitoring.
Approval of time in ETC authorizes a payroll check. Additionally, a number of timekeepers are
entering their clock in and out times as adjustments rather than calling from
a designated phone. We recommend
that WCR provide guidance to departments for developing and implementing
policies and procedures to address the issue of adjustments and approval of
timekeepers’ time in ETC. |
In Progress |
Ensure accurate time
reporting and payroll expenses |
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Most timekeepers we interviewed were not familiar with ETC’s
reporting functionality, specifically the reports that can be generated for
management purposes. None of the
timekeepers or managers we interviewed, are distributing reports available in
ETC to review employees’ time and adjustments. Most of the timekeepers commented that reports available from
ETC are difficult to access and read. The majority of the timekeepers interviewed stated that now that
they have had some experience with ETC, a refresher course covering available
reports and their uses would be beneficial. We recommend that the reporting functions of the ETC system be
enhanced so that users can easily access and read or print system
reports. A refresher training course
should be required periodically for all timekeepers to enhance their awareness
of ETC capabilities and the best practices that will assist with monitoring
and managing the time collection process. |
In Progress |
Ensure accurate time
reporting and payroll expenses |
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2001-009 |
June 7, 2001 |
ARP/ATP Grant Review |
Compliance |
No institutionally or functionally significant issues. |
N/A |
N/A |
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2001-010 |
June 7, 2001 |
THECB Family Practice
Residency Pilot Project |
Compliance Financial |
No institutionally or functionally significant issues. |
N/A |
N/A |
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2001-101 |
June 7, 2001 |
Institutional Compliance
Program (ICP) Effectiveness Review |
Effectiveness
and Efficiency |
The
methodology used by the ICP to complete the FY 2001 Institutional Compliance
Risk Assessment was sound. However, to
enhance future risk assessments, we recommend that the ICP expand the circle
of input into its risk identification process. Additionally, to help ensure continuity and verifiability of the
risk assessment process, we recommend that the ICP document its risk
assessment methodology and establish and adhere to record retention
guidelines for the work products resulting from its risk assessment efforts. |
In Progress |
Increases the probability
that significant compliance risks will not be overlooked during the risk
identification process. Enhances management’s
ability to demonstrate that the risk assessment process was complete,
objective, analytical, and applied across the institution. |
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During the course of this audit, we met with several
members of institutional management to obtain their assessment of the
effectiveness of the ICP. Overall, the comments received
indicated that the ICP is a valuable resource and responsive to management’s
needs. Equally as important, was the
managers’ belief that the institution is focusing its resources on the
appropriate compliance issues. Information
obtained during these meetings indicated that the ICP should develop and clearly
communicate guidelines regarding when it is appropriate to notify and/or
involve it in issues of a compliance nature.
Additionally, there is an opportunity for the ICP to increase
awareness of its existence among the faculty. |
In Progress |
Increases the likelihood that faculty and staff
will not attempt to contend with compliance issues without notifying and/or
involving the ICP when appropriate. Ensures that the institution’s management of
compliance issues is coordinated, appropriate, and consistent with executive
management’s directions. |
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The ICP has implemented a process for ensuring that a good
infrastructure is in place to facilitate the effective management of
high-risk compliance areas. A key element missing from this process is the development and
communication of guidelines regarding the type of support documentation that
high-risk areas should be maintaining to substantiate their compliance
related activities. In that regard,
we recommend that the ICP expand its process to incorporate the establishment
of documentation and record retention guidelines for high-risk compliance
areas. |
In Progress |
Facilitates efforts to
monitor and/or validate the effectiveness of compliance activities and
efforts to ensure that adequate support is available to substantiate
the performance and results of those activities. |
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2001-102 |
June 7, 2001 |
APC Process Design Review |
Effectiveness and Efficiency |
Written policies and procedures have not been developed detailing
the process for updating the Hospital Charge Description Master (CDM) and
obtaining the required approvals.
Additionally, the Risk-Based Compliance Plan for the Hospital CDM
indicates that routine audits will be done; however, such a system has not
been implemented. Management should
develop written policies and procedures for updating the CDM, including the
review and approval process for changes.
In addition, procedures should be put in place to routinely monitor
the CDM for accuracy and conduct annual charge master reviews with department
managers. Consideration should be
given to conducting a thorough review of the CDM every two to three years and
creation of a Charge Master Steering Committee to oversee the CDM activities,
as well as pricing of services and compliance issues. |
In Progress |
Facilitates accuracy of
the Hospital CDM. |
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Some departments have very well defined monitoring procedures
and performance standards for their coders, while others do no. It is our understanding that Physician
Billing Service (PBS) is in the process of developing system-wide coding
performance standards for all coders, and one group will conduct quality
assurance reviews in all departments.
Management should continue to pursue efforts for ensuring the accuracy
of Medicare coding and nursing documentation. Once an established QA process for coders has been established,
policies, procedures, and performance standards should be developed to ensure
consistency among departments. |
Factors Delayed
Implementation Responsibility for
monitoring and QA functions have been transferred to the Compliance
Department. Status is In Progress. Responsibility for
establishing coding standards and policies and procedures still remains with Faculty
Practice and the Director of UTMED Financial Services. |
Ensures accuracy of coding
and billing under the Medicare Outpatient Prospective Payment System |
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2001-104 |
August 14, 2001 |
Institutional Compliance
Training Design Review |
Compliance |
No institutionally or functionally significant issues. |
N/A |
N/A |
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2001- 105 |
August 14, 2001 |
Research A-21 Compliance (Major
Projects) |
Compliance Efficiency & Effectiveness |
No institutionally or functionally significant issues. |
N/A |
N/A |
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2001-203 |
Jan. 25, 2001 |
Information Technology |
Due to the nature of the information that is contained in this
Information Technology Audit report, we have elected to provide the details of
the report to appropriate parties when requested. |
In Progress |
Minimizes the risk of
business interruptions. |
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2001-204 |
June 7, 2001 |
Siemans Change Control |
Information Technology |
Due to the nature of the information that is contained in this
Information Technology Audit report, we have elected to provide the details
of the report to appropriate parties when requested. |
In Progress |
Minimizes the risk of
business interruptions. |
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2001-206 |
Jan. 25, 2001 |
Virus Prevention and Detection |
Information Technology |
Due to the nature of the information that is contained in this
Information Technology Audit report, we have elected to provide the details
of the report to appropriate parties when requested. |
In Progress |
Minimizes the risk of
business interruptions. |
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2001-208 |
Aug. 30, 2001 |
ClinWeb |
Information Technology |
Due to the nature of the information that is contained in this
Information Technology Audit report, we have elected to provide the details of
the report to appropriate parties when requested. |
In Progress |
Minimizes the risk of
business interruptions. |
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2001-209 |
Aug. 30, 2001 |
Institutional E-mail Systems |
Information Technology |
Due to the nature of the information that is contained in this
Information Technology Audit report, we have elected to provide the details
of the report to appropriate parties when requested. |
In Progress |
Minimizes the risk of
business interruptions. |
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2001-301 |
June 7, 2001 |
Patient Registration/ Admission Process |
Effectiveness and
Efficiency |
Outpatient Service
Associates (OSA) are key players in the registration process. Personnel in these and other key positions
are charged with the responsibility of ensuring that the registration process
activities are accurately and completely carried out. According to management, OSA turnover coupled with
various other factors including staff reductions, increased responsibilities,
and task complexity have and continue to pose a challenge to the effective
discharge of OSA responsibilities. Data obtained from Human Resources approximates the
FY 2000 OSA turnover rate at 52% (34% internal and 18% external). Management should assess
the environment in which the OSA position functions to determine if it
adequately supports the successful discharge of OSA responsibilities. Specifically, management should evaluate
the practicality and benefits of transferring critical registration process
activities (e.g., pre-certification obtainment, unsponsored account
conversion) from the fast paced clinic environment to a centralized, more
controlled back-office setting (e.g., centralized verification center,
centralized pre-certification center). |
In Progress |
Increases the likelihood
of successful discharge of OSA responsibilities and decreases the likelihood
of lost revenue and other negative consequences associated with OSA
responsibility failures. |
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Pre-certification obtainment
is one of the key activities in the patient registration process. Without appropriate processes in place to
ensure that pre-certifications are obtained when required, charges submitted
for unauthorized services may be denied by payers. Our review of
outpatient clinic personnel performance in this area indicated that
improvement is needed. Noted failures were
attributable to several factors including the existence of a fragmented
process for obtaining pre-certifications and the absence of a consistently
used tool for monitoring scheduled patient encounters to ensure that
pre-certifications are obtained prior to delivering services. Part of the development of
a comprehensive approach to addressing this issue should include an
assessment the efficiency and effectiveness of the current fragmented process
and the exploration of automated solutions to performance issues. |
In Progress |
Reduces the risk of lost
revenue due to failure to obtain authorization from payers when appropriate. |
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Management has not
instituted an adequate process for ensuring that account conversion efforts
are initiated for unsponsored outpatient accounts (e.g., those accounts
associated with indigent or potential Medicaid eligible patients). To improve performance in
this area we recommend that management explore an automated solution to this
issue. Specifically, management
should evaluate the feasibility of converting the Medicaid Eligibility
Screening Guidelines (currently contained in the registration system) into a
logic-based electronic questionnaire that assesses the responses to the
questionnaire and when appropriate mandates the initiation of the account
conversation process before the registration process can proceed further. |
In Progress |
Reduces the risk of lost
revenue due to missed opportunities to convert unsponsored outpatient
accounts to a third party program (e.g., Medicaid, Supplemental Security
Income). |
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Management has implemented a QA process that monitors
and measures the accuracy and, to a limited degree, the completeness of the
outpatient registration process. We recommend that management expand the registration
elements currently reviewed by the QA process to include items such as
pre-certification obtainment, off-line eligibility verification, and the
adequacy of case documentation. We also recommend that
management follow up on its plan to eliminate the potential biases that are
inherent in the design of its QA process. |
In Progress |
Facilitates management’s
efforts to identify and address process failures and decreases the likelihood
of negative operational and financial consequences. |
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2001-302 |
Aug. 29, 2001 |
Institutional Review Board
Adverse Events Reporting |
Compliance |
No
institutionally or functionally significant issues. |
N/A |
N/A |
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2001-304 |
Aug. 27, 2001 |
Chart Availability &
Loose Document Processing |
Effectiveness
and Efficiency |
When a
patient has more than one appointment on a given day, chart availability for
the second appointment is less than desirable. Management should
take action to improve the availability of patient charts for each
appointment. Specifically, management
should assess and if necessary address several factors including:
appointment-scheduling intervals, visit documentation timelines, and chart movement
processes. |
In Progress |
Facilitates continuity of
care efforts by ensuring that health care providers have access to medical
documentation during the delivery of care. |
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The current loose document filing QA process assesses and
addresses accuracy issues associated with current (i.e., recent) filing
activity. This process does not
however; assess or address the cumulative effect of filing errors made during
previous periods. |