Overview of Healthcare Reimbursement

Reimbursement is driven by rules and contractual arrangements. Understanding this important fact leads an auditor to ask three crucial questions:

1. What are the rules or terms of reimbursement?
2. What is covered and what is not?
3. What is the basis of the contractual arrangements?

Medicare, for example, has three parts: Part A covers inpatient care. Part B covers ambulatory care (most operations, Labs, Diagnostic) and professional services. Part C provides prescription drug coverage. Medicare is a federally administered program, unlike Medicaid, where each state has its own set of rules for what is covered. All public programs have their rules available to the public. In contrast, private-payer offerings and their rules are not publicly available. These policies are typically written based on the customer needs and any legislative mandates. How can this impact an audit?

First, let us look at a public program; in particular, a state-managed Medicaid program that had a provision to only pay for three prescriptions per month. However, at times an individual may have the medical need for four prescriptions per month and does not have the ability to finance that fourth prescription. As an auditor, what would you look for to determine whether a patient was manipulating this limit of three covered prescriptions per month? You could start by looking at whether a covered family member was receiving multiple prescriptions. For example, Mom needs ...

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