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LBJ's accounting system not meeting basic levels

“LBJ’s qualified audit opinion by Moss and Adams is not a real good opinion,” said the LBJ Hospital’s Chief Financial Officer, Pauline Gebauer about their Fourth Quarter Report.  As we move forward to improve this challenge, it will require a system change which is forthcoming in May 2015,” she noted.

 

The Fiscal Year 2014 last quarter report says LBJ does have challenges in many areas. According to Gebauer, in their last quarter the hospital experienced cash flow challenges from time to time depending on the receipt of funds. “Our main sources of revenue come from Medicaid, Medicare, Department of Interior (DOI), the American Samoa Government subsidy of 2% tax infusion, insurance reimbursements and the local revenue captured from the facility fees and cafeteria sales. The report says that the local hospital is also transacting business with Samoa’s healthcare system to use LBJ’s radiology services.

 

According to the report, the hospital’s current Medicaid billing methodology is another big challenge. “We are using a methodology that is approved by Medicaid based on our presumptive eligible resident population, where we receive $1.1million or so monthly which equates to about $13.2million annually.

 

“Interestingly enough, our current billing system captures this Medicaid billed population at $3.1million monthly which is about three times more (July data for research purposes).

 

If we can reach out to CMS to review our data so we can change our methodology and use this actual billing data, we can yield approximately $37.2million annually.” The hospital says this would improve their cash flow, along with pulling down Affordable Care Act funds.

 

MOSS ADAMS AUDIT OPINION

 

While the report indicates that LBJ’s qualified audit opinion by Moss and Adams is not a good one, as they move to improve this challenge it will require a system change. “This is a most needed change for our financial reporting package and to include an integrated billing system will greatly address improving this opinion,” said Gebauer who also noted that it would take time.

 

The hospital’s financial statement preparation is an item from the auditor’s findings where LBJ is not meeting the Generally Accepted Accounting Principles (GAAP) standard. “I would say it’s very similar to our CMS survey deficiencies that are being addressed. We do have deficiencies in the area of financial preparation, there are several cited by Moss and Adams: there are no personnel capable of preparing the finical statements. They conducted their testing and found the biggest challenge is in the billing and accounts receivable arena,” she said.

 

Gebauer stated in the report that this audit finding will be addressed when the hospital implements their new financial system by December or January. “However if we don’t have the qualified staff to do the necessary work, we can implement all the systems we want, it will still have the same results,” she stated.

 

Payroll integrity in the processing, according to Gebauer “was one of the many audit findings, because if payroll is not properly processed where we have checks and balances— or in accounting lingo, a strong internal control— we will be at high risk for all our federal funded dollars.” She noted that not having a strong payroll processing system is referred to as “high risk error probability.”

 

LBJ is about to switch back to an electronic timesheet system that was used previously, she noted.

 

She also pointed out in the report that clinical documentation integrity is needed to be complaint with CMS regulations and is a foundation for proper and accurate billing, as the hospital has to capture all information associated with clinical outpatient and inpatient visits where it is connected to an ancillary service such as a lab, radiology work orders, rehabilitation therapy, etc.

 

She also noted that there is a need for a certifiable type of training for all of the hospital. “We are putting together a three year plan for the Technical Assistance training to propose to the governor and DOI. It will capture all of the hospital’s needs and it helps address this challenge and the deficiencies we have encountered in our CMS survey due primarily to our lack of staff training.  This is our fix-it plan for the CMS plan of corrections and it will need to be an on-going hospital wide quality assurance plan of improvement,” she said.

 

There were more than ten violations of federal regulations found following surveys conducted by a CMS team from the San Francisco Regional Office in June this year. The federal agency now requires LBJ to correct the violations, or face the loss of its CMS re-certification.