INTERNAL CHECK / AUDIT Internal auditing is a profession and activity involved in advising organizations regarding how to better achieve

their objectives. Internal auditing involves the utilization of a systematic methodology for analyzing business processes or organizational problems and recommending solutions. Professionals called internal auditors are employed by organizations to perform the internal auditing activity. The scope of internal auditing within an organization is broad and may involve internal control topics such as the efficacy of operations, the reliability of financial reporting, deterring and investigating fraud, safeguarding assets, and compliance with laws and regulations. Internal auditing frequently involves measuring compliance with the entity's policies and procedures. A hospital's internal audits increasingly should focus on the clinical aspects of cost and payment. This scrutiny can provide a better look at the efficiency of clinical operations control and bottom line effect. Four steps are involved in planning an operations audit: First, background information (including regulations and standards concerning pacemakers) should be obtained. Flow charts and questionnaires can help explain various administrative stages for acquisition handling and charging. Second, a set of preliminary objectives should define the scope of an audit. An audit should review the financial and operational issues involved in purchasing concepts, control pricing, charging, and credit return. A hospital audit should include justification for extended stays, surgical management care, and protocol. Third, an auditor should be familiar with an institution's goals, objectives, organization, staffing, information systems, performance standards, and written procedures. A walk-through with the manager of each review area is a good idea. The final step is to devise a step-by-step audit program. Performing An Audit, For an analysis of charges and payments, a personal computer can be used to establish databases from the following source documents: Accounts payable files by manufacturer; Medical records and billing files by patient; and Operational and surgical logs for implanting and explanting.

The analysis should include sufficient data to draw reasonable conclusions.

A hospital's medicine charges, found in its billing files, can be compared to its medicine purchases, listed by manufacturer or serial number. Bills should be separated into charges versus payments received and recorded as either profit or loss per patient. Bill review computation or electronic method of transmitting pacemaker data to third-party payers for accuracy and timeliness of payments also should be analyzed. The next step involves determining whether surgical implant charges are based on time, procedure, or both. Charges should be consistent from patient to patient. Price changes should be verified, and unadjusted profit margin on price changes should be identified. The unit price the hospital is paying should be examined against the manufacturer's list price, with particular attention given to discounts and bidding agreements. To avoid MediClaim fraud and abuse issues, manufacturers can be asked whether physicians are receiving any form of commission or rebate for using a particular brand of medicine. While a manufacturer is unlikely to reveal a commission arrangement, inquiring about it can help clear a hospital of liability in the event of fraud or abuse charges.