MedicareTwo things happened that involved me within the last 24 hours that concern audits:  I completed an audit of an organization and I read a column in the SpokesmanReview about audits in Medicare.

I’ve been doing audits, and their cousin, inspections, for more than 30 years.  I remember what it was like when I first started – I was the one who was coming in to bayonet the wounded after the battle.  No one liked being audited.  It was a pain and the littlest thing would be blown up.

The best advice I got for dealing with audits in those days was from the Commander of the Naval Sea System Command.  At an annual meeting of the Supervisors of Shipbuilding, he spoke of reading some audit reports on commands under him one Sunday afternoon.  There apparently were hundreds – thousands – of dollars in checks sitting in the controller safe undeposited!  This demanded immediate action, so, he called the commanding officer of the delict command to find out why.  The truth of the matter was a few checks for a few hundred dollars that had been sent from travel agencies and car rental companies for overcharges.  But, the funds couldn’t be assigned to specific orders and therefore couldn’t be entered into the system because every dollar must be accounted for.  The checks were returned to the companies and that eliminated the problem.  True, the government was out a few hundred dollars, but the auditors were happy.

That was when VADM Fowler gave the best advice in dealing with auditors: ”Whenever they find something, say, NO!  You don’t understand.  And then keep talking until they do.”

I put that advice to use just a short time later when a navy auditor showed up in my office and stayed for 9 months.  In the end, when he saw my commanding officer, he had three findings: One we weren’t doing anymore; one we had signed a memo saying we won’t do it anymore; and one that really was the customer’s problem, not ours.  That was one of my greatest victories in the navy.

Today, when I do an audit, I tell the auditee(s) that I’m not there to bayonet anyone.  The audit’s purpose is identifying where what is being done is in accordance with what is expected and where it is not.  When I find something that is not in accordance with requirements, then I start the 5 why process.  The 5 whys process is a technique introduced in America by Philip Crosby and used to find the root cause of a problem.  You keeping asking why until to identify what is the origin of the chain of events that resulted in the discrepancy.  It’s simple and very effective.

The audit I finished yesterday found a lot of discrepancies ranging from a simple typo to a complete inability to get the required approvals for expenditures.  Sounds terrible, right?  But the truth is that the financial management system didn’t allow the people using the system to generate the proper reports that were supposed to be used for approval.  In short, the system was changed so the people couldn’t do what they were asked to do and the system then blames them for not doing what they are supposed to do!  Using the 5 why process I identified lack of training and the financial system itself as the problems – it wasn’t the people!

The column in the SpokesmanReview described how audits are used in the Medicare system for durable medical equipment (DME) – equipment used by patients that is supposed to last quite a while such as oxygen concentrators, beds, wheel chairs, etc.  If the auditor finds anything wrong in the paperwork – a missing date, signature, notes, etc. – the claim is denied and the patient is then liable for paying the claim.  Now, this equipment is a matter of life and death in many cases, particularly anything involving oxygen.  But the system that has been created is guaranteed to be a gotcha system.

  1. The paperwork must be perfect.
  2. There is a lot of paperwork.
  3. The patient needs the equipment NOW.
  4. The paperwork takes time to assemble, review and approve.
  5. The auditor may not get to the audit for 27 months.

The result is increased risk to everyone, particularly the patient.  Does the provider give the patient the DME now or wait?  Can the patient pay for 27 months use of DME if the claim is denied?

The objective of the auditing is to prevent fraud, a noble goal.  But in the pursuit of catching fraud, the risk to ordinary people who just want to serve others and those who want to breath, creates a situation that works against the basic purpose of Medicare.

The bottom line is that audits should help organizations and people to do a better job by identifying opportunities for improvement.

A physicist by trade, author by choice, a born teacher, a retired veteran, and an adamant problem solver, Frank has helped the White House, federal agencies, military offices, historical museums, manufacturers, and over 250 technology startups get stuff done, communicate effectively, and find practical solutions that work for them. In his spare time, he makes sawdust and watches Godzilla movies.