You are an internal audit staff member conducting an auditing of the physician practice unit associated with the hospital and healthcare system at a...

You are an internal audit staff member conducting an auditing of the physician practice unit associated with the hospital and healthcare system at a major university. One of the tasks you have been assigned to perform is to exam the physician practice's Medicare billing to make sure Medicare has been billed with the correct diagnostic codes. Medicare billing is based on the diagnosis code and the procedure codes. A physician from the hospitals quality of care staff will be assisting you in reviewing the medical records to see if the coding was correct, but you need to determine which records to evaluate and how many should be evaluated. The physician practice unit had total claims in the last 12 months of 87,500. For this particular test, you are restricting your scope to the last three months. In that period, there were 24,875 claims. For each claim, the physician working with you will determine if the coding of the medical diagnosis is supported by the documentation in the patient's medical record.

Questions:

(a) Describe a judgment (non-statistical) sampling approach you could take to performing this test

(b) If you wanted to take a statistical approach, describe a sampling plan you could use to do statistical sampling

(c) The Centers for Medicare & Medicaid Services expects coding to be accurate - you have decided that you want a statistical sample that will give you a confidence level of 95% and that the coding error rate is 3% or less. From an audit done several years ago of the billing system you have an expectation that this is done correctly 99% of the time. What is the initial sample size you would plan for the test?

(d). Assume that you sample size you took was 200 and that you found 2 errors. Evaluate these results and indicate what, if any, further action is necessary?