Bayesian inference of local government audit outcomes.

The scandals in publicly listed companies have highlighted the large losses that can result from financial statement fraud and weak corporate governance. Machine learning techniques have been applied to automatically detect financial statement fraud with great success. This work presents the first application of a Bayesian inference approach to the problem of predicting the audit outcomes of financial statements of local government entities using financial ratios. Bayesian logistic regression (BLR) with automatic relevance determination (BLR-ARD) is applied to predict audit outcomes. The benefit of using BLR-ARD, instead of BLR without ARD, is that it allows one to automatically determine which input features are the most relevant for the task at hand, which is a critical aspect to consider when designing decision support systems. This work presents the first implementation of BLR-ARD trained with Separable Shadow Hamiltonian Hybrid Monte Carlo, No-U-Turn sampler, Metropolis Adjusted Langevin Algorithm and Metropolis-Hasting algorithms. Unlike the Gibbs sampling procedure that is typically employed in sampling from ARD models, in this work we jointly sample the parameters and the hyperparameters by putting a log normal prior on the hyperparameters. The analysis also shows that the repairs and maintenance as a percentage of total assets ratio, current ratio, debt to total operating revenue, net operating surplus margin and capital cost to total operating expenditure ratio are the important features when predicting local government audit outcomes using financial ratios. These results could be of use for auditors as focusing on these ratios could potentially speed up the detection of fraudulent behaviour in municipal entities, and improve the speed and quality of the overall audit.

Is the two-midnight rule much ado about nothing?

The Centers for Medicare & Medicaid Services has declared that stays that span two midnights should be presumed to be inpatient stays, but case managers still need to make sure patients meet inpatient criteria and that the documentation is complete. Physicians must certify medical necessity, sign, date, and time the admission, and include a treatment plan and the anticipated length of stay. Physician documentation must be accurate, detailed and give a complete picture of what's going on with the patient or hospitals could face significant payment implications. Medicare auditors still will be scrutinizing the records and are likely to continue to target one-day stays and two-day stays for medical necessity.

CM experts: hospitals need ED case managers now more than ever.

It's no longer a luxury for hospitals to have case managers in their emergency departments, according to some case management experts--it's a necessity to make sure patients are admitted in the proper status and to ensure that those being discharged from the emergency department have what they need to manage their conditions. Hospitals need to ensure that patients meet medical necessity criteria to avoid losing reimbursement. Case managers can help provide a smooth transition from the emergency department back to the community and connect patients with post-discharge services. Case managers can work with patients who frequently utilize the emergency department and educate them about more appropriate venues of care.

Centers for Medicare and Medicaid services tighten reimbursements.

Hospitals will suffer when the Medicaid Recovery Audit Contractor (RAC) starts on Jan. 1, 2012, if case managers aren't scrutinizing those patients as closely as those who are covered by Medicare. Make sure your documentation is complete to avoid denials and prepare for appeals. Work with your state Medicaid provider to determine how the program will work in your state. Learn the rules for all states in which your patients reside. Be aware that the Medicaid RACs are charged with taking a proactive approach to identify potential fraud.