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Michigan Primary Care Association Medicare FQHC Cost Report Training Presented by: Michael B. Schnake, CPA, CGFM August 23, 2012
Michigan Primary Care Association
Medicare FQHC Cost Report Training
Presented by: Michael B. Schnake, CPA, CGFM
August 23, 2012
Presentation PreludeIn order to remain financially viable, health
centers must consistently capture available revenues from services provided to all patients, including Medicare beneficiaries
Understanding and completing the Medicare FQHC cost report timely and accurately is important to maintaining Medicare program revenues and cash flow
Presentation PreludeBureau of Primary Health Care (BPHC) Key Health Center
Program Requirements includes expectation that health centers “maximize collections and reimbursement for costs”
Policy Information Notice (PIN) # 98-23 includedguidance noting “health centers must participate in favorable enhanced or cost-based reimbursement programs for which they are eligible”
HRSA Program Assistance Letter 2011-04: “Process for Becoming Eligible for Medicare Reimbursement under the FQHC Benefit”
Presentation PreludeHealth care reform legislation mandates a
transition from the current Medicare FQHC cost-based reimbursement system effective for cost reporting periods beginning on or after October 1, 2014
Medicare Prospective Payment System planning considerations
Presentation PreludeCMS Transmittal 10 dated November 2011 revises
the Medicare FQHC cost reporting form, Form CMS 222-92, for cost reporting periods that overlap or begin on or after January 1, 2011
More detail later in the slide show
CMS has revised the PS&R information that is available to health centers
Make sure you have current software for cost report filing (the Medicare program no longer provides a free software option)
Today’s AgendaWhy focus on Medicare?
Medicare FQHC enrollment considerations
Understanding the Medicare FQHC cost report
Walkthrough of Worksheet S
Today’s AgendaWalkthrough of Worksheet A
Walkthrough of Worksheet A-1
Walkthrough of Worksheet A-2
Walkthrough of Worksheet A-2-1
We’ve completed Worksheet A –where does this information go?
Today’s AgendaWalkthrough of Worksheet B, Parts
I & II
Walkthrough of Worksheet B-1
Walkthrough of Worksheet C, Parts I & II
Medicare FQHC Cost Reporting Mistakes – Top 10
Today’s AgendaMedicare Advantage Matters
Medicare Cost Report Potpourri
Final Thoughts
Why Focus on Medicare?
Environment Issues The Medicare program, while small as a percentage
of overall health center patient related revenues, is an important third-party payer of services (generally the second best payer after state Medicaid)
Payer mix goal for community health centers
Maintain and/or grow the percentage of Medicare beneficiaries served
Traditional Medicare beneficiaries and Medicare managed care plan beneficiaries
Reimbursement Issues –Medicare Parts A & B Medicare FQHC cost-based reimbursement is
applicable to FQHC-core services only Medicare FQHC reimbursement is based on
a per-visit rate subject to an upper payment limit (the “cost cap”) 2012 rural limit - $109.90 2012 urban limit - $126.98
Services provided by core service providers are paid based on a per-visit methodology
Reimbursement Issues –Medicare Parts A & B Medicare covered services outside of FQHC-core
services
Services such as laboratory; technical component of diagnostic tests such as radiology and EKG; and the technical component of many preventive services (such as pap smears and prostate cancer screenings)
Reimbursement made on the basis of applicable Medicare fee schedules without regard to the health center’s cost of providing such services
Reimbursement Issues –Medicare Parts A & B Medicare covered services outside of FQHC-
core services (continued) Important to compare health center charges
for covered services to the Medicare fee schedule amounts (charges should generally be set at or above the approved fee schedule amounts – annual review necessary)
Reimbursement Issues –Medicare Parts A & B Many services are not eligible for
reimbursement under Medicare Parts A & B
Dental
Pharmacy
Other
Reimbursement Issues –Medicare Parts A & B Medicare reimbursement for FQHC-core services
ultimately determined through submission of Medicare FQHC cost report Final Medicare program payment based on 80% of
defined Medicare cost determined from the cost report
Medicare beneficiary copayments are based on 20% of covered charges
No reconciliation process for services reimbursed based on a Medicare fee schedule
Common Myths of Medicare FQHC Cost Reporting & Reimbursement I followed the prior year cost report - it must be
right The cost report can’t be complex – there are not
too many pages I’m over the cost limits - it really doesn’t matter
how the cost report is prepared There is no need to challenge intermediary
proposed adjustments if the final settlement is not significantly changed
Medicare FQHC Enrollment
Considerations
FQHC Certification Issues Receiving Section 330 grant funding, Look-Alike
designation or approval of a BPHC change in scope to add a site
Establishes eligibility to enroll in Medicare as an FQHC
Does not initiate the Medicare FQHC enrollment application
FQHCs are considered “institutional providers”
FQHC Certification Issues Underlying issues of importance
Regulations require site-by-site certification
Medicare approval granted on a prospective basis
Failure to get it right will likely impact your health center negatively
FQHC Certification Issues Certification process involves the Centers for
Medicare & Medicaid Services (CMS) & intermediary/MAC
Provider enrollment application (CMS 855A)
New application fee per each enrollment application effective March 23, 2011
Calendar year 2012 fee of $523
FQHC Certification Issues Accurate & timely completion/submission
of CMS 855A should be a priority
Completion of CMS 855A can be very confusing - seek clarification of any uncertainties prior to submission
Proactive management of certification process a must for health center management
FQHC Certification Issues Common problems that have potential
significant negative financial implications Multiple sites utilizing one FQHC provider
number
Failure to decertify sites no longer in existence and/or utilized for health center activities
Word to the wise - get it right from the start
Current Issues Sites assigned to a MAC where “legacy” sites
remain with National Government Services (NGS)
MACs setting low initial interim rates
MACs requesting a cost report for an individual site (though the health center files a consolidated cost report)
Cash flow interruption while problem issues are resolved
Understanding the Medicare FQHC Cost
Report
Medicare FQHC Cost Report Keys to preparing an accurate Medicare FQHC
cost report include: Understanding the purposes of the Medicare
FQHC cost report Understanding Medicare reasonable cost
principles Maintenance of adequate tracking systems
within the health center’s financial reporting and practice management systems for proper data accumulation
Reimbursement Principles Application of Medicare Reasonable Cost
Principles Documented in 42 CFR part 413 Underlying principle Payments based on reasonable
costs must be necessary and related to the care of covered beneficiaries
Application of Medicare Reasonable Cost Principles Medicare Provider Reimbursement Manual
(CMS publication 15)
Provides guidelines & policies to implement Medicare regulations which set forth principles for determining the reasonable cost of provider services
Includes application of the prudent buyer principle as a means to investigate situations where costs seem excessive
Application of Medicare Reasonable Cost Principles Prudent buyer principle
A prudent & cost conscious buyer seeks to minimize cost
Amounts paid for costs incurred must be commercially reasonable
Provides intermediary discretion to exclude potentially excess cost (documentation is the key)
Purpose of the Medicare Cost Report Determination of reimbursable (Medicare allowable) cost
per visit Costs – concept of “cost buckets” (Worksheet A lines
noted) Direct reimbursable costs (lines 1 – 11, 13 – 15,
and 17 - 23) Direct nonreimbursable costs, including costs other
than FQHC (lines 51 – 56 and 58 - 60) Overhead costs
– Facility costs (lines 26 – 36)– Administrative costs (lines 38 – 48)
Visits
Purpose of the Medicare Cost Report Determination of Medicare program liability
Computed Medicare reimbursement less interim Medicare payments
Represents formal claim of reimbursement for FQHC services provided to Medicare beneficiaries during a cost reporting period
Generally filed on a consolidated basis (versus a site by site basis)
Example Assumptions Medicare allowed costs - $4,000,000 Total visits (as defined by Medicare) –
40,000 Computed cost per visit of $100 is less
than the cost limit What if visits were 25,000 and the
computed cost per visit was $160?
Walkthrough of Worksheet S
Overview of Worksheet S Worksheet is divided into three parts
Part I – Statistical data
Part II – Certification by officer or administrator
Part III – Statistical data for clinics filing under consolidated cost reporting
Walkthrough of Worksheet S Part I
Lines 1 – 4; Facility identifying information (name, address and provider number)
Line 5; type of provider (FQHC) and date certified
Line 6 – Source of federal funds
Walkthrough of Worksheet S Part I
Lines 7 & 8; physician information (not required to be completed now)
Lines 9 - 12; relevant if the facility operates as other than FQHC (line 9 requires an answer; lines 10 - 12 drive from the line 9 response)
Walkthrough of Worksheet S Part I
Line13; question regarding low or no Medicare utilization filing option
Line 14; question regarding consolidated filing option where health center organization has multiple FQHC approved sites (answer, if “yes”, drives completion of Part III)
Need to also indicate the number of sites included in the consolidated filing – excluding the main site
Walkthrough of Worksheet S Part II
Certification by officer or administrator – it is important for the person signing the cost report to read and understand the information being attested to
Compliance issue
Walkthrough of Worksheet S Part III
Complete a separate worksheet for each consolidated site that is in addition to the main site identified in Part I
Similar information as required for reporting in Part 1 (excluding the type of provider and source of federal funds)
Walkthrough of Worksheet A
Overview of Worksheet A Columns 1, 2, and 3 of Worksheet A report: Compensation costs Other costs Total costs
Total costs included in column 3 should reconcile with the audited financial statements Is general ledger detail sufficient for accurate
completion of Worksheet A (beyond column 3)?
Overview of Worksheet A Worksheet A, Column 4 provides a recap,
by cost center, of cost reclassification entries Total of column 4, line 62, should be
zero Worksheet A, Column 5 – Reclassified
Trial Balance Total of column 5, line 62 will equal
total of column 3, line 62
Overview of Worksheet AWorksheet A, Column 6, provides
a recap, by cost center, of cost adjustments entriesWorksheet A, Column 7 – Net
ExpensesColumn 7 expenses represent the
“beginning of the rest of the Medicare cost reporting story”
Trial Balance of Expenses Facility health care staff costs Provider and support staff salaries are
reported on lines 1 – 7, column 1 Line 8 – lab technician (lab costs are
reported on line 54) Line 1, column 2 (other costs) – report
contract physician costs, if any What about employee benefits?
Trial Balance of Expenses Costs under agreement (lines 13 – 15)
Contract physician services are reported on line 1, column 2 as discussed on the previous slide
Other contract provider costs (mid-level providers, etc.) are reported on lines 13 - 15
Trial Balance of Expenses Other health care costs (lines 17 – 23)
Medical supplies
Transportation – health care staff
Depreciation - medical equipment
Malpractice insurance
Continuing medical education
Minor medical equipment
Other
Trial Balance of Expenses Facility overhead - facility costs (lines 26 – 36)
Rent
Building insurance
Interest on mortgage
Utilities
Depreciation – buildings, fixtures & building equipment
Housekeeping and maintenance
Property taxes
Minor equipment
Other
Trial Balance of Expenses Facility overhead - administrative costs
(lines 38 – 48)
Office salaries, column 1
Depreciation – office equipment
Office supplies
Legal & accounting
Insurance (D & O, general liability, etc.)
Telephone
Trial Balance of Expenses Facility overhead - administrative costs
(lines 38 – 48)
Fringe benefits and payroll taxes
Miscellaneous (should not be significant)
Postage & other related office expenses
Travel and seminar
Trial Balance of Expenses Facility overhead - administrative costs
(lines 38 – 48)
Advertising costs
–Yellow pages
–Recruitment
–Promotional
Contract services
Dues and licenses
Trial Balance of Expenses Cost other than FQHC services
(lines 51 – 56) PharmacyDentalOptometry LaboratoryRadiology
Trial Balance of Expenses
Nonreimbursable costs (lines 58 – 60)
WIC
Non-FQHC approved activity
Other
Cost Classification Issues – Common Questions
Bad debt expense
Medical records and front office staff
Health education
Outreach activities
Reconciliation of reported costs to audited financial statements
Overview of Worksheet A - Questions
How do I get from Worksheet A, Column 3 to Worksheet A, Colum 7?What is the underlying Medicare
guidance that requires cost report reclassification and adjustments entries?What information should be
accumulated for this process?
Walkthrough of Worksheet A-1
Worksheet A-1 Purpose of worksheet
Provides for the reclassification of costs to effect proper cost allocation
Align costs into the correct cost center
Use where costs applicable to more than one cost center are recorded in the organization’s accounting records in one cost center
Worksheet A-1 Layout (format) of worksheet
Column for explanation of reclassification
Increase and decrease columns include
Reclassification entry code
Cost center identification (name and line number)
Amount by cost center name and line number
Worksheet A-1 Amounts entered on Worksheet A-1
must be equal in total for each reclassification entry (total cost center increases = total cost center decreases)
Summary totals by cost center transferred to Worksheet A, column 4
Total of column 4 should be zero
Reclassifications of Expenses Common examples
Fringe benefits
Depreciation
Insurance
Continuing medical education (CME)
Reclassifications of ExpensesCommon examples
Inpatient hospital costs
Medical director costs
Reclassifications of Expenses Fringe benefits costs
If fringe benefits costs are directly assigned within the organization’s accounting records, reclassification entry is not necessary
For combined (pooled) costs, reclassification entry needed to assign costs to cost centers with identified salary costs
Pro-ration method
Reclassifications of Expenses Depreciation costs
Medicare regulations require use of American Hospital Association (AHA) Depreciable Lives Guidelines for assets acquired on or after January 1, 1981
Straight-line methodology required
Costs must be reported for medical equipment; buildings & fixtures; building services equipment; office equipment; and, other (non-reimbursable cost centers, etc.)
Reclassifications of Expenses Insurance costs
For combined (pooled) costs, reclassification entry needed to assign costs to appropriate cost centers
Professional liability insurance – medical, dental, etc.
Property, plant & equipment insurance
General liability insurance
D&O insurance
Reclassifications of Expenses Continuing education costs
For combined (pooled) costs, reclassification entry needed to assign costs to appropriate cost centers
CME costs are reported on Worksheet A, line 21
Dental and other non-reimbursable cost center provider education costs are reported within the appropriate non-reimbursable cost center
General education costs are included within facility overhead – administrative overhead costs
Reclassifications of Expenses Inpatient hospital costs
For organization providers that perform work in a hospital setting, costs (salary and related fringe benefits costs) must be reported in a separate cost center (“costs other than FQHC services”)
Generally a reclassification of such costs must be made from health care services costs to the cost center line created within “costs other than FQHC services” for reporting of hospital costs
How is this reclassification amount calculated?
Reclassifications of Expenses Medical director costs
For organization providers that perform health care director services (medical, dental, etc.), such costs (salary and related fringe benefits costs) must be reported as a component of facility overhead – administrative overhead costs
Generally a reclassification entry is necessary
How is this reclassification amount calculated?
Reclassifications of Expenses Other possible cost reclassification issues
Salary costs
Costs of locations that are not approved as FQHC sites for the entire cost reporting period
Advertising costs
Pharmacy costs (costs of injectable drugs that are not self-administered)
Contract services costs (administrative versus medical versus non-reimbursable costs)
Other
Worksheet A-1 Points to remember when completing Worksheet A-1
Generally this worksheet will not be blank
No limit on the number of reclassification entries that can be reported
Consideration can be given to more detailed reporting in an organization’s accounting records to limit the number of reclassification entries needed
Cost center increases reported must equal cost center decreases reported
Walkthrough of Worksheet A-2
Worksheet A-2 Purpose of worksheet
Provides for the adjustment of costs which are required under the principles of Medicare reimbursement
Made on basis of cost (if available) or revenue received
Adjustments are generally made to reduce reported costs
Can have positive adjustments in certain fact circumstances
Worksheet A-2 Layout (format) of worksheet
Column for description of adjustment
Column to report basis of adjustment
Cost = A
Revenue = B
Amount of adjustment (cost decreases are shown as a negative number)
Worksheet A cost center impacted
Worksheet A-2 Summary totals by cost center
transferred to Worksheet A, column 6
Total of Worksheet A, column 6 should match the total adjustment amount reported on Worksheet A-2, line 12
Worksheet A-2 Types of items reported include
Adjustment (removal) of non-allowable costs from the cost report
Adjustment for revenues that constitute a recovery of costs through sales, charges, fees, etc.
Adjustment of expenses in accordance with the principles of Medicare reimbursement
Adjustments to Expenses Common examples – cost matters
Promotional advertising
Contract laboratory
Pharmacy cost of goods sold
Donated services (generally)
Adjustments to Expenses Common examples – cost matters
Indigent care/specialty referral expenses
Related party costs (see later slides)
Bad debt expense if reported on Worksheet A, column 2
Adjustments to Expenses Common examples – revenue matters
Offset of interest income to the extent of interest expense
Offset of miscellaneous income
Grants, gifts, and income from endowments are NOT required to be offset against expenses
Worksheet A-2 Points to remember when completing Worksheet
A-2
Generally this worksheet will not be blank
No limit on the number of adjustment entries that can be reported
Cost report preparer should have a solid understanding of Medicare reasonable cost principles, including application of the Provider Reimbursement Manual, in order to achieve appropriate reimbursement
Walkthrough of Worksheet A-2-1
Related Organization Costs Related organization defined in
Provider Reimbursement Manual -Part 1, Chapter 10
Relationship can be through common ownership or control
Worksheet A-2-1 Purpose of worksheet
Provides for the reporting of related organization costs incurred, if any
Related organization costs may include costs applicable to services, facilities and supplies furnished by the related organization
Worksheet A-2-1 Purpose of worksheet
Provides for the adjustment of related organization costs to the actual cost incurred by the related organization
Medicare reasonable cost principles require the elimination of related organization profit
In addition, allowable costs cannot exceed the cost of services, facilities or supplies that can be obtained from an unrelated party
Worksheet A-2-1 Layout (format) of worksheet
Worksheet includes Part I and Part II
Part I – Requires a “yes” or “no” answer as to whether any related organization costs are reported in the cost report
If “no”, do not complete Part II
Part II – Provides detail of related organization costs; type of relationship; total cost incurred; amount of cost includable in allowable cost; and, any required adjustment to total cost incurred
Worksheet A-2-1 Any required adjustment to related party cost
identified on Worksheet A-2-1 is reported on Worksheet A-2, line 6
Adjustment can be positive or negative (generally any such adjustment will reduce reported costs)
Does the organization’s audited financial statements report related party transactions?
Discussion of examples
Walkthrough of Worksheet B, Parts I & II
Visits and ProductivityOne of the most common problems in
Medicare FQHC cost reporting is the reporting of visits and health center productivity information – can have significant detrimental consequences
System issues
Lack of understanding of Medicare cost report definitions
Worksheet A Tie-In Upon completion of Worksheet A, column 7,
costs are located in the proper “cost buckets” for completion of remainder of the cost report Total allowable costs Adjusted cost per visit
Amounts reported on Worksheet A, column 7 flow to Worksheet B, Part II See later slides
Worksheet B, Part I Visits, for purposes of Medicare FQHC
cost reporting, have a specific definition
Face-to-face encounter between the patient and a defined provider (see next two slides)
Imperative to get the visit count correct (“scrubbed”) for accurate cost report completion
Worksheet B, Part I Visits & productivity information required to be
reported for:
Physicians (including contracted physicians providing services on a regular basis) – line 1
Physician assistants and nurse practitioners –lines 2 and 3
Visiting nurse – line 5
Clinical psychologist and clinical social worker –lines 6 and 7
Worksheet B, Part I Visits & productivity information required
to be reported for:
Medical nutrition therapist – line 7.1
Diabetes self management training –line 7.2
Physician services under agreement –line 9
Worksheet B, Part I Section 5114 of the Deficit Reduction Act of 2005
(DRA) expanded the FQHC definition of a face-to-face encounter to include encounters with qualified practitioners of outpatient Diabetes Self-Management Training (DSMT) services and Medical Nutrition Therapy (MNT) services
All relevant program requirements must be met for the provision of DSMT and MNT services
Applicable for Medicare beneficiaries with diabetes or renal disease
Worksheet B, Part I Column 1 - recap of full time equivalent
(FTE) personnel reported for each of the applicable staff positions in the health center
How are FTEs calculated?
Productive hours / 2,080
Worksheet B, Part I FTE calculation -
Productive hours defined as total paid hours minus:
Vacation
Sick leave
CME
Non-FQHC covered services
Administrative duties
Other
Example Assumptions
Full time physician – 2,080 hours paid (52 weeks X 40 hours per week)
Vacation of 80 hours
Holidays of 56 hours
CME of 16 hours
FTE would be reported as .93 (2,080 – 80 – 56 –16 = 1,928/2,080 = .93)
Worksheet B, Part I Column 2 - recap of total visits
actually furnished to patients by all personnel in the applicable staff positions during the cost reporting period
Remember the definition of an FQHC visit
Worksheet B, Part I Column 2 - recap of total visits
Visits exclude:
Nurse visits
Visits related to non-FQHC covered services (dental, non-FQHC approved sites, etc.)
Other program visits (WIC, etc.)
Worksheet B, Part I Columns 3 through 5 - productivity standard
calculation Physician - 4,200 visit productivity standard Includes contracted physicians providing
services on a regular basis Physician assistants and nurse practitioners -
2,100 visit productivity standard Calculation is cumulative, not line item specific Other defined providers – productivity standard
does not apply
Worksheet B, Part I Column 3 - productivity standard (pre-populated on
the cost reporting form) Column 4 – minimum visits (computed by
multiplying the number of FTE personnel reported in column 1 by the applicable productivity standard reported in column 3)
Column 5 – line 4 will report the greater of actual visits or
the cumulative productivity standard Lines 5, 6, 7, 7.1, 7.2 and 9 report actual visits
Worksheet B, Part I Information from column 5, lines 8 and
9 will carry forward to Worksheet C, Part 1, lines 4 and 5 for calculation of the health center’s adjusted cost per visitThis information is used in the
denominator of the adjusted cost per visit fraction
Example Staffing assumption Physician FTEs of 7.5 (x 4,200 visits =
productivity standard of 31,500 visits) Nurse practitioner FTEs of 2.5 (x 2,100 visits
= productivity standard of 5,250 visits) Combined productivity standard of 36,750
visits (31,500 + 5,250)
Denominator of cost per visit fraction is the greater of actual visits or 36,750
Worksheet B, Part II Determination of total allowable cost applicable to FQHC
services
Lines 10 and 11 carryover from Worksheet A, column 7, lines 25 and (lines 57 plus 61), respectively
Line 10 – cost of FQHC services
Line 11 – cost other than FQHC services, excluding overhead costs
Overhead cost centers (Worksheet A, column 7, line 50) are allocated to FQHC services on a pro-rata methodology
Questions – Worksheet B, Part I What is the best practice for properly
reporting the number of FTE personnel for computation of the Medicare productivity standard?
What is the potential impact of not meeting the cumulative Medicare productivity standard?
Should there be an analytical review of total visits accumulated for the cost report?
Worksheet B-1
Calculation of Vaccine Cost Pneumococcal, seasonal influenza & H1N1
shots are reimbursed through the Medicare FQHC cost report
Reimbursement of actual cost of Medicare shots without regard to the Medicare cost limits
Maintain vaccine logs
Total shots given
Medicare shots given
Calculation of Vaccine Cost Reimbursement includes
Staff time cost (line 3)
Worksheet B-1, line 2 – ratio of vaccine staff time to total health care staff time
Computation of line 2 ratios
–Normal standard is 5 minutes per shot
Calculation of Vaccine Cost Reimbursement includes
Medical supplies cost (line 4)
Invoice support is best practice
What about donated shots?
Allocable overhead cost (line 9)
Total vaccine cost reported on Worksheet B-1, line 10
Calculation of Vaccine Cost Total number of vaccines are reported on
line 11
Cost per vaccine injection is reported on line 12
Medicare shots reported on line 13 multiplied by the cost per injection reported on line 12 = Medicare vaccine cost reported on line 14
Calculation of Vaccine Cost Total vaccine cost reported on line 15
and total Medicare vaccine cost reported on line 16 will carry forward to Worksheet C, Part 1, lines 2 and 20, respectively
Worksheet C –“The Rest of the Story”
Worksheet C, Part I Part I includes nine lines of reported information
culminating in the reimbursement rate used to calculate Medicare covered cost Lines 1 through 6 carry forward from other cost report
worksheets (B, Parts 1 and 2, and B-1) Line 7 – adjusted cost per visit (line 3 divided by line
6) Line 8 – Medicare cost limits Calendar year specific – columns 1 and 2
Line 9 – Rate for Medicare covered visits Lesser of line 7 or line 8
Worksheet C, Part I Medicare FQHC reimbursement is based
on a per-visit rate subject to an upper payment limit (the “cost limit”) 2012 rural limit - $109.90 2012 urban limit - $126.98
What cost limit is used if my health center has both rural and urban locations?
Worksheet C, Part II Worksheet C, Part II provides for the determination of
total payment - includes lines 10 through 25
Lines 18.01 through 18.06 are new via Medicare transmittal 10 dated November 2011 (new lines effective for cost reporting periods that overlap or begin on or after January 1, 2011)
Includes columns 1 through 3
Columns 1 and 2 are for separate calendar year reporting purposes
All cost reporting periods will use columns 1 and 2 with the exception of calendar year cost reporting periods
Worksheet C, Part II Lines 11 and 12
Line 11 – Medicare covered visits, excluding mental health services
Line 12 – Medicare cost excluding cost for mental health visits (line 10 x line 11)
Lines 13 and 14
Line 13 – Medicare covered visits for mental health services
Line 14 – Medicare cost for mental health services (line 10 x line 13)
Why are mental health services visits reported separately (see next slide)?
Worksheet C, Part II Lines 15 includes a mental health services limit adjustment =
line 14 x applicable outpatient mental health treatment limitation percentage
Outpatient mental health treatment limitation is being phased out through December 31, 2013
January 1, 2012 - December 31, 2012 (75.00%)
January 1, 2013 – December 31, 2013 (81.25%)
January 1, 2014 – forward (100%) – at this point, Medicare payment for mental health services will be equivalent to Medicare payment for other Medicare covered services
Remember Medicare PPS is coming for cost reporting periods beginning on or after October 1, 2014
Worksheet C, Part II Line 16 reports total Medicare cost
(the sum of lines 12 and 15)
Line 17 (beneficiary deductible) does not apply to FQHC services and will always be zero
Line 18 reports Medicare cost excluding the cost of vaccinations reported on Worksheet B-1 (line 16 –line 17)
Worksheet C, Part II Lines 18.01 through 18.06 are new – added to the
cost reporting form in accordance with provisions of Section 4104 of the Affordable Care Act (ACA)
Used for cost reporting periods that overlap or begin on or after January 1, 2011
Eliminates coinsurance and deductible for preventive services effective for dates of service on or after January 1, 2011
Results in calculation of Medicare reimbursement at 100% of cost for preventive services (versus 80% of cost for other Medicare covered FQHC services)
Worksheet C, Part II Lines 18.01 reports total Medicare FQHC charges
(generally from intermediary/MAC records)
Line 18.02 reports total Medicare charges for FQHC covered preventive services
Health center claims submission/coding requirements changed for services on or after January 1, 2011 – basis for the amount reported on line 18.02
Line 18.03 = (Line 18.02/Line 18.01) x Line 18 x 100%
Line 18.04 = (Line 18 – Line 18.03) x 80%
Worksheet C, Part II Line 18.05
For cost reporting periods that overlap January 1, 2011, enter total program costs (line 18 x 80%) in column 1 and enter the sum of lines 18.03 and 18.04 in column 2
For cost reporting periods that begin on or after January 1, 2011, enter the sum of lines 18.03 and 18.04, in each column, as applicable
Line 18.06
Reports the amount of coinsurance applicable to FQHC covered services
This line is for informational/statistical information only and does not impact the cost report settlement calculation
My health center has already submitted a cost report for a cost reporting period ended after January 1, 2011 and we did not have the new forms – what now?
How does my health center identify Medicare preventive charges to use in completion of these new lines?
Will the intermediary/MAC PS&R reports capture preventive charges?
New Lines 18.01 through 18.06 - Questions
Worksheet C, Part II Line 19 reports reimbursable cost of FQHC services, other than
vaccines (Line 18 x 80%)
This line is not used for cost reporting periods that overlap or begin on or after January 1, 2011
Line 20 reports the Medicare cost of pneumococcal and influenza vaccines – amount carries forward from Worksheet B-1
Line 21 reports total reimbursable Medicare cost
For cost reporting periods ending before January 1, 2011, this line will report the sum of lines 19 and 20
For cost reporting periods that overlap or begin on or after January 1, 2011, this line will report the sum of lines 18.05 and 20
Worksheet C, Part II Line 22 reports total payments made to the health
center for covered Medicare FQHC services during the cost reporting period
Use of PS&R reports from the intermediary/MAC
What about unpaid claims that have not been adjudicated and are not included in the PS&R reports?
Line 23 reports the balance due to/from the Medicare program, excluding Medicare bad debts
This is not the “end of the story” quite yet
Worksheet C, Part II Line 24 reports total reimbursable Medicare bad debts,
net of bad debt recoveries
Reimbursable Medicare bad debts
Completion of Exhibit 5 of cost report questionnaire (Form 339)
• Uncollected Medicare co-payments related to paid Medicare FQHC covered services are potentially eligible for reimbursement
• Reasonable collection efforts must be documented
• Generally, write-off must occur no earlier than 120 days after the date the patient is first billed
CMS Proposed Rule – 7/11/2012 Proposed rule reduces the amount of Medicare bad
debts that will be reimbursed for future cost reporting periods (current reimbursement is at 100% of allowed Medicare bad debts – through cost reporting periods (CRPs) ending on or before September 30, 2012)
Proposed Medicare bad debt reimbursement for future CRPs as follows:
CRPs beginning on or after October 1, 2012 – 88%
CRPs beginning on or after October 1, 2013 – 76%
CRPs beginning on or after October 1, 2014 and subsequent – 65%
Worksheet C, Part II Line 24.01 reports reimbursable Medicare bad debts for dual-
eligible beneficiaries
This amount is reported for statistical purposes only
Line 24.02 – Tentative settlement
This line is for intermediary/MAC use only
Line 25 reports the total balance due/to from the Medicare program, including Medicare bad debts (and net of any interim settlement amount – upon finalization of the cost report)
Sum of lines 23 and 24 plus/minus line 24.02
What if the health center is owed money?
What if the health center owes money?
Cost Report Submission Cost report filing deadline
Due within 150 days following the end of the cost reporting period
No extensions allowed other than for acts of God (flood, hurricane, etc…)
Late filing results in 100% withhold of interim payments (though partial relief of withholding may be granted – check with intermediary/MAC)
Example Assumptions
Computed cost per visit of $100 (below the cost limits)
Medicare visits of 5,000
Reimbursable Medicare bad debts of $7,500
Medicare FQHC interim payments of $439,600 (based on the 2012 rural payment cost limit of $109.90/visit)
Amount due to the Medicare program of $32,100 ($400,000 + $7,500 - $439,600)
Medicare FQHC Cost Reporting Mistakes – Top 10
Top Ten Mistakes 10.No reclassifications and/or adjustments
reported to align costs properly
9. Not properly listing clinic locations which may affect per-visit payment limit(s)
8. No tracking & reporting of vaccines and/or Medicare Part B billing issues
Top Ten Mistakes 7. No reporting of Medicare bad debts
6. Lack of review of intermediary/MAC proposed adjustments during settlement process
5. FQHC provider number issues
Top Ten Mistakes 4. No reconciliation of expenses reported
on cost report with total expenses per the audited financial statements
3. Not reporting expenses correctly in the proper “buckets” Direct cost – reimbursable services Direct cost – non-reimbursable services Overhead costs
Top Ten Mistakes 2. Incorrect computation of FTEs
and related productivity standard
1. Inaccurate reporting of visits
Medicare Advantage Matters
Medicare Advantage Medicare Advantage Plan types Coordinated care plans (network plans) Private fee-for-service plans (generally are non-
network plans with services provided by “deemed” providers)
Medical savings account plans (non-network plans)
Examples of coordinated care plans – HMO, PPO, POS, SNP
Medicare Advantage CMS Medicare Managed Care
Directory can be obtained at the following CMS websitehttp://www.cms.hhs.gov/HealthPlansGenInf
o/01_overview.asp
Medicare Advantage Issues of importance - coordinated care plans FQHCs can be a contracting or non-contracting
provider - reimbursement issues are different Contracting – total reimbursement at 100% of
reasonable cost (subject to the per-visit limit); three parties to bill & collect from
Non-contracting – total reimbursement at 80% of reasonable costs plus 20% of actual charge less plan’s cost-sharing amount; two parties to bill & collect from
Medicare Advantage Issues of importance – private fee-for-
service plans
CMS has published an online “MA Payment Guide for Out-Of-Network Payments” applicable to both non-contracting providers of “network plans” & “deemed” providers
What is happening in practice today?
Medicare Advantage The Medicare FQHC cost report form has not
been revised by CMS to accommodate reporting of Medicare Advantage Plan activity No current estimate of when the cost
reporting form revisions will be completed No current extensions to file – CMS is willing
to exclude this activity from the cost report for now
Medicare Advantage Supplemental payments to FQHCs
Required only if the FQHC is contracting with a Medicare Advantage Plan
Applicable only to Medicare FQHC-core services
Generally referred to as Medicare “wrap-around” payments
Medicare Advantage “Wrap-around” payment example
Assume the following set of facts
FQHC actual cost of $100 per visit (below the urban “cost cap” of $127 per visit)
Medicare Advantage Plan estimated average payment of $70 per visit (including a beneficiary copayment of $20 per visit)
Based on the above, the interim “wrap-around” payment should be set at $30 per visit ($100 - $70)
Medicare Advantage What is the effect if the actual cost per visit is
$135?
Remember – the “wrap-around” payment is required to consider the beneficiary cost-sharing amount a FQHC could collect vs. the amount, if any, actually collected
Medicare Advantage Given that the “wrap-around” payment is
limited to Medicare FQHC-core services, a FQHC must analyze & evaluate “the rest of the story” Medicare non-FQHC services
Medicare non-covered services
Medicare Advantage Plan incentive payments
Medicare FQHC Reimbursement Potpourri
Medicare Cost Report Questionnaire In addition to the Medicare FQHC cost report,
FQHCs are also required to submit a Medicare Provider Cost Report Reimbursement Questionnaire (CMS Form 339) Failure to submit the Questionnaire will result
in a suspension of Medicare payments Many of the sections of the Questionnaire are
not applicable for FQHCs (see next two slides)
Medicare Cost Report Questionnaire Questions include the following broad categories: Provider Organization and Operations Financial Data and Reports Capital Related Cost (N/A for FQHCs) Interest Expense (N/A for FQHCs) Approved Educational Activities Purchased Services (N/A for FQHCs) Provider-Based Physicians (N/A for FQHCs)
Medicare Cost Report Questionnaire Questions include the following broad categories: Home Office Costs (N/A for FQHCs) Bad debts (including completion of Exhibit 5) Bed Complement (N/A for FQHCs) PS&R Data Seeking detail of information utilized for
completion of the cost report Wage Related Costs (N/A for FQHCs)
Cost Report Settlement Process The cost report settlement process involves:
Initial submission by the deadline (5 months following the end of a health center’s cost reporting period/fiscal year)
Acceptance of the cost report by the intermediary/MAC Interim (tentative) settlement Intermediary desk review or field audit Preliminary proposed adjustment report & related
communications – see next slide Final settlement through issuance of a Notice of
Program Reimbursement (NPR)
Cost Report Settlement Process Prior to cost report being finalized
Analyze all adjustments for validity
Question adjustments that do not seem correct, even if no reimbursement impact (precedent setting issue)
Maintain copy of finalized cost report document as part of permanent record
Process available to amend finalized cost report if material errors or omissions discovered subsequent to issuance of finalized cost report
Low Medicare Utilization Cost Report
The intermediary/MAC may authorize less than a full cost report where a provider has had a low utilization of covered services by Medicare beneficiaries in a cost reporting period
The threshold to file less than a full Medicare cost report is at the discretion of the intermediary/MAC
Medicare Credit Balance Report FQHCs are required to file a Medicare credit balance
report (CMS Form 838) on a quarterly basis (calendar year quarters) – even if no credit balances exist
Submission of the report must be made within 30 days following the end of the calendar quarter (January 30th, April 30th, July 30th & October 30th)
Failure to submit will result in a 100% suspension of Medicare payments
Establish a tickler list and make sure this report is timely filed
BPHC Scope of Project Considerations Important to remember that the FQHC reimbursement
benefit is applicable to a health center location that is part of the BPHC approved scope of project and that is certified to participate in the Medicare program as a FQHC (similar situation for state Medicaid programs also)
When considering site modifications (additions, moves, etc.), it is important to deal with the BPHC change in scope of project matters proactively
Failure to navigate this process correctly can have significant negative financial consequences for a health center organization
Final Thoughts
Conclusion Health center personnel must understand
and manage the Medicare FQHC reimbursement process proactively to have good outcomes Remember – only you look out for you
(each health center must consider its individual facts and circumstances to successfully navigate Medicare FQHC reimbursement issues/opportunities)
