julie quinn, cpa - grhainfo.org · julie quinn, cpa vp, cost reporting & provider education...
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Julie Quinn, CPAVP, Cost Reporting & Provider Education
Health Services Associates
Southeast Regional Office
Health Services Associates, Inc.2 East Main Street 54 Pheasant Ln
Fremont, MI 49412 Ringgold, GA
Ph: 231.924.0244 231.250.0244
Fx: 231.924.4882 888.200.4788
Promoting Access to Health Care
Objectives Worksheet S: How and when to report Non-RHC
hours/Commingling Rules
Worksheet A: Proper cost classification for rate
maximization
Worksheet A-1: Methods for calculating lab/X-
ray/EKG reclassifications
Worksheet A-2: Interest income, Medicare
depreciation, Imputed compensation for Sole
Prop/Partnerships
Health Services Associates, Inc.
ObjectivesWorksheet A-2-1: Related Party
Transactions
Worksheet B: FTE Calculations, Overhead
allocations
Worksheet B-1: Vaccine ratio calculations,
data entry elements for B-1
Worksheet C: PS&R crosswalk, Bad Debt
overview, Sequestration
Health Services Associates, Inc.
How and when to report Non-RHC hours/
Commingling Rules
Promoting Access to Health Care
Statistics on Worksheet S/S-8
Facility Name
Entity Status
Hours of Operation
If combined cost report for multiple locations, worksheet S, Part III
If filing a ‘No Utilization’, “N” for line 13 (independent)
Health Services Associates, Inc.
Clinic Hours of Operation Should reflect hours practitioners are available to
see patients
Broken between hours operating as an RHC or a
Non-RHC, if applicable
Reported in military time format
Health Services Associates, Inc.
Clinic Hours of Operation
Worksheet S, Line 11: RHC Hours
Worksheet S, Line 12: Non-RHC Hours
Health Services Associates, Inc.
Manual Instructions on
Commingling
Rules on Comingling can be found in the Medicare
Benefit Policy Manual – Section 90 – Commingling:
http://www.narhc.org/uploads/pdf/medicare_benefit_po
licy_manual_-_rev._1-31-13.pdf
Health Services Associates, Inc.
Manual Instructions on
Commingling
Commingling refers to the sharing of RHC or FQHC
space, staff (employed or contracted), supplies,
equipment, and/or other resources with an onsite
Medicare Part B or Medicaid fee-for-service practice
operated by the same RHC or FQHC physician(s)
and/or non-physician(s) practitioners.
Health Services Associates, Inc.
Manual Instructions on
Commingling
Commingling is prohibited in order to prevent:
Duplicate Medicare or Medicaid reimbursement
(including situations where the RHC or FQHC is
unable to distinguish its actual costs from those that
are reimbursed on a fee-for-service basis), or
Selectively choosing a higher or lower
reimbursement rate for the services. (Known as
‘financial triage’)
Health Services Associates, Inc.
Manual Instructions on
Commingling
RHC and FQHC practitioners may not furnish RHC
or FQHC-covered professional services as a Part B
provider in the RHC or FQHC, or in an area outside
of the certified RHC or FQHC space, such as a
treatment room adjacent to the RHC or FQHC,
during RHC or FQHC hours of operation.
Health Services Associates, Inc.
Manual Instructions on
Commingling
If an RHC or FQHC is located in the same building
with another entity such as an unaffiliated medical
practice, x-ray and lab facility, dental clinic,
emergency room, etc., the RHC or FQHC space
must be clearly defined. If the RHC or FQHC leases
space to another entity, all costs associated with the
leased space must be carved out of the cost report.
Health Services Associates, Inc.
Manual Instructions on
Commingling
RHCs and FQHCs that share resources (e.g.,
waiting room, telephones, receptionist, etc.) with
another entity must maintain accurate records to
assure that all costs claimed for Medicare
reimbursement are only for the RHC or FQHC staff,
space, or other resources. Any shared staff, space,
or other resources must be allocated appropriately
between RHC or FQHC and non-RHC or non-FQHC
usage to avoid duplicate reimbursement.
Health Services Associates, Inc.
Manual Instructions on
Commingling
This commingling policy does not prohibit a provider-
based RHC from sharing its health care practitioners
with the hospital emergency department in an
emergency, or prohibit an RHC physician from
providing on-call services for an emergency room, as
long as the RHC would continue to meet the RHC
conditions for coverage even if the practitioner were
absent from the facility.
Health Services Associates, Inc.
Manual Instructions on
Commingling
The RHC must be able to allocate appropriately the
practitioner's salary between RHC and non-RHC
time. It is expected that the sharing of the physician
with the hospital emergency department would not
be a common occurrence.
Health Services Associates, Inc.
Manual Instructions on
Commingling
The MAC/FI has the authority to determine
acceptable accounting methods for allocation of
costs between the RHC or FQHC and another entity.
In some situations, the practitioner’s employment
agreement will provide a useful tool to help
determine appropriate accounting.
Health Services Associates, Inc.
Proper cost classification for rate maximization
Promoting Access to Health Care
Cost Report Categories
Cost Report has three main cost classifications:
Healthcare Costs - RHC
Overhead
Non-RHC/Non-Allowable
Health Services Associates, Inc.
Cost Report Categories
Overhead costs are allocated based on:
Healthcare Costs
Vs.
Non-RHC/Non-Allowable
Health Services Associates, Inc.
Adjustments to Cost
Promoting Access to Health Care
Reclassify or Exclude?
Activities in the RHC which use overhead require a reclassification to a non-reimbursable cost center to capture overhead
Lab, X-Ray, EKG (Independent RHCs to non-RHC/PB to hospital cost centers)
Non-RHC hours/Part B Clinic
Health Services Associates, Inc.
Reclassify or Exclude?Activities which do not use overhead should be excluded to avoid incorrect overhead allocations
Provider inpatient compensation and benefits
Outside lab
Non-allowable costs: charitable contributions, meals & entertainment, etc.
Health Services Associates, Inc.
Overhead Allocation
Overhead is allocated on the ratio of healthcare cost
to non-RHC cost
Allocation is calculated through the cost report on
worksheet B
An increase in direct costs allocated to non-RHC
cost centers will also increase the amount of
overhead allocated to non-RHC.
Health Services Associates, Inc.
Non-RHC Clinic time Where an RHC operates for certain specified hours
as a non-RHC, a carve out/reclassification of related
cost is necessary
Direct ‘Healthcare Costs’ should be reclassified
Overhead will be allocated by the cost report
Health Services Associates, Inc.
Non-RHC Clinic time Where an RHC merely ‘rents’ space to a specialist or
other non-related entity, an evaluation must be made
to ensure the clinic has excluded ALL costs (direct
and overhead) related to the other entity’s activities.
If the other entity shares resources such as clinic
medical staff and supplies, additional evaluation is
necessary to ensure costs are properly
excluded/allocated
Health Services Associates, Inc.
Promoting Access to Health Care
Lab/X-ray/EKG Allocations
Lab, X-ray, EKG
Billed to Part B by independent RHCs
Billed through hospital and included in hospital
costs for provider-based RHCs
Health Services Associates, Inc.
Lab/X-ray/EKG Allocations –
Time Study Method
Staff performing lab, X-ray, EKG duties maintain time studies of the time spent performing these functions
Each employee’s salary will be allocated to non-RHC cost centers based on time spent on non-RHC functions
Employee benefits will be allocated as part of the cost report’s overhead allocation process –do not direct allocate
Health Services Associates, Inc.
Time Study Basics Minimum of one full week per month – different
weeks each month (first week of Jan, second week of Feb, etc.)
Must be kept during the cost reporting year (cannot be applied to different years0
Must be provider specific (cannot be done at one RHC and applied at all RHCs within a hospital chain)
Health Services Associates, Inc.
Lab/X-ray/EKG Allocations –
Time Per Test Method
Time each type of test performed by the RHC using the time study guidelines
Run year-end reports for tests performed
Multiply the # of tests times its average time to perform (each test)
Health Services Associates, Inc.
Lab/X-ray/EKG Allocations –
Time Per Test Method
Calculated ‘Total Lab/X-Ray/EKG Time’ (time per test X # of tests)
Multiply total test time by the clinic’s average wage of employee’s performing lab functions
Reclassify resulting Lab/X-Ray/EKG wages to a non-RHC (Independent) cost center. (To the Lab/Radiology/EKG cost centers of the hospital for PB)
Health Services Associates, Inc.
Promoting Access to Health Care
Interest ExpenseNecessary and proper interest on current and capital
indebtedness is an allowable cost.
Definitions:
Interest – cost incurred for use of borrowed funds. Can be on current or capital indebtedness.
Necessary – incurred on a loan made to satisfy a financial need of provider. Loans which result in excess funds are not necessary. Incurred on a loan made for a purpose reasonably related to patient care.
Health Services Associates, Inc.
Interest Income
Interest income must be offset UP TO the amount of interest expense claimed
If no interest expense is claimed, no interest income offset is required
If interest income is greater than the interest expense claimed, offset up to the expense claimed
Health Services Associates, Inc.
DepreciationAn appropriate allowance for depreciation on
buildings and equipment used in provision of
patient care is allowable cost.
Depreciation must be:
Identifiable and recorded in accounting records
Based on historical cost of asset or fair market
value of donated assets
Prorated over the estimated useful of asset (using
AHA Guidelines)
Health Services Associates, Inc.
Depreciation
With few exceptions – straight line method of
depreciation only method acceptable
Depreciation on assets purchased with federal
funds an allowable cost
Depreciation on donated assets allowable
Fully depreciated assets still in use can have a
revised life assigned
Health Services Associates, Inc.
Imputed Compensation PRM Section 902:
Compensation--Sole Proprietorships and
Partnerships.--The allowance of compensation
for services of sole proprietors and partners is
the amount determined to be the reasonable
value of the services rendered regardless of
whether there is any actual distribution of the
profits of the business.
Health Services Associates, Inc.
Imputed Compensation Must be “Reasonable and Necessary”
Reasonableness.--Reasonableness requires that the compensation allowance be such an amount as would ordinarily be paid for comparable services by comparable institutions depending upon the facts and circumstances of each case. Reasonable compensation is limited to the fair market value of services rendered by the owner in connection with patient care. Fair market value is the value determined by the supply and demand factors of the open market.
Necessary.--The requirement that the function be necessary means that had the owner not rendered the services, the institution would have had to employ another person to perform them. The services must be pertinent to the operation and sound conduct of the institution.
Health Services Associates, Inc.
Related Party Transactions
Promoting Access to Health Care
Related Party Transactions Most common related party transaction is related
party building ownership (e.g. building is owned by the doctors which also own the clinic – clinic pays ‘rent’ to docs)
Cost must be reduced to the ‘cost of ownership’ of the related party
Cost is adjusted to actual expense incurred by the related party
Health Services Associates, Inc.
Related Party Transactions
Health Services Associates, Inc.
RELATED PARTY DATA
CLINIC NAME
F.Y.E:
Is the clinic building rented from the clinic owners? YES _____ NO ______
*If yes, please complete below. (tax returns or building specific financials can be submitted in lieu of this form.)
Paid Personally By The Owner**In Clinic
Financials?Paid By The RHC
**In Clinic
Financials?
Depreciation $ Depreciation $
Interest$ Interest $
Insurance $ Insurance $
Property Taxes $ Property Taxes $
Rent$ Rent$
Repairs & Maintenance $ Repairs & Maintenance $
Other $ Other $
**…of these, please indicate what amount(s) are already in the clinic's financials and what was paid personally by/expensed on the personal returns of the owner.
FTE Calculations
Promoting Access to Health Care
FTE Calculation
How are FTEs calculated?
FTE is based upon how many hours the
practitioner is available to provide patient care
FTE is calculated by practitioner type (Physician,
PA, NP)
Health Services Associates, Inc.
Hours worked for FTE
Calculation Only clinical hours should be used in the FTE
calculation
Categorize each practitioner’s work into:
Administrative (used to reclassify wages of provider)
Patient care – Clinic/Nursing Home (used to calculate the FTE input on the cost report for the provider)
Inpatient care hours - if inpatient work is part of the provider’s clinic compensation package (used to adjust wages of provider)
Health Services Associates, Inc.
Medicare Productivity Standard
Productivity Standard applied in aggregate
Total visits (all providers subject to the FTE calculation) is compared to total minimum productivity standard.
A productive midlevel with visits in excess of their productivity standard can be used to offset a physician shortfall.
Health Services Associates, Inc.
Medicare Productivity Standard
4,200 visits per employed or independent contractor physician FTE
2,100 visits per midlevel FTE
Aggregated for application of minimum productivity standard
Physician Services under agreement not subject to productivity standards – limited application (cannot work on a regular basis)
Health Services Associates, Inc.
Vaccine Reporting
Promoting Access to Health Care
Vaccine Ratios
Ten minutes is the accepted time per vaccine administration
Total Vaccines x 10 minutes/60 minutes = ‘total vaccine administration hours’
Divide ‘total vaccine administration hours’ by total clinical hours worked for Staff Time Ratio
Health Services Associates, Inc.
Vaccine Data Elements
Line 2: Vaccine Ratio
Line 5: Cost of vaccines (include invoices if possible)
Line 11: Total vaccines given of each to ALL insurance types
Line 13: Total Medicare vaccines given of each (Medicare log must accompany cost report)
Health Services Associates, Inc.
Vaccine Support
Clinic must maintain logs of Influenza and Pneumococcal vaccines administered
Invoices for the cost of Influenza and Pneumococcal vaccine should be submitted with the cost report
Submit vaccine logs electronically if possible
Health Services Associates, Inc.
Settlement Data
Promoting Access to Health Care
Settlement DataData is pulled from the clinic’s PS&R
Line 11: Medicare visits
Line 17: Deductibles
Line 18.01: Total Medicare charges
Line 18.02: Medicare preventative charges
Health Services Associates, Inc.
PSR
A copy of your PS&R (Provider Statistical and Reimbursement System report) will need to be obtained by the clinic electronically from IACS (Identity Management and Authentication System) through the new EIDM login system.
Health Services Associates, Inc.
Where to login:
https://portal.cms.gov
Steps To Login Click on Enterprise User Administration link in the
middle of the page
Click on the now blue tab: Research, Statistics, Data & Systems
Click on IACS Home, within the resulting list
Click on CMS Applications Login (the last item in the list at the top left)
Scroll down to “PS&R/STAR”
You should now be entered into the old IACS system
Order using same instructions from last year
PSR
Compare PSR total to your Medicare visit count. Is this accurate? If not, determine why:
Were incidental services included in the visit count
Were dual-eligible counted twice
Did more than one visit get counted on one day (surgical procedure/office visit)
Health Services Associates, Inc.
Promoting Access to Health Care
Medicare Bad Debt Medicare bad debt form must accompany cost report
of total bad debt being claimed.
Medicare bad debt is claimed on the cost report
based on the fiscal year in which the bad debt was
written off, not date of service.
Health Services Associates, Inc.
Bad Debt Log Patient Name
HIC number
Date of service
Whether the patient has
been deemed indigent and
their Medicaid number if
this was the method utilized
to determine indigence
Date the first bill was sent
to the beneficiary
Date the bad debt was
written off
Remittance advice date
Deductible and
coinsurance amount
Total Medicare bad debt
(reduced by recoveries)
Health Services Associates, Inc.
Bad Debt Reduction Schedule
Beginning in 2013, RHCs were subject to a reduction in
the amount of allowable bad debt reimbursement. These
reductions, mandated by section 3201 of the Middle
Class Tax Extension and Job Creation Act of 2012, took
effect in cost reporting periods beginning in FY 2013
under the following schedule:
Health Services Associates, Inc.
Bad Debt Reduction Schedule
2013: RHCs will be reimbursed at 88% of allowable bad
debts
2014: RHCs will be reimbursed at 76% of allowable bad
debts
2015 and forward: RHCs will be reimbursed at 65% of
allowable bad debts
Health Services Associates, Inc.
Promoting Access to Health Care
Sequestration Overview
2% Adjustment to Allowable Cost
Interim payments reflect a 2% adjustment to avoid overpayment on an interim basis
Total Reimbursable Cost X 2% = Sequestration
Line 24.11 of worksheet C/M-3
Health Services Associates, Inc.
Revenue Maximization
Strategies
Include all allowable cost:
Accrued vacation and sick pay.
Depreciation - * donated assets
* fully-depreciated assets
Properly record and count encounters
If you cannot bill for it – do not count it!
Health Services Associates, Inc.
Revenue Maximization
Strategies
Annually update fee schedule
Coinsurance reimbursement
Minimize non-reimbursable costs
Reduce overhead attributable to non-reimbursable costs
Carve-out hours
Medicare Advantage paying RHC rate?
Health Services Associates, Inc.
Revenue Maximization
Strategies
Include all allowable costs
Accrued vacation and sick pay.
Depreciation - * donated assets
* fully-depreciated assets
Properly record and count encounters
If you cannot bill for it – do not count it!
Health Services Associates, Inc.
Questions?
Health Services Associates, Inc.