Julie Quinn, CPA - grhainfo.org · Julie Quinn, CPA VP, Cost Reporting & Provider Education Health Services Associates Southeast Regional Office Health Services Associates, Inc. 2

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


How and when to report Non-RHC hours/

Commingling Rules


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)


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


Clinic Hours of Operation

Worksheet S, Line 11: RHC Hours

Worksheet S, Line 12: Non-RHC Hours


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



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.



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’)



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.



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.



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.



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.



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.



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.


Proper cost classification for rate maximization


Cost Report Categories

Cost Report has three main cost classifications:

Healthcare Costs - RHC

Overhead

Non-RHC/Non-Allowable


Cost Report Categories

Overhead costs are allocated based on:

Healthcare Costs

Vs.

Non-RHC/Non-Allowable


Adjustments to Cost


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


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.


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.


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


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



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


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


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)



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)



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)



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.


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


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)


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


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.


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.


Related Party Transactions


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


Related Party Transactions


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


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)


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)


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.


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)


Vaccine Reporting


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


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)


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


Settlement Data


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


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.


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)



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.


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)


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:


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



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


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!



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?



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!


Questions?


Documents

Julie Quinn, CPA - grhainfo.org · Julie Quinn, CPA VP, Cost Reporting & Provider Education Health Services Associates Southeast Regional Office Health Services Associates, Inc. 2