SIGN UP HERE
Find out how our healthcare accounting consultants can add value to your business. Email us or call us at 1 (888) 875-9770.
On May 2, 2014, the Centers for Medicare and Medicaid Services (CMS) published a final rule in the Federal Register on a Medicare prospective payment system (PPS) for federally qualified health centers (FQHCs). Beginning on October 1, 2014, FQHCs will transition to a PPS for services under Medicare Part B in compliance with the statutory requirements of Section 10501 of the Patient Protection and Affordable Care Act of 2010. The final rule establishes payment to FQHCs based on a single encounter-based per-diem rate per Medicare beneficiary. The new PPS for FQHCs is required to take into account the type, intensity and duration of services furnished by FQHCs and may include adjustments, including geographic adjustments, determined appropriate by the Secretary of the Department of Health and Human Services.
Although long-term care (LTC) is financed through a variety of private and public sources, the Medicaid program is the largest single payer of LTC services. In 2010, approximately two-thirds of nursing home residents had their bills paid by Medicaid. Estimates suggest that Medicaid-eligible patients who use LTC services account for seven percent (7%) of the Medicaid population, however, they consume upwards of fifty-two percent (52%) of total Medicaid spending. The majority of these patients end up in nursing homes. To remedy this imbalance, several states are taking advantage of a program in the Affordable Care Act of 2010 known as the Balancing Incentive Payments Program.
Critical Access Hospitals (CAH) may elect to bill the Medicare fiscal intermediary for facility services and professional services to its outpatients. In order to accomplish this, the physician must reassign his or her billing rights to the CAH in order for the hospital to bill Medicare for both the facility and professional services. Under this optional payment methodology, the CAH receives reasonable cost payment for its facility costs and 115% of the professional fee schedule amounts.
In order to claim a Medicare bad debt on the Medicare cost report, the provider needs to determine that certain criteria have been met. Medicare bad debts for deductibles and co-insurance are reimbursable if:
On January 31, 2014, CMS took steps to delay enforcement of its new two midnight rule that has been the center of debate and controversy since issued in the 2014 IPPS final rule. This delay will provide an additional six months, through September 30, 2014, to clarify the rules surrounding inpatient admission policies and the responsibility of the admitting physician to determine upfront whether a Medicare beneficiary will need care that spans two midnights. When this determination is made the beneficiary is admitted and the provider bills Medicare for an inpatient stay.
As a result of increased participation in the 340B Drug Pricing Program (340B Program), the Department of Health and Human Service’s Health Resources and Service Administration (HRSA) conducted 51 compliance audits of eligible healthcare organizations (covered entities) in fiscal year 2012. On January 9, 2014, HRSA issued a report on results from its 51 compliance audits as well as new information on the much-anticipated 340B Program regulation updates expected later this year.
When determining prospective payments to hospitals, CMS adjusts the labor-related standardized national reimbursement amounts to account for geographic differences in hospital wage costs. This adjustment is performed by means of a local area wage index (AWI), which acts as a relative measure comparing area average hourly wages to a national average. The FY 2014 wage index is based on data obtained in the FY 2010 cost report and occupational mix survey data from calendar year 2011 in order to calculate the wage index for each hospital.
CMS will adopt its proposal to apply a retrospective coding adjustment of 0.8% to the federal operating rate in FY 2014. The reduction was approved by Congress as part of the American Taxpayer Relief Act (ATRA) to offset a portion of the cost that would have been assumed by the Medicare physician payment fix. Further, CMS will continue to adjust FY 2014 IPPS payments by 1.0% to account for excess hospital readmissions under the Readmissions Reduction Program.
On December 26, 2013, the Office of Management & Budget (OMB) published final guidance on revisions to OMB Circular A-133 in the Federal Register entitled “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.” The new rules will be effective for single audits beginning on or after January 1, 2015. OMB Circular A-133 requires higher education and nonprofit institutions that expend a specific threshold of federal funds to annually undergo a detailed, organization-wide audit that complies with the criteria established under its provisions.
Nursing Homes facilities can increase their bed capacity without being required to obtain a determination of need (DoN). Historically nursing facility replacement and renovations of have been permitted by using the 12-bed exemption available under 105 CMR 100.020, definitions of Expansion and Substantial Change in Services. The DoN statute and regulation permit a facility to add 12 beds or fewer as a one-time exception to the suspension of bed additions, which was in part caused by the excess number of out of service nursing home beds that are available.
The 340B program requires pharmaceutical manufacturers to provide discounts on covered outpatient drugs purchased by qualifying entities. Once an eligible organization has registered and received approval to participate in the 340B program, it is the Organization's responsibility to monitor compliance of the program. The program is subject to audit by the drug manufacturer or the federal government. Failure to comply with the provisions of the 340B program could result in the repayment of discounts or the disqualification of the program. Program audits focus on patient eligibility, duplicate discounts, group purchasing, and contracted service compliance.
On October 1, 2014 all healthcare entities covered by the Health Insurance Portability and Accountability Act (HIPAA) will have to comply with the International Classification of Diseases, 10th Edition (ICD-10). ICD-10 will be the new coding system that will be used by the Center in order to be reimbursed for medical services performed.
The Center for Health Information and Analysis (CHIA) requires significant reporting of information by provider entities. The reporting requirements can be cumbersome and difficult to navigate. F&D has summarized the significant sections related to the relevant reporting requirements included in Massachusetts General Law Chapter 12C, Center for Health Information and Analysis. Providers should be aware of and familiar with these reporting requirements to ensure they are in compliance with all statutory filings.
Under the ACO payment model, organizations newly entering into an ACO environment, the current payor arrangements would consist of contracts that pay claims according to the pre-existing fee-for-service arrangements, but then add care management funding and/or shared savings distributions to that payment system. In the future, the expectation is that the providers will take on additional risk until they reach capitated arrangements.
To strengthen the privacy and security protections for health information established under the Health Insurance Portability Act of 1996 (HIPAA), the Department of Health and Human Services (HHS) has issued Omnibus Final Rule to the privacy, security and enforcement regulations under the Health Information Technology for Economic and Clinical (HITECH) Act. Covered entities and their business associates must be in compliance with these updated regulations by September 23, 2013.
The IRS recently put out an update to its guidance issued in 2011 on the community health needs assessment (“CHNA”) under section 501(r) of the Internal Revenue Code, enacted as part of the Patient Protection and Affordable Care Act in 2010. Under the guidance, hospitals and health systems must perform a community needs assessment for each individual facility at least once every three years. The requirement to conduct a CHNA applies to fiscal years beginning after March 23, 2012.
During 2012, the Centers for Medicare & Medicaid Services (CMS) proposed a rule that would update the Home Health Prospective Payment System (HH PPS) rates. This update included the national standardized 60-day episode rates, the national per-visit rates, the low-utilization payment amount (LUPA), and outlier payments under the Medicare prospective payment system for home health agencies effective January 1, 2013.
The Medicare Home Health Prospective Payment System (HH PPS) has been in effect since October 1, 2000. Before that date, home health agencies (“HHAs”) received payment under a cost-based reimbursement system. Section 4603 of the Balanced Budget Act of 1997 (“BBA”) governed the development of the HH PPS by adding section 1895 to the Social Security Act (“the Act”). In addition to establishing the current PPS episodic reimbursement for home health services, this section required the standard payment amounts to be increased annually.
The continuing reform of the Massachusetts healthcare environment took effect on November 5, 2012 with the Chapter 224 of the Acts of 2012. This legislation sought to use the Commonwealth’s original reforms as the basis of a plan to reduce the growth rate of healthcare spending and improve overall patient care and quality.
The Patient Protection and Affordable Care Act (ACA) created Internal Revenue Code Section 501(r) which is applicable to tax-exempt hospitals. Section 501(r) created four new requirements for exempt hospitals.
The New Markets Tax Credit (NMTC) Program was established in 2000 as part of the Community Renewal Tax Relief Act of 2000. The goal of the program is to stimulate revitalization efforts of low-income communities across the United States. The NMTC Program provides tax credit incentives to investors for equity investments in certified Community Development Entities (CDEs), which invest in low-income communities. The credit equals 39% of the investment paid out (5% in each of the first three years, then 6% in the final four years, for a total of 39%) over seven years.
In 2011, the Budget Control Act of 2011 (the “Act”) was signed into law. The Act requires a 10 year reduction of all federal spending totaling $2.1 trillion with an increase in the debt ceiling by up to $2.4 trillion. Under the Act, the Center for Medicare and Medicaid Services (“CMS”) will implement a 2.0% sequestration reduction to all Medicare payments beginning on January 1, 2013. Effectively, Medicare providers will continue to bill Medicare normally, but will be paid at 98% for the 10 year period. Total savings related to Medicare payment reductions are estimated to be approximately $125 billion over the 10 years.
The Medicare tax, which has historically been limited to earned income, has been expanded in 2013 to apply to net investment income at a 3.8% rate. Specifically, the 3.8% Medicare tax will apply to the lower of net investment income or modified adjusted gross income in excess of $250,000 for joint returns and surviving spouses, $125,000 for separate returns, and $200,000 in all other cases. Investment income includes interest, dividends, annuities, royalties, and capital gains. Rents from a passive activity are subject to the Medicare tax but rents from an active trade or business are not. In general, rents are not automatically passive in the case of real estate professionals (e.g., construction, real property brokerage).
The evolution of payment systems, provider agreements, cost control initiatives and strategic alliances underscores the significance of information management systems. Today’s financial managers must have the ability to readily access critical measurement tools to evaluate operations, clinical outcomes, and the ultimate costs of service lines and programs.
In the current environment providers are looking for opportunities to maximize and strengthen their financial and strategic positioning for the future. One opportunity is a strategic alliance that brings together two or more providers to enhance the potential reimbursements for all parties involved. The type of analysis used to assess these potential alliances involves comparing each provider’s contractual rates and fee schedule. The comparison includes calculating expected reimbursement under each provider’s rate schedules, by payor, for an agreed upon time frame and volume/data set to determine rate differentials, if any, and any other benefits of an alliance.
The FASB has issued ASU 2010-24 for Health Care entities to change the way insurance claims are being reported. The Accounting Standards Update is effective for fiscal years beginning after December 31, 2010. The intention of the update is to mitigate the current diversity in practice related to the accounting by health care entities for medical malpractice claims and similar liabilities (and their related anticipated insurance recoveries).
In July 2011, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2011-07, “Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities”. Healthcare organizations have historically recognized a significant amount of patient service revenue at the time the service was performed and did not evaluate the likelihood of collection. The resulting accounting was to report a gross-up of revenues along with a provision for bad debts in operating expenses.
MassHealth issued Long Term Care Facility Bulletin 106 in August, providing instructions for the submission of the annual accounting for Personal Needs Allowances (PNA). The forms will be made available online.
The Healthcare Financial Management Association (HFMA) recently published an analysis to clarify for healthcare providers the accounting for incentive payments received under the Health Information Technology for Economic and Clinical Health (HITECH) Act.
The ultimate fate of the Sustainable Growth Rate formula has again been tabled by Congress. In December 2011 Congress passed legislation to extend the payment cut override through February 2012.
In 2011, the Centers for Medicare and Medicaid Services (CMS) issued changes to the Provider Reimbursement Manual pertaining to revisions being made to the CMS-2540-10, the Medicare Skilled Nursing Facility and Skilled Nursing Facility Complex Cost Report. CMS had not made changes to this form since 1996. These changes are effective for cost reports for years beginning on or after December 1, 2010.
As we wrap up several Medicare cost reports using the new CMS 2552-10, we wanted to clarify our interpretation of the instructions for the Worksheet S-10, Hospital Uncompensated Care and Indigent Care Data and provide some additional observations about the format of the form.
On Friday March 16th, 2012, the Department of Health and Human Services (HHS) released a final rule that implements numerous provisions of the Accountable Care Act of 2010 relating to expansion and simplification of the eligibility and enrollment rules for the Medicaid Program and Children's Health Insurance Program (CHIP). The final rule effective January 1, 2014, will implement a minimum Medicaid eligibility income level of 133% of the Federal Poverty Level (FPL). The current FPL rate is $14,856 for an individual and $30,656 for a family of four.
In September 2011, members of the F&D healthcare group presented an update on changes to the CMS Form 2552-10, Hospital and Hospital Health Care Complex Cost Report (the Hospital Medicare Cost Report), and the annual update on the Inpatient Prospective Payment System.
The Centers for Medicare and Medicaid Services (CMS) published the final Medicare Outpatient Prospective Payment System (OPPS) rule for calendar year (CY) 2012 on November 1, 2011. The final changes to the Medicare OPPS are effective January 1, 2012 unless otherwise noted.
The Centers for Medicare and Medicaid Services (CMS) released its Medicaid RACs final rule on September 15, 2011 after delaying its previous expected implementation on April 1st. The Medicaid RAC program’s purpose is to fight Medicaid fraud and abuse, sharing many initiatives that the Medicare RAC program implements. According to Health and Human Services, the new initiative will save taxpayers an estimated $2.1 billion over the next five years, of which $900 million will be returned to the states.
Changes to Presentation and Disclosure of Patient Service Revenue and Related Accounts for Certain Health Care Entities - (ASU) No. 2011-07
In July 2011, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2011-07, Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities.
In the IRS Form 990, Schedule K, we have fielded numerous questions about the different types of refunding transactions. The purpose of this article is to clarify the types of refunding transactions, and to distinguish a refunding and a defeasance.
In August 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2010-24, “Presentation of Insurance Claims and Related Insurance Recoveries”.
The goal of the Patient Protection and Affordable Care Act (ACA) passed in March 2010 was to improve access to healthcare, and to change the healthcare delivery system by improving quality and reducing costs including improving the use of technology.
The purpose of this article is to provide an update as to some of the changes that have been implemented effective September 23, 2010 along with other key points relating to healthcare reform.
By now you are aware of the “Patient Protection and Affordable Care Act”, which was signed into law on March 23, 2010. As you know, this law is an incredibly complex piece of legislation that impacts nearly all Americans.
The Internal Revenue Service (IRS) has made revisions to the 2010 Return of Organization Exempt from Income Tax Forms 990 and 990-EZ, instructions, and schedules from the prior year’s form.
The Financial Accounting Standards Board (the “Board”) issued two accounting standard updates in August 2010. The first one is Number 2010-23, “Measuring Charity Care for Disclosure”. This standard has been issued in order to clarify the measurement basis used in the disclosure of charity care in financial statement footnotes.
The scope of this article will address several key components that will impact you as a healthcare provider. You’ve probably already begun to study the legislation and how it will impact the organization.
Return of Organization Exempt from Income Tax IRS Form 990 – Form and Instructions Revisions - August 2008
With the pay-for-performance reimbursement model gaining ground, Medicare’s new Physician Quality Reporting Initiative offers a risk-free way to start. Or does it? - May 2007
Healthcare Newsletters Archive
Rural Hospital's Bulletin: A Publication of the Feeley & Driscoll Health Care Services Group (2003)
NonProfit Tax Services