TRANSMITTAL 16 CHANGES PAGE 1 (SIGNIFICANT CMS FORM AND PROGRAM CHANGES CONTAINED IN COMPU-MAX VERSION 2013.

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1 TRANSMITTAL 16 CHANGES PAGE 1 Compu-Max Version contains changes required by Transmittal 16 to Form CMS This transmittal updates Chapter 32, Home Health Agency Cost Report, (Form CMS ). This transmittal clarifies and corrects the existing instructions. This transmittal also incorporates select provisions as well as select legislative provisions. The effective date for instructional changes will vary due to various implementation dates. SIGNIFICANT REVISIONS TRANSMITTAL 16: Worksheet S-4 - Revises line 16 to capture total visits performed by interns and residents in order to facilitate the calculation of allowable graduate medical education (GME) costs pass through costs incurred by a home health agency (HHA) based rural health clinics (RHC) and federally qualified health centers (FQHC). Worksheet C, Part III - Clarifies the use of line Worksheet D, Part I - Clarifies the instructions for line 1. Worksheet D, Part II - Clarifies line 19 conveying that HHAs are not eligible for bad debt reimbursement. This line is now shaded on the worksheet. Worksheet CM-3, Part II - Applicable to HHA based community mental health centers, line implements section 3201(c) of the Middle Class Tax Relief and Job Creation Act of 2012 which reduces bad debts by 12 percent for cost reporting periods that begin between October 1, 2012 and September 30, 2013, 24 percent for cost reporting periods that begin between October 1, 2013 and September 30, 2014, and 35 percent for cost reporting periods that begin on or after October 1, Worksheet RF-1, RF-2 and RF-3 - Revised the applicable worksheets to incorporate the payment of allowable GME costs for HHA based RHCs and FQHCs pursuant to 42 CFR (f)(2). Worksheet RF-2 - Added lines 7.01 (Medical Nutrition Therapist) and 7.02 (Diabetes Self-Management Training) as new position categories to facilitate the collection of full time equivalent (FTE) and visit data for FQHCs. Worksheet RF-3 - Added lines through to implement section 4104 of the Patient Protection and Affordable Care Act which eliminates coinsurance and deductible for preventive services furnished by HHA based for RHCs and FQHCs, effective for dates of service on or after January 1, o Applicable to HHA based RHCs and FQHCs, line implements section 3201(c) of the Middle Class Tax Relief and Job Creation Act of 2012 which reduces bad debts by 12 percent for cost reporting periods that begin between October 1, 2012 and September 30, 2013, 24 percent for cost reporting periods that begin between October 1, 2013 and September 30, 2014, and 35 percent for cost reporting periods that begin on or after October 1, Modified or added instructions to implement 3101 of the Middle Class Tax Relief and Job Creation Act of 2012, reducing payments for bad debts for the following: o Worksheet D Part II, Worksheet CM-3, Worksheet RF-3 Part II Modified or added instructions to implement the 2 percent Medicare sequestration adjustment, effective for portions of cost reporting periods that overlap or begin on or after April 1, 2013, as indicated in the Office of Management and Budget (OMB) Report to the Congress on the sequestration for fiscal year (FY) 2013 required by section 251A of the Balanced Budget and Emergency Deficit Control Act, as amended (the "Joint Committee sequestration"). o Worksheet D Part II, Worksheet CM-3, Worksheet RF-3 Part II REVISED ELECTRONIC SPECIFICATIONS EFFECTIVE DATE: Changes to the electronic reporting specifications are effective for cost reporting periods beginning on or after October 1, Sequestration (see Pages 2, 3 and 5) is effective for portions of cost reporting periods that either overlap or begin on or after April 1, 2013.

2 TRANSMITTAL 16 CHANGES PAGE 2 DISCLAIMER: The revision date and transmittal number apply to the red italicized material only. Any other material was previously published and remains unchanged. However, if this revision contains a table of contents, you will receive the new/revised information only, and not the entire table of contents. The list below is based on the list of Significant Revisions that is included in the Transmittal 16 instructions issued by CMS. We have added the affected instructions for each worksheet listed by CMS. WORKSHEET S-4 - HHA-BASED RURAL HEALTH CLINIC/FEDERALLY QUALIFIED HEALTH CENTER PROVIDER STATISTICAL DATA Line 16.--If this facility is claiming allowable Graduate Medical Education (GME) costs as a result of substantial payment for interns and residents, enter Y for yes or N for no in column 1. If yes, enter the number of Medicare visits performed by interns and residents in column 2 and total visits performed by interns and residents in column 3. Complete Worksheet RF-1, lines 20 and 27 as applicable. (See 42 CFR (f)(2).) WORKSHEET C - APPORTIONMENT OF PATIENT SERVICE COSTS Lines 15 and 16.--Enter in column 2 the total applicable costs for the entire cost reporting period for each line item from Worksheet B, column 6, lines 12 and 13, respectively (the costs entered on lines 15 and must be equal; the costs entered on lines 16 and must be equal). Enter in column 3 the total charges for the entire cost reporting period for each line (the charges entered on lines 15 and must be equal; the charges entered on lines 16 and must be equal). The language in the two preceding parentheticals is only applicable for cost reporting periods which overlap October 1, For cost reporting periods ending on or after July 1, 2006, enter in column 2 the total charges for services rendered on lines 15, 16, and 16.20, respectively. Enter in column 4 the ratio of costs (column 2) to charges (column 3) for each line. WORKSHEET D CALCULATION OF REIMBURSEMENT SETTLEMENT Line 19.--Enter the reimbursable bad debts, net of recoveries, in the appropriate columns. Columns 1 and 2 are shaded as HHAs cannot generate bad debts. Line 26.--Enter the sequestration adjustment amount from the PS&R report. WORKSHEET CM-3 CALCULATION OF REIMBURSEMENT SETTLEMENT CMHC SERVICES Line Enter in column 1 the result of line 17 (including negative amounts) times 88 percent for cost reporting periods that begin on or after October 1, 2012, 76 percent for cost reporting periods that begin on or after October 1, 2013, and 65 percent for cost reporting periods that begin on or after October 1, Line Enter the gross allowable bad debts for dual eligible beneficiaries. This amount is reported for statistical purposes only. These amounts must also be reported on line 17. Line 18.--For services rendered prior to August 1, 2000, enter in the appropriate column the result of line 17 plus the lesser of lines 14 or 16. For services rendered on or after August 1, 2000, enter in the appropriate column the result of line 16 plus line 17. For cost reporting periods that begin on or after October 1, 2012, enter in column 1 the result of line 16 plus line

3 TRANSMITTAL 16 CHANGES PAGE 3 WORKSHEET CM-3 CALCULATION OF REIMBURSEMENT SETTLEMENT CMHC SERVICES (continued): Line 23.--For cost reporting periods that overlap or begin on or after April 1, 2013, enter the sequestration adjustment amount as [(2 percent times (total days in the cost reporting period that occur during the sequestration period beginning on or after April 1, 2013, divided by total days in the entire cost reporting period, rounded to four decimal places)) times line 22]. WORKSHEET S-4 HHA-BASED RHC/FQHC PROVIDER STATISTICAL DATA Line 16.--If this facility is claiming allowable Graduate Medical Education (GME) costs as a result of substantial payment for interns and residents, enter Y for yes or N for no in column 1. If yes, enter the number of Medicare visits performed by interns and residents in column 2 and total visits performed by interns and residents in column 3. Complete Worksheet RF-1, lines 20 and 27 as applicable. (See 42 CFR (f)(2).) WORKSHEET RF-1 ANALYSIS OF HHA-BASED RHC/FQHC COSTS Line 20.--If the clinic incurred all or substantially all training costs for interns and residents, enter the total allowable direct GME cost. (See 42 CFR (f)(2).) WORKSHEET RF-2 ALLOCATION OF OVERHEAD TO RHC/FQHC SERVICES Line For medical nutrition therapy services performed by a registered dietitian, enter the corresponding FTE count in column 1 and total visits performed in column 2. (See IOM , chapter 13, section ) For FQHC only. Line For diabetes self-management training performed by a registered dietitian, enter the corresponding FTE count in column 1 and total visits performed in column 2. (See IOM , chapter 13, section ) For FQHC only. Line 15.--If you are claiming allowable GME cost (line 20 of Worksheet RF-1 completed), enter the amount of GME overhead costs. To determine the amount of GME overhead, multiply the amount of facility overhead (from line 14) by the ratio of Intern and Resident visits (from Worksheet S-4, column 3, line 16) over total visits (from Worksheet RF-3, line 6 ). If you are not claiming GME enter zero. Line 16.--Enter the net facility overhead costs by subtracting line 15 from line 14. WORKSHEET RF-3 CALCULATION OF REIMBURSEMENT SETTLEMENT FOR RHC/FQHC SERVICES Line 15.--Enter the total allowable GME pass-through costs determined by dividing Medicare visits performed by Interns and Residents (from Worksheet S-4, column 2, line 16) by the total visits (from Worksheet S-4, column 3, line 16,) and multiply that result by the (sum of total allowable GME cost reported on Worksheet RF-1, column 10, line 20 and allowable GME overhead costs from Worksheet RF-2, line 15) and enter that result on this line. For cost reporting periods that overlap January 1, 2011, prorate the result using a ratio of days before January 1, 2011, to days on and after January 1, 2011, for the applicable columns. For cost reporting periods beginning on or after January 1, 2011, do not use column 1; instead enter the result in column 2. NOTE: If there are no allowable GME pass-through costs, this line is zero.)

4 TRANSMITTAL 16 CHANGES PAGE 4 WORKSHEET RF-3 (continued): Line Enter the primary payers (from the PS&R). For cost reporting periods that overlap January 1, 2011, prorate the result using a ratio of days before January 1, 2011, to days on and after January 1, 2011, for the applicable columns. For cost reporting periods beginning on or after January 1, 2011, do not use column 1; instead enter the result in column 2. Line 16.--Enter the total Medicare cost. This is equal to the sum of the amounts on line 11, columns 1 and 2, plus line 14, columns 1 and 2, plus line 15, column 1 minus line For cost reporting period that overlap January 1, 2011, enter in column 1 the sum of the amounts on lines 11, 14, and 15, column 1, minus line Enter in column 2 the sum of the amounts on lines 11, 14, and 15, column 2, minus line For cost reporting periods that begin on or after January 1, 2011, enter the sum of lines 11, 14, and 15, columns 1 and 2, minus line 15.5 in column 2. NOTE: Section 4104 of ACA eliminates coinsurance and deductible for preventive services, effective for dates of service on or after January 1, RHCs and FQHCs must provide detailed HCPCS coding for preventive services to ensure that coinsurance and deductible are not applied. Providers must maintain this documentation to apply the appropriate reductions on lines and Line Enter the total program charges from the contractor s records (PS&R). For cost reporting periods that overlap January 1, 2011, do not complete column 1 and enter total program charges for services rendered on or after January 1, 2011 in column 2. For cost reporting periods beginning on or after January 1, 2011, enter total program charges in column 2. Line Enter the total program preventive charges from the provider s records. For cost reporting periods that overlap January 1, 2011, do not complete column 1 and enter total program preventive charges for services rendered on or after January 1, 2011 in column 2. For cost reporting periods beginning on or after January 1, 2011, enter total program preventive charges in column 2. Line Enter the total program preventive costs. For cost reporting periods that overlap January 1, 2011, do not complete column 1 and enter the total program preventive costs ((line divided by line 16.01) times line 16) for services rendered on or after January 1, 2011, in column 2. For cost reporting periods beginning on or after January 1, 2011, enter the total program preventive costs ((line divided by line 16.01) times line 16, column 2). Line Enter the total program non-preventive costs. For cost reporting periods that overlap January 1, 2011, do not complete column 1 and enter the total program non- preventive costs ((line 16 minus lines and 17) times.80) for services rendered on or after January 1, 2011, in column 2. For cost reporting periods beginning on or after January 1, 2011, enter the total program non- preventive costs ((line 16, column 2, minus lines and 17, column 2) times.80) in column 2. Line Enter the total program costs. For cost reporting periods that overlap January 1, 2011, enter total program costs (line 16 times.80) for services rendered prior to January 1, 2011, in column 1, and enter the sum of lines and 16.04, in column 2. For cost reporting periods beginning on or after January 1, 2011, enter the sum of lines and 16.04, in column 2. Line 17.--Enter the amount credited to the RHC's Medicare patients, to satisfy their deductible liabilities on the visits on lines 10 and 12 as recorded by the contractors from clinic bills processed during the reporting period. RHCs determine this amount from their PS&R. FQHCs enter zero on this line as deductibles do not apply. Line Enter the coinsurance amount applicable to the RHC or FQHC for program patient visits on lines 10 and 12 as recorded by the contractor from clinic bills processed during the reporting period. This line captures data for informational and statistical purposes only. This line does not impact the settlement calculation.

5 TRANSMITTAL 16 CHANGES PAGE 5 WORKSHEET RF-3 (continued): Line 18.--Enter the net Medicare cost, excluding vaccines. This is equal to the result of subtracting the amount on line 17 from the amount on line 16. Do not complete this line for cost reporting periods ending on or after January 1, Line 19.--Enter the net program costs, excluding vaccines. For cost reporting periods ending prior to January 1, 2011, enter 80% of the amount on line 18. Do not complete this line for cost reporting periods ending on or after January 1, Line Enter the result of line 22 (including negative amounts) times 88 percent for cost reporting periods that begin on or after October 1, 2012, 76 percent for cost reporting periods that begin on or after October 1, 2013, and 65 percent for cost reporting periods that begin on or after October 1, Line Enter the gross allowable bad debts for dual eligible beneficiaries. This amount is reported for statistical purposes only. These amounts must also be reported on line 22. Line 23.--Enter any other adjustment. For example, if you change the recording of vacation pay from the cash basis to the accrual basis, enter the adjustment. (See CMS Pub. 15-1, ) Specify the adjustment in the space provided. Line 24.--This is the sum of lines 21 and 22, plus or minus line 23. For cost reporting periods that begin on or after October 1, 2012, enter the sum of lines 21 and 22.01, plus or minus line 23. Line For cost reporting periods that overlap or begin on or after April 1, 2013, enter the sequestration adjustment amount as [(2 percent times (total days in the cost reporting period that occur during the sequestration period beginning on or after April 1, 2013, divided by total days in the entire cost reporting period, rounded to four decimal places)) times line 24]. Line For cost reporting periods that overlap or begin on or after April 1, 2013, enter the sequestration adjustment amount as [(2 percent times (total days in the cost reporting period that occur during the sequestration period beginning on or after April 1, 2013, divided by total days in the entire cost reporting period, rounded to four decimal places)) times line 25].