J11 Part A Provider Audit and Reimbursement Update. February 5, 2014

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1 J11 Part A Provider Audit and Reimbursement Update February 5, 2014

2 Agenda A & R Operational Update SSI/DSH Update PSR Update Wage Index 2015 Bad Debt Update EHR Audits Contacts 2

3 Audit and Reimbursement Operational Update

4 Operational Update Sharon Roberts retired as Senior Director for Audit effective 2/1/13 Mitch Williams retired as Senior Director for Reimbursement and Provider Enrollment effective 3/1/13 Audit and Reimbursement now combined under single department Audit and Reimbursement Director Scott Neely Provider Enrollment Director Teresa Newton 4

5 Operational Update - Audit Columbia, SC SC, NC, HHH Richmond, VA (NGS) VA, WV, NC Springfield, IL No longer J11 Appeals Columbia, SC 5

6 Operational Update Reimbursement Rate Reviews performed in SC office Rate Reviews/Tentative Settlement Transitioned to a 4 th and 8 th month review period Letter to include updates for DSH review Will include a complete passthrough schedule Tentative settlements continue to be completed within 60 days of acceptance Tentative settlement letter to include updates for the Cost to Charge Ratios 6

7 Rate Review Rate Review Information Requests: Requesting current information for use in setting payment rates Includes items such as bad debts, other costs and statistics Update on factors that could impact Medicare reimbursement, such as changes in service or Medicare utilization Forms are posted on our website under J11 Part A/ Resources/Audit and Reimbursement Audit Adjustment factors will continue to be used in rate review and tentative settlement determinations

8 Review Notification We will no longer be mailing underpayment and no money letters and their enclosures. These will be ed to the contact on file. Overpayment letters will continue to be mailed certified; however we will also these to the contact on file. This will allow the full 15 days notice of the overpayment.

9 Review Notification If you believe the contact we have is incorrect or if multiple people should be contacted; send an to the contact information. Contact information for the Reimbursement Consultant assigned to your facility is available.

10 Audit and Reimbursement SSI/DSH Update

11 SSI Update Settlements Pre-2006 remain on hold 2006 through 2009 have primarily been completed 2010 and 2011 settlements are now occurring and will continue over the course of calendar year 2014 No requirement to stagger settlement of 2010 and 2011 cost reports 11

12 SSI Update Reimbursement Latest published SSI percentages used in rate reviews, tentative settlement No information currently available for

13 DSH/Court Decisions Allina Health Services Impact?? Reopening letters will continue to be issued for the Allina case Alegent Health Immanuel Medical Center Impact?? 13

14 DSH Payments and the ACA Medicare DSH is to be reduced by 75% beginning in FFY 2014 Each IPPS hospital receive a distribution from a pool based on its share of national uncompensated care. The pool is based on 75% of current spending less other reductions S-10 likely source of uncompensated care data 14

15 DSH Payments and the ACA Accumulation of Medicare DSH listings will likely continue to be a requirement Listings will remain subject to audit CMS has yet to provide Audit guidance related to the DSH calculation under the ACA 15

16 Audit and Reimbursement PSR Update

17 PSR Update PSR Negative Charge Issue Issue started when FISS implemented CR 6712 around April 2010 CR 6712 implemented Medically Unlikely Edits (MUEs) 51 MUE is an edit applied to claim lines that exceed a certain number of units 17

18 PSR Update FISS programming initially labeled the claim line charges as denied. The 51 MUE programming identified the claim line as non-covered and the charges were subtracted a second time from the claim line. Example: Covered Charges $500 Denied Charges ($500) 51MUE Non covered ($500) Total Covered ($500) in some cases may be zero 18

19 PSR Update FISS initially reported that 51 MUE affected only outpatient hospital claims with the following bill types; 13X -outpatient hospital 14X - outpatient hospital non-patient 85X outpatient CAH FISS fixed the problem on June 6, 2011 on a prospective basis TDL11363 required mass adjustments in July 2011 to fix claims on a retro basis for 13X,14X and 85X The FISS mass adjustment utility didn t work: it couldn t adjust negative charges 19

20 PSR Update CMS issued instruction in early 2012 that addresses settlement of affected cost reports Contractors should review any significant overpayments that may be due to the negative-charge issue and hold settlement PS&R Negative charges should be changed to zero on asfiled cost reports to avoid a fatal error BCBSA distributed PS&R reports showing negative charges for each provider in March 2012 to help determine materiality Hold impacted cost reports open until issue has been resolved 20

21 PSR Update FISS fixed all claims for TOBs 13X,14X and 85X in January 2013 FISS did notfix 12X (inpatient B) claims CMS instructed MACs to mass adjust the 12X claims (completed in January 2014) Contractors will begin settling cost reports previously on hold for this issue Settlements expected to be completed by April 2014 as long as no new developments occur 21

22 PSR Update Negative Other amounts in PS&R may be occurring due to adjustments for Medicare Advantage claims or with uncompensated DSH Issues are expected to be addressed in a PSR fix to be released in late January 2014 RAC adjustments for PIP providers to be addressed via a field on the PS&R summary Awaiting CMS instructions regarding this fix and the impact on cost report settlement Outlier-Sequestration Prior to October 7, 2013 FISS was reducing outlier amounts by 2% PS&R took this reduced amount and added back the sequestration adjustment so Outlier in PS&R would balance FISS changed logic, but PS&R did not thus amounts are no longer balancing 22

23 Audit and Reimbursement Wage Index 2015

24 Wage Index 2015 Desk reviews started November 21, 2013 Pension Defined Benefit Plan 100% Review Desk Reviews completed January 29, 2014 Submission of findings to CMS Revised FY2015 PUF released February 20, 2014 First of multiple PUF file postings 24

25 Wage Index 2015 Rebuttal Period ends March 3, 2014 Correction of errors Revision to desk review adjustments Received vs. postmark date Wage index data resubmitted to CMS on April 9, 2014 Appeal Period ends April 16, 2014 Revised data resubmitted to CMS as necessary in late April 25

26 Wage Index 2015 Final PUF file released May 2, 2014 Deadline for submission of error corrections is June 2 Early August 2014 PUF data will be published in FY2015 final rule Wage Index 2016 Will include another round of occupational mix reviews OMS data likely due in June 2014; no forms released to date 26

27 Audit and Reimbursement Bad Debts

28 Palmetto GBA Procedures Bad Debt List The provider must submit a bad debt list that at minimum contains all data required per CMS Exh. 2. The bad debt list must agree with the amount claimed on the cost report. Differences will result in adjustment or require an amended cost report. Proper listings not obtained/incomplete may result in overpayment demands via tentative settlement or adjustment during desk review or audit. Provide listings in electronic format (Excel preferred) 28

29 Palmetto GBA Procedures Bad Debt List (cont) The bad debt listing must contain the data elements listed. Patient name HIC number Dates of service Indigency status and Medicaid number, if applicable Date first bill sent to beneficiary Date Collection Efforts Ceased/Write-off date Medicare remittance advice date Deductible and/or coinsurance Total Medicare write-off Medicaid remittance advice date (non-exhibit 5 element) 29

30 Palmetto GBA Procedures Collection Effort Review of Collection Effort Review the sample files for: Collection efforts are documented Write-off date is at least 120 days from the date of the FIRST BILL or last patient payment. Payments made by patients will restartthe 120 day cycle! Date of first bill is within a reasonable time frame of discharge; document rationale for late billing 30

31 Palmetto GBA Procedures Collection Effort Date of First Bill Although there are no CMS prescribed timeframes by which providers must issue the first bill, the later of 90 days of discharge or 45 days after the remittance advice from the primary payer (notwithstanding extenuating circumstances) are parameters expressed by CMS as reasonable In addition to applying the above parameters, the Medicare contractor must review the provider s policy on billing to ensure that the provider is meeting its own requirements, and that billing is applied to all payer classes consistently 31

32 Palmetto GBA Procedures Collection Effort Review of Collection Effort Collection effort includes actions such as subsequent billings, collection letters and telephone calls or other contacts Collection effort may include using or threatening to use court action to obtain payment Collection effort is consistent between payer class Efforts must be genuine, not token 32

33 Palmetto GBA Procedures Collection Effort Non-Medicare Accounts Select 5 non-medicare bad debt accounts and review to ensure collection efforts are similar: Are there more letters and contacts for non-medicare? Is the language in the non-medicare letters more aggressive? Are non-medicare accounts forwarded to collection agencies while Medicare accounts are not? 33

34 Palmetto GBA Procedures Other Payers Were other payment sources adequately pursued? Medicare Secondary Payor Third Party Liability Remittance advices Patient Account History notes 34

35 Palmetto GBA Procedures Indigent Determination Indigent Determinations Patient s file must contain documentation of the method by which the patient was determined to be indigent. Patient s total resource analysis (asset test) Providers must use their customary methods for determining the indigence of Medicare patients; they cannot have a different resource and income analysis for determining the indigence of Medicare patients. Comparison of patient s income to the federal poverty guidelines is not sufficient Determination should be made at time of admission or shortly thereafter 35

36 Palmetto GBA Procedures Collection Agency Use of Collection Agency A bad debt cannot be claimed as worthless if it is referred to the collection agency for additional collection effort and has not been returned to the provider as uncollectible. The bad debt can be claimed after the collection agency has deleted accounts from the patient s credit bureau file, ceased their efforts and informed the provider that the account was uncollectible. Note: If the account was referred to the credit bureau by the provider and not the collection agency, the provider does not have to ensure the account is deleted from the credit bureau file before claiming the bad debt. 36

37 Palmetto GBA Procedures Collection Agency Review the provider s contract with the collection agency to ensure that it is not in conflict with Medicare guidelines. If the provider uses multiple collection agencies, ensure amounts are not referred to different collection agencies based on financial class. 37

38 Palmetto GBA Procedures Collection Agency Use of Collection Agency Obtain a copy of the collection agency report that should include Patient name Date placed with agency Amount placed with agency Current balance Date account was returned to the provider from agency Disallow the bad debt if the provider cannot supply documentation from the collection agency that the nonindigent account was turned over to the collection agency 38

39 Palmetto GBA Procedures Collection Agency Disallow bad debts if there is no clear evidence that the accounts were returned from collection. Disallow the bad debts if the provider does not furnish documentation from the collection agency to support that the accounts were deleted from the patient s credit bureau file by FYE. An affidavit is testimonial evidence and is generally not sufficient documentation. The provider is responsible for obtaining and maintaining documentation from the collection agency at the time the account is returned. Request account history transaction details. 39

40 Provider Responsibilities Submit a complete and accurate bad debt list that agrees with the amount on the cost report. Ensure that amounts on the bad debt list are only for unpaid deductible and coinsurance. Do not include coinsurance for Part B professional fees or fee based services. Ensure that claims for bad debts have been reduced by patient and third party payments. Ensure that claims previously reimbursed have not been claimed again. 40

41 Provider Responsibilities Ensure that the bad debt list does not have duplicate current year or prior year write-offs. Submit a bill to the patient or responsible party shortly after discharge. Bill the state Medicaid agency timely for dual eligible beneficiary claims. Maintain a copy of the Medicaid remittance advice. 41

42 Provider Responsibilities Maintain auditable records to support the collection efforts and/ or indigent determinations. Ensure indigent determination considers total resources, and is not based solely on income. Ensure collection agency maintains documentation of referral and request for removal of accounts from credit bureau files. Generally the transaction details (account history) list when the account was referred to the credit bureau and when it was deleted from the credit bureau file Do not claim Medicare bad debts until the collection agency returns the account to the provider as non collectible. 42

43 Provider Responsibilities Maintain documentation of verification of no estate for deceased patients. County records Probate court Provide listing of Medicare recoveries and maintain audit trail to document accumulation of Medicare recoveries. Respond timely to requests from the Medicare contractor for bad debt documentation. 43

44 Provider Responsibilities Ensure the bad debt can be completely documented before putting it on a bad debt listing. Unusual circumstances do arise; document efforts to obtain information in the patient file. Be Proactive, rather than Reactive; contact Palmetto GBA for guidance if you are unsure whether the bad debt can be claimed and if alternative documentation will be sufficient. 44

45 Audit and Reimbursement EHR Audits

46 EHR Audits Meaningful Use Audits Audits performed by Figloizzi and Company Audits have started on attestations Audit schedules/details have not been shared with MACs/FIs Payment Audits Audits performed by MACs/FIs CMS to select the sample of providers Audits and desk reviews to start in calendar year

47 EHR Audits Tentative settlements now allowed for HITECH Meaningful Use audit may/may not occur prior to Payment audit Payment Audit Desk Audit Applicable to cost reporting periods of 12 months only Completed at same time as regular desk review or as close to timeframe as possible 47

48 EHR Audits Payment Audit Audit Field Audit vs. In-House Audit Audit work to be performed in conjunction with regular audit Avoids duplicate work May be instances where the EHR work will be completed separately 48

49 EHR Audits Payment Audit Desk Review Proper cost reporting Proper transition factors Payment reconciliation Review of 110 and 118 PSR Reports or provider alternative data Pre-scoping of Audit work 49

50 EHR Audits Payment Audit Audit scope Incentive Payment Calculation provides clues as to areas subject to review IPPS: Initial Amount x Medicare Share x Transition Factor CAH: Reasonable costs of EHR Technology x Medicare Share + 20% (not to exceed 100%) 50

51 EHR Audits Medicare Share: Inpatient Part A Days + Inpatient Part C Days Total Inpatient Days x ((Total Eligible Charges Charges applicable to Charity Care)/Total Eligible Charges) Expect reviews to focus in part on Medicare Share elements 51

52 EHR Audits Audit Objectives Verify Medicare Part A and Part C as well as Total Inpatient days Verify hospital charges and charity care charges Verify total discharges (IPPS) Verify reasonable cost of EHR assets (CAH) Ensure costs have not previously been claimed (CAH) 52

53 EHR Audits Inpatient Days Medicare days: 110 and 118 PSR Reports Total days: Routine and ICU days Census Reports Policies and Procedures» Count conforms with hospital policies and procedures» Count conforms with Medicare policy * Counted as full days * Day begins at midnight * Day of admission is counted; day of discharge excluded (same day admission/discharge = 1 day) 53

54 EHR Audits Total Hospital Charges Financials vs. Revenue and Usage Reports Routine Revenue Test 54

55 EHR Audits Charity Charges W/S S-10 Line 20, Col 3 Reconciliation of charges Listing of charity charges Patient name Dates of service Patient Account Number Name of insurer (private, Medicare, etc.) Total (gross) charges Charity charges 55

56 EHR Audits Charity Charges Review of charity policies Conforms with PRM I Section 312 Ensure policy is followed Charity charges calculated properly Exclusions: Charges applicable to Medicare patients (ded. and coins. claimed as bad debts and charity care allowances have no relationship to Medicare patients) Courtesy discounts, other discounts Physician and Professional charges 56

57 EHR Audits Total Discharges (IPPS) Listing of discharges Reconciliation of reported discharges Review of medical records and/or other appropriate documentation to support discharge count 57

58 EHR Audits Reasonable cost of EHR Assets (CAH) Listing of EHR Assets Identify each asset; notate lease or purchase Tag number/location of each asset Type of use, i.e., will it be shared with non-ehr systems Name of purchaser (hospital, home office, etc.) Date of purchase/virtual lease Acquisition cost 58

59 EHR Audits Reasonable cost of EHR Assets CAH must support reasonableness of cost Reconciliation of costs Verify costs Invoices, purchase orders Previous purchases; treatment of previously claimed depreciation Physical inspection of assets Interview of staff using assets Exclude interest, previous depreciation and costs that cannot be capitalized (internal training, internally developed software) 59

60 EHR Audits Reasonable cost of EHR Assets Leased Assets (previously thought to be nonallowable for EHR) Virtual purchase Fair market value (determined by the provider) Excludes cost elements such as depreciation, interest and insurance Assets also used for non-ehr purposes Separately identifiable Reasonableness of allocation methodology (i.e., hours of use) 60

61 EHR Audits Reasonable cost of EHR Assets Home Office Purchase support for allocations Direct allocation Functional allocation Group purchase Amount claimed must be actual cost incurred by provider 61

62 EHR Audits Previously incurred costs Plant ledger and depreciation schedules Costs should not be duplicated on depreciation schedules Remove via worksheet A-8, line 32 62

63 EHR Audits References ARRA of 2009, Pub. L HITECH ACT 42 CFR , , and FR Vol. 75, No. 144 dated 7/28/2010, Pgs PRM I, 104.1, 104.4, A, , 110 and 312 PRM-II, , , 4012, 4023, , 4013, and 4016 CMS Website -FAQs 63

64 Audit and Reimbursement Contact Information

65 Contact Information Key Contact Information For filing of Cost Reports Courier Service Palmetto GBA Attn: Cost Report Acceptance (AG-330) 2300 Springdale Drive, Building One Camden, SC U.S. Postal Service Palmetto GBA Attn: Cost Report Acceptance (AG-330) Post Office Box Columbia, SC

66 Contact Information Key Contact Information HITECH Payment Issues/Hospice Caps Jim Peebles at or (803) Courier Service Palmetto GBA Attn: Jim Peebles, Manager (AG-330) 2300 Springdale Drive, Building One Camden, SC U.S. Postal Service Palmetto GBA Attn: Jim Peebles, Manager (AG-330) Post Office Box Columbia, SC

67 Contact Information Key Contact Information Reimbursement Issues Michelle Anderson at (803) Courier Service Palmetto GBA Attn: Michelle Anderson, Supervisor (AG-330) 2300 Springdale Drive, Building One Camden, SC U.S. Postal Service Palmetto GBA Attn: Michelle Anderson, Supervisor (AG-330) Post Office Box Columbia, SC Alternate Contact: Jim Peebles, Manager 67

68 Contact Information Key Contact Information Provider Audit Issues relating to the cost report, desk reviews, audits, and settlements Palmetto GBA Provider Audit, AG-320 Post Office Box Columbia SC Contact: Scott Neely (or assigned manager) Manager, Provider Audit (803) (direct line) (803) (fax) Wage Index: 68

69 Contact Information Key Contact Information Provider Audit Filing of Cost Report Appeals and Reopenings Palmetto GBA Cost Report Appeals and Reopenings, AG-380 Post Office Box Columbia SC Contact: Cecile Huggins Supervisor, Provider Appeals and Reopenings (803) (direct line) (803) (fax) 69

70 Contact Information Contact Information for Cost Report Appeal and Reopening Requests Two addresses have been created for the electronic submission of cost report appeals and cost report reopening requests: Filing of Cost Report Appeals Filing of Cost Report Reopenings 70

71 Contact Information PRRB appeals correspondence that providers send to the Blue Cross and Blue Shield Association should now be sent via to In the Subject line, reference the case number first, followed by the case name, followed by the nature of the correspondence. For example: Subject: PRRB Case No ; ABC Hospital; Provider Preliminary Position Paper There is no need to send a paper copy 71

72 Audit and Reimbursement Questions??