Hot Topics in Enforcement Part II: Fiscal and HR Perspective Jacqueline C. Leifer, Esq. Senior Partner
AGENDA I. Federal Policy Updates PIN 2013-01: Budgeting & Accounting PIN 2014-02: Sliding Fee Discount Program New FQHC Medicare PPS II. OMB Supercircular Time & Effort Reporting Procurement Changes 2
I. Federal Policy Updates 3
BUDGET PIN HISTORY HRSA Policy Information Notice 2013-01 Health Center Budgeting and Accounting Requirements Issued June 12, 2013 Addressed both the total budget concept (final) and Grantee flexibility in the use of nongrant funds (draft) Draft included numerous restrictions on use of nongrant revenue Final Budget PIN 2013-01 issued March 18, 2014 4
FINAL VERSION OF BUDGET PIN Key provisions the part that was not in draft required and still requires: Designation in budget of what will be paid with federal funds and what is paid with non-grant funds Distinguish between allowable-allowable costs and allowable-unallowable costs (not a typo!) Post-award: separate accounting for use of federal funds and non-grant funds see next slide Concerns regarding the final PIN Definition of operational funds includes donations, unrelated grant program funding Ignores Excess Program Income 5
FINAL VERSION OF BUDGET PIN Non-grant funds may be used at the discretion of the health center to benefit the individual health center s patient/target population. But, non-grant revenue (or at least expected nongrant revenue) must be used for activities in scope Explicitly authorizes use of non-grant funds to support salaries above HHS salary cap if necessary to remain competitive All subject to Board Oversight Known Unknowns Excess Program Income 6
SLIDING FEE DISCOUNT PROGRAM PIN New PIN 2014-02 (issued September 22, 2014) Primary resource for HRSA s sliding fee discount program (SFDP) policy, superseding all prior guidance on the same subject Does not supersede billing requirements under Medicaid, Medicare or other programs Does not supersede any requirements specified in applicable Funding Opportunity Announcements or Notices of Awards SFDP s main goal is to minimize financial barriers to care (i.e., neither the fees nor operational procedures should present obstacles) 7
SLIDING FEE DISCOUNT PROGRAM PIN Areas of focus Structure of the fee schedule, discount schedule, nominal fee Eligibility for the SFDP Application of SFDP to in-scope services, service-related supplies and equipment, patient cost-sharing, in-scope referral arrangements Billing and collection policies, including discharge of patients for refusal to pay Governing Board responsibilities 8
SLIDING FEE DISCOUNT PROGRAM PIN Structure of Fee Schedule Fees must be set to cover reasonable costs and must be consistent with locally prevailing rates or charges for the service Fee schedule must address all in-scope services (required and additional) and be used as the basis for seeking payment from patients as well as third party payors Relative weight given to reasonable costs and locally prevailing charges may vary depending on the situation of the health center For example, new health centers may rely more heavily on locally prevailing charges until they have a reliable determination of their own actual costs of operations All health centers must adjust fees, as appropriate, based on regular cost analyses, as well as changes in the local health care market 9
SLIDING FEE DISCOUNT PROGRAM PIN Structure of Fee Schedule (cont.) Step #1: determine services that will have distinct fees Can combine certain services into single fee (such as services, supplies, lab) Can use global fee for services that require multiple visits (such as prenatal care) May include distinct fees for non-service in-scope elements if they are typically reimbursed separately Step #2: determine actual costs of providing required and additional services included in scope Step #3: consider locally prevailing rates for these services Look at charges of other community providers for the same or similar services (can use similarly situated communities if no comparable providers in center s community) Sources may include Medicare, Medicaid, private providers, or commercial sources 10
SLIDING FEE DISCOUNT PROGRAM PIN Structure of Sliding Fee Discount Schedule (SFDS) SFDS must have at least three discount pay classes between 101% - 200% of Federal Poverty Guidelines (FPG) that are tied to gradations in income levels Flexibility afforded in determining number of pay classes and types of discounts (% of fee or flat / fixed fee for each class) No discounts for patients with annual income above 200% FPG if receiving non-330 funds that provide for discounts above 200%, may reduce patient payments accordingly Structure of Nominal Fee No more than a nominal fee for patients at or below 100% FPG Nominal is defined as a flat fee that does not reflect the value of the service and is considered nominal from patient s perspective Nominal fee is not a payment threshold, minimum charge/fee or co-payment Nominal fee must be less than the fee paid by patient in lowest rung of SFDS 11
SLIDING FEE DISCOUNT PROGRAM PIN Eligibility for Sliding Fee Discount Schedule (SFDS) Income and family size are the sole factors in determining eligibility for SFDP Cannot consider other factors such as insurance status or population type in eligibility determination, but can consider unique population characteristics in developing supporting operating policies and procedures In particular, cannot require patient to apply and be turned down for insurance before offering SFDP However, if a patient chooses not to provide required eligibility verification information, may charge the patient full fee Board must define family and income consistent with Federal, state, and local laws and requirements As of April 2014, health centers are expected to recognize all same-sex marriages (not civil unions or domestic partnerships) legally entered into, regardless of whether or not the couple still resides in a jurisdiction that recognizes same-sex marriage Health centers must review and/or revise all policies and procedures referencing familial relationships to reflect this recognition, including those describing determinations of eligibility for SFDP 12
SLIDING FEE DISCOUNT PROGRAM PIN Health Centers have discretion regarding certain aspects of the SFDP and may elect to include the following attributes (which must be documented in board-approved policies and procedures): Alternative mechanisms for determining patient eligibility for the SFDS for circumstances in which documentation/verification is unavailable Establishing and collecting nominal charges Use of multiple SFDS, if applicable, with appropriate justification(s) Applying SFDS or other discounts to supplies and equipment associated with services covered by the SFDS Other provisions related to billing and collections including payment incentives, grace periods, payment plans, or refusal to pay guidelines 13
SLIDING FEE DISCOUNT PROGRAM PIN Application of SFDP Applies to all services furnished within scope of project for which a charge has been established, regardless of Whether services are required or additional Type of service or mode of delivery Service-related supplies and equipment charged separate from the underlying service (e.g., dentures, crowns) can be discounted under a structure different from SFDP (such as recoupment of costs), even if such discount off charge is higher than normal discount 14
SLIDING FEE DISCOUNT PROGRAM PIN Application of SFDP (cont.) Fully charge all third-party payors; however, if patient cost-sharing amount is more than he/she would have paid under SFDP as an uninsured patient (the patient s SFDS pay class), must reduce to that amount (subject to legal / contractual limitations) Permitted but not required to discount if cost-sharing does not exceed SFDS pay class Services provided through in-scope referral arrangements (Form 5A, Column III) must be offered based on discount schedule consistent with SFDP or the health center must pay the difference 15
SLIDING FEE DISCOUNT PROGRAM PIN Billing and Collection Policies Must maximize revenue from public and private third party payors must make every reasonable effort to collect such payments Cannot require patients to enroll in insurance but educate them of benefits!! Must make reasonable efforts to bill and collect payments from patients Billing and collection policies cannot become barrier to care or result in denial of care due to inability to pay Reasonable may vary on elements unique to the health center, such as target population Must establish policies and procedures that identify circumstances to waive or reduce fees to ensure access May establish policies to incentivize payment (cash/prompt pay discounts) and/or discharge patients for refusal to pay (only as a last resort) 16
SLIDING FEE DISCOUNT PROGRAM PIN Governing Board Responsibilities Full board approval (and periodic review) of all required SFDP policies Eligibility criteria, definitions of family/income, and documentation and verification requirements SFDS structure Billing and collection policies Policies to waive/reduce fees to ensure access, partial payment schedules, etc. If health center chooses to implement following, also must be board-approved: Alternative eligibility verification (such as selfdeclaration) Nominal charges (versus full discount) Discounts for supplies/equipment Alternative billing and collection policies (such as payment incentives, patient discharge, etc.) 17
NEW FQHC MEDICARE PPS SYSTEM Affordable Care Act required the development and implementation of a Medicare Prospective Payment System (PPS) for FQHCs to account for: Type Intensity of services furnished by FQHCs Duration CMS finalized the Medicare PPS April 29, 2013, with an implementation date beginning with cost reporting periods beginning on or after October 1, 2014 Payment methodology is based on 80% (preventive services at 100%) of: the LESSER of actual charges OR the new FQHC Medicare PPS rate 18
NEW FQHC MEDICARE PPS SYSTEM FQHCs will transition to the FQHC PPS on the first day of their cost reporting period that begins on or after October 1, 2014 Base payment of $158.85 from October 1 - December 31, 2015 FQHC Medicare PPS rates will be calculated as follows:» FACE to FACE Encounter : Base payment rate ($158.85) x FQHC Geographic Adjustment Factor (GAF) = PPS rate» IPPE: Base payment rate ($158.85) x FQHC GAF x 1.3416 = PPS rate PPS base rate will be updated annually» 2016 - by the Medicare Economic Index (MEI)» 2017 by the MEI or a FQHC market basket 34.16% increase in the PPS rate (and no coinsurance) for: New patients Patients receiving an Initial Preventive Physical Examination (IPPE) Patients receiving an Annual Wellness Visit (AWV) (initial or subsequent) 19
NEW FQHC MEDICARE PPS SYSTEM Application of lesser-of provision is guaranteed to yield routine underpayment PPS rate is an average and at least nominally cost based Actual charge undefined in statute and regulations, CMS used guidance to explain Thus: Payment is limited to PPS whenever charges exceed PPS (average) Payment limited to charges when charges fall short of PPS In order for the bundled PPS payment to be compared against a comparable charge, CMS stated in the Final Rule that it would implement visit-based payment codes called G codes Each of the five G codes represents a different type of health center visit The health center must establish a charge for each G code this is mandatory 20
NEW FQHC MEDICARE PPS SYSTEM New Codes for Bundled Services: G0466 FQHC visit, new patient G0467 FQHC visit, established patient G0468 FQHC visit, IPPE or AWV G0469 FQHC visit, mental health, new patient G0470 FQHC visit, mental health established patient Updated Billing Protocols: One of the above codes must be reported on claims, when applicable, with an associated charge amount reflective of typical services provided during these visits type AND ALL HCPCS codes for services that occurred on the same day 21
NEW FQHC MEDICARE PPS SYSTEM FQHCs that have a written contract with a Medicare Advantage (MA) organization are paid by the MA organization at the rate that is specified in their contract If the contracted rate is less than the Medicare PPS rate, Medicare will pay the FQHC the difference, less any cost sharing amounts owed by the beneficiary Applications to establish the average payment amount per visit for each MA organization will continue to be required The PPS rate is subject to the FQHC Geographic Adjustment Factor (GAF), and may also be adjusted for a new patient visit or if a IPPE or AWV is furnished The supplemental payment is only paid if the contracted rate is less than the fully adjusted PPS rate 22
NEW FQHC MEDICARE PPS SYSTEM Other Highlights: What is a new patient A new patient is someone who has not received any professional medical or mental health services from any site or from any practitioner within the FQHC organization within the past 3 years from the date of service FQHCs can bill for more than one visit per day in the following circumstances: Subsequent illness or injury Mental health visit occurring on the same day as another billable visit Co-insurance 20% of the lesser of the actual charge or the PPS rate No coinsurance charged for preventive services 23
II. The OMB Supercircular 24
THE SUPERCIRCULAR: UNIFORM GRANTS GUIDANCE A-102 A-102 A-110 A-89 A-21 A-87 A-122 A-133 A-50 Uniform Grants Guidance 25
THE SUPERCIRCULAR GOAL IS UNIFORMITY New 2 CFR part 200, other circulars will be removed from CFR Same set of rules apply to all Non-Federal Entities (mostly) Consistent terminology Standard grant award documents Some standardization of grant award competition requirements Flow-down of requirements to subrecipient relationships 26
Time and Effort Reporting 27
KEY TIME & EFFORT TERMS 2 CFR 200.4 Allocation: The process of assigning a cost, or a group of costs, to one or more cost objective(s), in reasonable proportion to the benefit provided or other equitable relationship. This may entail assigning a cost(s) directly to a final cost objective or through one or more intermediate cost objectives. 2 CFR 200.28 Cost objective A program, function, activity, award, organizational subdivision, contract, or work unit for which cost data are desired and for which provision is made to accumulate and measure the cost of processes, products, jobs, capital projects, etc. May be a major function of the non-federal entity, a particular service or project, a Federal award, or an indirect... cost activity... 28
INTERMEDIATE AND FINAL COST OBJECTIVES 2 CFR 200.60 Intermediate cost objective A cost objective that is used to accumulate indirect costs or service center costs that are subsequently allocated to one or more indirect cost pools or final cost objectives. 2 CFR 200.44 Final cost objective A cost objective which has allocated to it both direct and indirect costs and, in the non-federal entity s accumulation system, is one of the final accumulation points, such as a particular award, internal project, or other direct activity of a non-federal entity. 29
BASICS OF TIME & EFFORT Q.What is time and effort reporting? A. Documentation of staff time spent on programmatic activities that demonstrates health center s right to charge costs to Federal grant Needed because charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed For almost any grant, the largest budget item is salaries and wages, so those costs make up a majority of charges to health center federal awards 30
THREE PIECES OF THE PUZZLE 1. Payroll What it costs to have employees (salaries, fringe benefits, employment taxes etc.) 2. Time and Effort - Personnel Activity Reports or other documentation showing which intermediate or final cost objective is paying payroll costs 3. Charging Costs to the Grant When health center goes to Payment Management System and draw down federal funds to pay allowable costs 31
COMPARE AND CONTRAST CURRENT (OLD) A-122 RULES Required Elements for any employee charged in whole or in part to a federal award: 1. Actual Activity. Not budgeted; must be a reasonable estimate of actual work performed 2. Account for the Total Activity of employee 3. Signature Requirements (employee or immediate supervisor with first-hand knowledge) 4. Frequency Requirements at least monthly, coinciding with payroll 32
EXAMPLE: WHAT DOES A PERSONNEL ACTIVITY REPORT LOOK LIKE? Employee Name: Bi-Weekly Time Sheet: April 1 to 14, 2014 Activity 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Medical Administration WIC??? Hours (Emp.) % of Time (Attg.) Vacation Sick Holiday Other Leave Total Total Total Hours 100% Employee Signature: (OR) Supervisor Signature: Date: Date: 33
NEW RULES FOR DOCUMENTATION OF T&E: 2 CFR 200.430(I)(1) Documentation must accurately reflect the work performed Records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities; 34
MORE ON NEW T&E DOCUMENTATION SYSTEMS (iv) Encompass both federally assisted and all other activities compensated by the non- Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-federal entity s written policy; (v) Comply with the established accounting policies and practices of the non-federal entity; and [Yes, the Supercircular is missing number vi ] 35
MORE ON NEW T&E DOCUMENTATION SYSTEMS (vii) Support the distribution of the employee s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 36
NEW TIME AND EFFORT, CONT. (viii) Budget estimates (i.e. estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided: (A) The system produces reasonable approximations of activity; (B) Significant changes in the corresponding work activity are identified and entered into the records in a timely manner. Short term changes need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) Internal controls include processes to review after-thefact interim charges made to a Federal award. 37
ALTERNATIVES OR SUBSTITUTE SYSTEMS For State, Tribal and Local Governments still can use old Random Moment Time Studies and similar, statistically valid systems For Everyone two options: a) With federal approval alternative proposals based on outcomes and milestones for program performance where these are clearly documented b) Use performance plans to incorporate funds from multiple federal awards and account for their combined use based on performance-oriented metrics, provided that such plans are approved in advance by all federal awarding agencies 38
SO, WHAT DO YOU DO GOING FORWARD? If your federal grants pay for any salaries/wages: Can still use old personnel activity reports if they work for you Or, but should compare your system to all of the new required elements to make sure there s a fit! Employees who charge all of their time to one funding source or cost objective, use semi-annual certifications AND Employees who distribute their time between two or more funding sources or cost objectives use traditional Personnel Activity Reports 39
ESSENTIAL ELEMENTS OF A TIME AND EFFORT SYSTEM Written Policies and Procedures that set out: Purpose Requirements Good Faith, reasonable estimate Frequency Employees must use independent judgment Penalties for non-compliance Monitoring Start with a simple checklist, did everyone turn in their time sheets? Internal integrity? Training 40
SUMMARY Records must still be kept for every employee charged to the grant Even employees who work solely under one federal award Records must reflect the total activity for employees and actual activity, including both federally-assisted work and all other activities Default measurement is still how much time the employee spent working on the grant 41
Procurement Changes under the Supercircular (Note: One-year grace period for the Procurement Changes) 42
GRADUATED SYSTEM OF PROCUREMENT 2 CFR 200.320 provides guidance on choosing the method of procurement depending on the situation broken down in the following categories: Micro-purchase procedures (below $3,000, or $2,000 in case of acquisitions for construction subject to the David-Bacon Act) Small purchase procedures (below the Simplified Acquisition Threshold, currently at $150,000) Competitive proposals or Sealed bids if above $150,000 43
SOLE SOURCE PROCUREMENTS aka: Noncompetitive Procurement Old Rule: 45 CFR Part 74 gave non-profits flexibility, local governments did not have that flexibility New Rule: the local government rule, so Under 2 CFR 200.320, Sole Source Procurements can only be used in specific situations, they are: (1) Item is available from only one source; (2) Public exigency or emergency; (3) Authorized by awarding agency; or (4) After solicitation from a number of sources, competition deemed inadequate 44
ORGANIZATIONAL CONFLICTS OF INTEREST 2 CFR 200.319(b)(2) If the non-federal entity has a parent, affiliate, or subsidiary organization that is not a state, local government, or Indian tribe, the non- Federal entity must also maintain written standards of conduct covering organizational conflicts of interest. Organizational conflicts of interest means that because of relationships with a parent company, affiliate, or subsidiary organization, the non-federal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization. 45
RECORD KEEPING 2 CFR 200.318(i): Non-Federal entities must maintain records sufficient to detail the history of procurement. These records will include: Rationale for the method of procurement Selection of contract type Contractor selection or rejection Basis for the contract price 2 CFR 200.336: Records of non-federal entity must be available to awarding agency, Inspectors General, the Comptroller General, the pass-through entity or their authorized representative 46
GOOD FILING IS A MUST In addition to required items, in our opinion, files should include: Solicitation and any amendments Contract and any amendments Invoices Correspondence (with vendor, with Federal agency, other) Monitoring Reports Memos to file as necessary 47
INTERSECTION OF THE SUPERCIRCULAR AND HR T&E reporting applies to employee compensation Appropriation limit applies to employee salaries Applies to all employees (both non-exempt and exempt) For non-exempt employees, the health center must maintain records documenting the time worked each day (e.g., by using timesheets or biometric clocks) Records must be kept for every employee charged to the grant Even for employees who work solely under one federal award but divide time between a direct and an indirect cost activity Records must reflect the total activity for employees including both federally-assisted and all other activities Default is still based on how much time the employee spent working on the grant Procurement standards apply to independent contractors Critical to properly classify worker as employee or independent contractor 48
INTERSECTION OF THE SUPERCIRCULAR AND HR Right to Control test Right to direct how work is performed (means and methods) as well as what will be done = employee status Having right to control (as opposed to actually exercising control) is the key factor Misclassification can lead to significant liability for Federal and State tax purposes 49
QUESTIONS? Jacqueline C. Leifer, Esq. JLeifer@FTLF.com Feldesman Tucker Leifer Fidell LLP 1129 20 th Street N.W. Suite 400 Washington, D.C. 20036 (202) 466-8960 www.ftlf.com 50