THE MEDICARE FQHC PPS TRANSITION: THE REST OF THE STORY TENNESSEE PRIMARY CARE ASSOCIATION

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1 CPAs & ADVISORS experience clarity // THE MEDICARE FQHC PPS TRANSITION: THE REST OF THE STORY TENNESSEE PRIMARY CARE ASSOCIATION Thursday, October 15, 2015 PRESENTATION PRELUDE Implementation of the Medicare FQHC PPS provides opportunity for FQHCs to potentially improve Medicare reimbursement results Does implementation achieve increased reimbursement versus the old cost-based system? o As good as the CMS headline numbers? Implementation of Medicare FQHC PPS is not a one and done process Ongoing considerations over time Reconsideration of Medicare as a book of business? 1

2 MEDICARE: AN IMPORTANT PAYER The Medicare program, while small as a percentage of overall health center patient related revenues, is an important third-party payer of services Generally the second best third-party payer after state Medicaid 9.9% of aggregate health center revenues per Table 9D of the 2012 UDS Report (8.6% - traditional Medicare + 1.3% Medicare managed care) AGENDA Medicare FQHC PPS basics a quick review Lessons learned to date Ongoing considerations for success in the PPS environment Proposed new Medicare FQHC Cost Report data collection requirements Medicare Advantage Plan reminders Q&A 2

3 FQHC PPS BACKGROUND BASICS PPS implementation effective 10/1/14 based on Medicare cost reporting period All Health Centers should have transitioned by 9/1/2015 Base Rate X Geographic Adjustment Factor (GAF) Established = $ x GAF (0.952 for TN) = $ Higher Intensity = % FQHC PPS BACKGROUND BASICS Established five unique payment codes Payment based on the lesser of applicable PPS rate or provider charge for traditional Medicare claims Medicare Advantage claims are wrapped to applicable PPS rate 3

4 LESSONS LEARNED Not a simple billing change AND fees matter! Lack of policies and procedures guiding fee establishment Existing fee structures were outdated, reflected low charges and/or noncompliant Didn t allow adequate time for assessing fees, fee revisions and obtaining Board approval LESSONS LEARNED Coding does matter Under-coding Incomplete capture of services Not rendering, documenting correctly or coding for higher intensity visits including IPPE and AWVs 4

5 LESSONS LEARNED Billing changes presented challenges New payment codes were not initially recognized by payers outside of Medicare Procedures prompting payment changed under PPS Correlation of CPT codes to new payment codes was a new thought process Medicare Advantage reimbursement and claims procedures were not understood Increase in Medicare beneficiary copayment (in many cases) LESSONS LEARNED Quickly realized the guidance was unclear Limited/changing guidance from CMS Ongoing changes in qualifying visits as defined by CMS Changes in GAFs 5

6 11 // ONGOING CONSIDERATIONS Evaluation of fee schedule and services rendered is vital (every 6 months) Coding accuracy is an absolute must Outreach around IPPE and AWVs should be considered CMS guidance must be routinely monitored 6

7 MEDICARE FQHC COST REPORT FACT OR FICTION? The Medicare FQHC cost report will still be required in the PPS environment The Medicare FQHC cost report will not have relevance in the PPS environment Time invested in Medicare FQHC cost report preparation activities will be less in the PPS environment MEDICARE FQHC COST REPORT CMS COMMENTS CMS notes that the statute does not exempt FQHCs from submitting cost reports Reasonable costs of the following services will continue to be determined and paid through the Medicare FQHC cost report (there will still be a cost report settlement amount) Influenza and pneumococcal vaccines and their administration Allowable graduate medical education costs Medicare bad debts 14 7

8 NEW COST REPORT WHAT CMS SAID CMS noted that revisions were being considered to the cost reporting forms and instructions Provide information to improve the quality of CMS cost estimates for the industry o Examples reporting of FQHC s overall ratio of cost-to-charge ratio (CCR) and Medicare specific CCR Facilitate development of a FQHC market basket o MEI adjustment only at 1/1/2016 o Market basket adjustment at 1/1/2017? 15 NEW COST REPORT WHAT CMS HAS PROPOSED CMS published a notice regarding the Medicare FQHC cost report revision in the Federal Register of December 19, 2014 New cost report = Form CMS Notice was not well publicized to the industry Notice included a public comment period that ended February 17, 2015 o Comment letters by NACHC (11 pages) and BKD (10 pages) were timely filed the proposed new cost report form is 16 pages 16 8

9 NEW COST REPORT WHAT CMS HAS PROPOSED Proposed new cost report form is significantly altered from the current cost report form (Form CMS ) Many of the proposed changes are troublesome Proposed new cost report form: Includes a variety of new information that will be required Combines the previous cost report and cost report questionnaire into one document Anticipated to require approximately 20% more hours for completion based on CMS comments 17 NEW COST REPORT WHAT CMS HAS PROPOSED Overarching area of concern: Inconsistencies in the calculation of a FQHC s total cost per visit o Implementation of the Medicare PPS did not change the nature of cost finding for FQHCs o Integrity of the Medicare PPS may be compromised 18 9

10 NEW COST REPORT WHAT CMS HAS PROPOSED Many other areas of concern (for example): Provide dates of FQHC request and Contractor approval for submission of consolidated cost reports (by site) Worksheet A has been significantly altered and revised (hence the concern for inconsistency in cost finding) specific cost classification examples include o Medical equipment depreciation o Pharmacy o Medical supplies o Medical staff transportation 19 NEW COST REPORT WHAT CMS HAS PROPOSED Many other areas of concern (for example): Expands collection of visits information by provider type (beyond those provider types considered qualified practitioners as defined in Chapter 13 of the Medicare Benefit Policy Manual) Adds Worksheet F-1 for purpose of estimating total FQHC and Medicare specific margins 20 10

11 NEW COST REPORT WHAT CMS HAS PROPOSED CMS published another notice regarding the Medicare FQHC cost report revision in the Federal Register of August 4, 2015 this notice includes a final 30 day public comment period that will expire on September 3, 2015 Appears that some of NACHC s and BKD s comments have been addressed (analysis still in progress) Overarching concerns have not been alleviated Anticipate additional comment letters from NACHC and BKD 21 NEW COST REPORT WHAT NOW? Stay tuned for finalization of the new Cost Reportmost likely that health centers will be required to track and report information going forward that has not been tracked and reported in the past Proactive approach will be necessary Cost classification will deserve increased health center attention Initial Medicare FQHC cost report year impacted will be year ending September 30, 2015 (cost report due date of no later than February 29, 2016) 22 11

12 NEW COST REPORT REMIND ME WHY WE CARE CMS has indicated that cost report information will be used to update cost estimates and to facilitate the potential development of a FQHC market basket Beginning January 1, 2017, PPS rates will be increased by the percentage increase in a market basket of FQHC goods and services as established through regulations, or, if not available, the percentage increase in the MEI Opportunity to play offense and rededicate efforts to better tell the health center s cost story (important individually and as an industry) 23 NEW COST REPORT OTHER MATTERS Health center treatment of Medicare bad debts should be reconsidered potential area where dollars are being left on the table Amounts due solely from the patient o o Amounts adjusted in accordance with the health center s sliding fee scale policy are not eligible Any remaining amount due should be eligible Dual eligible bad debts o Medicare s must bill policy Medicare bad debts reimbursed at 65% for cost reporting periods beginning on or after October 1,

13 MEDICARE ADVANTAGE PLAN REMINDERS Medicare Advantage Plans in the PPS environment Based on an Issue Brief published during June 2015 by the Kaiser Family Foundation, the following trend is important to keep top of mind o MA Plan enrollment continues to increase Up 7% (1M beneficiaries) from 2014 to 2015 MA Plans now enroll approximately 31% of all Medicare beneficiaries Also, virtually all Medicare beneficiaries have access to one or more MA Plan choices MEDICARE ADVANTAGE PLAN REMINDERS Medicare Advantage Plans in the PPS environment Coordinated Care plans (CCPs) oprimarily HMOs & PPOs oprovide care through established provider networks Private Fee-for-Service plans (PFFS) omay or may not have an established provider network 13

14 MEDICARE ADVANTAGE PLAN REMINDERS Medicare Advantage Plans in the PPS environment For FQHCs under contract (directly or indirectly) with MA Organizations CMS has indicated that the supplemental wrap-around payment will be based on the applicable PPS rate without comparison to the FQHC s charge Important to successfully navigate the process of establishing appropriate wrap-around rate(s) Often times health centers do not navigate this process effectively and leave dollars on the table FINAL THOUGHTS The Medicare program represents an important payer for health centers Opportunity now to improve Medicare margins given implementation of the Medicare FQHC PPS Success requires ongoing performance evaluation and implementation of necessary changes/adjustments Health center internal champions can be helpful Maintaining and growing the Medicare book of business is a good goal Traditional Medicare patients Medicare managed care plan enrollees 14

15 QUESTIONS 29 Glenn Grigsby, CPA, Director 600 N. Hurstbourne Pkwy, Suite 350 Louisville, KY Office: Fax: