Update on Legal Compliance Issues

Transcription

1 Update on Legal Compliance Issues Rural Hospital Finance Workshop Wisconsin Office of Rural Health August 12, 2015 Presented by: Lori A. Wink HEALTH LAW IS OUR BUSINESS. CAH History & Future CAH Eligibility Requirements RHC Basics Provider-Based Update Agenda CAH/RHC Restructuring Case Study Compliance Update for CAHs Physician Practice Arrangements the Itinerant Rural Specialist Repayment Considerations for CAHs 2 1

2 This is Medicare 3 History of CAH Program After IPPS was introduced in 1983 there were a rash of rural hospital closures Demonstration project in Montana in late 1980s to pay rural hospitals based on cost CAH program introduced in 1997 to preserve access to primary/emergency services in rural communities Intended to be limited service hospitals providing essential services The number and scope of CAHs grew faster and bigger than anticipated: 41 in > to 1,055 in > to over 1,300 today 4 2

3 Status of CAH Program In each of the 50 states except Connecticut, Delaware, Maryland, New Jersey and Rhode Island >50% of US rural community hospital About 22% of all US hospitals Paid $1.3 billion > PPS - $1 million/cah About 850 are Necessary Provider CAHs Approx 450 have health clinics (CMS term?) Approx 80 have psych units Approx 20 have rehab units 5 CAH Program 6 3

4 Have We Come Full Circle? Regulations have created restrictions on CAHs: 2005: No new necessary provider designations 2005: Restrictions on CAH NP relocations 2007: Provider-based limits for CAHs 2013: 96-hour certification requirement (compare to average length of stay in CoPs) Proposals to revoke CAH status if CAH within 10 miles of another CAH/hospital (and other similar proposals) OIG Scrutiny 7 OIG Scrutiny August 2013 Report Necessary Provider Status Most (64%) CAHs would not meet the location requirements if required to re-enroll Recommendations: Seek legislative authority to remove permanent exemption from distance requirement for necessary providers Seek legislative authority to revise the CAH CoPs to include alternative location-related requirements Ensure that CMS periodically reassess CAH s compliance with CoPs 8 4

5 OIG Scrutiny October 2014 Report Beneficiary Copayments Medicare beneficiaries paid nearly half of the costs for outpatient services at CAHs Copayment based on charges Compares to 22% of the OPPS (copayment based on OPPS rates) Recommendation: Seek legislative authority to modify how coinsurance is calculated Options based on interim payment rates or base coinsurance amounts based on OPPS 9 Future of CAHs? Number of CAHs decreasing 14 CAHs closed between 2013 and 2014 More likely to close for many, operating margins are too small Creates health care and socio-economical issues Source of emergency care Source of primary care services Significant employer in some communities Medicaid payments? 10 5

6 Options for Rural Health Care Rural freestanding emergency rooms? Provider-based to another hospital? Must be sustainable based on payments Eliminate or reduce number of inpatient beds and create centers for primary and preventative care with diagnostic services Others? 11 Rural Emergency Acute Care Hospital Act S introduced by Sen. Grassley Would allow CAHs and hospitals with 50 or fewer beds located in a rural area or redesignated to a rural area to convert to Rural Emergency Hospitals (REHs) REHs would only provide emergency care Enhanced reimbursement rates of 110% of reasonable costs 12 6

7 13 CAH Legal Basics 42 USC 1395x(e) (SSA 1861) Hospital CAH The term hospital does not include, unless the context otherwise requires, a critical access hospital as defined in 1395x(mm)(1), which refers to. 1395i-4 (SSA 1820) Medicare rural hospital flexibility program CAH Conditions of 42 CFR (NOT 482) Interpretive Guidelines Appendix W Location, beds, ALOS, PB d Limits are all in COPs Not conditions of coverage/payment Provider Numbers = xx-13xx See State Operations Manual Chapter A & B Nomenclature for Provider & Supplier certification #s 14 CAH Eligibility Requirements CAHs must be located in rural area MSA/CBSA Census Bureau definitions; or Redesignated urban to rural via Must be >35 miles from any other hospital unless: Located in mountainous areas or have only secondary roads (15 miles); OR Received state designation as a necessary provider States CANNOT issue new NP designations after 12/31/2005 To be grandfathered from mileage rule: Had to have NP designation; AND Be certified as a CAH by January 1,

8 15 CAH Eligibility Requirements CAHs may operate up to 25 inpatient beds in any combination of acute care and swing beds bed cap not average census Average length of stay must be <96 hours All patients, annual average CAHs may also have distinct part units: Psych unit of up to 10 beds Rehab unit of up to 10 beds Excluded units do NOT count toward 25-bed limit ALOS calculation CAH Excluded Units CAHs can have up to 10 bed psych &/or rehab Paid under psych or rehab PPS NOT cost Process for exclusion Can only be excluded on 1st day of cost reporting period Surveys cannot be retroactive to before date of survey Catch 22 - cannot get survey until operational Need to use some of 25 beds for unit preexclusion to trigger survey Need lots of advance planning/notice to DHFS and CMS 16 8

9 CAH: Relocations Non-NP CAH must meet the location requirement (35/15 miles) at new location Necessary Provider CAHs must either: Meet location test at new site; or Meet same NP criteria upon which original approval was based and satisfy three 75% tests: patient zip codes, services & staff Blind Leap of Faith Must meet test up to 1 year AFTER the move to get CMS approval of CAH at new site CMS Definition of relocation can include entire new facility at SAME campus. 17 OIG Audit CAH selected for OIG Office of Audit Services Review for years Initial Request Ownership, org chart, job descriptions, list of all employees Policies & procedures as related to CoPs, cost reports, accounting Annual reports, audited F/Ss & surveys of CAH Chart of accounts Cost reports & workpapers List and copies of agreements with related parties 18 9

10 OIG Audit 3-4 OIG OAS personnel spent 4 CAH No CPAs or staff with prior cost report or COP background Asked for depreciation and asset records, serial #s, for hospital beds CAH set up point person for process and logged all info provided to OIG 19 OIG Audit Preliminary Findings: Failed CoPs due to >25 beds Bed roster included: 4 swap out beds stored in non-patient areas for replacement parts 2 basinets for infants to swap for adult beds when needed Claimed unallowable costs of: $61,912 penalties for late lease payments $1,033 lobbying costs 20 10

11 21 OIG Audit CAH Response Notified FI on costs FI reopened 2005 to adjust FI passed on 2006 too small to bother Fought tooth & nail on 25 beds VP-Nursing had been at hospital association conference that discussed a CMS Open Door forum in which CMS speakers said swap out beds not counted We had position that such beds stored in nonpatient areas should not count After much back & forth, OIG Final Report in 12/2009 agreed on bed count issue 22 Provider-Based CAH Off-Campus Facilities CAH Off-Campus Requirements: Any off-campus location opened or acquired after 1/1/08 that meets provider based requirements must be >35 (15 in M/SR areas) mile drive from any other hospital or CAH Applies to excluded psych and rehab units also Essentially includes all Pb d sites in determining whether 35/15 mile/np Location Rules Met Failure to comply: CAH status subject to termination unless the CAH terminates the offcampus arrangement Converting to free-standing should be sufficient 11

12 CAH Off-Campus Facilities Sites operated and qualified as provider-based before 1/1/08 are grandfathered Converting freestanding pre-1/1/08 site to Pb s after 1/1/08 is not grandfathered Relocation of pre-1/1/08 Pb d site loses grandfather status - it is site specific!!! May be outside CAH's control - lease termination Changes at grandfathered site: Addition of footprint or services Construction of new building to replace old Should be able to keep status but confirm with regional office 23 CAH Off-Campus Facilities CAH corporation is NOT prohibited from: Operating free-standing sites, just pb d. So lose option to get: Cost on hospital o/p facility services 15% bonus for Method II professional billing Opening Hospital-Based - Rural Health Clinics Exempt because not part of hospital provider Have separate provider number Law does NOT limit PPS hospitals from opening pb d sites within 35 miles of a CAH!!! 24 12

13 CAH Off-Campus Facilities CMS Guidance: CAHs seeking a pb d determination for newly created or acquired off-campus sites MUST submit an attestation to Regional Office to determine location requirements Even though regulation says pb d attestations optional Follow Guidance Pb d site may meet tests even though campus does not 25 Off Campus Clinic Location Example 26 13

14 Definition of Campus So What is On Campus???? Campus means the physical area immediately adjacent to the provider s main buildings, other areas and structures that are not strictly contiguous to the main buildings but are located within 250 yards of the main buildings, and any other areas determined on an individual case basis, by the CMS regional office, to be part of the provider's campus Affects: Ability to open new PB d services given 12/31/07 restrictions Relocation test Provider based: on vs. off campus 27 Definition of Campus On Campus Case Study CAH in Midwest Region 5 state Key to lines Blue = Owned land yards Red = hospital building yards Orange = hospital operated ambulance yards Green = expansion parcel for new building to house PT/OT, various o/p ancillary & hospital admin/support, & physician offices Portion of new building would be within Red & Orange 250 yard rules Is the building on campus? If yes, does it expand 250 yard footprint? 28 14

15 29 Definition of Campus Take aways Main buildings not defined CMS generally interprets as primarily I/P care Only main buildings enlarge footprint via 250 yard rule Region 5 rarely has approved discretionary expansion Maybe if nothing but open space between main buildings and new structure 30 15

16 Provider Based Update OIG Focus New Modifier CAH/RHC Refresher CMS Region 5 Position on Mixed Use Life Safety Code Reminder Recent Enforcement Actions Region 5 31 Provider-Based Recent OIG Focus OIG s 2013 Work Plan (new) Hospital-owned physician practices using provider-based status We will determine the impact of hospital-owned physician practices billing Medicare as provider-based physician practices. We all also determine the extent to which practices using the provider-based status met CMS billing requirements. In 2011, the [MedPAC] expressed concerns about the financial incentives presented by provider-based status and stated Medicare should seek to pay similar amounts for similar services

17 Provider-Based Recent OIG Focus 2013 OIG Survey regarding provider-based services OIG sent information requests to hospitals regarding ownership and operations of provider-based facilities Hospitals selected at random based on Certification and Survey Provider Enhanced Reports data Stated purpose was to determine the number of hospitals that own provider-based facilities But, collected information could potentially result in additional OIG or CMS enforcement contacts with specific hospitals 33 Provider-Based Recent OIG Focus OIG s 2014 Work Plan Impact of provider-based status on Medicare billing We will determine the impact of subordinate facilities in hospitals billing Medicare as being hospital based (provider based) and the extent to which such facilities meet CMS s criteria. Comparison of provider-based and free-standing clinics (new) We will review and compare Medicare payments for physician office visits in provider-based clinics and free-standing clinics to determine the difference in payments made to the clinics for similar procedures and assess the potential impact on the Medicare program of hospitals claiming provider-based status for such facilities

18 35 Provider-Based Recent OIG Focus OIG s 2015 Work Plan Medicare Oversight of Provider-based Practices We will determine the extent to which provider-based facilities meet CMS s criteria. Based on higher Medicare payments and increased beneficiaries coinsurance liabilities 2011 MedPAC concern about the financial incentives presented by provider-based status and statement that Medicare should seek to pay similar amounts for similar services Comparison of provider-based and free-standing clinics Compare Medicare payments for physician office visits in provider-based clinics and freestanding clinics for similar procedures and assess the potential impact on the Medicare program of hospitals claiming provider-based 36 Provider-Based New Modifier Final OPPS Rule: Off-Campus Provider-Based Claims Requires hospitals to identify on claims those services provided in offcampus PB d departments Hospital Claim: HCPCS Modifier PO on UB Voluntary reporting beginning January 1, 2015 Required reporting by January 1, 2016 Physician Claim: New place of service (POS) codes on professional claims (1500) Replace POS 22 (outpatient hospital dept) with two new codes: One to identify services provided in an on-campus outpatient dept and satellite locations; and One to identify services provided in an off-campus outpatient dept New POS codes required to be reported as soon as available not expected before July 1,

19 Provider Based RHCs Provider Based Entity not a hospital O/P department Separate provider number Subject to separate RHC CoPs Exempt from some PB d requirements, including: License Distance (w/i 35 miles of hospital to which it is based) Public awareness Off campus notice of split billing Don t count as a CAH off campus site for CAH location test RHC Conditions of Participation RHC COPs at 42 CFR 491 Surveyed & certified like other providers Location & facility requirements Organization & staffing requirements Services and medical record requirements Staffing Midlevel on site 50% of time operated At least 1 employed Midlevel (statutory requirement) Other midlevels can be contracted for Physician on site depending on facility/patient needs once every 2 weeks eliminated May 2014) 19

20 Provider Based RHCs 39 Not all services covered/billable under RHC provider number Effectively only physician & midlevel office visits Non-RHC covered services (ancillaries) must be billed separately: Hospital/CAH provider # if PB d Physician office # if free standing CMS Position to bill non-rhc RHC site under hospital/cah Provider # must meet ALL PB d requirements for those services at that site RHC Mixed Use May share facility with FS g clinic, HOPD, etc 6/27/2008 Federal Register May share waiting room, receptionist, etc. Must allocate costs properly to RHC Provider Based Mixed Use Mixed Use Sites: Part PB'd Part FS'g No formal guidance in regulations or otherwise Only CMS enforcement practice: learned through attestations and discussion with CMS representatives CMS Position will allow 1 building to have both, but generally: Suite by suite basis only Each suite with entrance & exit to outside or common areas No shared registration or waiting areas PB d & FS g segregated by appropriate barriers under LSC CMS may be more flexible w/i main hospital building imbedded FS g space w/o same segregation as other locations CMS Enforcement position based on: COPs and LSC application Public awareness requirement 40 20

21 Provider-Based Mixed Use CMS Denial & Revocation Region 5 Off-campus MOB Shared waiting room (hospital imaging and physician offices) Patient care areas not fully segregated 30 days to decide; conform to PB d or go FS g 60 days to appeal through ALJ process At risk: additional PB d reimbursement for all open cost report years 41 Provider-Based Mixed Use 42 21

22 43 CMS Position on Mixed Use Example Urban hospital campus Building new 8 story patient care tower All services outpatient in new tower Connected to inpatient tower on several floors Floors 1-5 all hospital outpatient departments Floors 6-8 to include about 25% of space for lease/use by physician practices for free standing office practices Took floor plan to CMS for advance approval Would not approve open floor plan design Hospital based portions of floor had to be walled off from common areas/free standing areas Separate waiting/registration areas in common space ok Provider-Based Mixed Use 44 22

23 COP/Life Safety Code Hospital Facility/Life Safety Code Requirements 3 Levels: application depends on services w/i space Health Care Occupancy inpatient Ambulatory Health Care Occupancy "outpatient" 4 or more patients receiving treatment that renders them incapable of taking action for self-preservation under emergency conditions.. Distance to exits, backup generator, 1 hour firewalls, sprinklers? Etc. Business Occupancy everything else including patient services Mixed use buildings: PB'd and FS'g portions LSC applies only to PB'd portion, but May affect other portions firewalls, etc Life Safety Code CMS memo released in February 2011 updating occupancy classifications for LSC Never incorporated in State Operations Manual Life Safety Code Proposed Rule Adopt the 2012 edition of the Life Safety Code Changes from 2000 edition: suite size, alcohol based hand rubs, sprinklers, door locking Facilities must meet the applicable occupancy requirements regardless of the number of patients Federal register language creates confusion regarding which occupancy requirements apply CMS intent is to be more flexible Not clear how this standard will be applied 23

24 Provider Based Enforcement: Public Awareness & Notice 10/8/2014 HC System Received Notice of PB d Revocation for: Name: ACME Health or ACME NOT ACME Medical Center Patient Complaint of not receiving split billing notice CMS Denial Cites to ACME Website Revokes PB d for 4 sites back to date of noncompliance Looks to be back to 2009 $5.9 million for 4 sites Potentially 15 more sites with same issue 47 Provider-Based Practical Takeaways Pick one and be it: either a hospital or something else Increased CMS/OIG scrutiny of provider-based locations, especially off-campus Consider compliance audit to ensure rule requirements are met Monitor guidance and requirements on LSC standards Consider billing audit to ensure: All Medicare patients (primary and secondary) are billed as hospital outpatients Physicians are billing with correct POS code Consider financial impact of OPPS changes and MedPAC recommendation Consider provider-based attestation for potential grandfather protection 48 24

25 CAH Structure - Pre 9/1/2014 Affiliation Necessary Provider CAH (<35 miles to nearest hospital or CAH) 5 Grandfathered Off Campus PB d RHC & HOPD Sites HOPD GF d per (e) as PB d sites <1/1/2008 RHC services exempt from CAH off campus restriction Employed physicians and PA/NP midlevels All admin, management and support personnel employed by CAH All RN, MA tech patient care workers employed by CAH As PB d sites eligible, for: Unlimited RHC cost reimbursement (PC & TC) Facility cost reimbursement for HOPD services Method 2 115% PFS payment for PC in HOPDs 340B eligibility for patients treated in PB d sites 49 Post Affiliation Goals Preserve CAH Status of Hospital Brand & market all sites as System Medical Group ( SMG ) as much as possible Implement SMG operational policies & practices Employ all clinic site provider and operational staff within SMG legal entity Physicians Midlevels PAs & NPs Patient care workers RNs, MAs, techs, etc. Keep all PB d benefits 50 25

26 Guardrails, Hurdles & Roadblocks Maintain CAH status - 42 CFR Change in control does not affect CAH eligibility 25 beds or less Location Rural as defined by Medicare not in an MSA per Census Bureau and >35 miles via primary roads from nearest hospital/cah >15 miles via secondary roads from nearest hospital/cah Grandfathered necessary provider - approved <1/1/2006 CAHs eligible per ACA for 340B Drug discounts HRSA 340B Guidance adopts PB d to define eligible hospital patient 51 Guardrails, Hurdles & Roadblocks RHC Conditions of 42 CFR Part 491 Must employ at least one midlevel (statutory requirement) Allows employment or contract for physicians, other midlevels and staff Operational requirements 50% hours must have midlevel RHC Coverage & Payment 42 CFR PB d to <50 bed hospital/cah for exemption from rate/visit limit on costs (~$80/visit) Allowable costs included: PC = physician & midlevel compensation Facility costs 52 26

27 Guardrails, Hurdles & Roadblocks Provider 42 CFR Public awareness Administration & supervision off campus sites Management K triggers direct employment requirement for off campus site patient care workers Method 2 CAH PC PC services in CAH HOPD Physician/midlevel must reassign billing rights to CAH Provider # (vis Form 855R) 53 Can t Have Your Cake & Eat it Too CAH Location Requirements N/A to RHC services 35/15 miles &/or Necessary Provider Because RHC = provider based entity PBE not CAH, but separately certified type of services HOPD services stuck in GF d Locations HOPD must either stay at same GF d street address, or Move and go to freestanding billing (non-cah) Move, keep PB d and LOSE CAH STATUS SMG & Hospital considered moving a site that had RHC and HOPD (PT/OT + Imaging) Reimbursement loss too big Stayed in place 54 27

28 Can t Have Your Cake & Eat it Too PB d Public Awareness requires Hospital Brand For HOPD but NOT RHCs But all RHC sites also had HOPD, so. Co-branded SMG with Region 5 anonymous approval Trying to separately brand RHC vs. HOPD portions of each site would violate TOO CUTE Principle PB d Admin & Supervision Requirement Direct supervision of main provider Same frequency & intensity as any other dept. Admin functions can be K d out if managed by main provider Can t Have Your Cake & Eat it Too RHC COPs least 1 employed midlevel So we left all at Hospital for simplicity RHC COPs allow for: Contracted physicians so moved all docs to SMG and did PSA back to Hospital Contracted staff so per RHC could have moved all to SMG & contracted back to Hospital BUT PB d Management K precludes contracting for patient care workers, so: Did Admin & Support K left 2 or 3 Clinic management positions at Hospital Got Region 5 anonymous determination that this was NOT a management K Sent in org charts & job descriptions 28

29 CAH Compliance Issues 57 Supervision of Therapeutic Services in CAHs In the 2009 OPPS final rule, CMS clarified that as a condition of payment for outpatient therapeutic services an appropriate physician or non-physician practitioner must provide direct supervision Applied to services in all hospital outpatient departments, including CAHs CMS delayed enforcement for CAHs and small and rural hospitals with fewer than 100 beds Congress passed HR 4065 that further delayed enforcement through 2014 Legislation has been introduced (but not yet passed) to delay through 2015 CAH Compliance Issues 58 OIG Work Plans Swing Beds Comparing reimbursement for swing-bed services at CAHs to traditional SNFs Determining whether Medicare could achieve cost savings through a more cost effective payment methodology. Beneficiary Costs for O/P Services Determining costs to Medicare beneficiaries for o/p services received at CAHs Beneficiaries who receive o/p services at CAHs pay coinsurance amounts based on charges, rather than costs 29

30 CAH Compliance Issues Critical Access Hospital Relief Act (H.R. 169) Proposed law Would remove the 96-hour physician certification requirement as a condition of payment for CAHs Would not remove the requirement that CAHs maintain an average annual length of stay of 96 hours Concept is in other bills as well 59 CAH Compliance Issues Rural Provider Payment Stabilization (H.R. 3225) contains a number of Medicare payment proposals target at rural hospitals and CAHs, including: Eliminating 96 certification requirement for CAHs Eliminating sequestration cuts and reversing cuts to bad debts Extending MDH status Permanent exception for CAH therapeutic supervision requirements Delaying penalties for failure to be Meaningful EHR user Proposed rule for new payment model for knee and hip replacements should not apply to admissions at CAHs

31 CAH Compliance Issues Updated Labor Market Areas Update CBSAs based on 2010 census data beginning FFY 2015 Urban counties became rural Rural counties became urban, and Urban counties change to a different CBSA. Could affect CAHs in areas that were once rural, but are now urban or Lugar Affected CAHs given 2 years to re-designate as rural 61 Physician Practice Arrangements 62 THE RURAL ITINERANT SPECIALIST Options - permutations Lease in clinic space (not otherwise PB) in hospital space Coverage in clinic space (not otherwise PB) in hospital space PC billed by hospital or physician Employee or independent contractor 31

32 Physician Practice Arrangements 63 Legal Issues Correct and consistent billing site of service/facility avoid double dip problems adequate supervision for incident to Provider based mixed use issues Stark & anti-kickback FMV and not based on VOVOR Stark on demand lease issues, defined space and set schedule Tax status - employee vs. Ind Cont. Tax exemption FMV & bond private use restrictions Physician Practice Arrangements Lease in Clinic Space FMV for rent & services or supplies Stark on demand issues Specialist bills PC & TC under PFS so no reassignment issues must have authority to supervise any Clinic employees used in leased space double dip occurs if Clinic also bills Lease = private use if building is bond financed 64 32

33 Physician Practice Arrangements Lease in Hospital Space FMV for rent & services or supplies Stark on demand issues Precludes PB d status for leased space May create PB d mixed use issues for other services Specialist bills PC & TC under PFS must have authority to supervise Hospital employees used in leased space double dip occurs if Hospital bills for TC / claims as allowable on cost report Lease = private use if bond financed 65 Physician Practice Arrangements Coverage in Clinic Space FMV for professional services Clinic bills PC & TC under PFS Specialist must have authority to supervise Clinic employees double dip occurs if Specialist bills Tax status correct - withholding or not? No private use if employee or if contract meets term & compensation limits 66 33

34 Physician Practice Arrangements Coverage in Hospital Space - Specialist bills PC (no reassignment) Hospital bills TC on UB-04 as PB d, claims space & costs as allowable Specialist bills PC on 1500 Double dip if specialist does not use site of service/facility RVUs (Place of Service code 22 hospital O/P) Precludes Method II/115% option for CAH No mixed use PB d issues all hospital use No Stark on demand lease issues no lease No compensation, so no tax status or FMV issues Coverage contract must meet term limits of bond restrictions Physician Practice Arrangements Coverage in Hospital Space - Hospital bills PC per reassignment Hospital bills TC on UB-04 as PB d, claims space & costs as allowable Hospital bills PC on 1500 (UB if all-inclusive) under reassignment (Place of Service code 22 hospital O/P) No mixed use PB d issues all hospital use No Stark on demand lease issues no lease FMV compensation to Specialist tax status - withholding No private use if employee or if contract meets term & compensation limits 34

35 Repayment Considerations for CAHs Need to consider how CAHs should address coding issues Question: How did the coding impact the CAHs payments? Examples: Infusion PT/OT Units of Service Rules Transfusion Admin Charge 1/day Non-covered Lab Services 69 Repayment Considerations for CAHs Coding Issues Hospitals, OIG and CMS contractors (RACs, CERTS, etc.) often perform reviews of coding issues Services that are covered by Medicare, but an incorrect CPT/HCPCS code was used (Example, infusion services) Compare: disallowed/non-covered services Most applicable to PPS hospitals because the codes drive the DRG or APC payment 70 35

36 71 CAHs Services Incorrectly Coded CAHs are reimbursed based on Medicare s portion of a hospital s costs of providing covered services APC payments do not apply Medicare should cover portion of a hospital s costs that are proportionately related to cost of providing covered services to Medicare beneficiaries Medicare cost report designed to accomplish this by allocating allowable costs based on Medicare charges relative to charges for all payors Uniform Charge Rule: Established charge structure must be applied uniformly to Medicare and non- Medicare services CAHs Services Incorrectly Coded Unlike PPS hospitals, a CAH cannot simply perform a coding review of Medicare claims and make an adjustment based on payment differences Not paid based on APCs Starting point If services are covered by Medicare, the cost of providing those services attributable to Medicare patients must be paid by Medicare Did charging/coding practices, result in Medicare paying its equitable share of the cost of providing covered services? 72 36

37 73 CAHs Services Incorrectly Coded Cost report that include charges based on consistently applied, but incorrect coding, could/should still result in appropriate allocation of costs Comply with Uniform Charge Rule - Services for all payors were coded the same Possible that Medicare could have paid more or less depending on the particular mix of services However, cost reimbursement system does not result in an exact dollar amount of payment for each service Instead, payment is based on series of cost accounting assumptions and methods Designed to achieve a reasonable estimate and fair allocation of costs between Medicare and non-medicare patients CAHs Services Incorrectly Coded Attempts to redetermine the Medicare costs have flaws and may violate cost determination laws and regulations Possible methods to redetermine Medicare costs: Review and recode only Medicare claims Similar to methodology used by PPS hospitals Violation of Uniform Charge Rule charges for Medicare patients would be different than for non- Medicare Cost-to-Charge ratio and cost apportionment would be incorrect 74 37

38 CAHs Services Incorrectly Coded Methods to redetermine Medicare costs (cont.): Multiply the difference in charges by the Medicare cost-tocharge ratio to calculate the overpayment Similar to methodology used by PPS hospitals Medicare would not pay its equitable share of the costs of providing care Violation of Uniform Charge Rule charges for Medicare patients would be different than for non- Medicare Disallows covered costs 75 CAHs Services Incorrectly Coded Methods to redetermine Medicare costs (cont.): Review a sample of claims from all payors and extrapolate the results to the cost report and reallocate the costs to Medicare May or may not result in better allocation of costs Still an estimate Burdensome and labor intensive Requested guidance from CMS Central Office, and suggested that these issues be corrected on a prospective basis (don t know if paid correctly, underpayment, or overpayment ) CMS failed to give any useful guidance Instead, CAH should contact its Medicare contractor 76 38

39 CAHs Services Incorrectly Coded If, the CAH determines that it should review the claims, the CAH needs to determine if Medicare calculated costs were impacted Need to look at all payors Review charges Calculate impact on Medicare costs 77 CAHs Services Incorrectly Coded Step 1 Identify population of services for all payors charges for each cost center Step 2 Assess whether there is a change in the Medicare utilization rates Determine reported Medicare and total charges for each cost center for each fiscal year, and the reported Medicare utilization rate Select and review a random sample of those claims Determine adjusted charges for Medicare and total charges, and the adjusted Medicare utilization rate 78 39

40 CAHs Services Incorrectly Coded Step 2 (cont.) Compare the reported Medicare utilization rate to the adjusted Medicare utilization rate If reported Medicare utilization rate is < or = to the adjusted utilization rate STOP Either an underpayment or no effect on cost-based payments If reported Medicare utilization rate is > to the adjusted utilization rate maybe an overpayment 79 CAHs Services Incorrectly Coded Step 3 Calculate change in Cost-based payments Rerun cost report with adjusted charge amounts; or Recalculate cost to charge ratios and Medicare costs for each cost center Step 4 Compare reported Medicare costs with adjusted Medicare costs 80 40

41 Questions? Thank you! Lori A. Wink