California Primary Care Association 2012 New CFO Boot Camp
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1 California Primary Care Association 2012 New CFO Boot Camp Medi-Cal FQHC PPS, Medicare FQHC, and Other Revenue/Reimbursement Strategies for Health Centers Presented by: Michael B. Schnake, CPA, CGFM
2 Presentation Prelude In order to remain financially viable, health centers must accurately and timely capture available revenues from services provided to Medi-Cal, Medicare and other third-party payer beneficiaries
3 Presentation Prelude In order to access Medi-Cal and Medicare FQHC enhanced reimbursement, service locations must be included within the health center s defined Bureau of Primary Health Care scope of service Differs from Medi-Cal FQHC scope of project The FQHC designation generally does not influence reimbursement from other thirdparty payers (insurance companies)
4 Presentation Prelude Issues of importance in achieving appropriate thirdparty payer reimbursement include Provider enrollment FQHC rate-setting AND ongoing rate management FQHC cost reporting Managed care and other FQHC reconciliation Billing Management of relationships with third-party intermediaries, etc.
5 Presentation Prelude Important for each health center to have a copy of California s Medicaid State Plan Amendment (SPA) governing Medi-Cal FQHC PPS reimbursement matters Overarching goal for this presentation provide participants with a better understanding of Medi- Cal FQHC PPS, Medicare FQHC and other revenue/reimbursement matters in order to help your health center
6 Today s Agenda How a health center gets paid a look at health center revenue streams Medicaid FQHC PPS implementation a look back Medi-Cal FQHC PPS reimbursement issues Rate setting for new facilities (SPA Section J) Alternative Payment Methodology for an existing FQHC that relocates (SPA Section F) Codes 02, 18, 19 and 20 rate management issues ( PPS differential rates )
7 Today s Agenda Medi-Cal FQHC PPS reimbursement issues (continued) Scope of Service Rate Change Adjustments (SPA Section K) Medi-Cal FQHC PPS reconciliation issues Medicare FQHC reimbursement issues Final Thoughts
8 How Do We Get Paid?
9 Health Center Revenue Streams Think of your financial statements Net patient service revenue Grant revenue Donations and contributions Other miscellaneous revenues
10 Net Patient Service Revenue Payers include Medi-Cal and Medi-Cal managed care Prospective Payment System (PPS) Capitation Managed care and crossover reconciliation Medicare Cost-based reimbursement for FQHC covered services Medicare Advantage Fee-For-Service (FFS) or capitation FFS for Medicare covered services outside of the scope of FQHC covered services
11 Net Patient Service Revenue Payers include Commercial insurers FFS Capitation Patients Required co-payments Self-pay, including amounts due from patients eligible for discounted care within the health center s sliding fee scale
12 Net Patient Service Revenue General ledger should report patient service revenue at full charges (gross patient revenue should be consistent across all payers) Third-party payer contractual adjustments, sliding fee scale adjustments, and the provision for bad debts are necessary to reflect patient service revenue at net realizable value Monthly estimates of such adjustments to patient service revenue are important A common area of financial statement audit adjustment
13 Grant Revenue Common sources of grant revenue Section 330 federal grant funds Other federal grants State, county and city grant awards Accounting for grant revenues is unique generally recognize grant revenue as qualifying expenditures are incurred
14 Donation/Contribution Revenue Foundations Foundation grants may be contributions Other donors (individuals and corporate donors) Accounting for contributions has specific rules and requirements
15 Medicaid RHC/FQHC PPS Implementation A Look Back
16 Medicaid PPS Federal law implementing a Prospective Payment System (PPS) for state Medicaid payments to RHCs/FQHCs effective January 1, 2001 Medicare, Medicaid & SCHIP Benefits Improvement and Protection Act (BIPA) signed December 21, 2000 by President Clinton
17 Medicaid PPS BIPA legislation required: Replacement of the phase-out and elimination of the reasonable cost payment system (system was to be repealed during 2003) Establishment of a minimum Medicaid per visit payment using a PPS methodology
18 Medicaid PPS BIPA legislation required (continued): Payment baseline using the average of each organization s 1999 and 2000 reasonable cost per visit rates thereby, resulting in unique PPS rates for each organization Established a methodology for rate setting for new RHCs/FQHCs
19 Medicaid PPS BIPA legislation required (continued): Permitted establishment of an alternative payment methodology (APM) as long as the APM resulted in Medicaid payment equal to (or greater than) the PPS methodology AND the APM was agreed to by affected organizations
20 Medicaid PPS BIPA legislation required (continued): Ongoing rate adjustments for Changes in the Medicare Economic Index (MEI) annual inflation adjustment Consideration of defined changes in the scope of services provided
21 Medicaid PPS BIPA legislation required (continued): States to make supplemental payments to RHCs/FQHCs that contract with Medicaid managed care organizations at a payment rate that is less than the established Medicaid PPS rate Supplemental payments are to be made no less frequently than every four months
22 Rate Setting for New Facilities
23 Pre-requisites to Medi-Cal Rate Setting The state must license the health center as a community clinic or the clinic must be exempt from licensure The health center must have a NPI number that is registered with Medi-Cal The health center must have documentation from HRSA showing the date the site was approved in the federal grant s scope of project (or the Look-Alike approval letter from CMS that states the effective date) The health center should contact DHCS to obtain Medi-Cal FQHC enrollment instructions
24 Rate Setting for New Facilities Rate setting options available (a one time option) Identification of three comparable FQHCs Filing of a projected cost report Decision process for rate setting is an important consideration for FQHC management personnel Can be difficult to reach agreement with DHCS personnel on three comparable FQHCs Projected cost report option has some timing issues of importance
25 Weighing the Options Advantages to the comparable clinic option include: If the proposed comparable clinics submitted to DHCS are deemed comparable, the FQHC PPS rate is set and there is nothing further to submit The PPS rate is immediately utilized for adjudication of claims It may be possible to identify comparable clinics with higher PPS rates than the health center s anticipated cost per visit
26 Weighing the Options Disadvantages to the comparable clinic option include: The enrollment process could be delayed while trying to identify comparable clinics The PPS rate could be less than the health center s anticipated cost per visit
27 Weighing the Options Based on discussions with DHCS personnel, the most common reasons a proposed clinic is not considered by DHCS to be comparable for FQHC PPS rate setting purposes include: The proposed comparable clinic is providing services that the new facility does not provide The proposed comparable clinic has a combined rate that includes services the new facility does not provide The proposed comparable clinic does not have a PPS rate yet established
28 Weighing the Options Advantages of selecting the projected cost report option include: The initial PPS rate will be based on the new facility s actual costs of operation The Medicare Upper Payment limit is acceptable as a placeholder interim rate until submission of the projected cost report (this enables the enrollment process to be completed faster) Upon submission of the projected cost report, the placeholder interim rate can be reconsidered (adjusted up or down) Services can be added subsequent to enrollment and included in the determination of the initial PPS rate
29 Weighing the Options Disadvantages of selecting the projected cost report option include: The new facility is required to submit two cost reports (a projected cost report and an actual cost report for the first full fiscal year after the FQHC effective date) There could be a long delay before the new facility receives the initial PPS rate (DHCS has 36 months to audit the rate setting cost report) The interim rate is not adjusted for MEI changes (this rate will remain unchanged until the initial FQHC PPS rate is determined)
30 Rate Setting for New Facilities If the projected cost report option is selected, a FQHC will not lose out on potential rate adjustments due to scope of service changes that occur between the date the projected cost report is filed and audited by DHS personnel What about an existing FQHC that relocates? Don t forget the alternative payment methodology permitted under SPA Section F (discussed on following slides)
31 Alternative Payment Methodology
32 Alternative Payment Methodology SPA Section F contains an alternative payment methodology for an existing FQHC that relocates An entity in this situation may elect to have its PPS rate re-determined Rate setting options in this situation are the same as for new facilities previously discussed (use of three comparable FQHCs or submission of a projected cost report Generally preferable versus filing a request for rate reconsideration based on a change in scope of service
33 Codes 02, 18, 19 and 20 Rate Management Issues
34 Code 02 Claim Characteristics The billing of Code 02 is related to certain Medicare/Medi-Cal crossover patients (health center dual eligible beneficiary claims) Code 02 application Primary payer Medicare or Medicare Advantage Plan (MA Plan reimburses the FQHC on a fee-for-service basis) Secondary payer Straight Medi-Cal (NOT a Medi-Cal managed care plan)
35 Code 18 Claim Characteristics The billing of Code 18 is related to certain Medi- Cal managed care plan patients Code 18 application Most frequent application Medi-Cal managed care plan patients (the plan reimburses the health center on a fee-for-service or on a capitation basis) Medicare/Medi-Cal crossover patients where Medicare (either traditional or managed care) is the primary payer and a Medi-Cal managed care plan is the secondary payer
36 Code 20 Claim Characteristics The billing of Code 20 is limited to a very narrow population of health center dual eligible beneficiary claims Code 20 application Primary payer Medicare Advantage Plan that reimburses the FQHC on a capitation basis Secondary payer Straight Medi-Cal (NOT a Medi-Cal managed care plan)
37 Goal of Code 02 The Code 02 rate is an estimate of the differential between a health center s established Medi-Cal FQHC PPS rate and the amount the health center is receiving from the Medicare program (straight Medicare or a Medicare Advantage Plan that is paying the health center on a fee-forservice basis) Rate generally set at 20% of the health center s Medi-Cal FQHC PPS rate
38 Goal of Code 18 The Code 18 rate is generally an estimate of the differential between a health center s established Medi-Cal FQHC PPS rate and the amount the health center is receiving from a Medi- Cal managed care plan (fee-for-service payments or capitation payments) How do dual eligible claims impact the calculation of this rate?
39 Goal of Code 20 The Code 20 rate is an estimate of the differential between a health center s established Medi-Cal FQHC PPS rate and the amount the health center is receiving from a Medicare Advantage Plan that is paying the health center on a capitation basis (such capitation payments are converted to a per visit average reimbursement)
40 Code 20 Example Medi-Cal PPS rate of $140 Medicare Advantage Plan specifics Capitation payments of $5,000/month (based on a PMPM methodology) Annual Medicare Advantage Plan visits of 1,200 Code 20 rate = $90 Medicare Advantage Plan average reimbursement per visit = $50 ($60,000/1,200 annual visits) Differential = $140 - $50 ($90)
41 FQHC Code 19 The Newest Billing Code
42 Code 19 Claim Characteristics The billing of Code 19 is related to CHIP program patients (Healthy Families in California) DHCS created this billing code for the CHIP PPS wraparound payment Code 19 and Code 18 application are very similar (though the Medicare components of the Code 18 process are not relevant to the Code 19 process) Code 19 payment matters Retroactive to October 1, 2009 When will we see the money (denied claims and claims not billed but greater than one year old)?
43 Scope of Service Rate Change Adjustments
44 Common Myths of Scope of Service Change Filings The filing of a Change in Scope of Service Request Form cannot have a negative impact on my PPS rate My qualifying event does not have to impact FQHC services Relocation of my FQHC entitles me to a Change in Scope of Service filing opportunity only I only have an interim PPS rate established - I should still file a Change in Scope of Service Request Form I can reserve my qualifying event for a future filing period
45 Rate Change Prerequisites The increase or decrease in cost is attributable to an increase or decrease in the scope of covered services, as defined in the SPA (section C.1.) The cost is allowable under Medicare reasonable cost principles set forth in 42 CFR Part 413
46 Rate Change Prerequisites The change in the scope of services is a change in the type, intensity, duration or amount of services or any combination thereof The net change in the rate equals or exceeds 1.75% for the affected site ( net change means the per-visit rate change attributable to the cumulative effect of all increases & decreases for a fiscal year)
47 Change in Scope of Service SPA Definition SPA Section K includes nine defined categories of qualifying events health center management should be familiar with all categories What are the common attributes of all scope of service changes defined in the SPA? Must be a change in FQHC or RHC services Must meet all four prerequisite conditions Documentation is key to support your claim with the DHCS
48 Change in Scope of Service Request Form Submission of the filing will be required on a consolidated or individual site basis consistent with the manner in which the PPS rate(s) was/were initially established Many possibilities exist be sure that you clearly understand the filing requirements so that a complete & accurate submission(s) will be made timely
49 Change in Scope of Service Request Form Possible scenarios Individual site filing without a HOCR Single FQHC site with no other chain components Individual site filings with a HOCR Single FQHC site with other chain components Single FQHC site at date of PPS implementation (PPS implementation occurred on or after January 1, 2001 know your situation) with additional sites added after PPS implementation
50 Change in Scope of Service Request Form Possible scenarios (continued) Consolidated filing without a HOCR Consolidated sites with no new sites after implementation of PPS Consolidated filing with a HOCR & additional individual site filings Consolidated sites with other chain components Consolidated sites with new sites established after implementation of PPS
51 Change in Scope of Service Request Form Completion of the form(s) is necessary to properly evaluate filing strategy No requirement to file for rate increases (evaluate impact based on the increase in cost versus the threshold amount) Filing required if rate decrease exceeds 2.50% AND the clinic has experienced a decrease in the scope of services provided Filing required if onsite dental or pharmacy services are discontinued
52 Understanding the PPS Rate Change Calculation
53 Change in Scope of Service Request Form DHCS will compare the computed rate to the current PPS rate in effect on the last day of the fiscal year during which the scope of service change occurred Difference in aforementioned rates discounted by 20% to determine amount to add to the current PPS rate to determine the adjusted rate reflective of changes in scope of service
54 Change in Scope of Service Request Form Adjusted rates will be retroactive to the first day of the FQHC s or RHC s fiscal year beginning after the fiscal year in which the change in scope of service occurred
55 Change in Scope of Service Request Form Example Assume that the 2012 rate = $115 & the current PPS rate = $95 for a difference of $20 ($115 - $95) The rate difference of $20 equals or exceeds the aforementioned 1.75% threshold ($95 x 1.75% = $1.66)
56 Change in Scope of Service Request Form Example Discount the difference of $20 by 20% End result is an adjusted rate of $111 ($95 + $16) that will be effective beginning the first day of fiscal year 2013 (the first day following fiscal year 2012 in which the scope of service change occurred) As you can see, Medi-Cal covered services may be provided for a period of time without compensation
57 Medi-Cal PPS Reconciliation Issues
58 Reconciliation Request Form Matters Reconciliation Request Forms are to be filed annually by each Medi-Cal FQHC provider number (due within 150 days following the end of the health center s reporting period) The SPA requires the DHCS to perform an annual reconciliation for Medi-Cal managed care, CHDP and Crossover visits to assure that FQHCs are paid an amount equal to the PPS rate The State has three years to audit and finalize settlement of the submitted Reconciliation Request Forms (accordingly, goal should be to have a breakeven outcome/settlement)
59 Reconciliation Request Form Matters Visits and payments are reported for Codes 18, 20 and 02 claims Managed care plan payments include both fee-for-service and capitation payments (do not include risk pool payments) Very important to annually monitor Code 18 payment amounts and request rate changes where necessary
60 Reconciliation Request Form Matters If a health center has an interim rate (versus a final Medi-Cal FQHC PPS rate), the health center should file the Reconciliation Request Form using the interim rate the DHCS will not finalize the filing until the initial FQHC PPS rate is established Interim settlements of the Reconciliation Request Forms are available (without regard to the status of the rate used in the submission of document)
61 Reconciliation Request Form Matters The State utilizes Affiliated Computer Services (ACS) visits and payment data for final settlement purposes (this data is reporting period specific for claims having dates of service in a particular reporting period) Evaluate each adjustment proposed by the State for accuracy (Medicare payment matter relative to mental health services) For claims to be reconciled they must be adjudicated by the fiscal intermediary (Code 02, Code 18, Code 20, etc.)
62 Reconciliation Request Form Matters Senate Bill 1194 (SB 1194) was implemented by DHCS in July 1999 to establish a differential rate code (Code 18) for Medi-Cal managed care claims The billing of Code 18 visits is not mandatory a DHCS policy change effective May 1, 2003 established a requirement that a Code 18 billing must be present (and result in an adjudicated claim) for a health center to reconcile Medi-Cal managed care claims
63 Other Reconciliation Considerations CHDP services have been removed from the Reconciliation Request Form (see billing guidance at the bottom of the Form instructions) DHCS A&I staff now want the Summary of Healthcare Practitioners and Summary of Current Services forms submitted with each annual Reconciliation Request Form filing Beware this information could be used to trigger a scope change filing inquiry from the DHCS A&I staff
64 Medicare FQHC Reimbursement Issues
65 Environment Issues 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 payer after state Medicaid) Payer mix goal for community health centers Maintain and/or grow the percentage of Medicare beneficiaries served Traditional Medicare beneficiaries and Medicare managed care plan beneficiaries
66 Reimbursement Issues Medicare Parts A & B Medicare FQHC cost-based reimbursement is applicable to FQHC-core services only Medicare FQHC reimbursement is based on a per-visit rate subject to an upper payment limit (the cost cap ) 2012 rural limit - $ urban limit - $ Services provided by core service providers are paid based on a per-visit methodology
67 Reimbursement Issues Medicare Parts A & B Medicare covered services outside of FQHC-core services Services such as laboratory; technical component of diagnostic tests such as radiology and EKG; and the technical component of many preventive services (such as pap smears and prostate cancer screenings) Reimbursement made on the basis of applicable Medicare fee schedules without regard to the health center s cost of providing such services
68 Reimbursement Issues Medicare Parts A & B Medicare covered services outside of FQHCcore services (continued) Important to compare health center charges for covered services to the Medicare fee schedule amounts (charges should generally be set at or above the approved fee schedule amounts annual review necessary)
69 Reimbursement Issues Medicare Parts A & B Many services are not eligible for reimbursement under Medicare Parts A & B Dental Pharmacy Other
70 Reimbursement Issues Medicare Parts A & B Medicare reimbursement for FQHC-core services ultimately determined through submission of Medicare FQHC cost report Final Medicare program payment based on 80% of defined Medicare cost determined from the cost report Medicare beneficiary copayments are based on 20% of covered charges No reconciliation process for services reimbursed based on a Medicare fee schedule
71 Common Myths of Medicare FQHC Cost Reporting & Reimbursement I followed the prior year cost report - it must be right The cost report can t be complex there are not too many pages I m over the cost limits - it really doesn t matter how the cost report is prepared There is no need to challenge intermediary proposed adjustments if the final settlement is not significantly changed
72 Other Issues The Medicare program does not recognize intermittent clinics all operating locations must be separately enrolled in the Medicare program as FQHCs
73 Health Care Reform Issues Affecting Medicare
74 Health Care Reform Issues Expanded coverage of Medicare preventive services provided by health centers on or after January 1, 2011 Replaces current Medicare FQHC costbased payment methodology with a PPS Cost reporting periods beginning on or after October 1, 2014
75 Final Thoughts
76 Final Thoughts Health center personnel must understand and manage Medi-Cal and Medicare FQHC reimbursement and other third-party payer processes proactively to have good outcomes Remember only you look out for you (each health center must consider its individual facts and circumstances to successfully navigate FQHC and other reimbursement issues/opportunities)
77 Thank You! We welcome your comments and questions BKD, LLP
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