EHR Incentive Payment: What Qualifies for the Medicare Cost Report. Kevin E. Wellen, CPA January 18, 2013

Transcription

1 EHR Incentive Payment: What Qualifies for the Medicare Cost Report Kevin E. Wellen, CPA January 18, 2013

2 EHR Incentive Payments Path to Payment Register Attest Payments Uses the Medicare and Medicaid EHR Incentive Program Registration & Attestation System (web based tool) 2

3 EHR Receiving Payment Medicare EHR Incentive payments Approximately 4-8 weeks after a successful attestation & submission of asset details (per CMS Webpage) Medicaid EHR Incentive payments States are required to issue incentive payments within 45 days of successful attestation 3

4 EHR Receiving Payment Medicare EHR Incentive Payments Will be made to the TIN selected at time of registration Payment will come via your current method either electronic funds transfer or paper check Direct deposits to the first bank account on file Will appear on the statement as EHR Incentive Payment 4

5 EHR Receiving Payment Medicare EHR Incentive Payments Current Hospital or EP Medicare Administrative Contractors (MAC) will not be making these payments They are accepting the listing of assets for CAHs and performing some initial level of review. Must communicate to NGS & CMS certain data data is transferred monthly Missing the monthly transfer can delay payment 30 days 5

6 EHR Receiving Payment Medicare EHR Incentive Payments CMS has contracted with a separate vendor to make these payments on a national basis National Government Services, Inc. (NGS) Receives the data monthly from all MACS Makes EHR payments monthly CMS has contracted with Provider Resources, Inc (PRI) as the appeals support contractor for EHR appeals. 6

7 EHR Receiving Payment Medicare EHR Incentive Payments Interim Payments will be computed from data contained in the most recently filed 12 month cost report Final Payments will be computed from data contained in the cost report after final settlement: PPS Hospitals: the cost reporting period ending during the payment year (federal fiscal year) CAH Hospitals: the cost reporting period beginning during payment year (federal fiscal year) 7

8 EHR Receiving Payment Medicare EHR Incentive Payments Timeline Submit Attestation & Listing of Assets Initial review of assets & determination Interim Incentive Payment Made using prior period cost report information Cost Report is settled via normal method EHR audit is conducted EHR final incentive payment determined and final settlement paid/recouped 8

9 EHR Receiving Payment Medicare EHR Incentive Payments Cost Report filed in year you attested (cost report year beginning during FFY you attested) will show an amount in the HIT column Your regular MAC will ignore this amount Column is for when final Medicare EHR incentive payment is settled in future years by NGS Has not resulted in any revised interim EHR incentive payments yet to my knowledge 9

10 EHR Receiving Payment Medicare EHR Incentive Payments Due to Interim EHR payments being based on a prior year cost report expect a settlement entry in your Due to/from Medicare account for the difference once you attest and have a final cost report. Some level of reserve of your EHR incentive payment may be wise given it will be audited in later years, much like a cost report. 10

11 EHR Receiving Payment Medicare EHR Incentive Payments Important Cost Report Worksheets Worksheet S-2 lines 167 & 168 Worksheet S-3 part I Total & Medicare days Medicare HMO days Worksheet S-10 line 20 all columns Charity care charges Worksheet A-7 part I PPE data Worksheet A-8 line

12 EHR Accounting EHR Incentive Payments GAAP Must follow normal capitalization guidance AHA Estimated Useful Lives of Depreciable Hospital Assets, 2008 edition Medicare now recognizes effective 08/01/2008 CMS Transmittal dated December 2011 Could use Construction in Progress (CIP) status until EHR is up and meet meaningful use Separately identifying EHR assets in your fixed asset ledger as a separate category is helpful 12

13 EHR Accounting EHR Incentive Payments GAAP for PPS 13 HFMA Principles & Practices Board Issue Analysis on the Medicare Incentive Payments for Meaningful Use of Electronic Health Records issued January 4, 2012 Two accounting and reporting models Contingency model Recognize income when all contingencies are satisfied IAS 20 grant accounting model Recognizes income when there is reasonable assurance that the entity will comply with the conditions attaching to them and the grants will be received.

14 EHR Receiving Payment EHR Incentive Payments GAAP CAHs No Official guidance on CAHs Big Four unwilling to comment to date Industry Representatives & Non-Big 4 CPA firms: Some Favor 100% recognition in year of attestation Some Favor deferring revenue over a period of years Some Favor it being in Net Patient Service Revenue Some Favor Other Operating Income Recommend discussing with your auditing firm 14

15 EHR Audit Issues EHR Incentive Payments Blue Cross Cost Reporting Issues Unofficial but seeing adjustments Offsetting 100% of EHR incentive payment revenue against depreciation Can request it be prorated over 5-7 years as an acceptable alternative BC treating it as grant income 15

16 EHR Audit Issues Medicare Medicare EHR Incentive Payments Audit Issues - Definition of acquisition costs No rentals or operating leases No capital leases No shipping or installation costs No capitalized labor (currently varies by MAC) No expenses related to implementing/maintaining the EHR system (maintenance contracts) No costs of other non-ehr functionalities will be included (only what is required to achieve meaningful use criteria) 16

17 EHR Audit Issues Medicare Medicare EHR Incentive Payments Capital Leases an allowable alternative as of June 2012 due to major advocacy initiatives Issue was lobbied heavily by a tag team of: Dennis Barry, King & Spaulding John Sheehan & Kevin Wellen, BKD, LLP American Hospital Association Shipping & Installation CMS was to instruct MACs to allow???? 17

18 EHR Audit Issues Medicare Medicare EHR Incentive Payments 18 EHR at Home Office or System Level Costs must be directly attributable to the CAH, Separately identifiable, & Cannot be allocated via the pooling method (may need to request a functional method) Follows same acquisition definition Some internal documentation if EHR assets are shared on how to determine the CAH portion. Hours of use Terminals

19 EHR Audit Issues Medicare Medicare EHR Incentive Payments After attestation will need to submit a schedule to your MAC on your EHR acquired assets Assets with specific C-CHIT numbers All other EHR related assets May get challenged how these help meet meaningful use Could Submit subsequent requests if more assets acquired to meet later stages or maintain EHR status If you do not claim can not get paid! 19

20 EHR Audit Issues Medicare Medicare EHR Incentive Payments Real MAC EHR questions and other audit issues on submitted assets for interim payment: Provide a detailed explanation of what the asset is and what it is used for and the department in which it is used? Explaining why some assets/systems have no C-CHIT number Explain how it is related to EHR? Explain how it was paid for? Be careful if you have funded depreciation before borrowing or committing to capital leases 20

21 EHR Audit Issues Medicare Medicare EHR Incentive Payments Real MAC EHR questions and other audit issues on submitted assets for interim payment Specify what percentage of usage time relates strictly to EHR and what percent of time relate to normal business activities; submit documentation to support each percentage. Provide contract/invoices to support EHR certified technology Provide a breakdown of costs if system involved more than EHR assets 21

22 EHR Audit Issues Medicare Medicare EHR Incentive Payments MAC auditors currently have no training on EHR or CAHs for that matter MAC auditors are accountants not IT professionals MAC auditing has traditionally underutilized technology and not been IT focused 22

23 EHR Oversight Medicare EHR Incentive Payments The Medicare & Medicaid EHR Incentive Program Registration & Attestation System contains a status tab which will contain The amount of the incentive payment The amount of tax or non-tax offsets applied Remittance advice reason code for any reductions 23

24 EHR Oversight Any provider attesting to receive an EHR incentive payment for either the Medicare or Medicaid program can be subject to an audit CMS contractors will perform audits on Medicare and dually-eligible EHR providers States or their contractors will perform audits on Medicaid providers CMS & the states will manage appeals processes 24

25 EHR Oversight Medicare Appeals Process Two level appeal process Informal review Request for reconsideration Three types of appeals excludes the standards and methodology Eligibility Meaningful use Incentive payment Deadlines for appeal are very short! 25

26 EHR Oversight 26

27 EHR Oversight CAH Appeal Issues Final Rule states The CAH may appeal the statistical and financial amounts from the Medicare cost report used to determine the CAH incentive payment EHR acquisition costs data is not reported in the cost report but through a separate process Does it qualify for appeal? 27

28 EHR Oversight CAH Appeal Issues Appeals seeking to review the methodology and standards that determine eligibility and payment amount are precluded from review. Unclear if the MACs EHR acquisition cost rulings would be considered methodology and standards Would include any related guidance CMS provides the MACs Do FAQs constitute methodology and standards? 28

29 EHR Oversight Retention of data Documentation supporting attestation should be retained for six years post-attestation (electronic or paper) Includes meaningful use measures Includes support for clinical quality measures (CQMs) Documentation to support payment calculations (i.e., cost report data) should continue to follow the current documentation retention process. 29

30 EHR Oversight Audits Numerous pre-payment edit checks built into the Registration & Attestation system Post-payment audits will be completed during the course of the EHR Incentive programs CMS has implemented an appeals process States will be implementing an appeals process too for the Medicaid EHR incentive program 30

31 EHR Oversight Audits will focus on three areas: Eligibility If provider is found not to be eligible the payment will be recouped Meaningful Use If provider is found not to have met meaningful use the payment will be recouped What if a CAH fails to meet stage II or III but there are no payments that year? Incentive Payment 31

32 EHR Oversight Penalties Imposed on hospitals that are not meaningful users by 2015 PPS Hospitals: Is a reduction in the market basket updates of 25%, 50%, and 75% for updates in 2015, 2016, and 2017 respectively CAH Hospitals: Imposed by reducing reimbursable costs from 101% down to 100% over three years; % in 2015; % in 2016; and 100% in 2017 and beyond Hardship exception available for up to 5 years Avoids penalties but does not extend incentive payments 32

33 EHR Issues Timing Issues for CAHs Last consecutive 90 day time frame to meet meaningful use and receive 4 full years payment is July 1, 2012 to September 30, 2012 Attestation is on a federal fiscal year Payment is made based on the CAH s cost reporting period that begins during the federal fiscal year No incentive payment in a cost reporting period beginning after FFY PPS Hospitals can attest in 2013 and still get 4 full years payments 33

34 EHR Issues Timing Issues for CAHs Example: 90 day Meaningful Use meet 10/1/2010 to12/31/2010 (FFY 2011); yet Provider has a 06/30/XX year end. Provider will lose EHR payment on any depreciation taken through 6/30/2011. Payment begins with depreciation on and after 7/1/2011. Provider s FYE and when they meet meaningful use should be in the same period or as close as possible to receive the most from the initial EHR incentive payment. CAH s first year of Medicare incentive payments will most likely will be the largest 34

35 EHR Issues CAH Payment Years verses Attest Years Pymt Yr Attest Yr

36 EHR Issues PPS Payment Years verses Attest Years Pymt Yr Attest Yr

37 EHR Issues Cost Report Issues Caution: Any costs that your Incentive Payment MAC determines to be non-depreciable for EHR should be added back to Worksheet A-8 for regular reimbursement consideration Back to lapsing schedules? May mean re-openings if costs is large enough? Coordination between two MACS? 37

38 EHR Issues Cost Report Issues Will need to track EHR assets and report PPE balances, additions, deletions and offset depreciation each year until fully depreciated. Total days are you capturing and reporting Labor & delivery days if applicable? Self Insurance days if applicable? 38

39 EHR CMS Final Rule CMS Published Final Rule in August 2012 defining Stage 2 of meaningful use 39 Proposed to delay the start of Stage 2 for one year to 10/1/2013 Payment & Penalty timetables unchanged Hospitals: Total of 20 objectives; 5 are new Required to meet 16 core objectives and 2 out of 4 menu objectives Physicians: Total of 22 objectives Required to meet 16 core objectives and 3 our of 5 menu set objectives

40 EHR CMS Final Rule CMS Published Final Rule in August 2012 defining Stage 2 of meaningful use Several Menu objectives (optional) moved to core (mandatory) Measurement bar raised for several objectives must be used for greater percentage of patients Increased use of electronic data exchange between providers and data sharing with patients Hospitals electronically generate and report on 24 CQMs from a menu of 49 40

41 EHR Participation $5.1 billion paid out through Nov ,776 PPS Hospitals for $3.3 billion or 64% of the total 283 CAH Hospitals for $157 million or 3% of the total 96,426 EPs for $1.7 billion or 33% of the total Betting that more emphasis by MACs will be spent on the 3% during the audit phase than the other 97%? 41

42 EHR Participation Washington D.C Perspective The Stage II EHR proposed compliance delay was driven directly from the White House White House is concerned EHR is not being implemented as quickly as it wants The White House has noted only a small percentage of CAHs that have attested have been paid. 42

43 EHR Participation CAH Option II physicians now eligible for EHR incentive payments effective Jan 2013 May begin participation during 2013 Due to system constraints and required programming changes will not be allowed to attest until 2014 Still excludes EPs who work exclusively in hospitals (e.g., Hospitalists, ER physicians) 43

44 EHR Participation February 28, 2013 last day for Medicare EPs to register and attest to receive an Incentive Payment for 2012 EPs are calendar year based 44

45 EHR - Study RAND Corporation Optimistic projections by RAND in 2005 encouraged Congress to approve the EHR legislation Initially projected EHR would save $81 billion to the US healthcare market Report paid for by GE and Cerner Corporation Since EHR passage their revenues have tripled 45

46 EHR - Study RAND Corporation subsequent study Evidence of projected savings is scant Costs in healthcare have risen $800 billion since 2005 study (numerous reasons cited) Critical of current EHR systems as: Hard to use No sharing of data across systems More focused on increasing billing by providers Not focused on improving care or Not saving money 46

47 EHR Documentation Impacts CMS guidance on use of templates and progress notes Some templates provide limited options and/or space for the collection of information such as by using check boxes, predefined answers, limited space to enter information, etc. CMS discourages the use of such templates Direct contradiction to trend created by CQMs, Value Based Purchasing, etc. that is predicated on structured answers 47

48 OIG EHR Study November 2012 Recommendations: CMS should obtain and review supporting documentation from selected professionals and hospitals prior to payment to verify the accuracy of their self-reported information CMS should issue guidance with specific examples of documentation that professionals and hospitals should maintain to support their compliance. 48

49 OIG EHR Study November 2012 Recommendations: ONC should require that certified EHR technology be capable of producing reports for yes/no meaningful use measures where possible ONC should improve the certification process for EHR technology to ensure accurate EHR reports. 49

50 Questions? Kevin E. Wellen, CPA Senior Managing Consultant BKD,LLP