Reimbursement

Article Dean Dorton

The Department of Education (ED) has released new guidance for all Higher Education Emergency Relief Fund (HEERF) allocations passed by Congress to date.

One of the biggest items in the new guidance is that the ED has now clearly formalized that all HEERF allocations (from all 3 rounds) are eligible to be used with the guidelines for all permitted uses dating back to March 13, 2020. See the notice below:

Department of Education Notice

In addition, the new guidance clarifies that the one-year spending period that has been applied to each individual HEERF allocation is being reset with the granting of each additional HEERF allocation. As such, schools have one year to spend its remaining HEERF funds (regardless of which round) from the date of its upcoming award notification from the American Rescue Plan.

The ED officially document that all HEERF funds can be used for grants to student, including those that are not Title-IV eligible, such as non-degree-seeking, non-credit, dual enrollment, and continuing education students, as well as students who have left school for any reason during the period of the national COVID-19 emergency that began on March 13, 2020. The updated guidance also allows for grants to qualified aliens.

The ED confirmed that institutions can pay these grants to students using their normal process for providing credit balance refunds to students without obtaining consent from the student. These funds must remain unencumbered by the school. If the school is applying the emergency grant directly to existing balances, the institution must obtain student consent first.

Finally, the Ed also released new Frequently Asked Questions that addresses many of the open questions regarding lost revenue as one of the allowable uses of all HEERF institutional funds. Lost revenue must be directly related to COVID-19 and the calculation can take in account all lost revenues dating back to March 13, 2020. Allowable lost revenues include tuition, room, board, fees, summer camps, bookstore, parking, and other institutional revenue sources that have been impacted. Lost revenue does not have to be associated with, or netted against, expenses and is considered an allowable use for quarterly and annual reporting to ED and on the Schedule of Expenditures of Federal Awards (SEFA).

Lance Mann, CPA, CFE, CGMA
Assurance Director
lmann@deandorton.com • 502.566.1005

Article Dean Dorton

Medicare Physician Fee Schedule Final Rule

The Medicare Physician Fee Schedule Final Rule for Calendar Year 2021 was published in the Federal Register on December 28, 2020. This Final Rule went into effect on January 1, 2021 and implemented the following changes:

  • Streamlined the reporting process for office and outpatient evaluation and management (E/M) services and increased the relative value units (RVU) for E/M services. The new Physician Fee Schedule provided significant increases in RVUs for common office and outpatient E/M services such as maternity care bundles, emergency room visits, end-stage renal disease capitated payment bundles and therapy evaluation services. The goal is to reduce billing and coding burdens on physicians and reimburse time spent evaluating and managing a patient’s care.
  • Expanded the list of covered telehealth services specific to the PHE and makes permanent certain codes that were only temporarily added since the onset of the PHE and created a new category (Category 3) of telehealth codes on a temporary basis to the approved list of Part B telehealth codes that will be covered for the duration of the PHE.
  • CMS acknowledged the importance of vaccinations to the public health and proposed increasing payment for vaccinations. On March 15, 2021, CMS increased the Medicare payment for COVID-19 vaccine from about $45 to $80 for a single dose of the vaccine and a payment rate of $80 for the vaccine requiring two doses.  The new and higher payment rate is designed to increase the number of vaccines providers can furnish each day. Vaccine providers are prohibited from charging patients any amount for this vaccine administration as a condition of receiving free COVID-19 vaccines.

Consolidated Appropriations Act

Signed by President Trump on December 27, 2020, this legislation includes the following provisions important to hospitals and health systems.

  • Provider Relief Funds – allows providers to calculate lost revenues using “any reasonable method” for the calculation that include the difference between budgeted and actual revenue if such budget had been established and approved prior to March 27, 2020.
  • Provides a 3.75% increase in payments un the Physician Fee Schedule for 2021.
  • Eliminated the Medicare sequester cuts for the first three months of 2021.
  • Lifts the cap on Medicare-funded physician residency positions in teaching hospitals by 1,000, effective in FY2023.
  • Includes $30 billion for the purchase and administration of COVID-10 vaccines and related therapeutics.
  • Protects patients from surprise medical billing that arise from out-of-network emergency care provided at in-network facilities without the patient’s informed consent (effective 1/1/2022).
  • RHC payments – increases the Medicare cap for independent rural health clinics to $100 beginning on 4/1/2021 and gradually increases the upper limit each year through 2028 until the cap reaches $190. Provider-based RHCs which are provider-based to hospitals with fewer than 50 beds and certified after 12/31/19 also will now be subject to a cap to their reimbursement.  For the provider-based clinics approved prior to 12/31/19, they will have a clinic-specific cap established based on their 2020 all-inclusive rate that will grow annually at the Medicare Economic Index.

Dan Schoenbaechler, CPA, FHFMA
Healthcare Consulting Manager
dschoen@ddafhealthcare.com • 502.566.1097

Article Dean Dorton

In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which provided funds to institutions of higher education to support students and financial needs during the pandemic.  On December 14, 2020, the Internal Revenue Service released an FAQ to clarify questions around reporting for tax purposes.

Dean Dorton has received numerous questions around the reporting of emergency aid grants on Form 1098-T.  FAQ Question 3 addresses and resolves most of the questions surrounding this area:

Q3: Do higher education institutions have any information reporting requirements under section 6050S for emergency financial aid grants awarded to students under section 3504, 18004, or 18008 of the CARES Act? (added December 14, 2020)

A3: No. The emergency financial aid grants are qualified disaster relief payments, as described in A1 above, and are not included in students’ gross income. As noted in A2 above, students may not claim deductions or credits for these amounts. The reporting of these grants to the IRS on Forms 1098-T could result in the issuance of underreporter notices (Letters CP2000) to students and furnishing such Forms 1098-T to students could cause confusion. Thus, the IRS will not require that these grants be reported pursuant to section 6050S of the Internal Revenue Code on Form 1098-T.

For the whole FAQ, visit the link below:

FAQ

Allison Carter, CPA
Tax Associate Director
alcarter@deandorton.com • 859.425.7645

Megan Crane, CPA
Assurance Manager
mcrane@deandorton.com • 859.425.7643

Article Dean Dorton

Effective July 1, 2020, not-for-profit higher education institutions must comply with new financial responsibility rules. Audited financial statements released after July 1, 2020 must include a financial responsibility supplemental schedule (FRSS). Institutions must input FRSS information into the Department of Education’s eZ-Audit system and file by their single audit due date per the Office of Management and Budget’s Uniform Guidance.

Dean Dorton has helped multiple institutions to implement these schedules and we have developed the following brief list of questions that arose during those consultations.

FAQ Regarding Implementation of the Financial Responsibility Supplemental Schedule

  1. What is the date of implementation? These rules will be implemented as of July 1, 2020, meaning any audits submitted after July 1, 2020 must comply.
  2. If an institution does not have one of the components listed on the Section 2 of the FRSS do we exclude that line from our presentation? The answer is no, if an amount listed on the FRSS is zero, the institution should identify the source of the amount as NA and show zero as the amount.
  3. What should we do if a component listed on FRSS is not explicitly disclosed in the financial statements or the notes to the financial statements? The regulations require that all components listed on the FRSS be explicitly disclosed in either financial statements or the notes to the financial statements. In some cases an institution will need to disaggregate lines in their disclosures in order to facilitate the direct linking of the FRSS and the financial statements and notes to the financial statements. An institution can also create a separate disclosure to provide the disaggregated information necessary to comply with these requirements.
  4. What is included in “debt obtained for long-term purposes”? The rules for debt obtained for long-term purposes are all follows:
    1. Limited to net property, plant and equipment and can include liabilities related to construction in progress and capital leases/right of use assets.
    2. Includes two separate components, each with their own rules and each component will need to tracked separately
      • Debt acquired prior to implementation
      • Debt acquired after implementation
  5. What is included in the “losses without donor restrictions” component of “total expenses and losses without donor restrictions”. Add the “losses without donor restrictions” only if you have net losses on unrestricted investments. All net investment gains and all net losses on investments with donor restrictions are excluded.

NACUBO has also developed a Tutorial and Crosswalk between the FRSS and the Department of Education’s eZ-Audit which can be a helpful aid during implementation. Additionally, NACUBO has reached out to the Department of Education for clarification concerning how annuities, net assets released from restriction, and gains and losses on investments are recorded in the FRSS and input in the eZ-Audit system. We will keep you advised as answers to those questions and any additional guidance become available.

Learn more about Dean Dorton’s Higher Education services:

Dean Dorton Higher Education

Megan Crane, CPA, FHFMA
Assurance Manager
mcrane@deandorton.com • 859.425.7643

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Market Basket Rate

The market basket rate increase for the upcoming federal fiscal year is 2.4%. That is the maximum a hospital provider can receive. It is adjusted downward based on whether or not the hospital submitted quality data and whether or not the hospital is a meaningful user. Key point is to submit quality data and be a meaningful user to obtain the maximum Market Basket rate increases each year.

Medicare DSH

The estimated Medicare DSH amount for FY 2021 is $15,170,673,476 (25% of which pertains to Empirical DSH). This amount represents a $60 million reduction from the FY20 final rule. Worksheet S-10 audits have recently been conducted and continue for hospitals claiming Medicare DSH, so it is important to maintain proper logs for charity care and bad debt amounts claimed on Worksheet S-10 for hospitals claiming Medicare DSH.

Stem Cell Acquisition Costs

Effective for cost reporting periods beginning on or after October 1, 2020, costs related to hematopoietic stem cell acquisition for the purpose of an allogeneic hematopoietic stem cell transplant will be reimbursed on a reasonable cost basis.

A hospital that furnishes an allogeneic hematopoietic stem cell transplant is not required to be a Medicare certified transplant center as is required for solid organs. Hospitals using revenue code 0815 for inpatient allogeneic hematopoietic stem cells will be provided this reasonable cost-based reimbursement.

New Technology Add-On Payments

CMS has approved an alternative inpatient new technology add-on payment which will establish a process in which certain antimicrobial products approved as QIDPs (Qualified Infectious Disease Products). This appears directly correlated with the COVID-19 pandemic.

Market-based MS-DRG Weights

Hospitals will report on their Medicare cost report the median payer-specific negotiated charge that the hospital has negotiated with all of its Medicare Advantage (MA) organization payers, by MS-DRG, for cost reporting periods ending on or after January 1, 2021.

In addition, CMS is finalizing the adoption of a market-based MS-DRG relative weight methodology for calculating the MS-DRG relative weights, beginning in FY 2024. The market-based MS-DRG relative weight methodology would utilize the median payer-specific negotiated charge data negotiated between hospitals and MA organizations.

Hospital Acquired Conditions Reduction Program

HAC Reduction Program currently evaluates participating hospitals through six measurements: one CMS patient safety and adverse events measure and five CDC health care-associated infections measures. Since 2019, CMS has used a 24-month period to collect sets of measurements. This 24-month period methodology will become permanent and will advance by one year automatically thereafter every year.

Hospital Readmissions Reduction Program

The Hospital Readmission Reduction Program reduces payments to hospitals based on readmission rates. Traditionally, CMS has used three years of data for measuring readmissions, and the applicable period is announced with each rulemaking. CMS is making permanent the three-year reporting period of readmission data for the Hospital Readmissions Reduction Program. The measures created in FY 2019 will remain unchanged. This program is expected to save CMS over $500 million and impact over 2,000 hospitals.

Hospital Value Based Purchasing Program

CMS is providing newly established performance standards for certain measures for the FY 2023 program year, the FY 2024 program year, the FY 2025 program year, and the FY 2026 program year. The estimated amount available for value-based incentive payments for FY 2021 discharges is approximately $1.9 billion.

Medicare Bad Debt Reporting Requirements

CMS finalized several changes related to allowable Medicare bad debts in this IPPS rule. The intent appears to clarify some longstanding policies that have been the source of Provider Reimbursement Review Board appeals. Some of the changes are as follows:

  • CMS clarifies that emails and text messages are valid mechanisms to use for following up on a billing statement. This update was provided due to feedback in comment periods from HFMA and others.
  • The rule clarifies that collection efforts must last 120 days from an initial bill before being written off and that the 120-day clock resets when a payment is received.
  • For dual beneficiaries, hospitals can claim deductibles and co-insurances in instances where the state Medicaid program does not provide a remittance advice (or permit a Medicare provider’s enrollment) if the provider submits the appropriate documentation to the MAC. The final rules provides this would include sufficient notification from the state that it has no obligation to pay the Medicare cost sharing, calculation of what the state owes for cost sharing and verification of the beneficiaries’ Medicaid eligibility. Initially, CMS proposed not to allow any amounts as bad debt if the hospital could not document the amount with a remittance advice from the state.
  • Regarding FASB Topic 606, in the final rule, CMS revises its initial proposal to specify that for cost reporting periods beginning before October 1, 2020, Medicare bad debts must not be written off to a contractual allowance account but must be charged to an expense account for uncollectible accounts. For cost reporting periods beginning on or after October 1, 2020, Medicare bad debts must not be written off to a contractual allowance account but must be charged to an uncollectible receivables account that results in a reduction in revenue.

Learn more about Dean Dorton’s Healthcare services:

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Dan Schoenbaechler, CPA, FHFMA
Healthcare Consulting Manager
dschoen@ddafhealthcare.com • 502.566.1097

Article Dean Dorton

With MACRA set to begin on January 1, 2017, the Centers for Medicare & Medicaid Services (CMS) announced this week more flexibility for physicians as it relates to complying with the physician quality payment program.

The update announced this week now allows for some easing into the program that the original rules did not include:

  • Option 1: Physicians following the MIPS pathway can now test the program and submit some data to the program and avoid a negative payment adjustment. This option allows physicians to ensure their systems are working for compliance in future years 2018 and 2019. Physicians choosing this option would avoid a negative payment adjustment.
  • Option 2: Physicians following the MIPS pathway can participate for a partial year. A slight positive payment adjustment could be awarded for physician data submitted after January 1, 2017.
  • Option 3: Participate in the MIPS pathway for the full calendar year and physicians may receive a more modest positive payment adjustment. Many physician practices have been preparing for these new quality measures and may be ready to participate fully on January 1, 2017.
  • Option 4: For those physicians participating in an Alternative Payment Model (APM), the update allows for participation in an Advanced APM such as Medicare Shared Savings Track 2 or 3 in 2017 instead of reporting quality data and other information under the MIPS pathway.

The four options will be described in more detail in the final rule to be issued by November 1, 2016; however, this announcement only affects reporting requirements for the program’s first year. Physician practices should continue to plan towards a full implementation of MACRA reporting guidelines and make sure processes are in place ahead of time to allow for an easier transition.

For more information, contact your Dean Dorton advisor or:

Adam Shewmaker, ashewmaker@ddafhealthcare.comView Adam Shewmaker’s BioPorter Roberts, proberts@deandorton.comView Porter Roberts’ Bio