1. North Carolina Community Health Center Association Financial Management & Operations Workshop NC Medicaid Cost Reporting March 2, 2011

2. Today’s Agenda Introduction
Understanding the Medicare FQHC cost report
Understanding the North Carolina Medicaid cost report
Questions and discussion

3. Introduction

4. Introduction
Keys to preparing an accurate North Carolina Medicaid FQHC cost report include:
Understanding the purposes of the Medicare FQHC cost report and the proper completion of the forms
Understanding Medicare reasonable cost principles
Understanding how the North Carolina FQHC Medicaid forms work and the proper completion of those forms

5. Understanding the Medicare FQHC Cost Report

6. Purpose of the Medicare Cost Report
Determination of reimbursable cost per visit
Costs – Worksheet A series
Visits – Worksheet B series
Determination of Medicare program liability – Worksheet C series

7. Worksheet S Facility location information
Medicare provider number information
Source of federal funds (if applicable)
Other information

8. Worksheet A

9. Trial Balance of Expenses
Facility health care staff costs (lines 1 – 11)
Provider salaries
Nurse salaries
Other health care staff salaries
Clinical psychologist
Clinical social worker
Other

10. Trial Balance of Expenses
Costs under agreement (lines 13 – 15)
Contract physician services
Other health care costs (lines 17 – 23)
Medical supplies
Depreciation - medical equipment
Malpractice insurance
Continuing medical education
Other

11. Trial Balance of Expenses
Facility overhead - facility costs (lines 26 – 36)
Rent
Depreciation on buildings & fixed equipment
Building insurance
Interest on mortgage
Utilities
Housekeeping and maintenance
Minor equipment
Other

12. Trial Balance of Expenses
Facility overhead - administrative costs (lines 38 – 48)
Office salaries
Office supplies
Legal & accounting
Depreciation on office equipment
Fringe benefits

13. Trial Balance of Expenses
Facility overhead - administrative costs (lines 38 – 48)
Telephone, postage & other related office expenses
Advertising (yellow pages versus recruitment versus promotional)
Other

14. Trial Balance of Expenses
Cost other than FQHC services (lines 51 – 56)
Pharmacy
Dental
Laboratory
Optometry
Other

15. Trial Balance of Expenses
Nonreimbursable costs (lines 58 – 60)
WIC
Non-FQHC approved activity
Other

16. Worksheet A-1

17. Reclassifications of Expenses
Purpose of worksheet
Align expenses into the correct cost center
Common examples
Fringe benefits
Depreciation
Insurance
Continuing medical education (CME)

18. Reclassifications of Expenses
Common examples
Inpatient hospital costs
Medical director costs

19. Worksheet A-2

20. Adjustments to Expenses
Purpose of worksheet
Adjust expenses as required under Medicare principles of reimbursement
Made on basis of cost (if available) or revenue received
Common examples
Promotional advertising
Contract laboratory

21. Adjustments to Expenses
Common examples
Offset of interest income to the extent of interest expense
Offset of miscellaneous income
Donated services (generally)
Indigent care/specialty referral expenses

22. Worksheet A-2-1

23. Related Organization Costs
Eliminates profit of related organizations - adjusts to cost (generally)
Related organization defined in Provider Reimbursement Manual - Part 1, Chapter 10
Check Part 1 “No,” if worksheet does not apply

24. Worksheet B - Parts I & II
Visits & Overhead Cost for FQHC Services

25. Worksheet B, Part I Visits & productivity
Column 1 - recap of full time equivalent (FTE) personnel (only the “billers” to the program)
FTE calculation
Calculated by dividing productive hours by 2080

26. Worksheet B, Part 1 FTE calculation
Productive hours defined as total paid hours minus:
Vacation
Sick leave
CME
Non-FQHC covered services
Administrative duties
Other

27. Worksheet B, Part 1 Column 2 - recap of total visits
Definition of a visit
Accurate visit count is essential
Visits exclude
Nurse visits
Visits related to non-FQHC covered services (dental, non-FQHC approved sites, etc.)
Other program visits (WIC, etc.)

28. Worksheet B, Part 1 Columns 3 - 5 - productivity standard calculation
Physician - 4,200 visit productivity standard
Mid-level providers - 2,100 visit productivity standard
Productivity standard does not apply to services of clinical psychologists and social workers
Productivity standard does not apply to services under agreement (unless such providers are used routinely at the health center – recent CMS change)
Calculation is cumulative, not line-item specific

29. Worksheet B, Part II
Determination of total allowable cost including the allocation of overhead
Overhead cost centers are allocated to FQHC services

30. Worksheet C
Worksheet C provides for the calculation of the Medicare cost report settlement amount
Paid and unpaid Medicare visits and related reimbursement (payment)
Use of PS&R summary
Medicare visits
Medical versus mental health

31. Determination of Medicare Reimbursement
Determination of rate for FQHC services
Adjusted cost per visit
Total Allowable Cost
Total Adjusted Visits
Compare calculated total to maximum rate per visit (payment limit is calendar year specific)
2010 rural limit - $108.81
2010 urban limit - $125.72
Lesser of the two is allowed

32. Understanding the North Carolina Medicaid Cost Report

33. North Carolina Medicaid Cost Report
New forms are released each year by the State
Summary worksheet
Name, address and contact information
Provider numbers
Certification statement

34. North Carolina Medicaid Cost Report
Schedule DMA-1 – Cost of Medicaid Core Services
Schedule designed to extract information from the Medicare FQHC cost report
Lower of cost-per-visit or Medicare cap should be entered on schedule
Medicaid visits
Core services
Mental health

35. North Carolina Medicaid Cost Report
Schedule DMA-2 – Cost of Other Ambulatory Services
Medicaid services that are allowable, but unallowable for Medicare, are added to determine appropriate Medicaid reimbursement
Must have separate line number between 51 and 56 on the Medicare cost report
Examples – pharmacy, dental, health check services (formerly EPSDT), maternity care coordination, hospital, other
Percentage of overhead applied to direct costs

36. North Carolina Medicaid Cost Report
Schedule DMA-3 – Allocation of Overhead Cost
Overhead applied to each individual service line to determine total cost
Total encounters or unit of service (e.g. pharmacy scripts) to determine cost per encounter or cost per unit of service

37. North Carolina Medicaid Cost Report
Schedule DMA-4 – Determination of Medicaid Reimbursement
Cost per encounter from DMA-3 is multiplied time Medicaid encounters/units of service to determine Medicaid cost
Add influenza/pneumococcal cost from DMA-7
Subtract interim payments from DMA-5 to determine Medicaid settlement
Addition of Medicaid reimbursable bad debts from DMA-6

38. North Carolina Medicaid Cost Report
Schedule DMA-5 – Summary of Medicaid Payments
Payment amount for each line of service recapped
State will provide payment data upon request – it is a good idea to request this before filing completed cost report

39. North Carolina Medicaid Cost Report
Schedule DMA-6 – Bad Debts (Medicaid)
Schedule DMA-7 – Schedule of Pneumococcal and Influenza Vaccines
Schedule DMA-8 – PPS Reconciliation Schedule
Greater of cost based or PPS paid

40. Questions and Discussion

41. Jeffrey Allen, CPA
Partner
910 E. St. Louis St.
Springfield, MO
Office:
Fax:

42. Thank You!