1. May 21, 2015 Critical Access Hospitals Navigating the Hurdles WV HFMA Spring Education Jill Griffith, CPA, CPC, Senior Manager - Health Care Services Presented by:

2. Agenda  Topics for Today’s Discussion  Provider Tax  Medicaid DSH  Meaningful Use Audits  Provider-based Rule  340b Drug Discount Program  Conditions of Participation 2

3. Provider Tax  Good News - There has been a resolution reached with CMS on Provider tax disallowance. Years 2009 to current.  Bad News – We do not know what costs are disallowed. No access to Medicare workpapers  What we do know that is not allowable.  Tax on skilled nursing including swing-bed  Tax on Physician services  Tax on Therapy Services 3

4. Provider Tax  Tax on Ambulance services  Tax on Dental services  We have been able to calculate the Provider tax disallowance within 1-2% of the Medicare disallowance in all cases that we have reviewed.  We recommend making a similar calculation and removing the cost on your current cost report and making a reserve for cost reports open but not settled. 4

5. Medicaid DSH: Updates  State FY 2011 Audit complete almost.  All Hospitals to send in a revised State FY 2011 DSH survey by June 15, 2015.  DHHR recalculation by September 1, 2015  DHHR will issue Demand letters by Sept. 15, 2015  State FY 2012 Audit data request has been sent to all Hospitals. 5

6. Medicaid DSH: Updates  DHHR would like Hospitals that exceed their 2011 DSH limit to refile the FY15 DSH survey.  Take into account: Items disallowed in the 2011 audit Reduction in self-pay due to State of West Virginia Medicaid expansion. Many CAH facilities have seen self-pay decrease 25-50% or more, which has a direct impact on your DSH payment. More than likely you have been over paid in 2014 and 2015 due to Medicaid expansion and the fact that the DSH survey’s are completed on data prior to expansion 6

7. Medicaid DSH: Updates  We recommend that a reserve for Medicaid DSH payback be calculated for your 2015 financial statements.  Hospital-based Rural Health Clinic costs were disallowed during the SFY 2011.  Discussions have taken place with DHHR and DHHR has sent a communication to CMS to request relief from RHC disallowances for 2011 and after.  No word yet. 7

8. Meaningful Use Audits  West Virginia CAH facilities have been receiving audits of the Fixed Assets claimed as related to meaningful use.  Some of the audit issues, so far include:  Consulting services related to training on the new electronic health record have been deemed as non-allowable.  Assets under $5,000 have been removed from listing due to Medicare fixed asset limit unless the assets are part of a group purchase and it is presented that way. 8

9. Meaningful Use Audits  Hospitals have not been billing the Medicare HMO Shadow bills. Medicare is adjusting the Medicare HMO days to the Medicare PS&R. If you have not done shadow billing you will not be allowed to include the Medicare HMO days in you Medicare utilization percentage This will affect you payment and settlement.  Medicare is reviewing the Charity care log and adjusting for discrepancies with policy 9

10. Provider Based Rule: Issues for Consideration  Public Awareness Requirement  The facility or organization seeking status as a department of a provider, a remote location of a hospital, or a satellite facility is held out to the public and other payers as part of the main provider. When patients enter the provider- based facility or organization, they are aware that they are entering the main provider and are billed accordingly.  Name of Hospital to which location is provider based needs to be included on signage  Needs to be prominent  Patient needs to know they are in a hospital department  All forms should reflect Hospital name Note:42 CFR, Section 413.65(b)(4) states, “A facility that is not located on the campus of a hospital and that is used as a site where physician services of the kind ordinarily furnished in physician offices are furnished is presumed as a free-standing facility, unless CMS determines the facility has provider based status.”. 10

11. Provider Based Rule: Issues for Consideration  Hospital should be operated as an Outpatient Department and not referred to in any way as a physician office or practice location.  Employees should be Hospital employees and report through the hospital chain of command.  Locations should use same consent forms and admission paperwork as OP Hospital locations.  The Medicare Secondary Payor Form is required for each Medicare beneficiary presenting for service to one of the OP Department locations.  Locations follow same policies as hospital including but not limited to, biohazardous materials, charity policies, sample drug logs, acceptance of gifts, etc.  Facility E&M levels are determined by an internal hospital policy (scorecard) developed internally by hospital representatives.  The Notice of Financial Responsibility must be on Hospital letterhead, completed prior to service and presented to each Medicare fee for service patient. 11

12. Provider Based Rule: Risk Areas  Referring to any of the OP locations as a physician office or practice.  Billing for an E&M level and a procedure when there is no documentation to support a separately identifiable significant service.  Double billing by separately billing a procedure and including it in the scoring of the level.  Changing a policy relating to a “physician practice” without having it be a hospital policy for an OP or ambulatory clinic.  Making changes to the copay letter. (Wording is directed from CMS)  Hanging signs or pamphlets in the location that refer to the old name of the practice.  A provider based location may not share space with a freestanding physician. The area must be completely separate. CMS Chicago and Philadelphia regions have stated they will deny provider based status to these or other types of condo arrangements. 12

13. Provider Based Rule: Risk Areas  New vs Established Patient  Medicare Carriers Manual - professional New Patient –” …a patient who has not received any professional services, i.e., E/M service or other face-to- face (e.g., surgical procedure) from the physician or physician group practice (same physician specialty) within the past three years.”  OPPS Final Rule 2012 – Excerpt – hospital (facility) New Patient – “…a patient who has not been registered as an inpatient or outpatient of the hospital within the 3 years prior to a visit would be considered to be a new patient for that visit.” 13

14. 340B Discount Drug Program Title  Discount drug program continues to be in the news  HRSA completed 18 covered entity audits in 2014 with more planned for 2015  Website notes:  In 2015, HRSA is planning to issue proposed rules pertaining to civil monetary penalties for manufacturers, calculation of the 340B ceiling price, and administrative dispute resolution. 14

15. Contract Pharmacy Audits  Annual audits performed by an independent, outside auditor with experience auditing pharmacies are expected, although the exact method of ensuring compliance is left up to the covered entity  Independent audits are particularly valuable where the covered entity utilizes multiple pharmacy options  They should follow standard business practices for audits, including audit trails provided by the entity to the auditor, and use of standard reports  The precise methodology utilized to ensure compliance and obtain the necessary information is up to the covered entity given its particular circumstances and, for example, might include spot audits where the system in place permits 15

16. Summary of 340B Requirements EntityDSH %GPO ExclusionOrphan Drug Disproportionate Share Hospital (DSH) >11.75%YesNo Children’s Hospital (PED)>11.75%YesNo Free-standing Cancer Hospital>11.75%Yes Critical Access Hospital (CAH)N/ANoYes Rural Referral Center (RRC)> 8%NoYes Sole Community Hospital (SCH)> 8%NoYes 16

17. 340B – Questions for your team  Have we reviewed our policy & procedures annually?  If we have contract pharmacies, do we obtain an annual outside audit?  What “self auditing” do we do?  How often do we make sure our physician list and 340B location list is updated? 17

18. Conditions of Participation  Released April 7 2015  http://www.cms.gov/Regulations-and- Guidance/Guidance/Transmittals/Downloads/R138SO MA.pdf  89 pages  Includes:  Changes to bed number counting  Use of observation services  Physician oversight of non-physician practitioners  Drug storage and handling  And much more… 18

19. Changes to Bed Counting Section 485.620(a) Any bed used for inpatient services at any time must be counted when assessing compliance with the 25 inpatient bed limit. Beds used for outpatient services, such as observation services, sleep studies, emergency services, etc. do not count towards the CAH’s 25-bed limit only if they are never used for inpatient services. 19

20. Use of Observation Services  Beds used solely for patients receiving observation services are not in the 25 bed count  “admit to inpatient” vs “place in observation”  Added a note regarding “only inpatients are “admitted”, although use of the word “admit” does not violate any CAH COP  Entire section on obs services > 48 hours was not deleted (?)  Two midnight rule applies to a CAH  “If a CAH maintains beds that are dedicated to observation services, the CAH must be able to provide evidence, such as the clinical criteria for admission to that unit and how patients in the unit meet those criteria, to demonstrate that its observation beds are not being used for inpatient services.” 20

21. Use of Observation Services  The CoP indicates that “observation services begin and end with an order by a physician or other qualified licensed practitioner of the CAH”  Direct conflict with MCPM Chapter 4, section 290.2.2  “observation time ends when all medically necessary services related to observation care are completed” 21

22. Physician Oversight of Non-Physician Practitioners  The doctor of medicine  Periodically reviews and signs a sample of outpatient records of patients cared for by NP’s, CNS’, CNM, or Pas only to the extent required under state law  CAH determines sample size by policy (CMS recommends 25% of encounters)  All IP records managed by NPP are reviewed and signed  Neither the regulation nor the preamble to the final rule adopting this regulation (79 Fed. Reg. 27105, May 12, 2014) specify a particular timeframe to satisfy the requirement for “periodic” review, but the CAH must specify a maximum interval between inpatient record reviews in its policies and procedures. 22

23. Drug Storage & Handling  The CAH must ensure all drugs and biologicals are managed in a manner that is safe and appropriate  Must have written policies and procedures addressing  Storage  Handling  Dispensing  Administration (timely to patients)  CAH must report all drug administration errors and adverse drug reactions 23

24. And Much More…  Infection Control  Nutrition  Patient Services (96 hour rule)  Services Under Arrangements/Purchased Services  Nursing Services 24

25. QUESTIONS? Jill Griffith, CPA, CPC Senior Manager - Health Care Services voice: 800.642.3601 x3334 e-mail: jill.griffith@actcpas.com