Reimbursement Counselors, Inc. is celebrating our 20^th anniversary today!  Special thanks to each and every client that has ever trusted us with your business, to our former and current employees, to those that have helped me as a consultant or friend along the way and, of course, to my wonderful wife, Lynn!  After 20 years, it is still exciting for me to find lost reimbursement dollars and get that money in the hands of the people that directly impact patients’ lives in a positive way on a daily basis!

Providers and their representatives received some good news recently in the courts! The U.S. Court of Appeals for the District of Columbia Circuit has invalidated CMS’s prohibition on appeals of so-called predicate facts. A predicate fact is a specific determination of an amount in the past that is used in the calculation of future fiscal periods reimbursement, such as a per resident amounts, resident caps, target amounts or base period amounts. Such facts are not reevaluated annually and may or may not be updated annually thereafter. The appeal before the court challenged the continued use of an allegedly erroneously calculated Federal rate from 1981. The court found that CMS’ so-called predicate fact regulation at 42 C.F.R. § 405.1885(a)(1) which was revised in 2013 does not apply to administrative appeals to the Provider Reimbursement Review Board.  Previously, an error in one of a Providers predicate fact amounts would be carried forward indefinately.  This new ruling will allow for the correction of real injustices our there and result in more equitable reimbursement amounts in all cases.

The court said that reopenings and administrative appeals are conceptually different, are governed by different statutory and regulatory provisions, and, most importantly here, are governed by different limitation rules.  Because the court determined that the regulation does not apply to appeals at all, but only to reopenings, this opens the possibility of expanded provider litigation focused upon the correction of predicate facts.

CMS has recently issued a proposed rule for the OPPS Payment System that included a proposal to significantly scale back reimbursement for Part B drugs to hospitals participating in the federal 340B Drug Discount Program.  CMS believes hospitals are being overpaid and are potentially overutilizing the Program; therefore, it wants to reduce reimbursement rates for separately payable, non-pass-through Part B drugs purchased through the 340B Program.

For those that may not be familiar with the Program, the 340B Program is a federal drug discount program (Section 340B of the Public Health Service Act).  The 340B Program requires drug manufacturers to sell drugs at a statutorily-set discounted rate to certain health care providers (designated in the statute as “covered entities”) that serve indigent populations. Covered entities are not required to pass these discounts on to insurers or patients.  The intent is to allow covered entities to use these savings to stretch scarce resources in order to better serve their patients.

For 340B Hospitals, Medicare reimbursement for Part B drugs often exceeds the acquisition cost of the drugs by a substantial margin. As a result, 340B hospitals realize high profits on these Part B drugs.  CMS believes there is a correlation between participation in the 340B Program and overutilization of certain drugs, such as potentially higher Medicare spending for chemotherapy drugs among 340B participating hospitals than those that do not qualify for 340B.

CMS is also concerned with rising costs to Medicare beneficiaries. Medicare beneficiaries are responsible for paying 20 percent of the Medicare payment rate for Part B drugs, and those co-payments, in some instances, may exceed what 340B hospitals pay to acquire the drugs.

To address these concerns, CMS has proposed to reduce reimbursement to an amount that is more aligned with the resources expended by hospitals to acquire the drugs.  CMS believes a reduction in reimbursement to equal the Average Sales Price minus 22.5% will adequately represent the minimum discount that a 340B participating hospital receives for separately payable drugs under the OPPS.  The reduction will only apply to Part B drugs that are separately payable, and excludes drugs on pass-through status and vaccines.

CMS is certain to receive a huge number of comments by potentially impacted facilities and their representatives seeking either exclusions for certain types of facilities, for certain types of drugs or simple reductions in the size of the cuts.  Comments must be received by their September 11, 2017 deadline.

CMS published the final FY 2016 wage index Public Use File (PUF) on May 1, 2015. CMS indicated that hospitals will have approximately 1 month to verify their data and submit correction requests to both CMS and their MAC to correct errors due to CMS or MAC mishandling of the final wage and occupational mix data.
The updated PUF was published at:

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY-2016-Wage-Index-Home-Page.html

Question:   Bill Super (named changed) at Bill Super and Associates, CPA firm is the best and the brightest!  We hire him to prepare our cost reports!  How can we have any errors on our Medicare cost reports that you could possibly correct for us?

Answer: Bill Supers are out there and they are extremely gifted individuals, but they usually have many clients and are spread very thin!  In bigger firms, they may not actually review your Medicare cost report at all!  Here are a few ways that we have found that mistakes do happen in this circumstance:

1)                 Bill Super does not actually prepare your cost report.  His less gifted and experienced staff does.

2)                 Bill Super’s staff makes a keying error when keying data into a spreadsheet.

3)                 Bill Super’s staff makes a keying error when keying one of the thousands of numbers in the cost report.

4)                 Bill Super’s staff is overworked at cost report deadline time and cuts a corner or two so they can meet the filing deadline.

5)                 Bill Super’s staff runs the PS&R incorrectly.

6)                 Bill Super’s staff has turnover and the new staff does not fully understand what the old staff did.

7)                 Bill Super’s staff did it just like last year, but was not aware that the circumstances had changed this year.

8)                 Bill Super’s staff overlooked, ignored or improperly corrected cost report software edits.

9)                 Bill Super’s staff does not read and fully understand new law and regulations.

10)                 Bill Super is going through some personal issues that distract him temporarily from his work.

11)                 The MAC auditor makes a judgment error during the Medicare audit.

12)                 The MAC auditor makes a keying error during the Medicare audit.

13)                 The MAC auditor is at their deadline time and cuts a corner to meet the deadline.

14)                 The MAC has turnover in auditors and the new auditor does not fully understand the situation.

15)                 The MAC settlement personnel don’t fully understand the MAC auditors’ work.

16)                 The MAC auditor did it just like last year, but was not aware of the circumstances changed this year.

17)                 The MAC auditor overlooked, ignored or improperly corrected cost report software edits.

18)                 The MAC auditor does not read and fully understand new law and regulations.

19)                 The MAC changed and the new MAC does not know or understand what the old MAC did.

20)               The MAC auditor is given improper data or no data at all and makes an incorrect adjustment.

21)                The MAC auditor is not sane.

22)                 The required data was not available to Bill Super’s staff at the time of filing and they did not remember that they needed to amend the report when the data became available.

23)                    Hospital staff coded an invoice wrong, but it was not big enough in amount for Bill Super’s staff to review.

24)                    Hospital staff made an incorrect Journal Entry, but it was not big enough for Bill Super’s staff to review.

25)                    Hospital’s accounting system improperly maps revenue or expense, but the totals were right.

26)                    Hospital’s Chargemaster needed to be updated to reflect proper revenue codes, services, etc.

27)                    Hospital’s census data is incorrectly accumulated or stated in census reports.

28)                    Hospital’s staff produced bad debt listing did not capture all the Medicare allowable bad debts.

29)                    Hospital staff made a keying error in a spreadsheet prepared for Bill Super’s staff.

30)                    Hospital staff did not fully understand how to conduct a particular time study and its impact.

31)                    Hospital staff forgot to conduct a time study.

32)                 Hospital staff had turnover and some things did not get done during the interim period.

33)                 Hospital staff did it just like last year, but the circumstances had changed in this year.

34)                 Hospital staff does not read and fully understand new law and regulations.

35)                 Bill Super’s staff went over budget on hours and cuts corners to reduce hours and fees written off on engagement.

The cost reporting law, regulations and process are very complex.  The process has a lot of human elements.  Given adequate opportunity, as there is in the cost reporting process, human beings will make errors!  All it takes is one small error in the right place to swing hundreds of thousands or millions of dollars in reimbursement.