Tag: Medicaid

Thank you for working with Toyon Associates and our Uncompensated Care Recognition Services (UCRS).  CMS’s requirements for reporting UC cost, and subsequent UC Disproportionate Share (DSH) payments, rely heavily on ever-changing regulations and language in the financial assistance policy (FAP).  Importantly, as recently reported in the FFY 2021 IPPS Final Rule, CMS states:

 “(CMS) does not set charity care criteria policy for hospitals, and within reason, hospitals can establish their own criteria for what constitutes charity care in their charity care and/or financial assistance policies.”

A hospital’s determination of its own financial charity care criteria – likely within reason of patients qualifying under federal poverty level [FPL] thresholds – provides hospitals discretion on how patient financial discounts are articulated in the FAP.   

To compliantly position hospitals for this important impact on reimbursement, Toyon is sharing recommended language for FAP consideration as it relates to Medicare UC DSH.  Toyon’s recommendations[1] are to assist hospitals compliantly report core areas of UC cost on worksheet S-10 of the Medicare cost report. 

For assistance on implementing best practices for FAP language and associated means of capturing the charges written off as charity care, please contact Toyon’s lead of Uncompensated Care Recognition Services, Fred Fisher at 888.514.9312, fred.fisher@toyonassociates.com.

Toyon’s recommendations are focused on the following UC cost areas:

• Charity care for insured and underinsured
• Self-pay discounts
• Discounts to insurers with no contractual or inferred contractual relationship[2]
• Presumptive charity eligibility process
• Non-covered and denied Medicaid as charity care
• Bad Debt and Implied Price Concessions

Below are Toyon’s updated recommendations for FAP language related to Medicare cost report worksheet S-10 and UC DSH.  Some of Toyon’s recommendations include FAP language italicized in blue.  Any language changes considered by hospitals and health systems should follow the appropriate approval procedure with hospital leadership / board of directors.

1. Non-Covered Charges for Medicaid or other Indigent Care Program

Medicare cost report instructions allow charges related to “non-covered services for Medicaid eligible patients” to be included as UC cost, provided this coverage is specified in the FAP.  There are different industry interpretations regarding the level of specificity of non-covered Medicaid that must be in an FAP.  Toyon recommends hospitals consider FAP language stating:

“Non-covered and denied services provided to Medicaid eligible beneficiaries are considered a form of charity care.  Medicaid beneficiaries are not responsible for any forms of patient financial liability and all charges related to services not covered, including all denials, are charity care.  Examples may include, but are not limited to:

• Services provided to Medicaid beneficiaries with restricted Medicaid (i.e., patients that may only have pregnancy or emergency benefits, but receive other hospital care)
• Medicaid-pending accounts
• Medicaid or other indigent care program denials
• Charges related to days exceeding a length-of-stay limit
• Out-of-state Medicaid claims with no payment”

2. Presumptive Charity Care

In the FFY 2021 IPPS Final Rule, CMS affirmed presumptive eligibility tools are not allowable to determine patient financial status for Medicare bad debt reporting[3].  Toyon recommends the following regarding presumptive charity care determinations are applied by hospitals:

• Presumptive charity care is applied to everyone except indigent Medicare fee for service patients.
• For all patients receiving presumptive eligibility to qualify for financial assistance, it is recommended hospitals maintain a log of each instance, as well as any documentation from an outside agency to support presumptive eligibility (such as PARO like resources).

3. Patient Billing – External Collection Agencies

Hospitals may discover additional charity care associated with patient accounts in collections.   Typically, outstanding patient receivables relate to coinsurance, copayment and deductible (C+D) amounts.  This is a significant population, considering when C+D are reported as charity care, these amounts are not reduced by the cost to charge ratio. 

Toyon recommends hospitals consider updating the FAP language to include additional information when charity is discovered during the collections process.  Example language may state:

“Discovery of Patient Financial Assistance Eligibility During Collections – Determination of patient financial assistance as close to the time of service as possible is optimal.  However, additional time and resources are sometimes required to determine eligibility, and therefore some patients eligible for financial assistance may have not been identified as eligible for patient financial assistance prior to initiating external collection action.  Collection agencies shall be made aware of this possibility and are requested to refer-back patient accounts that may be eligible for financial assistance. When it is discovered an account is eligible for financial assistance, [Hospital | Health System] will reverse the account out of bad debt and document the respective discount in charges as charity care.” 

4. Insured Patients Not Under Contract with the Hospital

Related to HHS CARES Provider Relief Funding (PRF)

CMS permits UC costs can include “patients with coverage from an entity that does not have a contractual relationship with the provider who meet the hospital’s FAP.”  

For cost reports beginning on after October 1, 2020, CMS clarifies providers may report amounts related to inferred contractual relationships.  CMS defines an inferred contractual relationship in new cost report instructions[4] as:

“a contractual relationship between an insurer and a provider will be inferred where a provider accepts an amount from an insurer as payment, or partial payment, on behalf of an insured patient”

Also importantly, the Terms and Conditions (T&C) for providers receiving CARES Provider Relief Funding prohibit billing in excess of:

“…an amount greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network Recipient”.

Toyon recommends hospitals update FAP language to:

• Stipulate when a carrier is “under contract” vs. obligated to reimburse the hospital as an “inferred contractual relationship”; and
• Confirm “out of network” for a presumptive or actual case of COVID-19 is provided at an amount no greater than if the care was provided at an in-network provider.
• Listed below is FAP language for hospital consideration:

“Insured Patients Not Under Contract with the Hospital” – Negotiations with insurance carriers involving inferred contractual relationships, for insured patients not under contract with [hospital / health system] will be conducted by executive management at [hospital/health system]. Although [hospital / health system] may agree to the terms of the negotiations with insurance companies, an inferred contractual relationship is not representative of a patient “under contract” with [hospital / health system]. All unreimbursed amounts are a form of patient financial assistance and determined as the difference between gross hospital charges and hospital reimbursement. Any care provided to a presumptive or actual case of COVID-19 is provided at an amount no greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider.”

5. Financial Assistance for Patients with Insurance

Medicare cost report instructions allow and differentiate[5] the reporting of financial assistance for insured patients as:

• Amounts related to charity C+D amounts. These amounts have a material impact on the determination of uncompensated care cost, as they are not reduced by the cost to charge ratio.
• Charges representing an insured patient’s liability for medically necessary hospital services, other than Charity C+D amounts. These amounts are reduced to cost using a hospital’s overall cost to charge ratio.

Toyon recommends hospitals consider updating FAPs, articulating insured patients are eligible for discounts related to charity C+D amounts as well as charge discounts to an insured patient’s liability for medically necessary hospital services. 

6. Access to Healthcare Crisis FAP Language

In recognition for the extraordinary demand pandemics have on the healthcare system (including COVID-19), Toyon has crafted the FAP language below.  This is draft template language to assist hospitals if necessary.

“An Access to Healthcare Crisis must be proclaimed by [hospital leadership / approved by the board of directors] and attached to this patient financial assistance document as an addendum.  An Access to Healthcare Crisis may be related to an emergent situation whereby state / federal regulations are modified to meet the immediate healthcare needs of [hospital / health system’s] community during the Access to Healthcare Crisis.  During an Access to Healthcare Crisis [hospital / health system] may “flex” its patient financial assistance policy to meet the needs of the community in crisis.  These changes will be included in the patient financial assistance policy as included as an addendum.  Patient discounts related to an Access to Healthcare Crisis may be provided at the time of the crisis, regardless of the date of this policy (as hospital leadership may not be able to react quickly enough to update policy language in order to meet more pressing needs during the Access to Healthcare Crisis).”  

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We appreciate the opportunity to provide regulatory and reimbursement services to you and your team.  At any point in time, should you have any questions about our work, or need any further assistance, please contact Fred Fisher at 888.514.9312, fred.fisher@toyonassociates.com.

Respectfully,  

Toyon Associates, Inc.

[1] FAP language changes should follow the approval procedure with hospital leadership / board of directors.

[2] A contractual relationship between an insurer and a provider will be inferred where a provider accepts an amount from an insurer as payment, or partial payment, on behalf of an insured patient.

[3] Per the FFY 2021 IPPS Final Rule, related to Medicare Bad Debts “Although presumptive eligibility tools may reduce a provider’s burden when evaluating indigence, we disagree that presumptive eligibility tools should be used to determine a Medicare beneficiary’s indigence status for Medicare bad debt purposes.”

[4] https://www.govinfo.gov/content/pkg/FR-2020-11-10/pdf/FR-2020-11-10.pdf

[5] For cost reports beginning on/after October 1, 2020. 

• Patients with a pending positive test that came back positive after June 10 are not allowed in COVID-19 admissions data due June 15.
• Do not include emergency department patients in COVID-19 admissions data.
• Admissions occurring at multiple campuses, under the same TIN, should be reported separately and not rolled up into one count.
• If the prior submission of COVID-19 positive admissions was submitted in error (i.e., all COVID-19 positive admissions submitted by system instead of by facility), HHS requests providers to use TeleTracking to correct and update the data to reflect all COVID-19 positive inpatient admissions from January 1 through June 10.

• HHS expects providers will only use Provider Relief Fund payments for permissible purposes. If, at the conclusion of the pandemic, providers have leftover Provider Relief Fund money that cannot be expended on permissible expenses or losses, then providers will return this money to HHS. 

• HHS will be providing further guidance about the type of documentation to provide per the terms and conditions (e.g., documentation due with quarterly reports July 10).  
• HHS clarifies the term “healthcare related expenses attributable to coronavirus” is a broad term for determining eligibility of expenses and lost revenues eligible for reimbursement including:
  • supplies used to provide healthcare services for possible or actual COVID-19 patients,
  • equipment used to provide healthcare services for possible or actual COVID-19 patients,
  • workforce training; developing and staffing emergency operation centers; reporting COVID-19 test results to federal, state, or local governments,
  • building or constructing temporary structures to expand capacity for COVID-19 patient care or to provide healthcare services to non-COVID-19 patients in a separate area from where COVID-19 patients are being treated; and
  • acquiring additional resources, including facilities, equipment, supplies, healthcare practices, staffing, and technology to expand or preserve care delivery.
• Providers may have incurred eligible health care related expenses attributable to coronavirus prior to the date on which they received their payment.  HHS expects that it would be highly unusual for providers to have incurred eligible expenses prior to January 1.
• The term “lost revenues that are attributable to coronavirus” means any revenue lost to providers due to the coronavirus. 
• HHS encourages the use of funds to cover lost revenue so providers can respond to the coronavirus public health emergency to cover employee or contractor payroll, employee health insurance, rent or mortgage payments, equipment lease payments and electronic health record licensing fees.

• Parent organizations with multiple billing TINs that each received payments, may attest and keep the payments as long as providers associated with the parent organization were providing diagnoses, testing, or care for individuals with possible or actual cases of COVID-19 on or after January 31 and can otherwise attest to the Terms and Conditions.  The parent organization can allocate funds at its discretion to its subsidiaries. If the parent organization would like to control and allocate Provider Relief Fund payments to its subsidiaries, the parent organization must attest to accepting its subsidiaries’ payments and agreeing to the Terms and Conditions.
• Providers with TINs covering all business lines can report lost revenues under the same TIN that are actively caring for patients with COVID-19 or actively working to prevent the spread of COVID-19.
• Parent entities, submitting revenue information on behalf their subsidiaries may encounter an issue if they have multiple Medicare/Medicaid provider numbers (there is only one space in the HHS Portals to populate these numbers). HHS states these providers should submit a statement on the first page of the uploaded tax return file stating (i) the parent entity’s Filing TIN and that it does not bill Medicare and (ii) a schedule of the billing subsidiaries, their Billing TINs, their Medicare/Medicaid ID numbers, and gross sales or receipts.

• $15 billion Medicaid and CHIP funding to eligible providers that participate in state programs and have not received a payment from the Provider Relief Fund General Distribution. Approximately one million health care providers may be eligible for this funding.
• $10 billion safety net funding to approximately 760 hospitals. HHS states the safety net distribution will occur this week. Recipients will receive a minimum payment of $5 million and a maximum payment of $50 million. In order to qualify for this funding, hospitals must have:
  • A Medicare Disproportionate Payment Percentage (DPP) of 20.2 percent or greater,
  • average Uncompensated Care per bed of $25,000 or more, and
  • profitability of 3 percent or less, as reported to CMS in its most recently filed Cost Report.