1. Audit and Reimbursement Update
Novitas Solutions
Audit and Reimbursement Update
September 25, 2014
Proprietary and Confidential

2. Agenda Introduction Organizational Structure Reimbursement Issues
Audit Issues
Wage Index
FFY 2015 IPPS Changes

3. Organizational Structure
Revised Organizational Structure to improve effectiveness and efficiencies of the organization, quality of production, and communications
Personnel and roles:
Steve Holubowicz, Sr. Director over Audit and Reimbursement (JH)
Timothy LeJeune, Director of JH Audit
Bruce Snyder, Acting Manager of Reimbursement and Settlement
Jackie Burke, Manager of Audit (Florida and Georgia)
Lisa Travis, Manager of Audit (Dallas and Milwaukee )
Jennifer Garrett, Supervisor of Reimbursement
Carrie Rudy, Acting Supervisor of Settlement

4. Organizational Structure

5. Reimbursement Issues Interim Rate Reviews
Complete two reviews on: PIP, CAH, RHC, FQHC, TEFRA,GME providers, Children’s and Cancer facilities
Complete four reviews on CAH PIP and all other provider types we complete one rate review.
We request data from cost providers, GME, RHC, FQHCs, TEFRA, and PIP providers.
CMS is stressing current cost data, non-compliance is subject to payment withhold of 25% (always contact prior to a withhold)
We request data from PIP providers for each review (since we are required to have discharges)
All other providers for the 1st review we typically use the cost report, and for the subsequent review we utilize provider supplied data.

6. Reimbursement Issues Rate Review Timing
PIP providers – After three months and after nine months. Information is due back three weeks after the end of the nine-month period. Reminder to remain on PIP, 85% of claims submitted must be “clean claims” billed within 30 days of discharge and be able to project, discharges that will not result in overpayments due to a substantial decline in Medicare utilization.
Cost providers or those requiring two reviews – GME, RHC, FQHC, TEFRA – After nine months. Information is due back three weeks after the end of the nine-month period.
CAH providers – After three months and after nine months. Information is due back three weeks after the end of the nine-month period
Questions on rate reviews can be directed to:

7. Reimbursement Issues MDH and Low Volume Adjustment – Hospitals
MDH and Low-Volume adjustment programs will now expire April 1, 2015
Provider must inform MAC regarding whether it can meet the Low-Volume adjustment by 9/1/14
Low Volume Adjustment reverts to 200 discharges (down from 1,600) in April 2015
Only a few hospitals will be qualified after this change
Congress is considering an extension and retroactive application
May not happen until second quarter of 2015
We will issue a listserv and website update when information becomes available
As part of the Pathway for SGR Reform Act of 2013, Congress reinstated the Medicare Dependent Hospital (MDH) program which had expired as of October 1, 2013 through March 31, Generally, providers that were classified as MDHs prior to the expiration of the MDH provision will be reinstated as MDHs effective October 1, 2013 with no need to reapply for MDH classification. This letter serves as notification regarding {Provider Name’s} MDH status.
<Insert any of the following paragraphs, as applicable:>
1. <{Provider Name} will be reinstated to MDH status effective October 1, No additional action is required on your part.>
2. <{Provider Name} had requested classification for SCH status and was approved effective October 1, This SCH classification precludes {Provider Name} from being reinstated as an MDH. Therefore, in order to be classified as an MDH, {Provider Name} must request a cancellation of its SCH status in accordance with the regulations at 42 CFR (b)(4) and then reapply for MDH classification in accordance with the regulations at 42 CFR (b).>
3. < {Provider name} requested classification for SCH status and was approved effective {effective date - after 10/01/2013 and before 12/26/13. {Provider Name’s} MDH status will be reinstated effective October 1, 2013 through {enter date of day immediately prior to effective date of SCH classification} and will be cancelled effective {enter effective date of SCH classification}. In order to be classified as an MDH, {Provider Name} must request a cancellation of its SCH status in accordance with the regulations at 42 CFR (b)(4) and reapply for MDH classification in accordance with the regulations at 42 CFR (b).>
4. <{Provider Name} requested a cancellation of its rural status under 42 CFR and was approved for the cancellation effective October 1, This cancellation precludes {Provider Name} from being reinstated as an MDH. Therefore, in order to be classified as an MDH, {Provider Name} must submit a request for reclassification as a rural hospital under the regulations at 42 CFR (b) then and reapply for MDH classification in accordance with the regulations at 42 CFR (b).>
5. < {Provider name} requested a cancellation of its rural status under 42 CFR and was approved for the cancellation effective {effective date - after 10/01/2012 and before 12/26/13. {Provider Name’s} MDH status will be reinstated effective October 1, 2013 through {enter date of day immediately prior to effective date of cancellation of rural classification} and will be cancelled effective {enter effective date of cancellation of rural classification}. In order to be classified as an MDH, {Provider Name} must submit a request for reclassification as a rural hospital under the regulations at 42 CFR (b) and then reapply for MDH classification in accordance with the regulations at 42 CFR (b).>
6. <This letter serves as notification that {Provider Name} will be reinstated to MDH status effective October 1, However, it has come to our attention that {Provider Name} no longer meets the criteria for MDH status under 42 CFR (a)(1)(iii)(C). Based on {enter Medicare utilization during applicable cost reporting periods}, {Provider Name} has {enter the percentage of days/discharges} and consequently does not meet the 60% Medicare inpatient utilization requirement in at least two of the last three most recent settled cost report for which the hospital has a settled cost report. Therefore, {Provider Name’s} MDH classification will be cancelled effective {date = 30 days from date of notification}.
Under the regulations at 42 CFR (b)(7), in order to be reclassified as an MDH, a hospital may reapply only after another cost report has been audited and settled.>
: Low-Volume Hospitals – Criteria and Payment Adjustments for FY 2014
Sections 3125 and of the Affordable Care Act amended the low-volume hospital adjustment in section 1886(d)(12) of the Act by revising, for FYs 2011 and 2012, the definition of a low-volume hospital and the methodology for calculating the low-volume payment adjustment. These amendments were extended for FY 2013 by section 605 of the American Taxpayer Relief Act. Prior to the recently enacted Pathway for SGR Reform Act of 2013, beginning with FY 2014, the low-volume hospital qualifying criteria and payment adjustment had returned to the statutory requirements that were in effect prior to the amendments made by the Affordable Care Act and the ATRA. Section 1105 of the Pathway for SGR Reform Act of 2013extends, for FY 2014 discharges occurring before April 1, 2014, the temporary changes in the low-volume hospital payment policy provided for by the Affordable Care Act, as amended by the ATRA. CMS implemented the changes to the low-volume payment adjustment provided by the Affordable Care Act and the ATRA in the regulations at § in the FY 2011 IPPS/LTCH PPS final rule (75 FR through 50275) and the FY 2014 IPPS/LTCH PPS final rule (78 FR through 50613).
To implement the extension of the temporary change in the low-volume hospital payment policy for FY 2014 discharges occurring before April 1, 2014 provided for by section 1105 of the Pathway for SGR Reform Act of 2013, in accordance with the existing regulations at § (b)(2)(ii) and consistent with our implementation of the low-volume hospital payment adjustment in FYs 2011 through 2013, CMS published a notice in the Federal Register (CMS 1599N) updating the discharge data source used to identify qualifying low-volume hospitals and calculate the payment adjustment (percentage increase) for FY 2014 discharges that occur before April 1, 2014.
In that notice, CMS established that for FY 2014 discharges occurring before April 1, 2014, the low-volume payment adjustment will be determined using FY 2012 Medicare discharge data from the March 2013 update of the MedPAR files. In Table 14 of the Addendum to that notice, CMS provides a list of the IPPS hospitals with fewer than 1,600 Medicare discharges based on the March 2013 update of the FY 2012 MedPAR files. However, this list of IPPS hospitals with fewer than 1,600 Medicare discharges is not a listing of the hospitals that qualify for the low-volume adjustment for FY 2014 discharges occurring before April 1, 2014 since it does not reflect whether or not the hospital meets the mileage criterion (that is, to qualify for the low-volume adjustment, the hospital must also be located more than 15 road miles from any other IPPS hospital). In order to receive the applicable low-volume hospital payment adjustment (percentage increase) for FY 2014 discharges occurring before April 1, 2014, a hospital must meet both the discharge and mileage criteria.
In order to receive a low-volume hospital payment adjustment for FY 2014 discharges occurring before April 1, 2014, consistent with the previously established procedure, CMS is continuing to require a hospital to notify and provide documentation to its MAC that it meets the mileage criterion. Specifically, a hospital must make its request for low-volume hospital status in writing to its MAC and provide documentation that it meets the mileage criterion, so that the applicable low-volume percentage increase is applied to payments for its discharges occurring on or after October 1, 2013 (that is, the beginning of FY 2014). The MAC must be in receipt of the hospital’s written request by March 22, 2014, in order for the effective date of the hospital’s low status to be October 1, A hospital that qualified for the low-volume payment adjustment in FY 2013 may continue to receive a low-volume payment adjustment for FY 2014 discharges occurring before April 1, 2014, without reapplying, if it continues to meet the Medicare discharge criterion, based on the FY 2012 MedPAR data (shown in Table 14 of the Federal Register notice (available on the Internet as noted below) and the distance criterion. However, the hospital must verify in writing to its MAC that it continues to be more than 15 miles from any other “subsection (d)” hospital no later than March 22, For requests for low-volume hospital status for FY 2014 discharges occurring before April 1, 2014 received after March 22, 2014, if the hospital meets the criteria to qualify as a low-volume hospital, the MAC will apply the applicable low-volume payment adjustment in determining payments to the hospital’s FY 2014 discharges occurring before April 1, 2014 prospectively effective within 30 days of the date of the MAC’s low-volume status determination.

8. Reimbursement Issues
FY 2014 Proposed Rule for DSH - Overview of ACA Provisions
Effective for discharges on or after 10/1/2013
Expands DSH to more hospitals, due to expanded Medicaid programs
Empirically Justified Amount – 25% of estimated DSH payments (current method) – no changes
Uncompensated Care Amount – 75% of estimated DSH payments- three factors
Factor 1 – estimation of 75% of global DSH payment
Factor 2 – reduction based on estimated decrease in uninsured
Factor 3 – individual hospital’s proportion of uncompensated care to all DSH hospitals’ uncompensated care
Uncompensated care payments are based on an estimate
CMS not accepting the uncompensated care amounts on WS S-10

9. Reimbursement Issues ACA, Section 3133 (DSH)
Proxy for 2015 – CMS provides this data
Inpatient days of Medicaid patients from March, 2014 Hospital Specific File for the FY 2012 cost report, WS S-2 plus
Inpatient days of Medicare SSI patients fro the FY 2012 cost report
Not sure how long the proxy will be used
Essentially a pre-determined amount for the year paid during the year based on Medicare discharges
Example – pre-determined that a provider will receive $20M during the FY
During the year they only receive $19M, the additional $1M will be a cost report add- on
Special rules for newly eligible hospitals, merged and new hospitals

10. Reimbursement Issues CRNA Exception Criteria
In order for a provider to qualify for the CRNA exception and be paid on a bi-weekly basis, a provider must perform less than 800 surgeries and total CRNA hours work must be less than 2,080.
Providers are required by law to make a formal request to Novitas and the request MUST be RECEIVED prior to 1/1/2015. Reviews will occur, additional info requested if needed, determination letter sent for Exception effective 1/1/14. Requests received after 1/1/2015 will be denied.
Information and questions can be directed to Catherine Rushing, Novitas Solutions, 532 Riverside Avenue, Jacksonville FL Information required includes all current CRNA/AA contracts, CRNA licenses, and surgery logs from 1/1 through 9/30/14 which supports the volume.

11. Audit Issues
HITECH
Matching your EHR payment period to the correct cost report period
The Medicare Cost Report is used to determine the final payment amount for the EHR Incentive so it is important to use the correct cost report period
Must be a 12-month cost report period (between 360 and 371 days)
The cost report period is determined using the hospital’s meaningful use effective date and the federal fiscal year.
As specified by the HITECH UDR Program, we select the correct cost report period by determining “which cost reporting period for the Hospital begins during the Federal Fiscal Year that the Hospital’s Meaningful Use Effective Date falls in.”
Example provided on the next slide

12. Audit Issues HITECH: FISS Data for 6/30 Provider

13. Example: Choosing the Correct Cost Report Period for HITECH

14. Audit Issues 2010 and 2011 Cost Reports (SSI Ratios)
CMS has published the FY 2010 and FY 2011 SSI Ratios
The FY 2010 SSI Ratios shall be used for all cost reporting periods beginning on or after October 1, 2009
The FY 2011 SSI Ratios shall be used for all cost reporting periods beginning on or after October 1, 2010.
The FY 2011 SSI Ratio shall also be used for interim payment purposes
Cost reports that use the FY 2010 or FY 2011 SSI Ratios will be NPR’d between now and November, 2014
2012 SSI Ratios issued in June 2014.

15. Audit Issues PS&R Negative Charges
Hospital O/P claims paid after 4/1/10 with a 51 MUE denial code
We have a complete list of all affected providers (many have a small dollar impact)
There are less than 20 total providers with significant impact
CMS has instructed MACs to re-price claims by 1/15/14
Cost reports with re-priced claims were to be finalized by 4/17/14 (assuming there is no other hold on the report). There are still claims issues that are holding up the process to finalize the cost reports impacted.
If you are impacted, you would see negative or reduced charges on PS&R in “other” column.

16. Audit Issues Other issues
Sub-contractors are in place through the end of February 2015
Currently utilizing Figliozzi & Company as well as Heffler, Radetich & Saitta to complete Desk Reviews and some Audits.
Subsequent payments are NOW included in your NPR letter and final settlement
Reflects all payments included with the filed cost report
Tentative settlement amounts now included
Eliminates confusion, much cleaner

17. Audit Issues Wage Index notices or activity planned
For FY 2016, CMS has changed the Wage Index Development Timetable.
The process now starts in early to mid July with the preliminary CY Occupational Mix Survey Data, based on the FY 2013 occupational mix surveys submitted by the hospital to MACs by July 1, 2014.
Process now starts in September, with the posting of the September PUF (previously posted in October and known as the October PUF)
Certain subsequent dates in the FY 2016 Wage Index Development process are also earlier than in previous years.
Please pay careful attention to the new due dates and deadlines. See the revised 2016 Wage Index Timetable at:
Payment/AcuteInpatientPPS/Downloads/FY-2016-Tentative-Hospital- Wage-Index-Development-Time-Table.pdf

18. Audit Issues: Wage Index Key Dates
Nov 21, 2013
October 6, 2014
October 15, 2014
Deadline for Hospitals to request revisions to OMS Data and Wage Index.
Deadline for only hospitals with FY 2012 cost reporting periods that begin on or after August 15, 2012 or have defined benefit pension plans.
Feb 10, 2014
December 8, 2014
Deadline for MACs to notify State Hospital Associations re: hospitals that failed to respond to audit issues
Jan 29, 2014
December 16, 2014
Deadline for MACs to complete all desk reviews of Wage Index
Feb 20, 2014
February 15, 2015
CMS releases revised Wage Index and occupational data on PUF on website
Mar 3, 2014
March 2, 2015
Deadlines for Hospitals to dispute PUF data or MAC errors
April 9, 2014
April 8, 2015
Deadline for MACs to transmit final wage index data

19. Audit Issues: Wage Index Key Dates
April 16, 2014
April 15, 2015
Deadline for Hospitals to appeal MAC determinations or seek CMS intervention
May 2, 2014
May 1, 2015
CMS releases the final FY 2016 Wage Index on CMS website
June 2, 2013
June 1, 2015
Deadline for hospitals to submit correction requests to both CMS and MACs: any errors of the final wage index or occupational mix data
August 1, 2014
August 1, 2015
CMS’ estimated date for publishing the final rule with all corrections
October 1, 2014
October 1, 2015
Effective date of the FY 2016 wage index

20. FFY 2015 IPPS Two-Midnight IPPS Reduction
Effective 10/1/2014
Stays less than two midnight are considered to be for an OP stay, with those greater than two being considered as IP stay.
Permanent adjustment will be (0.2%) taken against the Standardized Amount.
Uncompensated Care Data to be used for DSH
CMS will be using Worksheet S-10 data, but there are many noted errors being made in the as-filed data.
Many Hospitals have not completed the worksheet.
Many Hospitals are claimed Medicare Bad Debts but did not include any bad debt data on the worksheet.
More Gross Charges reported on S-10 than that reported on Worksheet C.
Uninsured vs. Charity
Charity must be determined during the cost-reporting period.
Bad Debt write-off timing issues.

21. FFY 2015 IPPS FFY 2015 Operating Outliers
The proposed Threshold will increase from $21,748 to $24,758
The increase is due to the larger than expected increase in outlier payments as a percentage of DRG payments rose from 4.86% in FFY 2013 to 5.71% in FFY CMS had targeted a rate of 5.1% in FFY 2014.
FFY 2015 Standard Rate Updates
Acute Hospital update: 1.4% net increase
Excluded Hospital update: 2.9%
LTCH update: 2.2%
Third year of the update (FYs 2013, 2014, 2015)
LTCH One-Time Prospective Adjustment of (Year 3)

22. FFY 2015 IPPS Payment Update IPPS Hospital Payment Adjustments
Market Basket: Starting point: %
Update to IPPS standardized rate (due to adjustments) 1.4%
Performance-Based Adjustments
Failure to submit quality data %
Failure for HER meaningful use: %
Readmission reduction program %
Hospital Acquired condition reduction %
Value-Based Purchasing Hospital Specific Adjustment
Hospital could have negative update factor, depending on performance

23. FFY 2015 IPPS Payment Update Failure to submit quality data -.75%
Previously, hospitals that do not participate successfully in the Hospital IQR Program have their applicable percentage increase reduced by two percentage points.  Since the implementation of this financial penalty, hospital participation has increased to well over 99 percent of Medicare-participating hospitals that are paid under the IPPS.  
Starting for the FY 2015 payment determination, however, that reduction will be approximately one quarter of a hospital’s annual payment increase that would otherwise apply
Majority of hospitals do participate in the Quality Reporting Program
63 Measures Reported
47 Required; 16 Voluntary

24. FFY 2015 IPPS Payment Update Failure for EHR Meaningful Use -.75%
CMS is preparing a comprehensive list of several hundred providers who have failed meaningful use
CMS will notify Novitas and we will send a letter to the provider informing them of the failure and reduction of .75% to their rate of increase
CAH’s who fail the MU standard will have see their payments reduced from the current 101% to %
Not material, but we are required to enter this into FISS

25. FFY 2015 IPPS Payment Update Readmissions Reduction Program - 3.0%
Third year of the program (ACA, Section 3025)
CMS will assess hospitals’ readmission penalties using five readmissions measures endorsed by the National Qualify Forum (NQF):
heart attack, heart failure, pneumonia, chronic obstructive pulmonary disease, and hip/knee arthroplasty.
CMS has finalized an updated methodology to take into account planned readmissions for these five existing readmissions measures, as well as refinement in the hip/knee arthroplasty readmission measure methodology.
CMS will add a new readmission measure beginning in FY 2017: readmissions for coronary artery bypass graft (CABG) surgical procedures
Adjustments are made on a per claim basis; does not include IME, DSH, outlier, or low-volume adj. The cost report was modified to handle this.

26. FFY 2015 IPPS Payment Update
Preventable Hospital-Acquired Conditions %
FY Lowest performing quartile will have their inpatient payments reduced by 1%
CMS estimates that 753 hospitals will be affected
Overall payments would decrease $330 million, or an estimated $438,000 per affected hospital

27. FFY 2015 IPPS Payment Update
Value-Based Incentive Payments Hospital Specific Adjustment
Third year of the program – funded through payment reduction to operating DRG payments FY % (approximately $1.4 billion)
Redistributed to IPPS hospitals based on performance compared to peers
80% of the measures assess health outcomes, patient experience and cost
Final rule updates the FY 2017 measure set by adding two new Safety measures and one new Clinical Care and removing six “topped-out” clinical process measures
Hospital-onset methicillin-resistant Staphylococcus aureus (MRSA) bacteremia and Clostridium difficile infection
Clinical Care - Process measure: early elective deliveries
Adjustment factors for each hospital released 10/2014 – CMS website

28. RCE Limitations FY 2015 CMS Updated the RCEs
Based on American Hosp. Assoc. of Periodic Survey of Physicians data
Effective for cost reporting periods beginning on or after January 1, 2015
Applies to salaried physicians for providers that are payable on a reasonable cost basis under Medicare – Part A component
Does not apply to Critical Access Hospitals
Minimal impact to a IPPS facility unless they have a cost-based component

29. RCE Limitations
FY 2015 CMS Updated the RCEs

30. Questions and Contact Information
QUESTIONS?????
For any additional Questions - Please Contact:
Sr. Director – Audit and Reimbursement
Director of Audit -
Manager of Reimbursement and Settlement -