Cost Reporting for Rural Health Clinics TOP |
Slide 1: Cost Reporting
for Rural Health Clinics
Rural Health Clinic Audioconference
August 31, 2005
Presented by:
Jeff Bramschreiber, CPA
Wipfli LLP
Green Bay, Wisconsin Office
920.662.2822
jbramschreiber@wipfli.com
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Cost Reporting for Rural Health Clinics TOP |
Slide 2: Presentation Overview
-
Cost Reporting Theory
-
Payment Rate Calculation
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Allowable Costs
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Non-RHC Costs
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RHC Visits
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Physician/Provider FTEs
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Cost Report Forms
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Helpful Hints
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Cost Reporting for Rural Health Clinics TOP |
Slide 3: 2 Types of Rural Health Clinics
1. Independent RHCs: can be owned
by physicians, midlevels, hospitals, etc. Submit claims to
1 of 5 regional fiscal intermediaries (Riverbend in Illinois,
Michigan, Minnesota, and Wisconsin).
2. Provider-based RHCs: must
be owned and operated by hospital, SNF, or home health agency.
Submit claims to owner providers fiscal intermediary
(UGS in Illinois, Michigan, and Wisconsin). Need to meet provider-base
requirements.
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Cost Reporting for Rural Health Clinics TOP |
Slide 4: Cost Reporting Theory
Image: Flow Chart with Clinic Direct
Costs and Indirect Allocated Costs Flowing either to Non-RHC
Services, including hospital I/P, hospital O/P, lab services
or to RHC Services including clinic, nursing home, home visits.
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Cost Reporting for Rural Health Clinics TOP |
Slide 5: Cost
Reporting Theory
Image:
Flow chart with Clinic Direct Costs and Indirect Allocated
Costs flowing to Cost of RHC Services and then to RHC $ Rate
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Slide 6: Payment Rate Calculation
RHC Cost Per Visit (Rate) =
Allowable RHC Costs/Rural Health Clinic
Visits
(Not to exceed the maximum reimbursement
limits, except for hospitals < 50 beds.)
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Slide 7: Payment Rate Calculation
RHC Reimbursement Limits
|
2000 |
2001 |
2002 |
2003 |
2004 |
2005 |
Maximum |
$61.85 |
$63.14
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$64.78
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$66.72 |
$68.65 |
$70.78 |
Increase
|
2.4% |
2.1% |
2.6% |
3.0% |
2.9% |
3.1% |
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Slide 8: Allowable Costs for Rural Health
Clinics
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Slide 9: Allowable RHC Costs:
- Defined at 42 CFR 413.
- Explained in Provider Reimbursement Manual,
Pub. 15.
Allowable costs are the cost
actually incurred by you which are reasonable in amount and
necessary and proper to the efficient delivery of your services.
RHC Manual, Ch.501
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Slide 10: Allowable Costs
Costs Recorded on Accrual Basis:
- Recorded when cost incurred, not when
paid.
- Payment must be made within 12 months
after year end (unless a more restrictive requirement applies.)
Examples:
- Employee profit-sharing contributions
recorded in 2004, but contributions made in 2005.
- Expenses incurred in December 2004, but
paid in January 2005.
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Slide 11: Allowable Costs
Not
the Same as Tax Deductions:
- Accrual vs. cash basis.
- Depreciation.
- Related parties.
- Provider/Owner compensation.
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Slide 12: Allowable
Costs
Depreciation:
- Accelerated depreciation for tax.
- §179 write-offs.
- Differences in useful life.
Examples:
- First year tax write-off (§179) of $100,000
not allowable on RHC cost report.
- 3-year useful life for tax purposes;
may be 5- or 7-year life according to AHA .
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Slide 13: Allowable Costs
Related through ownership or control (board
of directors, key employees).
The intent is to treat the costs incurred
by the supplier as if they were incurred by the provider itself.
CMS Pub. 15-1 (PRM)
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Slide 14: Allowable
Costs
Related Parties:
- Building and equipment leases.
- Contracted employees.
- Purchased services (e.g. cleaning, billing,
etc.)
Examples:
- Clinic shareholders own clinic building
through separate real estate partnership. Lease to RHC.
- Clinic management forms separate billing
service and contracts with RHC.
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Slide 15: Allowable
Costs
Related Party Example Bldg.
Lease:
- RHC pays $4,000 per month ($48,000 per
year) to owners' partnership for building rent.
- Actual annual cost of building incurred
by partnership:
- Interest on mortgage = $20,000
- Depreciation on building = $8,000
- Property taxes = $6,000
- Insurance on building = $1,000
- Total annual costs = $35,000
- RHC costs must be reduced by $13,000.
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Slide 16: Allowable
Costs
Provider Compensation:
- Reasonable in relation to other providers:
- Can use comparative survey data.
- Can use other RHC cost reports.
- Can be adjusted for hours worked or productivity
measurements:
- Providers working hours in excess of
1 full-time equivalent (FTE).
- Provider productivity measured by visits,
professional charges, or work relative value units.
- Different for sole proprietors/partnerships.
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Slide 17: Allowable
Costs
Provider Compensation Example Corporations:
- Compensation is the amount earned during
the year.
- May include a year-end bonus, even if
not paid until after the end of the year.
- Owners must be paid within 75 days after
year end.
Example: Providers receive production
bonus based on RVUs. 2004 bonus is not paid until January 2005.
The bonus must be claimed as a RHC cost on the 2004 cost report.
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Slide 18: Costs Other Than Rural Health
Clinic
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Slide 19: Non-RHC Costs
Common Non-RHC Services
- Diagnostic radiology
- Hospital patients (inpatient/E.R./ASC)
- Laboratory services
- Medical directorships
- Mammography
- DME
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Slide 20: Non-RHC Costs
Laboratory Services
. . . Clinical diagnostic laboratory
services are not within the scope of services covered and
paid for under the RHC provisions. Consequently, laboratory
services (including the six required laboratory tests for
RHC certification . . .) furnished by a clinic should be paid
under the laboratory fee schedule.
When clinics separately bill laboratory
services, the cost of associated space, equipment, supplies,
facility overhead and personnel for these services must be
adjusted out of RHC/FQHC cost report.
CMS Program Memorandum A-00-30
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Slide 21: Non-RHC Costs
Laboratory Services (continued)
The Health Care Financing Administration
[CMS] has notified our office that this ruling applies to
venipuncture services as well. These services should also
be billed to the Part B Carrier (or Fiscal Intermediary) effective
for dates of service on or after January 1, 2001.
Per Riverbend GBA Medi-995-01
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Slide 22: Non-RHC
Costs
Laboratory Services (continued)
Most Common direct cost associated with
lab:
- Lab tech salaries/benefits
- Nursing salaries/benefits (for venipunctures)
- Reagent costs
- Other lab supplies
- Lab equipment depreciation
- CLIA licensure/Reference lab fees
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Slide 23: Non-RHC
Costs
Costs unrelated to the RHC must be excluded:
Example:
- Visiting specialists rent space from
the RHC. Rental income must be FMV, and used to offset occupancy
costs.
- RHC billing department also does billing
for an unrelated practice. Costs related to providing billing
service must be removed from RHC cost.
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Slide 24: Non-RHC
Costs
Commingling
" . . . the simultaneous operation
of an RHC and another physician practice, thereby mixing the
two practices. The two practices share hours of operations,
staff, space, supplies, and other resources."
CMS Proposed Rule, February 28, 2000
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Slide 25: Non-RHC
Costs
Commingling
CMS Goal is to:
- Remove opportunities for duplicate billing.
- Eliminate opportunities for RHC's to
shift between functioning as RHC and other entities to achieve
higher reimbursement.
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Slide 26: Non-RHC
Costs
Commingling
New Rules (status pending):
- Under the new rule, CMS prohibits the
use of RHC space, professional staff, equipment, and other
resources by another health care professional (during RHC
hours of operations).
- New rules allow for operation of multi-purpose
facilities, but preclude any RHC provider from furnishing
non-RHC services during RHC hours of operation.
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Slide 27: Avoid
Commingling by:
- Maintaining cost records for each facility/department
- If operating specialty clinic next to RHC, need to maintain
time-studies for staff sharing between departments.
- Do not use same staff simultaneously.
- Separate certification may be necessary
(e.g. CLIA).
- Establish separate hours of operation
(post it!).
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Slide 28: Rural
Health ClinicVisits
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Slide 29: RHC
Visits
The term visit is defined
as a face to face encounter between the patient and a physician,
physician assistant, nurse practitioner, nurse midwife, specialized
nurse practitioner, visiting nurse, clinical psychologist,
or clinical social worker during which an RHC service is rendered.
RHC Manual, Ch.504
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Slide 30: RHC
Visits
- Total visits, the denominator in the
cost per visit calculation, should include all "visits"
that take place in the RHC during hours of operation, home
visits, and nursing home visits for all payers.
- Total visits should not include hospital
visits (either inpatient or outpatient visits), or "nurse-only"
visits in the RHC setting.
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Slide 31: RHC
Visits
The method of counting visits should be
clearly defined and documented in the RHC. The visit statistics
reported on the RHC cost report must be supported by documentation
used to generate the totals.
Suggestion: Prepare a written policy and
procedure for counting visits.
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Cost Reporting for Rural Health Clinics TOP |
Slide 32: RHC
Visits
Total RHC Visits on the Cost Report:
- Greater of actual visits or productivity
standards.
- Higher visit count lowers cost per visit.
- Penalty for low productivity.
- Standard applies in aggregate:
- 4,200 per physician FTE
- 2,100 per midlevel FTE
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Cost Reporting for Rural Health Clinics TOP |
Slide 33: RHC
Visits
Example of Total RHC Visits on the Cost
Report:
Table:
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Number of FTEs
|
Total
Visits |
Standard |
Minimum
Visits |
Greater of |
Physicians |
0.8
|
3,000
|
4,200
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3,360
|
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Physician Asst. |
0.75
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1,500
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2,100
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1,575
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Nurse Practitioners
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0.5
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1,200
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2,100
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1,050
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|
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Subtotal |
2.05
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5,700
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5,985
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5,985
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If actual RHC costs are: |
$300,000
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Actual Cost per Visit |
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$52.63
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Adjusted Cost per Visit |
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$50.13
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Cost Reporting for Rural Health Clinics TOP |
Slide 34: Physician/Provider
Full-Time Equivalents (FTEs)
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Cost Reporting for Rural Health Clinics TOP |
Slide 35: Physician/Provider
FTEs
Provider Full Time Equivalent (FTE):
Actual number of hours worked divided by
the
greater of:
- the hours considered to be full time,
or
- 1,600 hours per year.
(CMS Pub. 27, Sec. 503)
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Cost Reporting for Rural Health Clinics TOP |
Slide 36: Physician/Provider
FTEs
FTEs
A physician may be considered > 1.0
FTE if the documented hours are > 2,080:
- this will increase the compensation
allowance, but
- will also increase the productivity
standards.
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Cost Reporting for Rural Health Clinics TOP |
Slide 37: Physician/Provider
FTEs
Sample Reconciliation of FTEs reported on
Worksheet B, Part I:
Clinical FTE (w/s B, Part I)
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0.70 |
Administrative FTE |
0.05 |
Hospital FTE |
0.20 |
Medical Director FTE
|
0.05 |
Total FTE |
1.00 |
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Cost Reporting for Rural Health Clinics TOP |
Slide 38: Rural
Health ClinicCost Report
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Cost Reporting for Rural Health Clinics TOP |
Slide 39: Cost
Report
Cost Report Components
- RHC/FQHC Provider Statistics
- Reclassification and Adjustment of Trial
Balance of Expenses
- Reclassifications
- Adjustments
- Related party adjustments
- Flu/PPV Vaccine Costs
- Visits (part I), Overhead (part II)
- Determination of Medicare Reimbursement
(part I) & Payment (part II)
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Cost Reporting for Rural Health Clinics TOP |
Slide 40: Cost
Report
Computation of Flu/PPV Costs
- May be the only settlement on the cost
report.
- Reimburse on cost per injection basis.
- Do not bill to FI during year - Keep
a log with the following information:
- Patient Name
- HIC Number
- Date of injection
- Compute ratio of injection staff time
to total health care staff time
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Cost
Reporting for Rural Health Clinics TOP |
Slide 41: Helpful
Hints
- Collect data on an ongoing basis; monitor
changes during the year.
- Include explanations and details with
the cost report.
- Be consistent from year to year.
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Cost
Reporting for Rural Health Clinics TOP |
Slide 40: Questions
& Discussion
Thank You!
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