IRS says, “Clean up time!”
Final regulations have recently been issued requiring any person who has been assigned an Employer Identification Number (EIN) to provide updated information to the IRS. The regulations are aimed at enhancing the IRS’s ability to maintain accurate information about persons and businesses who have been assigned EINs.
The IRS and the Treasury stated, “The listing of nominees or other individuals who are no longer associated with the entity prevents the IRS from gathering and maintaining correct and current information with respect to the responsible party for the EIN application. The requirement in the final regulations to provide updated application information will allow the IRS to ascertain the true responsible party for persons who have an EIN. This knowledge will prevent unnecessary delays by allowing the IRS to contact the correct persons when resolving a tax matter related to a business with an EIN. In addition, this information will help the IRS combat schemes that abuse the tax system through the use of nominees, which results in the concealing of the true responsible party for entities that hide assets and income.”
The regulations are effective January 1, 2014. The IRS will issue a relevant form and instructions in advance of this effective date. Estimated time of completion is 15 minutes.
If you have questions, please contact a Moore Stephens Lovelace representative. We are always happy to assist!
Kurt Alter, Shareholder
800.683.5401
kalter@mslcpa.com
IRS says, “Clean up time!”
Final regulations have recently been issued requiring any person who has been assigned an Employer Identification Number (EIN) to provide updated information to the IRS. The regulations are aimed at enhancing the IRS’s ability to maintain accurate information about persons and businesses who have been assigned EINs.
The IRS and the Treasury stated, “The listing of nominees or other individuals who are no longer associated with the entity prevents the IRS from gathering and maintaining correct and current information with respect to the responsible party for the EIN application. The requirement in the final regulations to provide updated application information will allow the IRS to ascertain the true responsible party for persons who have an EIN. This knowledge will prevent unnecessary delays by allowing the IRS to contact the correct persons when resolving a tax matter related to a business with an EIN. In addition, this information will help the IRS combat schemes that abuse the tax system through the use of nominees, which results in the concealing of the true responsible party for entities that hide assets and income.”
The regulations are effective January 1, 2014. The IRS will issue a relevant form and instructions in advance of this effective date. Estimated time of completion is 15 minutes.
If you have questions, please contact a Moore Stephens Lovelace representative. We are always happy to assist!
Kurt Alter, Shareholder
800.683.5401
kalter@mslcpa.com
MSL Pulse April 2013
Medicaid Prospective Payment System on Horizon?
The Governor’s office recently proposed draft proviso language that would fund development of a budget-neutral RUGs-based PPS model for Medicaid reimbursement to reduce payment variability among SNFs for similar patients. AHCA would be expected to submit their plan of action by January 2014, with full implementation scheduled for July of 2014. FHCA expressed concerns about development and implementation in such a short time frame, and has proposed options including an impact study and more realistic implementation schedule (e.g. phase-in) if the legislature decides to implement.
CMS “Clarifies” Manual Medical Review (MMR) Process
On February 21, the Centers for Medicare and Medicaid Services (CMS) issued interim guidance regarding how the Manual Medical Review (MMR) process will be implemented in 2013 for Part B therapy charges for beneficiaries that exceed the $3,700 limit.
Remember that for October—December 2012, CMS started a prior approval process at $3,700 where providers submitted requests to their Medicare Administrative Contractor (MAC) for approval of up to 20 additional visits. With that request, providers included information such as the plan of care, progress reports, etc., to support medical necessity for the additional visits.
For 2013, CMS replaced the prior approval process with prepayment review (for now at least; both providers and MACs prefer POST-payment review). Under prepayment review, when the patient reaches $3,700 in Part B therapy charges, the MAC will send the provider an electronic Additional Development Request (ADR) asking for documentation so that the MAC can determine medical necessity for the services. This means that upon implementation, any beneficiary Part B claims above $3,700 result in an ADR.
Typically, MACs have 60 days to make a determination. While CMS required a decision within 10 days of receipt of the documentation under the prior approval process, we are not aware of such a requirement for post-payment reviews. At this point, it appears CMS has only recommended the 10 day review window to the contractors, it does not appear to be a mandate.
Once the MAC decides to pay or deny based on the ADR, the decision will be posted in the online Medicare DDE system. Obviously, you’ll need to regularly check for status updates and let your therapists know whether the services were denied or approved. One provider group believes that the additional therapy information required to be submitted beginning April 1, 2013 may result in changes to both short and long term therapy goals for residents.
Variable Rate Notification Reminder
If you are a provider with variable mortgage rate, don’t forget that April 15 is the semi-annual deadline for you to submit any current changes to your mortgage rate for an adjustment on your FRVS rate for the July 1 rate semester. Those with an unreported increase could be leaving money on the table and those with an unreported decrease risk an audit payback and interest rate reset down the road.
Author-Steve Jones
Fiscal Cliff Averted (and Extended)
Although the Chinese calendar says 2013 is the Year of the Snake, a more appropriate name might be the Year of the Band-Aid as 2013 is shaping up to be a series of short-term fixes to long-range problems for the federal government. The American Tax Relief Act of 2012 (The Act) was signed into law shortly after the new year, designed as a temporary fix to the “fiscal cliff” and delaying scheduled sequestration cuts for roughly two months. The Act addressed a hodgepodge of issues from tax provisions to Medicare payments which will affect providers this year. Unfortunately, the Act also sets up another fiscal showdown over spending by and funding of the Federal government, and of course, raising the debt ceiling.
Bonus Depreciation – The Act extends the 50% bonus depreciation provision for qualified property acquired through December 31, 2013. The use of bonus depreciation is especially advantageous because, unlike the IRC §179 expensing provision outlined below, there is no taxable income limitation applied to restrict the use of the deduction during the bonus period and the deduction can result in the creation of or increase to a company's current net operating loss.
Small Business Expensing (IRC §179) – The Act provides that for taxable years beginning in 2012 and 2013, small businesses may elect to expense up to $500,000 of machinery and equipment purchases, with a phase-out of the deduction when total purchases exceed $2,000,000, and a total deduction limited by the Company's taxable income.
Medicare Physician Payment Update – The Act averts the 26.5% payment cut to physicians caused by the sustainable growth rate (SGR) formula for one year. The Centers for Medicare & Medicaid Services (CMS) is currently revising the 2013 Medicare Physician Fee Schedule (MPFS) to reflect the new law’s requirements as well as technical corrections identified since publication of the final rule in November. Medicare Administrative Contractors (MACs) will be posting the MPFS payment rates on their websites no later than January 23, 2013.
The Multiple Procedure Payment Reduction, implemented last year, increases from 25, to 50% of the Practice Expense (PE) component for all therapy units provided in one day, except for the unit with the highest PE.
Extension Related to Payments for Medicare Outpatient Therapy Services – The Act extends the exceptions process for outpatient therapy caps through December 31, 2013. Providers of outpatient therapy services are still required to submit the KX modifier on their therapy claims when an exception to the cap is requested for medically necessary services furnished through December 31, 2013. The two separate caps one for physical therapy and speech language pathology services combined, and one for occupational therapy services, both increased to $1,900 for 2013. As always, the gross charges are used, so deductible and coinsurance amounts applied to therapy services count towards the limits.
The Act also extends the mandate that Medicare perform manual medical review of therapy services furnished January 1, 2013 through December 31, 2013, for which an exception was requested when the beneficiary has reached a dollar aggregate threshold amount of $3,700 for therapy services. There are two separate $3,700 aggregate annual thresholds that coincide with the caps mentioned above.
Beginning January 1st as a voluntary submission, all therapists providing Part B services must submit on their claim non-reimbursable G codes regarding a patient’s functional limitations. The submission of this information will become mandatory effective July 1, 2013.
2013 Medicare Premiums and Deductibles Announced
The CMS released the Medicare Part A and Part B premiums and deductibles for the calendar year 2013. The Notices indicate that the daily coinsurance for days 21-100 in a skilled nursing facility will increase from $144.50 to $148 in 2013. CMS announced the standard Medicare Part B monthly premium will increase 5% from $99.90 to $104.90 and the Medicare Part B annual deductible will increase by 5 percent from $140 to $147.
Author-Steve Jones
On Friday, the IRS issued newly revised percentable withholding tables to implement the rates that will be in effect this year. The tax rates in the tables range from 10%, through and including the new 39.6% rate that applies to income above $400,000 for individuals, $425,000 for heads of households, and $450,000 for married filing jointly.
MSL's Tax Team havs summarized this recent announcement from the IRS, including withholding rate changes and deadline dates for employers and payroll companies.
On January 2, 2013, a new tax bill became law by Congress passing, and the President signing, The American Taxpayer Relief Act of 2012 (the “Act”, TATRA). This new legislation provides a number of provisions that may have a direct impact on your 2013 individual and business income tax returns, including:
- Income Tax Rates
- Employee Payroll Tax
- Medicare Payroll Tax
- Long-Term Capital Gains Rate
- Alternative Minimum Tax (AMT) Exemption Amount
- Estate and Gift Taxes
- Bonus Depreciation
- Small Business Expensing
- Research and Experimentation Tax Credit
For more information, contact an MSL representative at 1.800.683.5401 TODAY!
Author: Steven R. Jones
New Compliance Requirements from Affordable Care Act
Several years ago, the Office of Inspector General (OIG) published compliance program guidance for nursing facilities setting forth seven elements of an effective voluntary compliance program and discussing risk areas that providers should target. Beginning in 2013, certain provisions in the Affordable Care Act (ACA) require the Department of Health and Human Services (HHS) and the OIG to promulgate regulations that impose on most healthcare providers and suppliers a mandatory form of compliance program intended to be "effective in preventing and detecting criminal, civil, and administrative violations" under the Medicare and Medicaid laws.
Those regulations "may" include a model compliance program. Specific elements of the program are expected to be more extensive for organizations that operate five or more facilities, and requirements may "specifically apply to the corporate level management of multi-unit nursing home chains. The compliance program under ACA mandates is divided into two categories: (1) nursing facilities and (2) all other providers/suppliers. The nursing facility compliance program provisions in the ACA are far more detailed and contain an implementation timeline, whereas Congress did not set forth in the legislation any time frame for other healthcare provider/supplier compliance program implementation, leaving it to the discretion of HHS.
By March 23, 2013, skilled nursing facilities must have "in operation" a compliance and ethics program that meets the Law's criteria. The very same day, the HHS Secretary shall have completed "an evaluation" of the compliance and ethics programs that nursing facilities will be required to establish. Sometime after March 23, 2013, the Secretary must submit an evaluation report to Congress with recommendations on changes to the regulatory requirements for nursing facility compliance programs.
In the current environment, failure to implement certain core compliance program features will invite further regulatory and law enforcement scrutiny, as well as increase potential False Claims Act liability for failure to prevent or identify improper federal healthcare program claims and payments.
Zone Program Integrity Contractor’s (ZPIC) New Weapon
There has historically been a wall between claims and cost reimbursement. ZPICs are trying to dismantle that wall. In the past, if auditors reviewed claims, their recoupments would be limited to claims for the period under audit. If claims were adjusted, the cost reports were not reopened to include the impact of those adjustments. This meant auditors could only go back and recoup for periods in which they reviewed claims data. In the last six months, ZPICs in Florida have instructed Medicare Administrative Contractors (MACs) to reopen Medicare cost reports to apply statistical findings to periods earlier than those reviewed and apply “disallowance percentages” determined from reviews of later claims (that have not yet been appealed). This has enabled CMS to recover monies as far back as three years earlier than the fiscal period claims they reviewed. Even more onerous, the providers immediately go into recoupment of the reopened cost report findings and the appeal process around cost reports is very long. It can take providers years to successfully fight these adjustments.
It has also upset the process of reviewing cost report audit adjustments. Since 1966 when Medicare was created, auditors had to cite a Medicare regulation to support each adjustment. The regulations around Medicare reimbursement could be found in section 42 of the Code of Federal Regulations (CFR). Statistical data around paid claims came from the Provider Statistical and Reimbursement Report (PSR) and cost report claim information was only adjusted to reconcile settlement data to the PSR. ZPICs in Florida are convincing Medicare MACs to reopen cost reports to apply statistical findings from their reviews to all cost reporting periods available for reopening. Since Medicare cost reports can be audited up to three years after the cost report is submitted and since cost reports are subject to reopening for three years from the date of the first audit, cost reports available for reopening may go back a number of years, creating several problems:
- MAC’s start immediately recouping alleged over payments from the reopened cost reports-potentially bankrupting the providers.
- MAC’s do not provide regulatory codes from the CFR for claims adjustments; leaving providers unable to properly dispute the adjustments to their cost reports. (assuming you can figure out a way to respond to a non-audit.)
- Since claims data from older periods (e.g. prior to a change of ownership) is not always available to the providers, they may not have access to respond to the disallowance.
While this may ultimately be determined an overreach by Medicare, many targets may never recover from the onslaught. If providers had time to utilize the Medicare cost report appeals process, the reopenings would probably not stand at hearing before the PRRB because:
- Long standing principles at the PRRB look unfavorably with using data from one period as a “proxy” for another period.
- Medicare would have difficulty producing actual claims data from the period reopened showing that any individual claim in that period should be reopened.
As discussed, the appeals process can take years. More bad news is that precedent indicates that financial hardship is not often a reason for the PRRB to accept an accelerated appeal hearing.
Author: Steven R. Jones
Financial Hurricane Preparedness Reminder
Once again, it is that time of year. Tropical storm Beryl kicked off the 2012 hurricane season for the east coast a little early, prompting us to offer the following tips regarding Medicaid reimbursement during the recovery process in the event of a hurricane or other natural disaster. Under certain conditions, the Medicaid program has allowed affected providers to have their Medicaid rate temporarily increased via an Interim Rate Request (IRR) for extraordinary increases in costs. Generally, the request must be filed within 60 days of occurrence. Normally, the effect of these expenses must be greater than $5,000 and cause, at a minimum, a one percent increase in the Medicaid rate on an annualized basis. The Agency for Health Care Administration (AHCA) has made exceptions for previous hurricane IRRs to eliminate ceiling limitations in the rate calculations to provide for full Medicaid participation in reimbursement for the increase in costs.
It is important that you keep detailed records, since supporting documentation is the key to having the IRR approved. This information includes paperwork relating to payroll and overtime expenses for those employees affected for the disaster period (along with the three most recent payroll period records against which the increase is benchmarked). Bonus payments will be excluded, so consider paying an hourly rate for your salaried staff as an alternative for the overtime they work. You should also assemble copies of all paid invoices by cost center, with the cancelled check or back-up documentation for cash disbursement, to support non-payroll expenses. These can include extra supplies and materials consumed or purchased to replace spoilage, meals, travel and lodging, transportation costs, non-capitalized repairs and replacement of damaged items. These costs will be submitted, net of any reimbursements expected or received from insurance policies and FEMA. Since cash is king during disasters and recovery, make sure you have some on hand. Of course, disbursements must be closely monitored and adequately documented.
The settlement amount granted for the IRR component must be accounted for in the cost-reporting period that is affected. Effective post-disaster procedures and protocol are essential in resuming normal operations and avoiding a financial disaster. These comments are based on AHCA’s response to previous disasters and may not be specifically supported by rule or regulations. FHCA has made SNF and ALF Emergency Planning Guides available at www.fhca.org.
Commercial Break
MSL’s Tim Powell and Steve Jones, along with Lana Waud (owner of A/R SNF Solutions billing consultants), will be presenting “Dealing with Denial, Managed Care Style” at the FHCA Annual Conference to help you avoid denials (and minimize delays) of Managed Care claims. This issue will be of critical import for all Medicaid providers when we transition to Medicaid Managed Care. The presentation is Monday, July 30 from 9:45-10:45, and will be repeated Wednesday evening from 5:30-6:30 pm. (Steve has promised that his jokes will NOT be repeated). Come see us at FHCA's Trade Show on July 30-31, booth #709.
At LeadingAge Florida’s Annual Conference, MSL’s Ron Shuck will be presenting “CCRC Equity Models” on Monday, July 23 at 10:30 am. Steve Jones will be presenting on “Florida Medicaid Managed Long-Term Care” on Tuesday, July 24 at 9:00 am. The repeat presentation has been moved to Thursday, July 26 at 11:00 am. Come see us LeadingAge Florida's Trade Show on July 23-24, booth #317.
Now, Back to Our Program - So, What’s a PTAN?
A PTAN (Provider Transaction Access Number) is a Medicare-only number issued to providers by Medicare contractors upon enrollment to Medicare. The first set of revalidation notices went to providers who are billing, but are not currently in PECOS. Contractors searched their local systems for the PTAN numbers and when they found a PTAN not in the PECOS system, a revalidation letter was sent. CMS asks all providers who receive a request for revalidation to respond to that request. When a Medicare contractor approves enrollment and issues an approval letter, the letter will contain the PTAN assigned to the provider. The PTAN is generally limited to interaction with Medicare contractors. The approval letter will note that the NPI must be used to bill the Medicare program and that the PTAN will be used to authenticate the provider when using Medicare contractor self-help tools such as the Interactive Voice Response (IVR) phone system, internet portal, on-line application status, etc.. Together, the NPI and PTAN identify the provider in the Medicare program. So make sure you keep your PTAN handy (and protected) so your interactions with Medicare contractors go as smooth as possible.
Part B Therapy Limits- Exceptions
While the exceptions process was extended through December 31, 2012, the extension legislation created some procedural changes:
The KX modifier must now be used on all claims exceeding the statutory level of the cap, which is $1,880 for 2012. Congress included this requirement because CMS contractors were not always requiring use of the modifier on claims exceeding the cap
Effective October 1, 2012, all therapy claims, above and below the level of the cap, must include the national provider identifier (NPI) of the physician responsible for certifying and periodically reviewing the plan of care.
Also effective October 1, 2012, all claims exceeding $3,700 will be subject to what the new law states is a “manual medical review process.” The bill notes that this process should be similar to the manual review under the original exception process instituted in 2006
The legislation also requires two reports on outpatient therapy to be completed in 2013. Congress directs the Medicare Payment Advisory Commission (MedPAC) to complete a report by June 15, 2013, that recommends payment reforms that better reflect acuity, condition, and the therapy needs of the patient
Finally on January 1, 2013 CMS is required to begin collecting additional data on therapy claims related to patient function during the course of therapy in order to better understand patient conditions and outcomes.
Author: Steven R. Jones
Dodging a Bullet?
Great news from the Medicare crystal ball - The CMS has indicated that an Update Notice would be released this year instead of a Notice of Proposed Rule Making for the FY2013 SNF Prospective Payment System (PPS). This signals that only payments will only be updated and we won’t see extensive policy changes (that would result in additional reimbursement cuts), since those generally require a full Notice of Proposed Rule Making and comment period. The notice, scheduled to be published no later than July 31, will at a minimum provide a SNF market basket update. The Affordable Care Act mandates that according to a productivity adjustment, the market basket update must be cut around 1%. Nevertheless, the industry should see a positive update from CMS. Congress has the prerogative to decrease or eliminate the update. At the end of the year, Congress will be looking for "pay fors" to fund various priorities including the doc fix and the therapy cap exceptions process, which expire on December 31st. Here is a quick summary of what we anticipate:
• Market basket update of approximately 2.6%. Currently, projections as of Q4 2011 indicate this to be 2.6%, but we continue to monitor for updates to see how data from Q1 2012 might affect this estimate.
• Productivity adjustment of 0.8%. This is due to the Affordable Care Act’s stipulation that Medicare payments for SNFs be reduced $14.6 billion over 10 years. The LTCH PPS proposed rule and the IPPS proposed rule were announced and each had a 0.8% productivity adjustment, so we anticipate this is to be true for all providers considering the wording of the provision in ACA.
• Overall SNF payment update of 1.8%. (2.6-.8) This may change after Global Insight provides Q1 2012 data which would potentially affect the market basket update.
Remember that because the Joint Select “Super” Committee didn’t come up with required budget savings, that 2% Medicare sequestration (across the board payment cuts) are scheduled to begin February 1, 2013.
Medicaid Policy Change
AHCA has posted, and FHCA circulated, changes to Medicaid payment policies that will be implemented effective July 1, 2012. Specifically, nursing facility claims will be denied with EOB 2107 when the long-term care benefit plan is not on the recipient’s file for the dates of service billed. The Department of Children and Families (DCF) must determine the recipient eligible for Medicaid nursing home services to be reimbursed. DCF must also determine Institutional Care Program (ICP) Medicaid eligibility for SSI (Supplemental Security Income) recipients and individuals that were eligible for Medicaid in the community before entering the facility. The good news is providers may continue to bill Medicaid for Medicare Part A coinsurances (level of care “X”) and Medicare B Crossover claims when the recipient is not ICP Medicaid eligible, but is eligible for Qualified Medicare Beneficiary (QMB). This should minimize disruptions to the write-off process for Medicare dually-eligible bad debts.
Please keep in mind that this change only means that these claims will be initially denied, rather than paid and then subject to recoupment by AHCA or a Medicaid Integrity Contractor. Also, AHCA does not intend to recoup any previously identified claims that would have been denied as part of this process. However, all prior paid claims are subject to recoupment during audit (Third Party Liability, Program Integrity, etc.) if ICP determination was not received.
For those providers with residents pending Medicaid approval, this rule change makes it even more crucial to ensure that residents’ ICPs are approved by DCF to avoid a delay in the retroactive reimbursement of claims and address any problems before billing.
Author: Steven R. Jones
Recovery Audit Document Limits Increased
The CMS announced in March the number of claims that a Recovery Auditor can request from provider has increased. The limits are based on the number of Medicare Claims for the previous calendar year. One of the major changes is that CMS can grant permission to the RA to increase the number of claims requested from the provider. The maximum number of requests per 45 days is now 400 (the previous limit was 200). The new provider limit is equal to 2% of all claims (including professional services) submitted for the previous calendar year and divided by eight (the previous limit was 1%). Finally, one ADR represents a beneficiary’s entire episode of care. This includes medical records for all services rendered from the date of admission to date of discharge.
Medicare Revalidations
If you are a provider enrolled with Medicare prior to March 25, 2011, be alert for a “revalidation letter” from your Medicare Administrative Contractor (MAC). The notices are being sent in accordance with the Patient Protection and Affordable Care Act (PPACA), Section 6401(a). CMS is urging providers and suppliers to refrain from submitting a revalidation until your MAC notifies you. Proactively submitting a revalidation will significantly impact the ability to process applications in a timely fashion and the ability to take advantage of innovative technologies and streamlined enrollment processes.
Providers have 60 calendar days from the postmark date of the revalidation letter to submit the completed enrollment forms and pay the fee (one 60 day extension can be requested). It is VERY important that the application to revalidate is filed timely and accurately, as even seemingly minor errors can invalidate the entire application, resulting in inability to bill and payment suspension. If an application is not received timely, CMS must revoke the provider’s billing privileges and impose a 1-year re-enrollment bar. A revocation will be effective 30 days after the notification of such action is mailed. The notice of revocation will also include your right to appeal which must be submitted in a timely manner to allow a re-examination of the revocation.
Following a revocation action, a provider can regain billing privileges by submitting a Corrective Action Plan within 30 days demonstrating it is in compliance with the Medicare requirements or request reconsideration before a contractor hearing officer within 60 days. Even if a provider is able to provide the necessary documentation to successfully regain billing privileges, recertification may only be retroactive to the date the appropriate documentation was submitted, resulting in lost revenue that no one can afford in today’s environment. Protect yourself by retaining documentation that information was timely submitted.
HIPAA Violations Result in Maximum Penalty
HHS recently reached an agreement with an entity subject to HITECH rules for the maximum penalty allowed - $1.5 million, This enforcement action is the first resulting from a breach report required by the Health Information Technology for Economic and Clinical Health (HITECH) Act breach notification rule. An investigation determined that unencrypted computer hard drives had been stolen from a facility which contained protected health information of over 1 million individuals, including member names, social security numbers, diagnosis codes, dates of birth and health plan identification numbers.
Although the number of breaches of security was significant, this should serve as a sobering reminder to all providers to review their own procedures and safeguards to adequately protect HIPAA regulated information. This includes computer hard drives, servers, PCs, and any electronic transmissions of any HIPAA-protected information by any means of electronic media. All HIPAA-protected information transmitted over any electronic media should be encrypted with a password provided in a separate transmission.