1. HFMA Western Michigan Chapter Revenue Cycle January 28, 2010 Presenters: Jenni Hoonhorst, FHFMA Debby Sieradzki, PhD MAKING SURE YOUR BAD DEBTS PASS MEDICARE AUDITS 2. Learning Objective Understand what documentation is required by the fiscal intermediary Understand how your audit support and bad debt/collection policies must be consistent Tips to help your audit go smoother 3. Medicare Bad Debts Defined Medicare Bad Debts are primarily Medicare Deductible and Coinsurance amounts that have gone through the hospitals collection process and have been written off to bad debt. 4. Criteria for Allowable Bad Debt 1. Must be related to covered services and derived from deductible and coinsurance amounts. 2. Must be able to establish that reasonable collection efforts were made. 3. The debt was actually uncollectible when claimed as worthless. 4. Sound business judgment established that there was no likelihood of recovery at any time in the future. 5. What is Reasonable Collection Efforts? Must be similar to the effort the provider puts forth to collect comparable amounts from non- Medicare patients. It must involve the issuance of a bill on or shortly after discharge or death of beneficiary to the party responsible for the patients obligations. There must be subsequent billings, collection letters, and telephone calls which constitute a genuine collection effort. After reasonable collection efforts, the debt may be deemed uncollectible if it remains unpaid 6. Collection Agencies Collection agencies may be used in addition to or in lieu of subsequent billings, follow up letters, and other contact. Referral of Medicare uncollected accounts should be treated the same as all uncollected accounts. Agency collection efforts need to be documented in the patients file just as if the provider was performing the collection. Clarification from CMS requires that the bad debt must be returned from the collection agency before it can be claimed. 7. Medicare Bad Debts under State Welfare Programs (Title 19) States are not obligated to pay deductible and coinsurance amounts for services that are beyond the scope of the State Title 19 plan. If the State is obligated by statue or under the terms of its plan to pay all or part of deductible and coinsurance, those amounts would not be allowable as Medicare bad debts. The State may be obligated to pay, but 8. Indigent and Charity Care Patients Once indigence is determined, the debt may be deemed uncollectible without applying reasonable collection efforts. Patients indigence is determined by the provider, not the patient The provider considers all of the patients resources The provider determines that no source other than the patient would be legally responsible for the patients medical bills. Document in the patient's file how indigence was determined. Include all backup to substantiate 9. Recoveries and Partial Payments Recoveries are to be netted against bad debts in the fiscal year the recovery is received. If only a partial payment is received, payment should be applied proportionately to Part A and Part B deductible and coinsurance, and non- covered services. 10. Bad Debt list Preparation 1. Responsibility for the listing may be with Reimbursement, Patient Accounting, and/or Information Services. The best listings usually involve all three departments, or the use of a consultant who specializes in bad debt preparation). 2. Methods vary by provider based on resources available. The method may be as simple as compiling a list based on write off codes. The best methods are more complex and may include matching detailed PS&R deductable and coinsurance amounts with hospital patient detail. 11. Submitting the Medicare Bad Debt Listing to the Intermediary 1. Hospitals are required to submit their detailed bad debt listings with their cost report submission. 2. Hospitals may have the opportunity to provide updated listings at the time of audit. Medicare Bad Debt audit policies often change and may require the hospital to revise their listings. 3. Be sure to have all the columns per the CMS- 339 completed. For example, you need to provide the Medicaid RID (Recipient ID) on Medicaid crossover claims. The FI may reject a listing if it is deemed not to be complete. 12. Notice of audit What should you do? Call the Fiscal Intermediary and ask the following: A. If you believe that, based on your last audit, there may be problems with your listing, request providing a new updated list. B. Let them know that you want to discuss the sample methodology if bad debts will be scoping for audit. Be sure to get them to agree that they will discuss it with you BEFORE they pull a sample. C. Establish dates for providing support. This may have been stated in the audit letter, but generally this might only be 2 weeks from the date of the letter (and you may have received the letter a week after the date of the 13. Entrance Conference - Timing is Everything! 1. Request when the Final Audit NPR date will be. 2. Establish agreed-upon dates for providing additional support to the Intermediary. 3. Identify dates when you can expect to receive the preliminary and final adjustment reports. 14. Entrance Conference - Timing is Everything! (cont) A. Audit the staff auditors are usually very good about providing a preliminary adjustment report and accepting additional support within the time allowed. This is the period when you think you have everything resolved, etc B. Supervisory Review - IMPORTANT! The staff auditor will turn in their work for supervisory review. This may be very close to the required NPR date. Be sure that you set a date that you will receive a copy of ALL the final audit work papers including the ACL extrapolation. If there are new issues at the time of supervisory review, you need to have ample time to provide additional support. The supervisor may finalize and NPR the audit (along with new adjustments) without allowing the hospital the opportunity to provide additional support . Do all you can upfront to agree on a date and period of time that you can review the final adjustment with ALL of the audit work papers. NGS will typically send only the adjustment report without any support stating they will send you the support after it has been NPRd. Do not allow this to happen if possible. 15. Going to Audit 1. The fiscal intermediary will review the list and determine whether or not the Medicare bad debt listing will scope for audit. The fiscal Intermediary may determine the following: a) The entire listing will scope for audit b) Part of the list will scope for audit c) The listing will not scope for audit 16. Going to Audit (cont) 2. If the listing scopes for audit, the Fiscal Intermediary will pull a sample. It is helpful to discuss with the auditor how the sample will be determined before being pulled. (Call and let them know you want to discuss this as soon as you receive the audit letter). If the FI has already pulled a sample, it will be difficult to have a new sample pulled. Key factors impacting sample include: Sample size, stratified amounts, etc. Separate listings between patient type (IP and OP) and category (Traditional/Dual Eligible) 17. What will the Fiscal Intermediary require at the time of audit? A copy of the hospitals bad debt policy for the period being audited A copy of the charity policy may be requested A copy of the hospitals collection policies A copy of the collection policies used by each of the collection agencies may also be requested. 18. Support Required Traditional Claims 1. Copy of the UB 2. Copy of the Medicare voucher (If available, the PS&R detail report may be submitted) 3. Patient account history showing the date of the write off 4. Evidence that you have removed fee screens on outpatient accounts. (PS&R detail report, FSS screens, etc.) 5. Evidence that you have contacted Probate to bill the estate for deceased patients 6. May request the collection notes/activity from the collection agency. 19. NGS Instructions How to identify Fee Screen amounts Below are the instructions on how to identify the fee based services for Fee Screen Amounts: 1. Map screen 171A in FISS identifies ded/coins for each charge code 2. Log into FISS and use 01-Inquiries 3. Then 12 - which is claim inquiry 4. Input the HIC number and DOS 5. Locate the claim you want and enter a S (show) at the left of claim 6. Go to page 2 - which is claim detail by entering F11 20. What if a hospital doesnt have access to the FSS screens? Per Sue Liu: They can look at the revenue codes on the detailed PS&R. PT, OT, ST, Mammogram, and etc are fee based services. However, they may not catch all of them. (Some of revenue codes 63x or 64x may be fee based also.) The problem is a listing of revenue codes for the provider to identify the fee based services does not exist. Our auditors usually go to the details fee screen to be sure, but it is more time consuming. 21. Fee Screen Implications 1. Some Radiology and Lab codes may be paid as a fee screen or may be bundled with the APC. (You will see the same revenue codes on your PS&R Summaries for APCs and Fee Screen payments). Dont let NGS deny you a fee screen amount based on code alone. It may not have been paid as a fee screen. 2. Codes may be considered a fee screen before or after certain dates. Make sure that NGS does not deny a code that may now be considered a fee 22. Support Required Crossovers (Medicaid) 1. Copy of the UB 2. Copy of the Medicare voucher (If available, the PS&R detail report may be submitted) 3. Patient account history showing the date of the write off 4. Evidence that you have removed fee screens on outpatient amounts. (PS&R detail report, FSS screens, etc.) 5. Medicaid Voucher (NGS will not accept the electronic version) 6. May require the FD622 for Outpatients 7. Psych is paid at the county level and generally does not generate a detailed voucher. NGS will request a Medifax as evidence of Medicaid eligibility. (Note: The state is not sending Psych data to Medifax at this time) 23. Michigan Medicaid (legacy) Vouchers 1. NGS has not had time to review the new Medicaid Voucher to determine how they will be auditing them. 2. Evidence that you have billed Medicaid is not enough. The FI looks for the following: 107 Codes for IP and 840 Codes for Outpatients (Medicare has paid more than Medicaid) Rejected accounts are not allowed. They must be re-billed and accepted to be allowable for bad debt. Certain codes are not allowed e.g. 023 = Not eligible for DOS 24. Problems with the Michigan Medicaid (legacy) Vouchers 1. The FI will require that they see evidence of full and correct amounts billed to Medicaid. The Amount Approved or Billed does not always appear on the Medicaid voucher correctly. NGS has not accepted a copy of the UB billed to Medicaid as evidence that the correct amount was billed. 2. The FD622 report may provide the total amount billed, but again, it is not always 100% accurate. Some hospitals do not keep the FD622 reports and they are not available. 3. The FD622 may indicate a Patient Pay amount that is not accurate. Many FIs outside of Michigan will try to disallow these amounts saying that there was a spend down amount not met. (A call to Sue Lius office will help with this issue) 4. The FI may try to disallow an account because the name on the Medicaid voucher may not be the same as the name on the Medicare voucher. Be sure to point out the control numbers that are on both the Medicare and Medicaid vouchers that proves that they are the same 25. Audit problems with Charity Care Patients 1. The auditor will request a copy of the hospitals Charity Care policy. If a copy is not provided, all of the Charity Care will be disallowed. (If you are claiming Charity Care, you should insist on a separate sample listing. There is a higher error incidence with Charity Care, and you do not want this to impact your other listings) 2. Charity support, including the worksheet used to determine if the patient qualifies, will be scrutinized in detail. Any item in the Charity Care policy not in the patient support will be reason for disallowance. 26. ACL Sampling 1. ACL is the most punitive and harsh sampling methodology to date. There are 3 levels of errors that may be applied against a sample: a) Most Likely Error b) Upper Error Limit c) Upper Error Limit plus the basic precision 2. The method used is based on auditor discretion. At the entrance conference, request that they use the Most Likely Error when applying any errors. Note: Most re- openings challenging the use of the Upper Error limits have been adjusted down to the Most Likely Error. 27. ACL Sampling (cont) 3. It is important to receive the ACL sampling error worksheets so you can determine which method was used. The FI may defend using the Upper Error Limit because of the number of errors in a sample. However, the error may represent only small partial amounts (fee screens, etc.) and are not full errors. 4. Do not allow the Basic Precision to be included in the Upper Error limit. 5. If you are having difficulty getting all of the support you need for an account, and it results in an error, it may be helpful to indicate the amount of disallowance that you will have if the support is not 28. Audit Etiquette 1. Be nice. The Fiscal Intermediaries are people too and they have a difficult job. It is not always easy when they appear to be unreasonable. 2. Help the FI remember important upcoming dates (Hijust a quick reminder that the final adjustments and work papers that we agreed to at the Entrance Conference are due on Tuesday) Be sure to copy the audit manager on your correspondence. 3. If you have an auditor that worked well with you, write a short note of appreciation and copy their audit manager. A positive comment on an auditor at the Exit Conference may also be made. 4. Remember that you may be working with the same auditors 29. QUESTIONS? lubaway, masten & company, ltd. Healthcare regulatory, financial, revenue cycle and managed care consulting services Jenni Hoonhorst (616)560-6797 Debby Sieradzki (586) 292-6446 510 Highland Avenue #311 Milford, MI 48381