Medicare releases FY2022 final and proposed rules on payment and fee schedules

Read this if your organization is required to report on Provider Relief Funds.

On October 27, 2022, HRSA released an update to its Post-Payment Notice of Reporting Requirements for Provider Relief Funds (PRF) and American Rescue Plan (ARP) funds, the first update since June 11, 2021. Although many of the updates are used to add the additional reporting periods for PRF (Periods 5 through 7) and incorporate ARP into the reporting requirements, there are several things you can do to prepare and understand the nuances of Period 4 reporting. By way of a reminder, here are the remaining reporting time periods: 

Be aware. Did you know?

Before we provide a refresher on the data elements you need to prepare your portal submission, here are some very important elements to be aware of:

1. Phase 4 and ARP payments are required to be maintained in interest-bearing accounts.
2. ARP monies must be utilized before any unspent general PRF distributions. 
3. ARP distributions cannot be transferred or allocated to another recipient, because distributions were determined specific to the historical claims data of the qualifying recipient. If reporting is performed at the parent level, parent entities can still report on the ARP payments received by their subsidiaries.
4. PRF and ARP monies can be used for lost revenues only through the end of the quarter in which the Public Health Emergency (PHE) ends. Currently, the PHE has been extended through April 11, 2023.
5. Reporting through the HRSA portal will be on a cumulative basis. This may provide you the opportunity to change your option election for lost revenue (for the cumulative period) or correct for previous reporting errors.

Steps for reporting the required data elements

As a result of changes in requirements and the ARP distribution, the steps for reporting have morphed. Data will be entered in the following order:

1. Interest earned on PRF payments prior to Phase 4
2. Interest earned on Phase 4 and ARP payments 
3. Other assistance received
4. Use of ARP payments for eligible expenses
5. Use of ARP payments for lost revenues 
6. Use of Nursing Home Infection Control (NHIC) Distribution payments
7. Use of General and Targeted Distribution payments for eligible expenses
8. Use of General and Targeted Distribution payments for lost revenues
9. Net unreimbursed expenses attributable to COVID-19

Although PRF and ARP funds have similar utilization, it is important to review the Terms and Conditions associated with each distribution to help ensure compliance that the funds are used appropriately.  

Data elements you will need

The following is a category overview of the data elements that will be requested as you complete your portal submission:

1. Reporting entity identifying information
2. Associated subsidiary questionnaire—TIN(s), total PRF Targeted Distributions
3. ARP subsidiary attestation
4. Acquired or divested subsidiary information
5. Interest earned on PRF and ARP payments
6. Tax status and Single Audit information 
7. Other assistance received, broken down by quarters:
   a.   Department of the Treasury or SBA
   b.   FEMA
   c.   HHS COVID Testing
   d.   Local, state, and tribal government assistance
   e.   Business insurance
   f.    Other
8. Use of ARP payments (and related earned interest) on eligible expenses
9. Use of ARP payments (and related earned interest) on lost revenues attributed to COVID 
10. Use of NHIC Distribution payments
11. Use of PRF General and Targeted Distribution payments (and related earned interest) on eligible expenses
12. Use of PRF General and Targeted Distribution payments (and related earned interest) on lost revenues attributed to COVID
13. Net unreimbursed expenses
14. Personnel, patient, and facility metrics
15. Survey

Two reminders for reporting expenses and lost revenues:

1. Recipients with qualifying expenses of $500,000 or more will need to report expenses in greater detail. As a refresher, the expanded categories are as follows:
   
   General and Administrative (G&A) expense categories: Mortgage/rent, insurance, personnel, fringe benefits, lease payments, utilities/operations, and other G&A
   
   Healthcare related expense categories: Supplies, equipment, IT, facilities, and other health care related expenses
2. Patient service revenue must be reported at net and broken down by payor (Medicare Part A & B, Medicare Part C, Medicaid/CHIP, commercial, self-pay, and other)

The final step in the portal is to complete the required survey, which often catches recipients off-guard as they grow weary toward the end of rigors of the submission and ready to cross the finish line. Be prepared to respond to questions on the impact the PRF and ARP payments have made for your organization, whether the benefits have been overall operations, solvency, staff retention, COVID operations, etc.

HRSA audits—next steps

In addition to a federal Single Audit requirement when a recipient expends more than $750,000 of federal funding in one year (regardless of whether those federally sourced funds came directly from the federal government or were passed from a state or local government), HRSA may also perform its own audits of recipients. These audits will address the data used by the recipients to report on their usage of PRF and ARP monies. Recipients will need to provide support for lost revenue and expenses that justify the use of the funds that they received.

The HRSA is going to drill down on the revenue numbers, specifically looking at the general ledger (GL) and other select revenue tests. On the expenses side, they are going to review the GL, invoice dates, payments and more.

To complete this audit, HRSA will require a significant amount of supporting documentation. Ideally, most of these documents should already have been copied and set aside as support in anticipation of financial reporting requirements. Below is a partial list of items that could be requested during the audit:

• GL details
• Listing of expenses reimbursed with PRF and ARP payments grouped into specified categories
• Listing of patient care revenue by payor
• Listing of other sources of assistance
• Listing of expenses reimbursed with the other assistance received
• Detailed inventory listing of IT supplies
• Budget attestation from CEO or CFO and board minutes showing ratification of the budget before March 27, 2020
• Documentation of lost revenue methodologies
• Audited financial statements
• CMS cost reports for Medicare and Medicaid
• Other supporting documentation

If certain documentation isn’t available, recipients will need to request copies from their vendors. Missing documentation may make it difficult to justify the use of funds and may result in recipients having to repay a portion or all of their provider relief funding.

It is possible that certain expenses were not allowable under PRF and ARP. However, that doesn’t necessarily mean recipients will have to repay their funds. Recipients may have other lost revenue or expenses that would be allowed under PRF and ARP—but only if they have the documentation to prove it. That’s why it’s crucial that recipients have all relevant documentation for expenses and lost revenue over the periods they received provider relief funding.

To get ready for a potential HRSA audit, there are at least three immediate steps you should take:

• Select a responsible point person. One person should be responsible for coordinating the process to help ensure that nothing falls through the cracks or is overlooked. 
• Keep your PRF/ARP filing reports on hand. Pull any related supporting documentation and collate it into one place if it isn’t already.
• Identify what support is needed by doing a gap analysis. Determine where you need additional support or expertise and seek to close these gaps before the notification of any audit process.

Insufficient documentation may result in the recapture of provider relief funding by the HRSA. Fortunately, a lack of documentation is preventable with the right support and resources in place. If you would like more information or have any questions about your specific situation, please contact us. We’re here to help.

Release Date: July 27, 2022 
Federal Register Publication Date: August 1, 2022 
Effective Date: October 1, 2022  

The Centers for Medicare & Medicaid Services (CMS) issued a final rule that would update Medicare payment rates and policies for Inpatient Rehabilitation (IRF) Prospective Payment System (PPS) and IRF Quality Reporting Program (QRP) for the fiscal year 2023, as well as other provisions. Following is a summary of the major provisions of this final rule. 

IRF PPS Final Changes to Payment Rates: 

CMS finalized a 3.9% net increase in FY 2023 Medicare IRF PPS rates and a 0.6% decrease in outlier payments to maintain outlier payments at 3% of total payments. Net overall IRF payments will increase by 3.2%, or an estimated $275 million (note: the net overall increase is 3.2% due to rounding). Components of the increase are broken down as follows: 

Major Final Provisions: 

• Apply a 5% cap on any decrease in IPF’s wage index to mitigate negative effects of year-to-year variation in wage index 
• IRF teaching payment adjustment to reflect higher costs similar to the IPPS indirect medical education (IME) adjustment.  
• IRF QRP expands quality data reporting requirements to include all IRF patients, regardless of payor, beginning on October 1, 2024 
• Outlier threshold amount increased from $9,491 to $12,526 for FY2023.  
• Labor-Related Share remains the same as FY2022 at 72.9%. 
• Standard Payment Conversion factor is $17,878 for FY2023 
• Update to IRF Cost-to-Charge Ratio (CCR) ceiling and urban/rural averages for FY2023.  
  • Estimated national average CCR of 0.466 for rural IRFs. 
  • Estimate national average CCR of 0.392 for urban IRFs. 
  • National Ceiling of 1.41 for FY2023 

Sources:  

CMS-1767-F Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2023 and Updates to the IRF Quality Reporting Program. 

Release Date: July 27, 2022
Federal Register Publication Date: July 29, 2022
Effective Date: October 1, 2022

The Centers for Medicare & Medicaid Services (CMS) issued a final rule that would update Medicare payment rates and policies for Inpatient Psychiatric Facility (IPF) Prospective Payment System (PPS) for the fiscal year 2023, as well as other provisions. Following is a summary of the major provisions of this final rule.

IPF PPS Final Changes to Payment Rates:

CMS finalized a 3.8% net increase in FY 2023 Medicare IPF PPS rate and a 1.2% decrease to the outlier payments to maintain outlier payments at 2% of total payments. Net overall IPF payments will increase by 2.5%, or an estimated $90 million increase (note: the net overall increase is 2.5% due to rounding). Components of the increase are broken down as follows:

*Market based update for FY23 would be the highest implemented due to recent high inflationary trends impacting the outlook for price growth over the next several quarters.

Major Final Provisions:

• Apply a 5% cap on any decrease in IPF’s wage index to mitigate negative effects of year-to-year variation in wage index
• IPF Federal per diem base rate from $832.94 to $865.63
• IPF Labor-Related Share from 77.2 percent to 77.4 percent.
• Update to IPF Cost-to-Charge Ratio (CCR) ceiling and urban/rural averages for FY2023.
  • National Median CCR of .05720 for rural IPFs.
  • National Median CCR of .4200 for urban IPFs.
  • Rural ceiling of 2.0412
  • Urban ceiling of 1.7437

Sources:

CMS-1769-F Medicare Program; FY 2023 Inpatient Psychiatric Facilities Prospective Payment System-Rate Update and Quality Reporting-Request for Information.

Release Date: July 07, 2022
Federal Register Publication Date: Scheduled for July 29, 2022
Effective Date: January 1, 2023
End of Comment Period: September 6, 2022

The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update Medicare payment rates under the Physician Fee Schedule (PFS) for the calendar year 2023, as well as other Part B provisions. Following is a summary of the major provisions of this proposed rule.

PFS Proposed Changes to Conversion Factor:

• PFS conversion factor reflects the statutory update of 0%, expiration of the 3% increase in PFS payments for CY2022 provided by the Consolidated Appropriations Act of 2021 (CCA), 1.55% reduction necessary for changes in relative value units for budget neutrality, and anesthesia-specific practice expense and malpractice adjustments of 0.53%.

Major Provisions Proposed:

• Future rebasing and revision of the Medicare Economic Index (MEI) cost share weights that would use publicly available data from the US Census Bureau NAICS 6211 Offices of Physicians to set PFS payments rates. Using new MEI cost weights for PFS rate setting would not change overall spending on PFS services but would likely result in significant changes to payments among the various PFS services. Therefore, CMS is not proposing the use of the newly proposed method for CY2023 rate setting and is seeking comment on the proposed updated MEI cost share weights to calibrate payment rates and update the geographic practice cost indices (GPCI) under the PFS in the future.
• Changes in coding and documentation for Other Visits (hospital inpatient, hospital observation, emergency department, nursing facility, home or residence services, and cognitive impairment assessment) intended to reduce administrative burden using a similar approach to changes finalized in the CY2021 PFS final rule for office/outpatient Evaluation and Management (E/M) visit coding and documentation. Also propose to maintain the current billing policies that apply to E/M visits while potential revisions are considered for future rulemaking. 
• Delay the Split (or Shared) E/M visits policy finalized in CY 2022 related to the definition of substantive portion as more than half the total time. Until CY 2024, clinicians will continue to have a choice of meeting the definition of substantive portion based on history, physical exam, medical decision making, or more than half of the total practitioner time spent.
• Proposing to cover several services that were temporarily available as telehealth services during the PHE through CY 2023 on a Category III basis and extending the time these services are temporarily included on the telehealth services list for a period of 151 days following the end the PHE. 
• Telehealth claims would require the appropriate place of service (POS) indicator to be included on the claim instead of modifier “95” after the period of 151 days following the end of the PHE. For Medicare telehealth services furnished via audio-only technology modifier “93” would be available, where appropriate. 
• Establish a new General Behavioral Health Integration (BHI) service for monthly care integration where mental health services performed by Clinical Psychologists (CP) or Clinical Social Workers (CSWs) is the focal point of care integration. This new General BHI service would also allow a psychiatric diagnostic evaluation to serve as the initiating visit. 
• Make an exception to the direct supervision requirement under “incident to” regulations to allow behavioral health services provided by auxiliary personnel (such as licensed professional counselors and licensed marriage and family therapists) incident to the services of a physician or non-physician practitioner (NPP) to be allowed under general supervision of a physician or NPP, rather than under direct supervision.
• Proposing new HCPCS codes and valuation for Chronic Pain Management and treatment services (CPM) that would include a bundle of services furnished during a month. 
• Opioid Treatment Program (OTP) would revise the pricing methodology for the drug component of the methadone weekly bundle and the add-on code for take-home supplies of methadone. CMS also proposes to allow the OTP intake to be furnished via two-way audio-video communications technology when billed for the initiation of treatment with buprenorphine, when authorized by the Drug Enforcement Administration (DEA) and Substance Abuse and mental Health Services Administration (SAMHSA). Audio-only communication technology to initiate treatment with buprenorphine would also be permitted where audit-video technology is not available. 
• Create a new G-code for audiologists to bill for services without a physician referral for non-acute hearing or balance assessments unrelated to disequilibrium, hearing aids or examinations for the purpose of prescribing, fitting, or changing hearing aids. Billing the new G-code would be limited to once every 12 months.
• Expand coverage for certain colorectal cancer screening tests by reducing the minimum age to 45 years and considering a follow-up screening colonoscopy after a Medicare covered at-home test to be a preventative service.
• Preventive vaccine administration would receive annually updated payment amount based on the increase in the MEI and adjustment for geographic locality. Also, CMS proposes to continue the additional payment for at-home COVID-19 vaccinations and clarifies that policies regarding the administration of COVID-19 vaccines and monoclonal antibody products will continue until the Emergency Use Authorization (EUA) declaration for drugs and biological products is terminated.
• CMS proposes a variety of changes for the Quality payment Program and Medicare Shared Savings Program.

Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs):

• Add the new chronic pain management and behavioral health integration services to the RHC/FQHC-specific general care management HCPCS code, G0511.
• Policies to extend telehealth flexibilities for 151 days after the PHE would be applicable to RHCs and FQHCs as well. 
• Provider-based RHC’s payment limit per visit would be established by using a 12-consecutive month cost report. 

Sources: 
CMS-1770-P Medicare and Medicaid Programs; CY 2023 Payment Policies under the Physician Fee Schedule and Other Changes to Part B Payment Policies; Medicare Shared Savings Program Requirements; Medicare and Medicaid Provider Enrollment Policies, Including for Skilled Nursing Facilities; Conditions of Payment for Suppliers of Durable Medicaid Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS); and Implementing Requirements for Manufacturers of Certain Single-dose Container or Single-use Package Drugs to Provide Refunds with Respect to Discarded Amounts

When we meet with hospital boards to review the results of their audit, we are most often asked to share what we are seeing in the industry—and how their hospital compares with others in our client base. As we (hopefully) emerge from the COVID-19 pandemic, I wanted to see where we are as an industry after two challenging years. In reviewing our own benchmarking data, and reading this very comprehensive CFO Outlook Survey by BDO, it reinforced that these are challenging times indeed. 

The pressures of top line sustainability, cost containment, and recruitment and retention of talent are very real. And while healthcare providers are seasoned to the continual challenges and opportunities, the difference going forward, post-pandemic, will be what this looks like for rural providers without the influx of stimulus funds and beyond the initial surge of postponed surgeries. Based on the BDO survey, 69% of healthcare organizations surveyed expect an increase in profitability. Is your organization prepared to take the steps to make it happen? What is your financial resilience outlook?

You can read the survey here. If you would like to discuss further, please contact our Hospital Consulting team. We’re here to help.
 

Read this if you have not yet reported for Phase 1.

Phase 1 provider relief reporting portal

HRSA opened the Provider Relief Funds (PRF) reporting portal on July 1, 2021, for Phase 1 PRF reporting. In Phase 1, providers will be reporting on the use of PRF received prior to June 30, 2020. While Phase 1 reporting was originally due September 30, 2021, HRSA has provided a 60-day grace period for the reporting period. Providers will be considered out of compliance with the reporting requirements if they do not submit reporting by November 30, 2021. Providers can submit their reporting on the Provider Relief Fund portal. Please note:

1. Providers must register for the reporting portal, as this is not the same portal as the application and attestation portal. The portal registration must be completed in one session. Follow the link to the Portal Registration User guide. 
2. Providers can only report on eligible lost revenues and expenditures related to payments received before June 30, 2020. Providers are not yet allowed to report on payments received subsequent to June 30, 2020. See the June 11, 2021 Reporting Requirements Notice for more detail on reporting requirements.
3. The period of availability for Phase 1 lost revenues and eligible expenditures is January 1, 2020 through June 30, 2021.
4. It is extremely helpful to complete the HRSA provider portal worksheets prior to beginning the portal data entry. 
5. Providers should return unused funds as soon as possible after submitting their report. All unused funds must be returned no later than 30 days after the end of the grace period. (December 31, 2021)
6. Provider Relief Funds are considered federal awards under Assistance Listing Number (ALN) 93.948. Providers, both for-profit and not-for-profit, may be subject to a Uniform Guidance Audit if they expend more than $750,000 of federal awards during the provider’s fiscal year. 
7. Providers are able to retrieve their data submission from the portal if a copy was not retained during the submission process.

Your BerryDunn Hospital team is here to help you navigate the Provider Relief Fund reporting and compliance requirements. Please contact us if you have any questions or would like to talk about your specific situation. 

Read this if you are involved with financial statement audits or use audited financial statements. 

Almost as exciting as the look of a new outfit or (completion of) a renovation project, SAS 134 brings a new design to the auditor’s report accompanying your audited financials for periods ending on or after December 31, 2021. Why the new look, you ask? 

Users spoke and the AICPA Auditing Standards Board listened. The new standard significantly changes the layout and content of the report (including management’s responsibilities) and permits communication of key audit matters (areas of higher assessed risk of material misstatement, areas involving significant judgment, or significant events or transactions during the period). Implemented changes include: 

• The auditor’s opinion is now at the beginning of the audit report and otherwise strengthens the transparency for the auditor’s opinion.
• The standard clarifies the responsibilities of both management and the auditors, strengthening the financial audit. 

Sample auditor’s report

The simplest way to relay the changes is with an example. The following report is a basic illustration in which an unmodified opinion was issued and the auditor was not engaged to communicate key audit matters. 

If you have questions or would like to speak to us about your specific situation, please contact us. We’re here to help.