Medicare Sequestration Update

Medicare Sequestration Update

 

LUTZ BUSINESS INSIGHTS

 

Medicare Sequestration Update

medicare sequestration update

julianne kipple, healthcare shareholder

 

The Budget Control Act of 2011 (BCA; P.L. 112-25) established a Medicare Sequestration of 2%, which is an automatic reduction of certain federal spending as a budget enforcement tool. Originally, the sequester was supposed to be in effect from FY 2013 to FY 2021. However, most recently, the Infrastructure Investment and Jobs Act (P.L. 117-58) extended the sequester through FY 2031.

Additional legislation, including the CARES Act and the Protecting Medicare and American Farmers Act, has suspended the application of the sequester to Medicare from May 1, 2020, through March 30, 2022. It also limited Medicare reductions to 1% from April 1, 2022, through June 30, 2022. As of now, the full 2% Medicare sequestration will be in effect starting July 1, 2022.

Various hospital advocacy groups have been pushing to obtain additional relief from the Medicare payment sequester. However, the Federal Funding bill passed in March 2022 did not include any Medicare sequestration relief, although it did include some temporary relief on eligibility criteria for the 340B Drug Pricing Program.

If you have any questions, please contact us or learn more about our healthcare accounting and consulting services.

 

Sources: Congressional Research Service (March 29, 2022). Medicare and Budget Sequestration. https://sgp.fas.org/crs/misc/R45106.pdf

ABOUT THE AUTHOR

julianne kipple

402.827.2075

jkipple@lutz.us

LINKEDIN

JULIANNE KIPPLE + HEALTHCARE SHAREHOLDER

Julianne Kipple is a Healthcare Shareholder at Lutz with over 12 years of professional experience in the healthcare industry. Her expertise is in accounting and consulting services for healthcare facilities, including outsourced CFO services, Medicare and Medicaid reimbursement, and Medicaid Disproportionate Share Surveys (DSH).

AREAS OF FOCUS
AFFILIATIONS AND CREDENTIALS
  • Healthcare Financial Management Association, Member
  • American Institute of Certified Public Accountants, Member
  • Nebraska Society of Certified Public Accountants, Member
  • Certified Revenue Cycle Representative
  • Certified Public Accountant
  • Certified Healthcare Financial Professional
EDUCATIONAL BACKGROUND
  • BSBA in Accounting, with high distinction, Creighton University, Omaha, NE
  • MBA, Creighton University, Omaha, NE

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CMS Blanket Waivers Update

CMS Blanket Waivers Update

 

LUTZ BUSINESS INSIGHTS

 

CMS Blanket Waivers

cms blanket waivers update

julianne kipple, healthcare shareholder

 

On April 7, 2022, CMS issued a memorandum that ended specific waivers for skilled nursing facilities/nursing facilities (SNFs/NFs), inpatient hospices, intermediate care facilities for individuals with intellectual disabilities (ICF/IIDs) and end-stage renal disease (ESRD) facilities. CMS will end the specific waivers in two groups, the first 60 days from the issuance of the memorandum and the second 30 days from the issuance of the memorandum.

CMS notes that they targeted these specific waivers as they continue to review the need for existing emergency blanket waivers issued in response to COVID-19. They believe that these facilities have developed policies or other practices that mitigate the need for the specific waivers. Also noted, they targeted waivers that should be restored to address the risks to resident health and safety that are not related to infection control. Applicable waivers will remain in effect for hospitals and critical access hospitals (CAHs).

 

Blanket Waivers Ending 30 days from publication of Memorandum:

  1. Resident Groups – 42 CFR §483.10(f)(5)
  2. Physician Delegation of Tasks in SNFs – 42 CFR §483.30(e)(4)
  3. Physician Visits – 42 CFR §483.30(c)(3)
  4. Physician Visits in Skilled Nursing Facilities/Nursing Facilities – 42 CFR §483.30
  5. Quality Assurance and Performance Improvement (QAPI) – 42 CFR §483.75(b)–(d) and (e)(3)
  6. Detailed Information Sharing for Discharge Planning for Long-Term Care (LTC) Facilities – 42 CFR §483.21(c)(1)(viii)
  7. Clinical Records – 42 CFR §483.10(g)(2)(ii)

 

Blanket Waivers Ending 60 days from publication of Memorandum:

  1. Physical Environment for SNF/NFs – 42 CFR §483.90
  2. Equipment Maintenance & Fire Safety Inspections for ESRD facilities – 42 CFR §494.60(b) and(d)
  3. Facility and Medical Equipment Inspection, Testing & Maintenance (ITM) for Inpatient Hospice, ICF/IIDs and SNFs/NFs – 42 CFR §§418.110(c)(2)(iv), 483.470(j), and 483.90
  4. Life Safety Code (LSC) and Health Care Facilities Code (HCFC) ITM for Inpatient Hospice, ICF/IIDs and SNFs/NFs – 42 CFR §§ 418.110(d)(1)(i) and (e), 483.470(j)(1)(i) and (5)(v), and 483.90(a)(1)(i) and (b)
  5. Outside Windows and Doors for Inpatient Hospice, ICF/IIDs and SFNs/NFs – 42 CFR §§418.110(d)(6), 483.470(e)(1)(i), and 483.90(a)(7)
  6. Life Safety Code for Inpatient Hospice, ICF/IIDs, and SNFs/NFs – 42 CFR §§418.110(d), 483.470(j), and 483.90(a)
  7. Paid Feeding Assistants for LTC facilities: 42 CFR §§483.60(h)(1)(i) and 483.160(a)
  8. In-Service Training for LTC facilities – 42 CFR §483.95(g)(1)
  9. Training and Certification of Nurse Aides for SNF/NFs – 42 CFR §483.35(d) (Modification and Conditional Termination)

If you have any questions, please contact us or learn more about our healthcare accounting and consulting services.

 

More information

Specific waivers that will be ending:

Current emergency blanket waivers in effect due to the COVID-10 pandemic:

ABOUT THE AUTHOR

julianne kipple

402.827.2075

jkipple@lutz.us

LINKEDIN

JULIANNE KIPPLE + HEALTHCARE SHAREHOLDER

Julianne Kipple is a Healthcare Shareholder at Lutz with over 12 years of professional experience in the healthcare industry. Her expertise is in accounting and consulting services for healthcare facilities, including outsourced CFO services, Medicare and Medicaid reimbursement, and Medicaid Disproportionate Share Surveys (DSH).

AREAS OF FOCUS
AFFILIATIONS AND CREDENTIALS
  • Healthcare Financial Management Association, Member
  • American Institute of Certified Public Accountants, Member
  • Nebraska Society of Certified Public Accountants, Member
  • Certified Revenue Cycle Representative
  • Certified Public Accountant
  • Certified Healthcare Financial Professional
EDUCATIONAL BACKGROUND
  • BSBA in Accounting, with high distinction, Creighton University, Omaha, NE
  • MBA, Creighton University, Omaha, NE

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RHC Testing & Mitigation (RHCCTM) Program Reminder

RHC Testing & Mitigation (RHCCTM) Program Reminder

 

LUTZ BUSINESS INSIGHTS

 

RHC Testing & Mitigation (RHCCTM) Program

rhc testing & mitigation (rhcctm) program reminder

julianne kipple, healthcare shareholder

 

Eligible Rural Health Clinics (RHCs) received RHC Testing and Mitigation (RHCCTM) program funds of $100,000 in June of 2021 under the American Rescue Plan Act of 2021. The program supports maintaining and increasing COVID-19 testing efforts, expanding access to testing in rural communities, and expanding the range of mitigation activities in local communities.

Allowable Expenses

Please note that allowable expenses under the RHCCTM program need to be expended by 12.31.2022. Allowable expenses may be incurred from January 1, 2021 – December 31, 2022. There is also mandatory registration and monthly reporting through the RHC COVID-19 Reporting Portal for this distribution. RHC COVID-19 Testing and Mitigation Program reporting is anticipated to continue until January 31, 2023.

RHCCTM Program funds may not be used for direct provider-to-patient vaccine administration (i.e., shot-in-arm). The scope of the direct provider-to-patient vaccine administration does not include associated costs and add-on services necessary to facilitate or in conjunction with the direct provider-to-patient vaccine administration.

RHCCTM vs. RHCCT

Please note the RHC Testing and Mitigation (RHCCTM) is a different program than the RHC Testing Program (RHCCT). The RHC Testing (RHCCT) Program distributed $49,461.42 per RHC site and had different allowable expenses. Those program funds had to already been expended by the end of last calendar year (12.31.2021).

  1. Allowable expenses for the RCHCTM Program: https://www.hrsa.gov/coronavirus/rural-health-clinics/testing/allowable-expenses
  2. Reporting Details can be found here: https://www.hrsa.gov/coronavirus/rural-health-clinics/testing/reporting
  3. Additional information on the RHCCTM program: https://www.hrsa.gov/coronavirus/rural-health-clinics/testing

If you have any questions, please contact us or learn more about our healthcare accounting and consulting services.

ABOUT THE AUTHOR

julianne kipple

402.827.2075

jkipple@lutz.us

LINKEDIN

JULIANNE KIPPLE + HEALTHCARE SHAREHOLDER

Julianne Kipple is a Healthcare Shareholder at Lutz with over 12 years of professional experience in the healthcare industry. Her expertise is in accounting and consulting services for healthcare facilities, including outsourced CFO services, Medicare and Medicaid reimbursement, and Medicaid Disproportionate Share Surveys (DSH).

AREAS OF FOCUS
AFFILIATIONS AND CREDENTIALS
  • Healthcare Financial Management Association, Member
  • American Institute of Certified Public Accountants, Member
  • Nebraska Society of Certified Public Accountants, Member
  • Certified Revenue Cycle Representative
  • Certified Public Accountant
  • Certified Healthcare Financial Professional
EDUCATIONAL BACKGROUND
  • BSBA in Accounting, with high distinction, Creighton University, Omaha, NE
  • MBA, Creighton University, Omaha, NE

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5.11.22 | ERC + ImagiNE: Business Tax Incentives Explained | Recording

5.11.22 | ERC + ImagiNE: Business Tax Incentives Explained | Recording

 

LUTZ BUSINESS INSIGHTS

 

ERC + ImagiNE

ERC + IMAGINE: BUSINESS TAX INCENTIVES EXPLAINED

5.11.22 | RECORDING

Join us for a webinar as we provide updates on Employee Retention Credits (ERC) and the ImagiNE incentive program.

The ERC, developed in response to COVID-19, provides a refundable payroll tax credit on certain employee wages. It aims to help businesses retain top talent amid revenue loss or government shutdowns.

The ImagiNE Nebraska Act is a tax incentive program that encourages high-wage jobs and promotes investment in the state of Nebraska. It can help your business receive sizeable employee payment credits, investment credits, property tax exemptions, and sales tax refunds.

Lutz experts help you understand the qualifications required to receive credits, how to apply, and steps to claim your funds.

Key Takeaways:

  • Updates on Employee Retention Credit
  • Overview of ImagiNE Nebraska Tax Act
  • Explanation of Requirements
  • How to Apply

Seminar Level: general business knowledge and up

RECENT POSTS

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2022 Stark Updates + Group Practices

2022 Stark Updates + Group Practices

 

LUTZ BUSINESS INSIGHTS

 

Preparing Your Practice for Physician Compensation Changes

2022 Stark updates + group practices

lauren duren, healthcare & cas manager

 

At the end of 2019, the government amended the federal physician self-referral law (Stark Law). This amendment brought significant changes to how compensation is reported under the group practice definition. This blog discusses the Stark regulation updates and how the changes will affect your physician compensation models.

 

What is the Stark Law? Why is it Important?

The Stark Law prohibits physicians from referring patients for certain Designated Health Service (DHS) paid for by Medicare to any entity in which the physician has a financial relationship.  This is a strict liability statute – meaning, the physician’s intent to influence referrals does not matter.  If in violation, the monetary penalties can be significant.  Exceptions apply, but arrangements must meet every element of an exception.

Under the Stark law, a referral by a physician to the physician’s own practice can implicate Stark. Thus, many physicians rely on an exception to assure compliance. Certain exceptions (Physician Services; In-Office Ancillary Services) rely on the practice meeting the definition of a “Group Practice.” Thus, to qualify for the Stark exception(s) and allow partners/employees of a physician practice to “refer” DHS to their own practice, the practice must meet the definition of “Group Practice” – and every element within.

To meet the definition of a group practice, you must:

  • Be a single legal entity.
  • Have at least two physicians.
  • All physicians must provide a full range of patient care services.
  • Substantially all the physicians’ services must be furnished through the group/Substantially all the group’s services must be provided by the physician members.
  • Be a unified business.
  • Distributions of expenses and income must be pre-determined.
  • Compensation cannot be based on the volume or value of referrals (for DHS).

 

Notable Rule Changes/Clarifications

There are a few notable changes and added clarification to the Stark Law. These include:

  • Restructuring the regulation
  • Removal of the Medicaid reference related to DHS
  • Update and clarification to the definition of “Overall Profits;” end of “split pooling;” robust discussion of pod pooling/distributions

Timeline

On November 19, 2020, the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services Office of Inspector General issued a final rule modernizing the Stark Law. Many of the revisions to the Stark regulations became effective January 19, 2021; however, revisions to the physician group practice regulations became effective January 1, 2022.

As of that date, there are several implications for group practices from these changes, but most notably, these changes revise the rule related to the distribution of overall profits and productivity bonuses.

Profits from all the DHS of the practice, or a component of the practice that consists of at least five physicians (a “5+ physician pod”), must be aggregated before distribution. Group practices that use split pooling need to modify their compensation methodologies to account for this change.

Physician practices also need to be aware of important commentary from CMS on the special rule that clarifies CMS’s intentions regarding permissible DHS profit sharing and additional revisions to the regulation text that impact profit sharing, which may also necessitate (or, in some cases, permit) changes to certain group practice compensation methodologies.

 

Solutions for Group Practices That Do Not Meet Revised Stark Regulations

There are several possible solutions for group practices that do not currently meet the Stark revisions for the group practice compensation formula.

For some larger group practices where certain pods or subsets of at least five physicians exist, multiple revenue distribution models can be adopted. As an example, Pod 1 can be distributed one way, while Pod 2 can be distributed another, as long as the same method for distributing overall profits for every physician in the pod is the same. 

Practices with less than five physicians may identify other models.  If there are fewer than five physicians in a group, “overall profits” mean the profits derived from all the DHS of the entire group and they may aggregate DHS profits among less than five physicians (because the entire group is less than five physicians.)

CMS confirmed that any physician in the practice may be paid a share of the overall profits of the group practice; the share does not have to be just among owners.

 

What is Changing in Physician Compensation?

The reality is that physician compensation is changing. From provider mix, reimbursement models, workforce demographics, and the ever-changing regulations and compliance, it is important now more than ever to remain current with rules and regulations to ensure agreements are in line with the current statutes.

Value-Based Participation

The Stark rule update adds another exception that allows physicians to be paid profits from DHS that relate directly to a physician’s participation in a value-based enterprise.

“Profits from designated health services that are directly attributable to a physician’s participation in a value-based enterprise may be distributed to the participating physician.” It is important to note that value-based enterprises must meet the Stark definition.

Value-based enterprise (VBE) means two or more VBE participants:

  1. Collaborating to achieve at least one value-based purpose,
  2. Each of which is a party to a value-based arrangement with the other or at least one other VBE participant in the value-based enterprise,
  3. That have an accountable body or person responsible for the financial and operational oversight of the value-based enterprise, and
  4. That have a governing document that describes the value-based enterprise and how the VBE participants intend to achieve its value-based purpose(s). Arrangements will have to be reviewed for compliance.

Now is the time for physician group practices to implement these changes into their compensation plans. This is also a good opportunity to update compensation plans for reasons other than compliance. Physician groups should also examine the methods of payment they are participating in or contemplating participating in so that they can assess now whether they can modify physician compensation in 2022 both to be compliant and to further attract and incentivize excellent health care providers.

If you have any questions or would like to learn more about this topic, please contact us.

ABOUT THE AUTHOR

402.827.2062

lduren@lutz.us

LINKEDIN

LAUREN DUREN + HEALTHCARE & CAS MANAGER

Lauren Duren is a Healthcare & CAS Manager at Lutz with over six years of relevant experience. She provides healthcare consulting, as well as outsourced accounting services to clients with a focus on QuickBooks, tax, and payroll compliance.

AREAS OF FOCUS
  • Healthcare Accounting Consulting
  • Outsourced Accounting
  • Tax
  • Payroll Compliance
  • QuickBooks
  • Financial Reporting, Budgeting & Forecasting
  • Provider Compensation Plans
  • Practice Benchmarking
  • Private Physician Practices
  • Nonprofit Industry
AFFILIATIONS AND CREDENTIALS
  • American Institute of Certified Public Accountants, Member
  • Nebraska Society of Certified Public Accountants, Member
  • National Medical Group Management Association, Member
  • Nebraska Medical Group Management Association, Member
  • Certified Public Accountant
EDUCATIONAL BACKGROUND
  • MBA, University of Nebraska, Omaha, NE
  • BSBA in Accounting, University of Nebraska, Omaha, NE
COMMUNITY SERVICE
  • Lutz Gives Back, Volunteer

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Types of Trusts and When to Use Them

Types of Trusts and When to Use Them

 

LUTZ BUSINESS INSIGHTS

 

Types of Trusts

types of trusts and when to use them

hannah goscha, senior accountant

 

The right trust offers many advantages over traditional mechanisms for protecting and passing on assets. However, determining which trust will best meet one’s needs requires professional expertise. In this article, we will review the various types of situations that are well-served by the creation of a trust, as well as a description of some of the more popular trusts available.

 

Why Use a Trust? 

1. Estate Planning

A trust can be a useful vehicle for those who wish to remove their taxable assets from their estate so that assets are passed to specific recipients without interference from government bodies such as the IRS. 

2. Succession Planning

Utilizing a trust for succession planning purposes helps define how business assets should be distributed upon one’s death. This may include instructions on who is to assume positions or titles within a company upon the passing of a business owner(s).

3. Asset Protection

Some states allow trusts to be designed in such a way as to protect one’s cash and other property from creditors. An asset trust can transfer ownership of property and/or cash to a trustee. Since the assets are owned by someone else, they can’t be seized by creditors of the deceased.  

4. Income Tax Planning

Income and estate taxes can eat away significant portions of a deceased person’s assets. Trusts can be set up to avoid incurring excessive amounts of taxes against one’s estate or business.

5. Charitable Planning

Charitable trusts such as CRATs, CRUTs, and CLATs allow philanthropic individuals to set aside appreciable assets in order to benefit a designated charity, and in some cases, eventually a beneficiary. For example, Charitable lead trusts (CLTs) donate charitable payments from the trust for a certain period of time, after which the remaining assets are given to the designated beneficiaries. 

Another option includes charitable remainder trusts (CRTs), which provide the following benefits:

  • Asset distributions go to beneficiaries, with the remainder going to charity.
  • Grantor receives a tax deduction upon funding a CRT trust.
  • No estate taxes are paid at the time of death.
  • Possible accumulating income, which can then be passed to named beneficiaries.

 

Types of Trusts 

1. REVOCABLE VS. IRREVOCABLE TRUST

Most people have heard of revocable and irrevocable trusts but may not be familiar with some of the differences between the two. A revocable trust is one whose provisions can be altered, modified, or removed. An irrevocable trust is one whose provisions that make up the trust can’t be modified, altered, or terminated, except perhaps under specific circumstances. While a revocable trust is convenient and fairly simple for alterations such as adding a beneficiary, an irrevocable trust is protected from creditors. It’s important to understand the pros and cons of each type of trust to select the one that best meets your financial planning goals.

2. GRANTOR RETAINED ANNUITY TRUST (GRAT)

With a Grantor Retained Annuity Trust (GRAT), a grantor can contribute assets to the trust and receive annuity payments for a specified term. At the end of the trust, the remaining assets are transferred to the beneficiary. If the grantor passes away before the trust’s assets expire, the assets within the trust become part of their taxable estate, after which the beneficiary receives none of the assets within the trust.

3. IRREVOCABLE LIFE INSURANCE TRUST (ILIT)

As its name implies, this type of trust is irrevocable. An ILIT holds life insurance policies as its chief assets. It also directs the distribution of assets upon a person’s death and is not considered part of their taxable estate.  

4. INTENTIONALLY DEFECTIVE GRANTOR TRUST (IDGT)

In an Intentionally Defective Grantor Trust (IDGT), assets are transferred from an individual for estate tax purposes, but not income tax. The grantor continues to pay tax on the trust income, allowing the assets within the trust to grow tax-free. With this type of trust, grantors can swap assets held in the trust with other assets of equal value.

5. SPOUSAL LIFETIME ACCESS TRUST (SLAT)

This type of irrevocable trust involves gifting assets from one spouse to another. One advantage is that the originating spouse retains indirect access to the assets within the trust in case they are ever needed. Another advantage is that the trust allows for the transfer of wealth outside the couple’s combined estate. Complications can occur if the couple decides to divorce or if the non-donor spouse passes away.     

6. DYNASTY TRUST

The purpose of this trust is to pass wealth from generation to generation without incurring any transfer taxes along the way. Most states have rules to prevent the trust from existing indefinitely. 

7. S-CORP TRUSTS

One type of S-Corp trust is the Qualified Subchapter S Trust or QSST. This type of trust treats the current income beneficiary as the owner of the S-corp. The trust is only allowed one beneficiary, and the beneficiary must pay any taxes at their marginal tax rate.

Another option is an Electing Small Business Trust or ESBT. This type of trust is actually treated as two trusts, although only one tax return is filed. One trust holds stock, while the other trust holds all the assets. While the trust does pay at the highest tax rate, it does allow for multiple beneficiaries, as long as they are eligible S-Corp shareholders.

 

Summary

In summary, business owners and individuals with substantial assets need to thoroughly understand all the options available to them for asset preservation. Consulting with a professional will enable you to select the trust that best meets your specific needs. If you have any questions or would like to learn more on this topic, please contact us. You can also read related articles on our accounting blog.

ABOUT THE AUTHOR

Hannah Goscha

402.763.2064

hgoscha@lutz.us

LINKEDIN

HANNAH GOSCHA + SENIOR ACCOUNTANT

Hannah Goscha is a Senior Accountant at Lutz with over four years of experience in public accounting. She is responsible for providing taxation services to businesses, individuals, and trusts with a focus on the nonprofit industry.

AREAS OF FOCUS
  • Tax
  • Nonprofit Industry
AFFILIATIONS AND CREDENTIALS
  • American Institute of Certified Public Accountants, Member
  • Nebraska Society of Certified Public Accountants, Member
  • Certified Public Accountant
EDUCATIONAL BACKGROUND
  • Master's in Accounting, University of Nebraska, Omaha, NE
COMMUNITY SERVICE
  • Lutz Gives Back, Co-President
THOUGHT LEADERSHIP
  • Types of Trusts and When to Use Them

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We tap into the vast knowledge and experience within our organization to provide you with monthly content on topics and ideas that drive and challenge your company every day.

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