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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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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Understanding the Importance of Payor Mix in Your Private Practice Financial Strategy  

Understanding the Importance of Payor Mix in Your Private Practice Financial Strategy  

 

LUTZ BUSINESS INSIGHTS

 

Payor Mix in Your Private Practice

understanding the importance of payor mix in your private practice financial strategy

katie blycker, senior accountant

 

As a healthcare provider, your payor mix is an essential component of your financial strategy that can significantly impact your financial success. This blog post will help you understand why your payor mix is so important and what you can do to improve it. 

Who is a Payor? 

In the healthcare industry the term “payor” refers to people or organizations paying for services provided by healthcare providers. Payors include private insurance companies, state and federal governments (Medicare and Medicaid), and self-paying patients. Healthcare providers need to know what type of payors they will be working with to create effective strategies for their businesses. 

What is Payor Mix? 

The payor mix is the percentage of a practice’s revenue from private insurance versus self-paying patients versus public insurance programs (Medicare & Medicaid). The payor mix can directly affect the health of your business. Understanding how much each type of insurance will pay you can help you run a successful healthcare organization, improve cash flow, and forecast future financial trends. 

The Importance of Payor Mix in Healthcare Financial Strategy

Private practice organizations can experience difficulties with their financial health if they do not understand the importance of payor mix.  A private practice has separate agreements with each payor, which can result in different reimbursements from payors for the same service provided.

To get started, determine your current payor mix. Look at total numbers of patients and total visits for a certain period.

Next, it is important to understand your reimbursement rate from each payor for your most frequently billed (top 5-10) CPT codes. Medicare reimbursement rates can be calculated using the Medicare Fee Schedule and Medicaid reimbursement rates from your state’s rate and fee schedules. Commercial insurance typically pays more for healthcare services then Medicare and Medicaid, and it is based on the agreement the practice has with the commercial insurance carrier. Once you determine your reimbursement rate for each payor for specific services, it is important to compare this to the cost. To operate profitably, the reimbursement rate needs to be higher than the cost.

There are several tactics to consider to optimize your payor mix:

  1. Review your contracts annually. Is there room for negotiation to acquire a better reimbursement rate using your current volume as leverage? The busier your practice is, the more leverage you have.
  2. Determine which insurance carriers your practice will accept. Think big picture here. Medicare reimbursement may be lower than your cost for your fifth most billed CPT code level, but may be significantly higher than your cost for all other CPT codes.
  3. Cater your marketing and advertising to Zip Codes that contain an ideal age population or by targeting employers who offer your most profitable insurance plan.
  4. If a payor is reimbursing 100% of your fee, look at your fee schedule to determine if increases are needed.

Knowing your payor mix will help you understand and budget for your organization. If a commercial insurance carrier typically does not pay out claims for two months – this will help you to manage your cash flow. You also will be aware of CPT codes in which the cost to perform is higher than the reimbursement. Try to limit these procedures, if possible.

Work With the Best

Lutz has been a trusted resource for physicians for many years. We offer a full range of accounting and consulting services, including tax preparation and compliance, benchmarking analysis, preparation of financial statements, and operations analysis to clients. To learn more about how Lutz can help your private practice organization, contact us or visit our website.

ABOUT THE AUTHOR

Katie Blycker

402.514.0013

kblycker@lutz.us

LINKEDIN

KATIE BLYCKER + SENIOR ACCOUNTANT

Katie Blycker is a Senior Accountant at Lutz with over five years of experience in public accounting.  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
  • Family Office Accounting
  • Payroll Compliance
  • QuickBooks Training
  • Financial Reporting, Budgeting & Forecasting
  • Provider Compensation Plans
  • Practice Benchmarking
  • Private Physician Practices
AFFILIATIONS AND CREDENTIALS
  • American Institute of Certified Public Accountants, Member
  • Nebraska Medical Group Management Association, Member
  • Nebraska Society of Certified Public Accountants, Member
  • Certified Public Accountant
EDUCATIONAL BACKGROUND
  • MPA, University of Nebraska, Lincoln, NE
  • BSBA in Accounting, University of Nebraska, Lincoln, NE
COMMUNITY SERVICE
  • Lutz Gives Back
THOUGHT LEADERSHIP
  • Understanding the Importance of Payor Mix in Your Private Practice Financial Strategy

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Lutz adds Ashley Bredthauer and Nevan Hoffman

Lutz adds Ashley Bredthauer and Nevan Hoffman

 

LUTZ BUSINESS INSIGHTS

 

Ashley Bredthauer
Nevan Hoffman

Lutz adds ashley Bredthauer and nevan Hoffman

Lutz, a Nebraska-based business solutions firm, recently added Ashley Bredthauer and Nevan Hoffman to its team.

Ashley joins the accounting division as a Healthcare Manager. She is responsible for providing accounting and consulting services to healthcare organizations with a focus on financial reporting and reimbursements. Graduating from the University of Nebraska-Lincoln, she received her Master’s degree in business administration. Bredthauer works in Lutz’s Lincoln office.

Nevan joins the tech division as a Service Desk Technician. He is responsible for providing onsite support to Lutz Tech clients. He will also be installing, assessing, and troubleshooting computer equipment. In addition, he services the helpdesk to resolve immediate technical issues and provide IT support and incident tracking. Graduating from Wayne State College, he received his Bachelor’s degree in computer information systems. Hoffman works remotely.

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