Idaho Medicaid DSH Audit Training April 15, 2011

1. Idaho MedicaidDSH Audit TrainingApril 15, 2011 Karen Calhoon, Supervisor Myers and Stauffer LC 8555 W. Hackamore Drive, Suite 100 Boise, ID 83709 800.336.7721 Kcalhoon@mslc.com

2. Review Federal DSH Regulation CMS Responses to Comments Summary of Prior Year Audit Findings Common Mistakes General Instructions for Completing the Survey Overview

3. Federal Register Vol. 73, No. 245, 12-19-2008 Medicaid Reporting Requirements 42 CFR 447.299 (c) Independent Certified Audit of State DSH Payment Adjustments 42 CFR 455.300 Purpose 42 CFR 455.301 Definitions 42 CFR 455.304 Conditions for Federal Financial Participation (FFP) Federal DSH Regulation

4. For DSH year 2005 and after, the state must annually report the following elements: Hospital Name Estimate of hospital-specific DSH limit Medicaid I/P utilization rate Medicaid Low income utilization rate State defined DSH qualification criteria IP/OP Medicaid FFS basic rate payments IP/OP Medicaid managed care payments Supplemental/enhanced Medicaid IP/OP payments Total Medicaid IP/OP payments Reporting Requirements

5. Total cost of care for Medicaid IP/OP services Total Medicaid uncompensated care Uninsured IP/OP revenue Total applicable Section 1011 payments Total cost of IP/OP uncompensated care costs Total uninsured IP/OP uncompensated care costs Total annual uncompensated care costs DSH payments For out-of-state hosp., must report items 1,6,8,9 & 17 Reporting Requirements – Continued

6. Independent certified audit Auditor operates independent from the Medicaid agency and hospitals Express an opinion for each verification Identify data issues or other caveats Definitions:

7. Medicaid state plan rate year The 12 month period defined by the state’s approved Medicaid state plan that estimates eligible uncompensated care costs and determines corresponding DSH payments as well as other Medicaid payment rates Ex) 10-1-07 through 9-30-08 Definitions - Continued

8. The state must submit an independent audit to CMS for each Medicaid state plan rate year. FFP is not available for expenditures for DSH payments that exceed the hospital-specific eligible UCC limit. For Medicaid state plan rate year 2008, the state must submit to CMS an independent certified audit report no later than 12-31-11(Myers and Stauffer report due to the state by 9-30-11). The state must use specific data sources to complete the audit: Approved Medicaid state plan Payment and utilization information from MMIS Medicare cost report Audited hospital financial state and accounting records Conditions for FFP

9. Specific Requirements – Audit Verifications Each hospital in the state that qualifies for a DSH payment is allowed to retain that payment to offset its UCC. DSH payments made to each qualifying hospital comply with the hospital-specific DSH payment limit. The DSH payments made in the audited Medicaid state plan year must be measured against the actual UCC in that same plan year. Only the UCC of furnishing inpatient and outpatient hospital services to Medicaid and uninsured individuals are eligible for inclusion in the hospital-specific DSH limit. Conditions for FFP - Continued

10. For purposes of the hospital-specific DSH limit, Medicaid payments which are in excess of Medicaid costs must be applied against the UCC. All information and records of all of a hospital’s Medicaid inpatient and outpatient and uninsured service costs have been separately documented and retained by the state. The information in (5) includes a description of the methodology for calculating each hospital’s payment limit. Conditions for FFP - Continued

11. Transition Provision Findings of state reports and audits for Medicaid state plan years 2005-2010 will not be given weight except to the extent that the findings draw into question the reasonableness of the state’s UCC estimates used for calculating prospective DSH payments for Medicaid state plan year 2011 and thereafter. Conditions for FFP - Continued

12. Questions/Comments?

13. Reporting Eligible Uncompensated Care: Uncompensated costs for individual without third party coverage is offset by payments. Improper billing does not change the status of the individual as insured or otherwise covered. In no instance should costs associated with denied claims be included in the calculation of the hospital-specific UCC. Costs associated with services furnished to individuals who have limited insurance are not included in the calculation of the hospital-specific limit. ex) Indian Health Services The DSH limit does not include unpaid co-pays or deductibles. CMS Responses to Comments

14. Reporting Dual Eligible CMS believes the costs attributable to dual eligible should be included in the calculation of the UCC. All Medicare and Medicaid payments are taken into account. The state of Idaho is unable to produce MMIS reports for cross-over claims. You should pull this data from your internal computer systems. Both Medicare and Medicaid payments need to be included on the survey on the appropriate line. Cont’d

15. Reporting (Cost Defined) The same cost reporting methodology used in preparing the Medicare cost report should be applied in determining costs in calculating the DSH hospital-specific limit. Medicaid UCC + Uninsured UCC = Total annual UCC Physician costs billed as professional services should not be included in the calculation of the hospital-specific DSH limit. Cont’d

16. Reporting (Revenue) Audit of uninsured should take into account self-pay revenues (including liens and collections) during the year in which they are received, regardless of whether such revenues are applicable to another prior period. Cont’d

17. Auditing CMS expects reports and audits will be based on the best information available. The audit methodology for the uninsured will need to exclude costs from services furnished to individuals with third party coverage (prisoners, duplicate accounts, individuals included in the Medicaid UCC, elective procedures and professional charges). Instances where the hospital’s cost reporting period differs from the Medicaid state plan rate year, states and auditors may need to review multiple years of reports to fully cover the Medicaid state plan rate year under audit. Cont’d

18. Questions/Comments?

19. The hospitals were asked to provide data on crossover claims. We did not receive information from most of the hospitals: and we were unable to obtain complete data from the state. One hospital was non-compliant with the audit process. Material error rates were found in some uninsured samples due to inadequate computer systems (inability to query proper data). Uninsured payment data was incomplete. Summary of Prior Years Audit Findings

20. Misclassification of inpatient, outpatient, and non-hospital revenue associated with survey Section C and MCR C/R G-2. Misclassification of charges and payments related to charity, subsidies and bad debt. Charity care represents care for services for which the hospital never expected to be reimbursed. Insured charity cannot be included in uninsured. Uninsured charity should be included in uninsured. Charity write-offs need to be included in Section A of the survey. Common Mistakes – Understanding Correct Reporting

21. If the hospital has uninsured patients and an application is made for state/county subsidy reimbursement, the uninsured charges should be included in the uninsured population. Insured patients cannot be included in the uninsured population. 42 CFR 447.299 provides that subsidy payments for the uninsured are not applied against the uninsured cost on the survey. Common Mistakes – Cont’d

22. Bad debt represents services from which the hospital anticipated but did not receive payment. Bad debt resulting for the uninsured should be included in the uninsured population. Common Mistakes – Cont’d

23. Omission of Section 1011 Payments Input the amount of payments received for services provided to undocumented aliens. If you are unsure if you received payments, please call our office for assistance. We have a full listing of payments made by Trailblazer through 6-30-09. Common Mistakes – Cont’d

24. Missing Out-of-state Data CMS requires that all Medicaid claims be reported on the survey. The hospital should report data from their own computer system if reports cannot be obtained from the other states. Common Mistakes – Cont’d

25. Questions/Comments?

26. Important Notes: The survey file includes an “Instructions” tab that should be printed and used for reference during the survey completion process. The survey file includes a tab titled “Uninsured Definitions”. The survey file includes a tab titled “Checklist”. Please submit all applicable source documents in accordance with the checklist. General Instructions for Completing the Survey

27. Section A, B, C & H tab: Select your hospital name from the drop down menu at the top of the page. Cost Report beginning and ending dates will pre-populate (These date should coordinate with your Medicare cost report period(s) and will be the reporting period(s) needed to complete the survey). Verify Medicare and Medicaid provider numbers. Be sure to answer questions 4,5 & 6. Record state and local subsidies received for patient care services. If specifically identifiable between inpatient and outpatient, record appropriately. If not, allocate them based on % of gross revenues shown in Section C. Charity care charges reported here need to reconcile to your financial statements/audit. Instructions by Section - Highlights

28. Section H – In the appropriate box record 1011 payments received, out of state DSH payments received and other supplemental Medicaid payments (such as UPL). Be sure to answer the Certification; was your hospital allowed to retain 100% of the DSH payment? Be sure to thoroughly complete the signature and contact information as per the instructions. Highlights cont’d

29. Section C tab: CMS requires that the audit report the low-income utilization rate (LIUR) for each period. Utilize Medicare worksheet G-2 and G-3 to record the separation between inpatient and outpatient revenues. SNF, Home Health, FQHC, RHC and Swing-beds are typical “non-hospital” related revenues. Be sure to classify these revenues in the Non-Hospital Column of Section C. The form directs you to allocate contractual allowances between hospital and non-hospital. Highlights cont’d

30. Section D tab: This section of the survey is used to collect information for calculating the Medicaid and Uninsured longfall/shortfall. Refer to the Instructions tab, Section D , detailed instructions outline the completion of the IS FFS Medicaid column of your survey. Option 1: If a settlement has been done for the survey period; enter days, cost, and payments. Option 2: If a settlement has not been done for the survey period; leave this section blank. Highights cont’d

31. Exhibit A & B: See survey exhibits for an example of formatting of the information that needs to be available to support the data reported in Sec D, Uninsured column. A separate Exhibit A must be submitted for each cost reporting period included in the survey. Uninsured charges and days data will need to be cross-walked into Sec D of the survey . Exhibit B should include all self-pay payments received during the cost report year needed for the survey (only the hospital related payments are netted against the uninsured cost in Sec D). Highlights cont’d

32. Uninsured cost reported on the survey will be used to calculation the uncompensated uninsured. The Medicaid uncompensated piece will be calculated using the “best information available”. In the absence on a new completed settlement, the state will use the Medicaid uncompensated amounts from your most recent settlement completed. DSH Payment Calculation

33. Questions/Comments?