Council of Community Clinics CFO Quarterly Meeting

Community Clinic Association of Los Angeles County
The Coalition of Orange County Community Clinics
Council of Community Clinics
Everything You Don’t Want to Know About PPS and “More”
Presented by
Steven Rousso, Senior Principal
HFS Consultants
February 11, 2011

FQHC Designation
SPA
PPS Rate Setting
New Clinic Enrollment Process
Change in Scope of Project - HRSA
Licensing Issues
Medi-Cal PPS Rate Setting
Medicare Rate Setting
Scope of Service Rate Changes
Medi-Cal & Medicare Reimbursement
Cross Over and Wraparound Rates
Reconciliations

Health Center
Program
• The Health Center Program
• Authorized and defined by Section 330 of the Public Health
Service Act
• Regulations are frequently updated
• Watch your PINs and PALs!
• Check them at http://bphc.hrsa.gov/policy/

Types of FQHC’s
• Types of Federally Qualified Health Centers
• 330 Grantee
• HRSA Notice of Grant Award
• Defines your Scope of Project
• Lists your FQHC billable sites
• Look-Alike
• Dual Status – 330 grantee with Look-Alike site
• Sub-grantee
• Outpatient health programs/facilities operated by
tribal organizations
• Hospital based – no new ones since 1999
• Government agency or County entity

• “SPA”
State Plan
Amendment
• Determines administration of Medi-Cal,
California’s Medicaid program
• Defines eligible Medi-Cal visits
• Defines eligible Medi-Cal providers
• Defines reimbursement system – “PPS”
• Defines qualifying events for Scope of
Service rate change
• A must read

State Plan
Amendment

What is PPS?
“Prospective Payment System”
• Definition: Method of reimbursement
for Federally Qualified Health Centers
(FQHC)
• Didn’t apply to FQHC’s that
participated under the 1115 Medicaid
Demonstration project for Los
Angeles County

PPS Pre-Cursors
• There a few steps between HRSA
designation and being able to bill as a
FQHC
• “Important” because lots of clinics
paid millions back to the state due to
skipping a few steps in-between

New Clinic Enrollment
Each site must be:
1. Licensed by DHCS
2. Added to HRSA Scope of Project
3. Enrolled in Medi-Cal under its own NPI
4. Have its own PPS rate
5. Enrolled in Medicare Part A with its own
PTAN (provider number)
6. Have a Medicare rate
‣ If you remember these 6, you won’t get into
trouble with your CEO or Feds

Licensing Issues
• Each site must be licensed by DHCS. Applications at:
http://www.cdph.ca.gov/pubsforms/forms/Pages/HealthFacilit
y-PCC.aspx
• Licensure Options & Alternatives
• Temporary
• Provisional
• Intermittent
• Affiliate
• Exempt
• Full application as community clinic
• No more hospital based FQHC’s after April 22, 1999
• SB 442 will help

Intermittent Clinics
• Welfare and Institutional Code 14043.15 exempts
intermittent and mobile clinics from separate
enrollment in Medi-Cal if:
• The intermittent clinic is operated by a primary care
clinic, that provides all staffing, protocols, equipment,
supplies and billing services
• It is open less than 20 hours per week
• CDPH is notified of the separate locations, premises,
intermittent sites or mobile health care units
• No exemption for Medicare, each site must be enrolled
separately

Licensing Options
•Which options best to use for
expansion?
•Affiliate or Intermittent?
•Number one issue for compliance
•“Didn’t know” is not a defense

Where to Begin?
Enrollment
• Do you have a NPI for the site?
• If not, enroll here:
https://nppes.cms.hhs.gov/NPPES/StaticForward.do
?forward=static.npistart
• NPI’s should be site specific – multiple
sites, get multiple numbers (easier to track
payments)
• NPI is primary identifier for each site and
physician

HRSA
Scope of Project Policy
TO:
All Bureau of Primary Health Care Grantees
This PIN describes the policy and procedures for
requesting approval for changes in sites or
services. The following are highlights of the major
changes:
• To obtain approval for a change in service delivery
sites and/or services provided, health centers must
prepare a change in scope request as outlined in this
PIN. Change in scope requests will no longer be
accepted as part of the continuation grant application,
but must be submitted as a separate request.

Now What?
•Now that you have HRSA
approval, are licensed, what do
you do now?

Rate Setting
• Medi-Cal – PPS Rate – Interim or Final?
• Retroactive to HRSA date if submitted within 30
days
• Later of licensing date or HRSA date or
enrollment date?
• Strategy of which method to use
• Cost Report Method – rate set based on
costs
• UPL or Projected or both?
• Sample Method – rate set based on
comparable clinic rates – final, take care!

When Should You Start
Thinking About Your Rates?
• As part of the FQHC Look-Alike or 330
application – think about rate
development early
• Don’t wait for DHCS or MAC to send
Rate Request package
• Be Pro-active vs. Re-active – Could be
the difference of 3 or 4 months for
obtaining your rates!
• Add 3 months for State staff furloughs

Which Rate Method
Should You Use?
Consider:
•Utilization during first year
•Numerator/Denominator growth
•Projected costs for the new entity
(necessary for Medicare)
•80% versus 100% or anything in
between

Rate Setting Package
for Medi-Cal
• Information required by DHCS:
• Summary of Current Services
Provided by Clinic
• Summary of Healthcare Practitioners
• Comparable Clinics Analysis/Letter
• Proof of licensure or Designation
•NGA letter or contract for services
• FQHC Enrollment Form
• All New Forms – need to submit
competitive data

Summary of
Practitioners Form (old)

Summary of Services
Form (old)

Comparison of Medical Services
Provider Name: Hospital A
Note: All services
provided on-site at
all 4 RHCs
Hospital A
Hospital B
Hospital C
1. Medical X X X X
2. Dental
3. X-ray
4. Laboratory
5. Pharmacy
6. Nutritional X
7. Psych/Social X X
8. Education
9. CPSP X
10. Outreach
11. Norplant Implants
12. Optometry
13. Chiropractic
14. Podiatry X
15. Physical Therapy
16. Occupational therapy
17. Treatment Room
18. Surgery
19. Anesthesiology
20. Radiology
21. Nuclear Med/CT
22. Clinical Lab
23. Central Supplies
24. Pathology
25. Radioisotope
26. Electrocardiology X
27. Electroencephalograph
28. Ultrasound
29. Speech Therapy
30. Audiology
31. Acupuncture
32. Other (Please List)
33. Pediatric X X
34. OB/GYN
35. Internal Med.
Hospital D

FQHC Provider
Enrollment Request

PPS Rate Setting
Sample Method
• DHCS – Audits & Investigations
• New facility identifies at least 3
comparable FQHC’s providing similar
services and patient volumes
• Rumor that samples don’t work –
submitted more than 20 that did
work
• Majority rejected due to “upping”

PPS Rate Setting
Sample Method
• How do you choose comparable
clinics?
• Every single PPS rate in the state is
available
• $60 - $407 statewide range:
•That’s per visit!
•State received a request for >$1,000
per visit
•Key is doing your homework and
submitting like clinics

Comparable Clinics

PPS Rate Setting
Cost Report Method
DHCS Audits & Investigations:
• Reimbursement at 80% to 100% of the
projected allowable costs
• Interim Rate
• Cost Settled - Liability/Receivable
• PPS rate will be the actual cost per visit
after A&I adjustments
• Set up your Chart of Accounts to accurately capture
direct and Home Office costs!
• Based on first full 12 month period for Clinic’s
FYE – true or false?

While you’re waiting…
• DHCS has three years from the date cost
report is submitted in which to audit
• (T or F?)
• Medi-Cal auditors will use productivity limits
• Remember to set up Code 02, Code 18, Code
19, Code 20
• It doesn’t come in the mail!
• PPS rate is usually at 80%, so watch your
accruals – can get 98% - c’mon?

PPS Rate Setting
Cost Report Method
• Congratulations! You have a final audited rate.
Now what??? You will receive retroactive
payments back to date of enrollment:
• PPS payments
• Full visits
• Code 01, 04, 11, 12, etc.
• HP reprocesses each claim - EPC report
• Paid on many Medi-Cal RA’s
• Differential rate payments
• Crossovers and wraparounds
• Code 02, 18, 19, 20
• DHCS re-computes PPS Reconciliation Reports
• Lump sum payment

Which Method is Better?
• Cash flow?
• Timing?
• Costs in base year?
• Settlement?
• Sleep at nite?
• Scope change?
• Comparable for add’l sites?
• Reconciliations

How Can You Obtain a
New PPS Rate?
• New Provider (new clinic site)
• Change of Ownership - mandatory
• Change in Scope of Service Rate
Request
• If you don’t like your PPS rate – MOVE!
• Never ever do a scope change for a move
• Why?

Medi-Cal Cost
Reports
• Cost reports are required to set an interim or final PPS rate.
There is no particular due date.
• Basic purpose is to divide total allowable costs by total visits to
compute the average cost per visit.
• Costs are adjusted per rules found in the CMS Provider
Reimbursement Manual. The basic rule is, they must be
reasonable and related to patient care. Common adjustments
include:
• Non-allowable costs are removed: meals, transportation,
publicity, etc.
• Other income is offset against costs: interest income, misc.
income, etc.
• Startup costs must be amortized over five years
• Visits must be counted properly per the State Plan Amendment
(e.g., exclude visits to nurses)

Medi-Cal Billing
Codes
DHCS sets rates for the following billing codes, which are all billed
to HP (formerly EDS), the Medi-Cal fiscal intermediary:
• Code 1: Traditional Medi-Cal: The basic rate used for non-managed
care and CHDP patients.
• Code 2: Medicare/Medi-Cal Crossover: A reduced rate meant to
cover the Medicare coinsurance on a Med/Medi claim.
• Code 3: Dental
• Code 4: Optometry
• Codes 6–9: Adult Day Health Care
• Code 11: LCSW
• Code 12: Psychologist
• Code 13: Psychiatrist
• Code 15: Acupuncture
• Code 16: Chiropractic
• Code 17: Heroin Detox
• Code 18: Managed Care Differential Rate (Wrap around)
• Code 19: Healthy Families Differential Rate
• Code 20: Capitated Medicare/Medi-Cal Crossover

FEDERALLY QUALIFIED HEALTH CENTER / RURAL HEALTH CLINIC CERTIFICATION AND ENROLLMENT
Approved by: Gregory Briscoe Date: October 21, 2010 Phone: 650-6674
Audits and Investigations
PROVIDER LEGAL NAME:
MEDI-CAL PROVIDER NUMBER:
N/A
NPI NUMBER:
OWNER NUMBER: 01 PROVIDER TYPE: 035 LOCATION CODE: 001
Special Processing Type
Codes:
REVENUE TYPE CODE:
F G R U x A
FQ: RH: x AD:
[ x ] INITIAL [ ] RATE CHANGE [ ] LA CO.-PPP [ ] CERT. CHANGE [ ] LIC. CHANGE [ ] OTHER
RATES
The rates to establish for this provider of FQHC / RHC services are:
DESCRIPTION
CODE
Medical Services 01
RATE
EFFECTIVE DATE
$145.92 4/20/2010
Medicare Crossover 02
$29.18 4/20/2010
Dental Services 03
$145.92 4/20/2010
Optometry Services 04
$145.92 4/20/2010
Non-Covered Man. Care
11 - 13
15 - 17
Man. Care Differential 18
Medicare Advantage Plans 20

Medi/Medi
Crossover Claims
• Code 02
• Medicare primary and Medi-Cal secondary
payor
• Difference between Medi-Cal PPS rate and
80% of Medicare rate (usually UPL)
• Not applicable to Medicare/Managed Care
Medi-Cal – bill Code 18
• Must be enrolled as Medicare FQHC to bill
Code 02 – its in the manual – not sure if
state enforces it

Medi/Medi
Crossover Claims

Medi-Cal
Wraparound Rates
• Code 18: Managed Care Differential Rate (aka
SB1194): A “wraparound” rate to make up the
difference between Medi-Cal managed care payments
and the full PPS rate.
• Code 19: Healthy Families Differential Rate – optional
• Code 20: Medicare Advantage Plans (MAP): A
“wraparound” rate for Medi/Medi crossover claims to
make up the difference between MAP capitated
payments and the full PPS rate.
“If you don’t request a Code 18 or 20 rate,
DHCS will set it to $1.00.”

Medi-Cal PPS
Reconciliations
• DHCS requires an annual claims reconciliation for the following visits:
• Medicare/Medi-Cal Crossover (Code 2)
• Medicare Advantage/Medi-Cal Crossover (Code 20)
• Medi-Cal Managed Care (Code 18)
• Healthy Families (Code 19)
• CHDP not billed as Code 01 or Code 18 (Billed on PM160)
• These visits are entitled to the basic Code 1 PPS rate, but because the
payments received are different, a reconciliation is needed.
• Clinics must file PPS recons within five months after FYE:
• If it shows money due to DHCS, they recoup it within a few weeks.
• If money is due from DHCS, they usually pay a “tentative settlement”
of 60% within a few weeks and hold the other 40% until the recon is
audited, which may take up to 3 years.
• If recons are not received timely, DHCS may withhold a portion of
current Medi-Cal payments.

Medi-Cal Scope of
Service Rate Changes
• Need a qualifying event (ten events that can trigger
a rate change);
• Submit a rate change request form for the facility
fiscal year in which the event took place;
• The form compares cost per-visit to the current rate,
subtracts 20% of that difference, and adjusts the
rate if the results are an increase of 1.75% or more
or a decrease of 2.5% or more;
• Forms must be submitted within 150 days of FYE.
“You may need a home office cost report
in addition to the rate change request form.”

Scope of Services
Change Instructions

Scope Changes
Some Basic Rules
• Need final PPS rate
• Qualifying event
•“Our costs went up” - who cares!
•PPS vs. cost/visit
•Been asked many times to lower PPS
rate
•5 months after fiscal year end
•Effective first day of new fiscal year

Medi-Cal Scope of
Service Rate Change
• New rate is not effective until the fiscal year after the
scope change event took place
• Getting the money for a new rate can take a year or
more! Sample timeline:
• June 2009: Clinic adds dental services
• Dec. 2009: Clinic’s fiscal year closes
• May 2010: Clinic submits rate change request
• Nov. 2010: DHCS audits and finalizes new rate
• Feb. 2011: EDS pays retro money for Jan. 2010 thru Nov. 2010
• MEI was 1.2% last year
“Keep good documentation of the scope
change event (contracts, payroll records, etc.).”

Medicare Rate Setting
• Retroactive to submission date (minus
30 days) for 855A – not HRSA date
• Reimbursed cost up to the upper
payment limit (“UPL”):
• Urban UPL is $126.10 effective 1/1/11
• Rural UPL is $109.14 effective 1/11/11
• Note: if you do not submit cost report,
Palmetto will establish a $50 placeholder rate

Medicare Rate Setting
• Many FQHC’s not enrolled as a
Medicare FQHC – bill fee for service
• Why you should or shouldn’t:
• Required to bill Medi/Medi crossovers -
Code 02
• Deductible?
• Too difficult after the fact
• Compliance
• % of Medicare patients

Rate Setting Package
for Medicare
Information required by Medicare FI:
•FQHC Request for Information
•I.R.S. Form W-9 (Verification of Federal
Tax ID number)
•Copy of CMS letter verifying FQHC
Medicare participation
(CMS-855 dependent)
•Cost Report – Revenues and Expenses
and supporting workpapers

Medicare Enrollment
Need an application?
• Go here:
http://www.cms.hhs.gov/MedicareProviderSupEnroll/0
2_EnrollmentApplications.asp#TopOfPage
• Which application to use?
• What do you need to enroll?
• Provider location? (855A)
• Part B services? (855B)
• Add/link a physician to a group? (855R, maybe 855I)

Overview
Medicare
Reimbursement
• An interim rate is paid on each claim. This is an allinclusive
rate including professional services and
facility costs.
• Total payments are reconciled annually to allowable
costs claimed on annual cost reports.
• Medicare does not pay for certain services even
though Medi-Cal does.
• Flu & pneumonia vaccinations are not billed, but they
are paid on costs through the cost report and are not
subject to the UPL.
• Lab & x-ray are paid on the physician fee schedule,
not an FQHC rate.

Medicare Cost
Reports
• Minimum productivity standards are applied
(i.e., 4,200 visits per FTE for physicians and
2,100 for PAs & NPs)
• A projected Medicare cost report is needed to
set the initial interim rate.
• Actual Medicare Cost Reports are required
within five months after every FYE.
• The fiscal intermediary (NGS) will stop
paying current claims if the annual cost
report is not received timely.

Medicare Cost
Reports
• For multiple clinics under common
ownership, it is possible to file a consolidated
cost report which includes all the clinics’ data
aggregated together.
• Like the Medi-Cal cost report:
• The Medicare report computes an average cost
per visit.
• Costs are adjusted per the CMS Provider
Reimbursement Manual.

Medicare Cost
Reports
• Unlike the Medi-Cal cost report:
• The Medicare form is different.
• Costs and visits must be excluded for certain
services (e.g. dental).
• Visits are held to a productivity minimum of
4,200 per FTE for physicians and 2,100 for NPs
and PAs.
• Cost per visit cannot exceed a federal Upper
Payment Limit (UPL) ($126.10 for urban FQHCs
for CY11).
• Flu & pneumonia vaccinations are paid on costs
and are not subject to the federal Upper
Payment Limit (UPL). They are not billed, but a
log is kept and the cost is claimed on the cost
report. The costs must be reasonable!!!

Medicare FQHC Visit
• Visits that are NOT billable as a Medicare FQHC visit
• Nurse (RN or LVN)
• Marriage & Family Therapist (MFT)
• Case management
• Enabling
• Immunizations
• Ancillary services such as lab and x-ray (billable to Part B)
• Multiple visits on the same date of service except if:
• Illness or injury occurring after the first visit that requires
additional diagnosis or treatment
• Medical visit and a clinical psychologist or LCSW visit on same
date

Final tips…
• Remember the Six?

Questions?
Steven Rousso
Senior Principal
HFS Consultants
(510) 768-0066
srousso@hfsconsultants.com