In accordance with the Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted as part of the American Recovery and Reinvestment Act of 2009, the Centers for Medicare & Medicaid Services (CMS) has directed Medicare administrative contractors (MACs) to audit the data elements used to calculate Medicare electronic health record (EHR) incentive payments for certain acute care hospitals. Eligible hospitals paid under the inpatient prospective payment system and eligible critical access hospitals (CAHs) may be selected for audit by CMS.
The MAC, or a subcontractor of the MAC, will perform payment data audits for a specific Medicare cost reporting period. These audits are designed to validate total discharges, the number of Part A and Part C inpatient bed days, total charges, total charges attributed to charity care, and depreciable asset costs (CAHs only). The MAC reviews are separate and distinct from meaningful use audits, which assess whether eligible professionals and hospitals can support the meaningful use data submitted during attestation.
Preparing for a HITECH Payment Audit
Based on our experience with these payment data audits, we recommend that hospitals prepare for these reviews in advance as they typically are given only a few weeks to provide the requested data to the MAC or its subcontractor. Although much of the data is fairly straightforward (e.g., discharges, patient days, total charges), charges attributed to charity care is one data element that is constantly changing and typically is more difficult for hospitals to support.
Because the total amount of charity care reported can have a significant impact on the EHR incentive payment, MACs are focusing their audits on this aspect of the payment calculation. Hospitals should be prepared to share the underlying details to support the amount of charity care reported as well as to ensure that the amount reconciles with charity care data on CMS Form 2552-10, “Medicare Cost Report,” Worksheet S-10; IRS Form 990, Schedule H; and audited financial statements.
To ensure the accuracy, consistency, and validity of charity care data, we suggest that hospitals consider the following:
- Uncompensated care should be reconciled later in the process, similar to what has historically been done with Medicare disproportionate share hospital eligibility. MACs are accepting listings of refreshed charity care charges submitted at the time of audit.
- As with Medicare bad debt audits, MACs are employing the use of statistical sampling methodologies in their reviews of charity care charge listings (insured upper and lower sample and uninsured upper and lower sample). Requests for supporting documentation for sampled accounts include:
- The uniform bill detailing the gross charges for the services provided and documentation of deductible and coinsurance amounts, such as reported on explanations of benefits or remittance advices
- Charity care applications and supporting documentation, such as pay stubs, other evidence of income, bank statements, and financial portfolios
Error rates are then established based on acceptance of the supporting documentation by the auditor. If, for example, the error rate on the sampled accounts is greater than 50 percent, only those accounts without errors will be allowed. This method of statistical sampling can result in significant disallowances of charity care, which negatively affects EHR incentive payments.
- HITECH adjustments are incorporated with any desk review adjustments before a settlement is issued.
- Any additional supporting documentation not furnished at time of audit will require the hospital to request a Medicare cost report reopening.
Suggested Annual Processes
To support charity care data adequately, hospitals may want to consider taking the following steps on an annual basis:
- Maintain a charity care log for claims with dates of service during each cost report period. Retain an electronic copy of the log until the cost report is final settled.
- Annually review the hospital’s charity care policies, and maintain supporting documentation for each cost report period.
- Confirm that the hospital’s charity policies are being followed and that they are reflected accurately in the billing system.
- Ensure charity care amounts are accurate. Establish separate transaction codes for bad debt and charity care, and make sure these transactions cleanly map to general ledger accounts. Clearly communicate any new charity transaction codes or changes in proposed mapping.
- Identify the best data source to track charity care data, and consistently use it for all uncompensated care reporting.
Hospitals can help protect their EHR incentive payments by being prepared to respond to HITECH payment data audits and by having complete and accurate charity care documentation available. They should be prepared to support the amount of charity care reported and to reconcile the charity care figures reflected on various financial statements and federal reports.
A version of this article, which was developed by Crowe and Helena Lefkow, Metropolitan Chicago Healthcare Council, originally appeared in MCHC’s “Reimbursement E-Brief,” November 2014.