Financial, Regulatory and Reimbursement Issue Updates

2007 Michigan Medicare Part B Fee Schedule

We have attached the 2007 Michigan Medicare Part B Fee Schedule for Outpatient Rehabilitation services. Please forward this schedule to your business office as these updated Part B fee screens must be used for January 2007 billings. For budgeting and comparison purposes, we have provided the 2006 fee screen amounts and a calculation of the differences.

Medicare B Therapy Caps and Exception Process

Medicare Part B Therapy caps took effect January 1, 2006. Congress subsequently passed an “exceptions process” in the Deficit Reduction Act of 2005 (signed in February 2006 ) to allow for continued Medicare coverage even after a beneficiary has met their therapy cap for the year under certain circumstances. This exceptions process was scheduled to end January 1, 2007, but has been extended through December 31, 2007. Physical therapy and speech therapy combined will have a cap of $1,780 in 2007. In addition, occupational therapy services will have a cap of $1,780. This limit applies to services provided in a location other than an outpatient hospital.

Provider Tax Program

• Continuation - Congress also passed legislation preserving the Provider Tax Program through 2011 at the maximum rate of 5.5% of industry revenue and preserved the annual Medicare update for skilled nursing facilities. These two measures should provide some assistance in maintaining current reimbursement rates. While the 5.5% maximum rate represents a reduction from the previous 6.0%, it is unknown how or whether this will directly impact the current provider tax program.
• State Plan Amendment – the State may implement new categories during 2007 under the program to allow for lower rates for a group of the smallest facilities, a group of the largest facilities, and certain qualifying CCRCs. All other facilities would experience an increased rate to maintain revenue neutrality for the State. While it is difficult to determine the ultimate outcome, it is potentially significant item for consideration.
• County Medical Care Facilities - the MCFs joined the program effective 10/1/2005
• Accounting Reminders–
  • Settlements - be sure to recalculate the actual revenue due the provider based on actual Medicaid Days times the Quality Assurance Supplement rate on the Medicaid rate letter and compare to the actual amounts received from Medicaid during the year to determine the net settlement amount.
  • Accrued Provider Tax – while there will be no settlement to actual days, it is still likely to have an amount due at year end (unless the invoice is paid early), so be sure to record the appropriate liability and reconcile total payments made to expected amounts.

Michigan Budgetary Issues

Estimations of the shortfall in the fiscal 2007 Michigan budget vary. However, there is consensus that funding cuts could be necessary in Medicaid. As a result, providers should be prepared for the potential for another Executive Order reducing reimbursement.

Capital Improvement Projects

The Medicaid Class I Current Asset Value limit was increased to $50,000 per bed effective October 1, 2006. Many skilled nursing facilities have current asset value determinations that are under this limit. As such, they may be eligible for additional reimbursement related to a capital project. Class III providers have also seen significant increases in the Plant Cost Limit (increased from $13.75 to $15.70) in the past year.

Billing and Collections

Many skilled nursing facilities are experiencing increases in their days outstanding in accounts receivable. Factors contributing to the increase include issues related to completion of the Level of Care Determination tool for Medicaid and a lack of adequate monitoring of the financial assets of residents, resulting in delays in Medicaid applications by residents who have spent down their funds. We encourage providers to conduct a thorough review of their aged accounts receivable to minimize the potential for bad debt expense.

Deficit Reduction Act (DRA)

Several initiatives from the DRA of 2005 relative to the Federal Civil False Claims Act and whistleblower protection statutes are required to be implemented on January 1, 2007. Implementation may require modification of employee handbooks and other policies and procedures. We encourage providers to have these materials reviewed by counsel to ensure compliance with the new regulations.

If you have any questions regarding these or other issues, please do not hesitate to contact your Plante & Moran representative. Best wishes for a happy and healthy Holiday Season.