A hospital that does not have a thorough process in place for billing the “no pay” claims for a Medicare Advantage patient may have significant opportunity to increase their Medicare EHR incentive payment
The Centers for Medicare & Medicaid Services (CMS) were authorized by the American Recovery and Reinvestment Act of 2009 to provide incentive payments to eligible professionals and hospitals that adopt, implement, upgrade, or demonstrate meaningful use of certified EHR technology.
Eligible acute care inpatient hospitals could begin receiving Medicare EHR incentive payments in any year from FY 2011 to FY 2015. Eligible hospitals that began receiving incentive payments prior to FY 2014 had the opportunity to receive incentive payments for up to four years. Any hospitals that start in FFY 2014 may only receive payments for 3 years and hospitals beginning in FFY 2015 will only be able receive payments in FY 2015 and FY 2016.
Ironically Federal Fiscal Year (FY) 2015 is the last year eligible hospitals are able to begin receiving Medicare EHR incentive payments and it is also the first year eligible hospitals that are not meaningful users of certified EHR technology will receive a payment adjustment. So there is no time better than the present to make sure you receive all of the incentive payments to which you are entitled. One component of the calculation that non-teaching hospitals may not be focusing on but should be is the Inpatient Part C Days, which are determined based on the “no pay” claims or shadow bills that a hospital submits to their Medicare Administrative Contractor (MAC).
The calculation of the Medicare EHR incentive payment includes three components: the initial amount, the Medicare share and a transition factor based on the payment year.
The initial amount for eligible hospitals is a base payment of $2,000,000 plus a per discharge amount of $200 beginning with a hospital’s 1,150th discharge of the year and ending with the hospital’s 23,000th discharge of the year. The initial amount is limited by the law to $6,370,400.
The Medicare share is calculated using the following formula:
Number of Inpatient Part A Bed Days +
Number of Inpatient Part C Days (Medicare Advantage Days)
Total Inpatient Bed Days x
[(Total Charges – Charges Attributable to Charity Care)/ Total Charges]
The data used to determine the Medicare share fraction is based on data from the latest filed Medicare cost report (which represents 12 months) at the time the calculation is made but will be updated upon settlement to the first 12-month Medicare cost report for the hospital fiscal year that begins after the beginning of the payment year being settled.
The calculation of the Medicare share increases the importance for all hospitals, whether teaching or non-teaching, to ensure they submit all of their Medicare Advantage “no pay” bills, otherwise known as shadow billing, to their Medicare Administrative Contractor in a timely manner.
The third component of the incentive payment calculation is the transition factor which is based on the fiscal year which a hospital began receiving the incentive payments and the fiscal year for which the payment is being calculated. Below is a table of the transition factors applicable to each year:
|Transition Factor for 2011||1.00|
|Transition Factor for 2012||0.75||1.00|
|Transition Factor for 2013||0.50||0.75||1.00|
|Transition Factor for 2014||0.25||0.50||0.75||0.75|
|Transition Factor for 2015||0.25||0.50||0.50||0.50|
|Transition Factor for 2016||0.25||0.25||0.25|
The following is an example of the Medicare EHR incentive payment calculation and the impact of increasing Medicare Advantage days on the incentive payment:
Total Discharges for 2014 = 7,500
Total Inpatient Part A Days for 2014 = 10,200
Total Inpatient Part C Days (Medicare Advantage Days) for 2014 = 2,250
Total Bed Days for 2014 = 36,500
Charity Care Charges for 2014 = $5,000,000
Total Charges for 2014 = $625,000,000
Hospital A began receiving Medicare EHR Incentive Payments in 2014
|Hospital A 2014 Incentive Payment Calculation||Hospital A 2014 Incentive Payment Calculation with an Increase of 250 Inpatient Part C Days|
|Additional Per Discharge Payment||$1,270,200||$1,270,200|
|Total Initial Payment||$3,270,200||$3,270,200|
|Inpatient Part A Days||10,200||10,200|
|Inpatient Part C Days||2,250||2,500|
|Total Medicare Days||12,450||12,700|
|Total Bed Days||36,500||36,000|
|Total Charges Excl. Charity/Total Charges||0.99||0.99|
|Medicare Share of Initial Payment||$1,124,447||$1,147,027|
|Transition Factor for FY 2014||.75||.75|
|Total Medicare Incentive Payment for 2014||$843,336||$860,270|
|Impact of Increasing Inpatient Part C Days by 250 patient days||$16,934|
|Payment Increase per day||$67.74|
A hospital that does not have a thorough process in place for billing the “no pay” claims for a Medicare Advantage patient may have significant opportunity to increase their Medicare EHR incentive payment by implementing a complete process for identifying Medicare Advantage patients and billing the “no pay” claims timely.