HFMA Express News - September 16, 2005

IN THIS WEEK’S ISSUE:

1. Hospitals Affected by Katrina Should Contact Ratings Agencies
2. HFMA Creates Resume Bank; List-Serve Participants Share Information
3. HIPAA Guidance Expanded for Hurricane Recovery
4. IRS Clarifies Relationship Between Excess Benefits and Exempt Status
5. CMS to Hold Nursing Home Pay-For-Performance Forum
6. Internal Control Communications Auditing Standard Proposed
7. Location Regulations Could Threaten Many RHCs
8. Quick Links
9. New in the Resource Center

1. HOSPITALS AFFECTED BY KATRINA SHOULD CONTACT RATINGS AGENCIES

HFMA advises managers of hospitals affected by Hurricane Katrina to get in touch with the rating agencies about the hospitals’ operational status as soon as possible to avoid miscommunications that could affect bond ratings.

This recommendation comes in light of a September 9 announcement from Fitch Ratings that placed Ochsner Clinic Foundation in New Orleans and Memorial Hospital at Gulfport on “Rating Watch Negative” (indicating the possibility, but not certainty, of a rating downgrade over the short term). For both of these hospitals, Fitch specifically noted that they were unable to contact management regarding the status of the facilities.

Fitch attributes the negative watch status to “the unprecedented infrastructure damage and evacuation efforts within each hospital’s service area, as well as the uncertainties involved in the receipt of insurance and Federal Emergency Management Agency (FEMA) monies.”

2. HFMA CREATES HURRICANE RESUME BANK; LIST-SERVE PARTICIPANTS SHARE INFORMATION

HFMA has created a new, free resume bank for members affected by Hurricane Katrina. Employers and fellow HFMA members: if you looking for temporary or permanent workers, please be sure to check this resume bank. You may review resumes on-line and contact the members directly.

This week on HFMA’s Hurricane Relief list-serve, many participants shared information on how they are classifying unpaid accounts receivable resulting from Katrina. They also compared notes on whether FEMA or other federal agencies have provided information on gaining coverage for those patients without healthcare coverage and how those claims may eventually be paid.

Also on the list this week was information from the Ochsner Clinic Foundation regarding its recovery and information on the Hurricane Relief Fund they have set up to support the hospital and its employees. Ochsner Hospital is one of three hospitals in New Orleans that remained up and running throughout the storm.

3. HIPAA GUIDANCE EXPANDED FOR HURRICANE RECOVERY

The HHS Office of Civil Rights (OCR) has issued a second bulletin regarding HIPAA privacy rule compliance and enforcement during the Katrina recovery. The guidance speaks to the need for identifying and providing prescription medications for displaced people, gathering information, and getting the information to the appropriate points of care.

Bulletin #2’s Attachment 2 provides discussion and sample language related to business associate contracts and disclosures necessary for services and information sharing. The OCR notes that if there is a failure to meet the requirements of the privacy rule, good faith efforts and the emergency circumstances will be taken into consideration. (Attachment 1 is the previously released guidance on sharing information to help in disaster relief efforts and getting patients the care they need.)

4. IRS CLARIFIES RELATIONSHIP BETWEEN EXCESS BENEFITS AND EXEMPT STATUS

The IRS has issued a proposed rule that would amend the regulations under the Internal Revenue Code section 501(c)(3) to provide guidance on factors that the IRS will consider in determining whether a tax-exempt organization that engages in one or more excess benefit transactions can continue as exempt under 501(c)(3). The rule also clarifies the relationship between the substantive requirements for tax exemption and the imposition of excise taxes under section 4958 (also referred to as the “intermediate sanctions” rule) on the recipient of the excess benefit, and how the IRS will determine whether excess benefit transactions could jeopardize an organization’s exempt status.

In determining whether an exempt organization that engages in excess benefit transactions can continue to maintain its tax-exempt status when excise taxes also apply, the IRS said it would consider the following factors:

• The size and scope of the organization’s regular ongoing activities before and after the allegations;
• The size and scope of the transactions;
• Whether the organization has been involved in repeated excess benefit transactions;
• Whether the entity has implemented safeguards that are reasonably calculated to prevent future violations; and
• Whether the transactions have been corrected or the organization has made good faith efforts to redress the granted benefit.

The IRS is paying close attention to executive compensation as part of its efforts to evaluate the accountability of exempt organizations. Recently, the agency has proposed changes to Schedules A and B of Form 990 to gather more specific compensation information. (See the August 26 HFMA Express News.)

Comments on the proposed rule are due by December 8, 2005.

5. CMS TO HOLD NURSING HOME PAY-FOR-PERFORMANCE FORUM

On September 20, 2005, CMS will hold an open door forum in Baltimore on a nursing home pay-for-performance demonstration project. Under the project, financial incentives would be provided to nursing homes that meet certain standards for providing high quality care. At this session, Abt Associates will present their recommendations to CMS regarding a draft design for a nursing home pay-for-performance demonstration. Participants will be able to ask questions about the recommendations and offer ideas related to quality and payment incentives in the nursing home setting.

The session is from 2:00 p.m. to 4:00 p.m. EDT. To participate by phone, dial (800) 837-1935 and use conference ID 8520445. To attend in person, an RSVP is required by September 16 to SpecialODF@cms.hhs.gov

6. INTERNAL CONTROL COMMUNICATIONS AUDITING STANDARD PROPOSED

The American Institute of Certified Public Accountants has recently released an exposure draft of a planned auditing standard, Communication of Internal Control Related Matters Noted in an Audit. The proposal is a rewritten version of a March 2003 draft intended to supersede Statement on Auditing Standards (SAS) No. 60, by the same name. “This proposed standard,” the cover letter says, “would establish standards and provide guidance regarding the auditor’s responsibility for communicating matters related to an entity’s internal control over financial reporting in an audit of an entity’s financial statements.” Comments should be submitted to the Auditing Standards Board (ASB) by October 31, 2005. See the cover letter for submission instructions.

Released with the draft of revised SAS 60 is a document entitled A Framework for Evaluating Control Deficiencies, which, though not a part of the proposed SAS, provides guidance on evaluating the significance of control deficiencies in various situations. The ASB would also like input on this document.

7. LOCATION REGULATIONS COULD THREATEN MANY RHCs

The OIG has found a pressing need for CMS to issue long-overdue regulations that would stipulate appropriate rural health center (RHC) locations. In an August report, the OIG charged that 279 RHCs are located in areas that the Health Resources and Services Administration (HRSA) has not designated as medically underserved or that the Bureau of the Census has designated as urbanized areas. Under the Balanced Budget Act of 1997, these RHCs should not be able to maintain their RHC status unless essential provider status was granted. Another 949 RHCs are located in shortage-designated areas that HRSA has not reviewed or updated within the required timeframe.

In response to the report, CMS has committed to reissuing proposed and final regulations (earlier regulations were withdrawn upon passage of the Medicare Modernization Act of 2003) to terminate clinics that do not meet the basic location requirements unless they are essential community providers for their service areas.

8. QUICK LINKS

BUSINESS MILEAGE RATE. The IRS has increased the optional standard mileage rate to 48.5 cents per mile for all business miles driven between September 1, 2005, and December 31, 2005, an 8 cents a mile increase over the previous rate.

HOME OFFICE COST REPORTING FORMS. This transmittal provides a new Chapter 39, Home Office Cost Statement, Form CMS 287-05, updating the forms and instructions, eliminating obsolete items, and correcting inconsistencies. The changes apply to cost reporting periods ending on or after September 30, 2005.

HEALTH QUALITY PROJECT PROPOSALS. CMS seeks proposals for its 5-year Medicare Health Care Quality Demonstration program. The project seeks to improve quality and increase efficiency among the major local and regional-level healthcare systems by modifying payment structures and providing incentives for better quality of care at lower costs.

CORRECTED RULE ON REPORTING ADVERSE ACTIONS. On September 13, the OIG issued a clarifying correction to the 1999 Healthcare Integrity and Protection Data Bank regulations, modifying the term “any other negative action or finding” and explaining what is reportable. 

REIMBURSEMENT FOR TRICARE DENTAL PROVIDERS. A proposed rule would require TRICARE dental program providers to be reimbursed in accordance with the program contractor’s network agreements, less any cost-share amount due for authorized services. Comments are due by October 31, 2005.

9. NEW IN THE RESOURCE CENTER

PROPOSED 2006 PHYSICIAN FEE SCHEDULE HIGHLIGHTS. Use this overview as a handy reference to the key provisions of the Medicare proposed rule updating physician payments for 2006.

HFMA ROUNDTABLE: CHARTING A REVENUE CYCLE ROADMAP. Nearly every
hospital and health system is interested in improving its revenue cycle. But where is the best place to start? In this roundtable, four senior healthcare financial executives from provider organizations and a revenue cycle marketing manager from a technology vendor share their views, experiences, and advice on the topic of revenue cycle teamwork, prioritization, and more.

For customer service, send an e-mail to HFMA’s Member Service Center or call (800) 252-HFMA, and press 2.

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