The Effect of Shrinking Rural America on Medicare Productivity Standards

michael-smithIn 1900, some 40 percent of the population worked in agriculture, a century later, only two percent did.1 Manufacturing jobs in most small towns began to disappear by the 1980s. Rural America, more than much of the rest of the country, is the victim of productivity gains. And in rural America, fewer other opportunities materialize to replace the jobs the machines take.

Our transition from rural to metropolitan has been rapid. At the beginning of this century, 60 percent of the people lived on farms or in villages. Today, just 19 percent of Americans live in areas the Census department classifies as rural, down from 44 percent in 1930.

This week’s tip goes hand-in-hand with our previous posting (please see tip #22) on the importance of accurately calculating your physician and mid-level FTEs for Rural Health Clinics (RHCs). The RHCs could receive enhanced reimbursement from Medicare and Medicaid, but this is dependent upon FTE counts and the relationship to productivity thresholds.

In some situations, a RHC has the necessary physician or mid-level to provide care, but due to declining populations, economic conditions or a combination of these, insufficient patient volumes exist to prevent the RHC from being impacted by the thresholds.

Tip #28:

The Medicare Administrative Contractor that processes Part A and Medicare Part B claims has the discretion to make an exception to the productivity standards based on individual circumstances (Chapter 13, Section 80.4).

Further guidance can be found on the Centers for Medicare and Medicaid Services (CMS) website:

Medicare Benefit Policy Manual RHC/FQHC

Questions? Please contact Michael Smith at 701.239.8635 or

1“The Graying of Rural America,” by Alana Semuels, The Atlantic

Fee schedule vs. a la carte hospital bills

When dining, one consideration in choosing a restaurant is the concept of “a la carte” dining, which means “from the menu.” When you order a la carte you are ordering individual items, rather than a complete meal. The opposite of a la carte is a “table d’hôte,” which is a meal served at a fixed price. Cheerful couple with menu in a restaurant making orderThe total cost of a meal consisting of several la carte items tends to be much more expensive than that of a fixed price full meal.

A similar concept exists in health care. Someone might receive care at a hospital and then gets an itemized bill for each service provided. This is a la carte care and anyone who has gotten a hospital bill knows this tends to be very expensive. But health care has its own version of table d’hôte called the fee schedule. Fee schedules exist for such things as laboratory, therapies, and ambulance services to name just a few. And just like fine dining, fee schedule health care services are a fixed price.

When a Medicare beneficiary does not pay their responsibility for fee schedule amounts, Medicare has taken the position that since the items are a fixed price, there is no unrecovered cost attributable to uncollectible deductible and coinsurance arising from covered services.

Tip #25:

Bad Debts that arise under a fee schedule are not reimbursable on the Medicare cost report.

Guidance can be found on the Centers for Medicare and Medicaid Services (CMS) website. In addition, each MAC may have supplemental guidance on this issue.

Medicare Intermediary Manual – Transmittal 1872

Questions? Please contact Marie White at 612.253.6546 or


Porsche vs. Honda: Spend Less to Get More!

When it comes to purchasing a car, most people budget for features they want in a vehicle, such as automatic transmission, air bags and power door locks/windows. There might be additional upgrades available, but they aren’t necessary for you to get around. As long as the vehicle enables you to get from point A to B, you’re good to go. A similar situation exists for Medicare hospitals in regards to nursing personnel. CMS wants you to employ the appropriate level of nursing staff for the care to be provided.

Every three years, a Prospective Payment Hospital (PPS) hospital is required to submit a survey that identifies the wages and hours of its employees by certain job categories. CMS then uses this data to come up with a factor that either increases or decreases the wage index. An increase can occur if a hospital uses lower wage LPNs and aides, rather than RNs. CMS does this to equalize the wages paid as a hospital should not be “rewarded” for using all RNs when a lower professional level is appropriate.

The survey is due to your MAC by July 1, 2017.

Tip #23:

Start reviewing your wages and hours by job category early to ensure you have the most accurate data to submit for Occupational Mix.

Further guidance should be available on the website of the Medicare Administrative Contractor (MAC) you are assigned to.

Questions? Please contact Marie White at 612.253.6546 or

Death, Taxes and Medicare Bad Debt

Past DueCompleting a task every day is generally pretty easy—the routine is familiar, so we accomplish it quickly.  But those things that we only do once a month, or worse once a year, tend to be overwhelming. An example is filing your income taxes—the government recognizes the difficulty, so we have until April 15—nearly four months, to comply.

A similar challenge presents itself with the claiming of Medicare bad debt on your Medicare cost report.

Deductibles and coinsurance amounts not paid by Medicare beneficiaries can be claimed as allowable bad debts. The general rules for what can be claimed, what constitutes reasonable collection efforts and timing are contained in Chapter 3 of the Provider Reimbursement Manual 15-1.

Chapter 3 also identifies some of the required elements that should be included on a bad debt log.

Tip #13:

Evaluate if bad debt logs comply with Medicare requirements (Pub. 15-1, §314)

In addition, each Medicare Audit Contractor (MAC) has guidance for the completion of bad debt logs and we encourage you to check out the MAC websites to ensure you are following any special direction that might be applicable to you.

The general guidance can be found on the Centers for Medicare and Medicaid Services (CMS) website:

Provider Reimbursement Manual 15-1

Questions? Please contact Marie White at 612.253.6546 or



Herding Cats to Finalize Your Cost Report? No Worries, It Can be Reopened

Stray CatsPreparing the Medicare cost report can be compared to herding cats—you have to gather a lot of data from a lot of people in a short period of time, with rules that seem to be constantly changing. So the odds of “getting it right” the first time are not very good.

The same argument applies to the audit or review of the cost report. In any given year, the Medicare Administrative Contractors (MACs) receive over 40,000 reports from different provider types—and all of these must be finalized in some fashion.

CMS recognizes the challenges of doing this and has included regulations that allow for the finalized cost report to be reopened. The same regulation allows a hospital to request a reopening if they determine something was not properly reported the first time. We recommend you read this regulation and know the process to follow if this situation arises.

Tip #12:

A settled cost report (NPR) can be reopened up to three years after its issuance (Pub. 15-1, §Section 2931.1)

Further guidance can be found on the Centers for Medicare and Medicaid Services (CMS) web

Provider Reimbursement Manual 15-1

Questions? Please contact Marie White at 612.253.6546 or