Nursing and Allied Health Issues

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Nursing and Allied Health Issues

Published on Oct 02 2017, Last Updated on May 07 2019

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Jurisdictions: J8A,J5A,Nursing and Allied Health (NAH),Nursing and Allied Health (NAH),Audit

Nursing and Allied Health (NAH) Tuition Revenue Offset

The regulations at 42 CFR 413.85(d)(2) indicate that “the net cost of approved educational activities is determined by deducting the revenues that a provider receives from tuition and student fees from the provider’s total allowable education costs that are directly related to approved educational activities.” At first glance, the use of the word “direct” in that statement may seem to imply that the tuition is only to be offset against “direct” costs and not any indirect overhead (aka general service) costs. However, the term “direct” in this instance is being used to show that the costs have to truly be costs of the educational activities, rather than some other cost center. In other words, a provider shouldn’t be offsetting the tuition revenue against some non-nursing and allied health related cost center.

This is further clarified in the next section of the regulation, which states that “a provider’s total allowable educational costs are those incurred by the provider for trainee stipends, compensation of teachers, and other costs of the activities as determined under the Medicare cost finding principles in 42 CFR §413.24 .” This reference to the cost finding principles is a clear indication that indirect general service costs are also subject to the offset.

There are a variety of ways in the cost report to “adjust” costs out of the cost report. The most common way is to adjust them through worksheet A-8. Generally, this is used when you want to only adjust direct costs. However, this has been stated by CMS to be the required methodology for offsetting tuition revenue, even when the tuition revenue offset is more than the amount of direct cost itself. Reporting an A-8 adjustment in excess of the direct costs in that cost center will carry over a negative number to that same line on worksheet B, where indirect costs are allocated. If the cost is still negative by the time it gets to the Administrative and General (A&G) cost center, it will not be allocated any of the A&G cost. If the cost for that NAH cost center is still negative by the time it reaches the end of the worksheet B part 1 step down, the negative will simply drop off of the cost report. The fact that NAH is a general service cost center is what allows for the negative cost to be reported without impacting other aspects of the cost reporting.

Some providers have suggested using a B-2 post step down adjustment as an alternative to an A-8 adjustment, as that method will allow for a full step down of A&G cost, rather than having that inhibited by the negative cost created through the A-8 adjustment method. However, this B-2 step down approach is improper. First, a true B-2 post step down adjustment cannot be entered for a general service cost center. The cost reporting software logic does not allow for it. This is because the general services are already closed by the time the step down has ended, so a “post step down” adjustment would be illogical. Although some of the cost report vendors have developed post step down adjustment columns in D part III and D part IV, these are not CMS approved columns, as indicated by their absence from the CMS cost reporting instructions.

If adjustments are not properly made to offset the entire amount of tuition revenue through an A-8 adjustment, adjustments may be proposed at the time of Desk Review or Audit.

NAH Managed Care Add-On Payment

Hospitals that provide training through a Nursing and Allied Health Program are paid on a reasonable cost “pass through” basis. In addition, those providers that service Medicare Advantage (aka Medicare Part C/HMO/Managed Care/Medicare + Choice) patients may also qualify for an additional NAH Managed Care Add On Payment.

The regulations at CFR 413.87(c)(1) drive the requirements for this add-on payment. They specifically state “a hospital that operates and receives payment for a nursing and allied health education program under 413.85 may receive an additional payment associated with Medicare + choice utilization.” At first glance, the inclusion of the word “operate” in this requirement seems to imply that only a hospital that is providing training through their own “provider-operated” program would be eligible for the NAH Managed Care Add-On payment.

However, there are situations where a hospital provides training through a “non-provider operated” program and is eligible for pass through reimbursement for their clinical training costs if they meet certain criteria.
CMS has clarified that even though the provider is not “operating” these programs, they may also be entitled to the NAH Managed Care Add On Payment, as long as they are receiving pass through reimbursement and meet all of the other criteria.

Non-Provider Operated Programs (1989 Cost Limit)

Hospitals that provide training through a non-provider operated program may be eligible for pass through reimbursement for their clinical training costs, but only if they meet certain criteria. The regulations at 42 CFR 413.85(g)(2) define these criteria. Among these requirements is one that states “In any cost reporting period, the percentage of total allowable provider cost attributable to allowable clinical training cost does not exceed the percentage of total cost for clinical training in the provider’s most recent cost reporting period ending on or before October 1, 1989.”

Narrowly read, this statement creates a situation where if the current year’s clinical training cost/total cost ratio exceeds the similarly calculated ratio from the 1989 cost report, the criteria is not met, and no pass-through payment at all is allowed, regardless of how far over that threshold a provider was.

However, there is a reference in the Federal Register at 66 FR 3363 (January 12, 2001) which states that: “The proposed regulations incorporated the provisions of section 4004(b)(2)(A) of Public Law 101-508 concerning which providers can claim pass-through payment for clinical training and how much they may claim. The commenters are correct in their assessment that, under these rules, providers that expand the magnitude of the support they provide to educational institutions would not receive a corresponding increase in Medicare pass-through payment. However, the rules merely limit the percentage of the costs, so if a provider expands some programs and decreases others, then there might be no adverse Medicare payment impact. Again, we believe the Congressional intent was to protect providers who had come to rely on Medicare payments for nonprovider-operated education programs without increasing Medicare expenditures.”

Due to the contradiction between the regulation and the Federal Register, we contacted CMS, who verified that the intent was to treat the 1989 percentage as a limit. As such, a provider that exceeded that percentage threshold for a year would still be eligible for reimbursement of clinical cost up to that percentage threshold.

global-tags: J8A,J5A,Nursing and Allied Health (NAH),Nursing and Allied Health (NAH),Audit

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J5B RADIO NPI_MODAL_J5B_RADIO	J5A RADIO NPI_MODAL_J5A_RADIO
INB NPI_MODAL_INB_RADIO	NTA NPI_MODAL_NTA_RADIO
MIB NPI_MODAL_MIB_RADIO	INA NPI_MODAL_INA_RADIO
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Nursing and Allied Health Issues

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Nursing and Allied Health Issues

global-tags: J8A,J5A,Nursing and Allied Health (NAH),Nursing and Allied Health (NAH),Audit