Pennsylvania Medicaid School Based Claiming

1. Pennsylvania Medicaid School Based Claiming SBAP Annual Cost Report Training March 2014 www.publicconsultinggroup.com

2. Agenda • Goals • Programmatic Changes to the School Based Access Program (SBAP) • Roles and Responsibilities • Annual Medicaid Cost Reporting Requirements • Direct Service Cost Reporting Requirements • Cost Settlement Calculation • Desk Review Overview • Timeline of Events • Contacts • Questions

3. Goals The purpose of this training is to help LEAs: • Understand the cost reporting process; • Learn program requirements and responsibilities; • Understand the implications of reporting or failure to accurately report; and • Understand the Medicaid cost settlement calculation and how the various contributing factors impact the calculation.

4. Programmatic Changes to the School Based Access Program (SBAP)

5. Programmatic Changes to SBAP • Effective July 1, 2013 the Centers for Medicare and Medicaid Services (CMS) approved the Pennsylvania Medicaid State Plan Amendment to implement an annual Medicaid cost reimbursement and cost settlement process for the School Based ACCESS Program (SBAP). • CMS made a national push to implement a standardized reimbursement process to ensure proper reimbursement to LEAs for direct medical school based services: cost based reimbursement. What is cost based reimbursement? • A cost based reimbursement methodology determines the actual cost of delivering direct medical services to special education students. • Cost based reimbursement ensures that LEAs are reimbursed their costs for the delivery of Medicaid allowable direct medical services.

6. Programmatic Changes to SBAP How will cost based reimbursement impact LEAs? • In order to identify the costs of delivering Medicaid school-based services, LEAs will participate in an annual cost settlement process. • The cost settlement process will include the submission of an annual Medicaid cost report. • LEAs will complete an annual Medicaid cost report online at https://costreporting.pcgus.com/pa. • The Medicaid cost report calculates the actual costs of providing Medicaid covered health related services and will be compared to Medicaid reimbursement received through SBAP interim payments for the fiscal year. • Interim payments are those payments received by the LEA through the fee-for-service billing activities throughout the fiscal year. These payments DO NOT include payments received for the quarterly MAC claims.

7. Programmatic Changes to SBAP Historical Approach to School Based Medicaid Programs • “Compartmentalized” programs with minimal integration • Unbalanced LEA participation in both programs • Some LEAs participated in MAC and FFS or just MAC or FFS • Various compliance issues in both programs • One reason the Federal government proposed to eliminate MAC Fee for Service (FFS) Medicaid Administrative Claiming (MAC) LEA $ LEA $

8. Programmatic Changes to SBAP Current Approach to School Based Medicaid Programs • Programs now work together • Integrated single time study for Medicaid Administrative Claiming (MAC) and FFS reimbursement • Focus on overall reimbursement and reimbursement of actual costs • Balanced participation in ALL areas by LEAs • Combined statewide and LEA operational model • Improved CMS clarity/compliance • Reimbursement that reflects LEA’s cost in treating Medicaid eligible students • Submission of annual Medicaid cost reports required

9. Roles and Responsibilities

10. Roles and Responsibilities Role of the LEA • Participate in the Random Moment Time Study (RMTS) • Submit a participant list for inclusion in the quarterly RMTS • Ensure all Medicaid eligible providers are included in the cost report • The list of Medicaid eligible providers on the cost report must be the same as the participant list submitted for the RMTS • Prepare and submit completed annual cost report Role of PCG and the PA Department of Public Welfare • Desk reviews of the submitted cost reports • Complete Medicaid cost report audits • Process Medicaid cost settlements

11. Roles and Responsibilities • SBAP allows districts to receive reimbursement for the cost of providing PA Medicaid covered services to Medicaid eligible, special education students. • Revenue available only when Federal and State Medicaid requirements are met.

12. SBAP Annual Medicaid Cost Reporting Requirements

13. SBAP Annual Medicaid Cost Reporting Requirements LEA requirements for participation in SBAP: • Continue submitting direct service claims; • Include direct service staff in the Random Moment Time Study (RMTS); • Report costs for direct service staff on a quarterly and annual basis; • Report costs annually on an accrual basis; and • Include only allowable costs on the cost report.

14. SBAP Annual Medicaid Cost Reporting Requirements • LEAs are required to continue with direct service documentation and claiming processes throughout the year. • LEAs will continue to receive interim payments on approved claims. • Interim claiming will remain a critical component in the direct service reimbursement process. • LEAs should submit direct service claims for staff participants included in the quarterly time study. • In order to receive Medicaid reimbursement, LEAs must continue to adhere to the participation agreement and program requirements.

15. SBAP Annual Medicaid Cost Reporting Requirements • LEAs must include direct service staff providing health related services to special education students on the random moment time study (RMTS) staff pool list. • Each LEA must determine the appropriate staff to include in the time study on a quarterly basis. • If participants are inadvertently omitted from the time study, costs incurred for these participants will not be recognized in the cost settlement process. • It is essential for LEAs to carefully identify and include direct service providers on a roster to participate in the quarterly time study.

16. SBAP Annual Medicaid Cost Reporting Requirements 3. LEAs are required to report costs for direct service staff on a quarterly and annual basis. • The cost settlement process directly links to both the quarterly financial submissions and the RMTS. • Each LEA will report the quarterly and annual costs for their staff included in the time study staff pool.

17. SBAP Annual Medicaid Cost Reporting Requirements • All costs captured on the SBAP Annual Medicaid Cost Report must be reported on an accrual basis. • This is a requirement within the Medicaid State Plan and Cost Reporting Guide approved by the Centers for Medicare and Medicaid Services (CMS). • Under an accrual based accounting methodology, expenses are recorded at the time in which the transaction occurs, rather than when the payment is made. • Expenses are counted when the LEA receives the goods or services. The LEA does not have to wait until the expense is actually paid to record a transaction.

18. SBAP Annual Medicaid Cost Reporting Requirements • All costs captured on the SBAP Annual Medicaid Cost Report must be reported on an accrual basis. Example of Accrual Based Reporting: • In July 2012, the LEA pays salaries and benefits for the last two weeks of June 2012. • This expense occurred in July 2012, but pertained to services provided in June 2012. • This expense should be recorded on the July-June 2012 annual cost report when the transaction occurred, not when it was paid.

19. SBAP Annual Medicaid Cost Reporting Requirements 5. Only allowable costs approved by CMS can be reported on the cost report. • CMS approved a cost reimbursement methodology that includes a number of data elements (listed on the following slides). • The CMS-approved cost and data elements related to direct medical services include: • Salary costs for eligible direct service providers; • Benefit costs for eligible direct service providers; • Purchased Professional Services (PPS) costs for eligible direct service providers; • Approved Direct Medical Service Materials and Supplies costs; • Depreciation costs for Approved Direct Medical Service Equipment; • Annual Tuition Costs; • Pennsylvania Department of Education Unrestricted Indirect Cost Rate (UICR) (pre-populated by PCG); • Random Moment Time Study (RMTS) Direct Medical Service Percentage Results (pre-populated by PCG); and • Individualized Education Program (IEP) Ratio. • Please ensure your LEA maintains all documentation to support allowable costs reported.

20. SBAP Annual Medicaid Cost Reporting Requirements 5. Only allowable costs defined by CMS can be reported on the cost report. • The CMS-approved cost elements related to transportation include: • Salary costs for eligible transportation staff; • Benefit costs for eligible transportation staff; • PPS costs for eligible transportation staff; • Other allowable transportation costs (such as fuel, insurance, etc.); and • Depreciation costs for approved transportation service equipment. • Please ensure your LEA maintains all documentation to support allowable costs reported.

21. SBAP Annual Medicaid Cost Reporting Requirements In summary, • Continue submitting direct service claims; • Include direct service staff in the random moment time study (RMTS); • Report costs for direct service staff on a quarterly and annual basis; • Report costs annually on an accrual basis; and • Include only allowable costs on the cost report.

22. Direct Service Cost Reporting Process and Requirements

23. Reporting Allowable Direct Service Costs

24. Reporting Allowable Direct Service Costs • Medicaid allowable costs in the SBAP annual cost report must relate to one of the direct services listed below, which are clearly outlined in the Pennsylvania Cost Reporting Manual. • Reimbursable services under the Direct Service program include: • Nursing Services; • Nurse Practitioner Services; • Occupational Therapy Services; • Orientation, Mobility and Vision Services; • Personal Care Services; • Physical Therapy Services; • Physician Services; • Psychological (including psychiatric), Counseling and Social Work Services; • Speech, Language and Hearing Services (including audiology and teachers for the hearing impaired); and • Assistive Technology Devices

25. Reporting Allowable Direct Service Costs • Only the eligible Annual Payroll Information for the SBAP service providers who are included in the RMTS qualify for SBAP cost reimbursement. • Columns on the Annual Payroll page indicate whether or not the individual was listed on the SPL for the particular quarterly period • If the column is marked with a 1, the individual was included on the SPL for the quarter and cost will be included in the SBAP cost report. If the column is marked with a 0, the individual was not included on the SPL for the.

26. Reporting Allowable Direct Service Costs • Regular wages • Paid time off (e.g., sick or annual leave) • Overtime • Bonuses or longevity • Stipends • Cash bonuses and/or cash incentives Note: Salaries are those payments from which payroll taxes are deducted. The reported salaries should be the total gross earnings for the individual as paid by the LEA for the reporting period.

27. Reporting Allowable Direct Service Costs • Employer-paid health/medical, life, disability, vision benefits, or dental insurance premiums • Employer-paid child day care for children of employees • Retirement contributions • Worker’s compensation costs • Other employer paid benefits including unemployment and FICA

28. Reporting Allowable Direct Service Costs • Only those salary and benefit staff costs for direct service providers included on the RMTS staff pool list are eligible for direct service cost reimbursement. • Only salaries and benefits for those service categories which the LEA billed and received interim payments will be included in the Medicaid cost settlement calculation. • LEAs are required to report gross expenditures as well as identifying expenditures paid from federal funding sources.

29. Reporting Allowable Direct Service Costs • Total costs of PPS for applicable contracted staff. Note: The reported costs should be the total costs for the individual as paid by the LEA for the reporting period. PPS costs include compensation paid for all services contracted by the LEA for an individual who delivered any direct services to Medicaid and/or non-Medicaid students. • Only those PPS costs for certain direct service providers that were included on the RMTS staff pool list are eligible for direct cost reimbursement. • Only contracted service costs for those service categories which the LEA billed and received interim paymentsfor will be included in the Medicaid cost settlement calculation.

30. Reporting Allowable Direct Service Costs • What types of Material and Supply costs will be included in the cost settlement process? • CMS has approved a very limited list of direct medical service material, supply, and equipment costs (Available on the MCRCS Dashboard). • Only those items included within the approved list can be reported on the Medicaid cost report • Examples include: hearing aids, stethoscopes, wheelchairs, etc. • Direct Medical Service Material, Supply, and Equipment Costs applicable only to General Education students should not be reported on the cost report • Only material and supply costs for service types – with the exception of Assistive Technology Devices – which the LEA reports payroll or contract costs for will be included in the Medicaid cost settlement calculation.

31. Reporting Allowable Direct Service Costs • What is Depreciation? • “Depreciation” is the systematic and rational allocation of the acquisition cost of an asset over its estimated useful life • What type of depreciation needs to be used in order to report costs on the Medicaid Cost Report? • Allowable depreciation expenses for direct medical services include OMB-A-87 allowable methodologies, including pure straight-line depreciation • Straight-line depreciation method is a method of calculating the depreciation of an asset which assumes the asset will lose an equal amount of value each year • The annual depreciation is calculated by dividing the purchase price by the estimated useful life of the asset

32. Reporting Allowable Direct Service Costs • When is it required to report direct medical service materials and supplies as depreciated cost? • If a single direct medical service material and supply cost exceeds $5,000, then the item should be depreciated • Only those items included within the approved list can be reported on the Medicaid cost report • Only material and supply costs for service types – with the exception of Assistive Technology Devices – which the LEA reports payroll or contract costs for will be included in the Medicaid cost settlement calculation.

33. Reporting Allowable Direct Service Costs • Example 1: A wheelchair is purchased by an LEA for $6,000 on July 1, 2012 and has a useful life of 5 years. • How does the LEA identify what is the useful life of a wheelchair? • The useful life of a wheelchair is estimated by the LEA • The LEA may use industry standards in order to report the useful life of a wheelchair • If the LEA does not have a fixed asset ledger that reports the useful life of an asset, an LEA may consult the "Estimated Useful Lives of Depreciable Hospital Assets", published by the American Hospital Association (AHA) • How does the LEA calculate the depreciation cost of the wheelchair? • Depreciation cost is calculated by dividing the acquisition cost of $6,000 by the estimated useful life of 5 years • This results in a calculated depreciation cost of $1,200 for school fiscal year 2013 (July 1, 2012 to June 30, 2013)

34. Reporting Allowable Direct Service Costs • Example 2: A wheelchair is purchased by an LEA for $6,000 on October 1, 2012 and has a useful life of 5 years • The Medicaid cost reimbursement and settlement process was effective July 1, 2012, so this requires the LEA to prorate the expense • This is accomplished by dividing the annual allowable expense of $1,200 by the number of months in the fiscal year or 12 in this case. $1,200/12 = $100 per month • The $100 per month cost is then multiplied by 9, which is the number of months the wheelchair was in use for the reporting period (July 1, 2012 to June 30, 2013) • Therefore, the final allowable depreciation cost would be $900 in this example ($100 of depreciation cost per month * 9 months = $900) • For the remaining 4 years of the useful of the wheelchair, the allowable depreciation cost would be $1,200 per year

35. Reporting Allowable Direct Service Costs • This section identifies the reimbursable portion of tuition expenditures for approved private schools and other school based out-of-district providers. • The cost report must include the following: • The specific school/agency to which tuition was paid • The total annual tuition paid to the specific school/program • The portion of tuition payments made using federal funds

36. Reporting Allowable Direct Service Costs • The data entered will be used to calculate the Tuition Payments Net Federal Funds (Tuition Payments) – (Federal Funds) = Tuition Payments Net Federal Funds • This value will then be multiplied by the Health Related Percentage which is distinct for each school/agency and will be calculated by PCG based on data from the agency or school’s Annual Financial Report to PDE. (Tuition Payments Net Federal Funds) x (Health Related Percentage) = Health Related Expense • The Health Related Expense will then be used to determine the Medicaid allowable costs for cost settlement

37. Reporting Allowable Direct Service Costs

38. Reporting Allowable Direct Service Costs • As LEAs are required to report gross expenditures, expenditures for funds paid from federal funding sources should be appropriately identified. • The cost reporting system will automatically calculate the net expenditures based on costs reported. • Funds received from Medicaid (interim billing, administrative etc) are not considered Federal Funds, and should not be reported as such.

39. Reporting Allowable Direct Service Costs

40. Reporting Allowable Direct Service Costs • CMS recognizes that LEAs incur indirect costs for direct service program administration. • Unrestricted indirect costs represent the expenses of doing business that are not readily identified within a particular grant, contract, program, but are necessary for the general operation of the organization to conduct the activities it performs. • The Pennsylvania Department of Education (PDE) is the cognizant agency responsible for calculating and approving LEA indirect cost rates on behalf of the United States Department of Education (US DOE).

41. Reporting Allowable Direct Service Costs • PCG will pre-populate the LEA’s unrestricted indirect cost rate (UICR) into the Medicaid cost report form. • The UICR is applied to net direct costs (total costs less amount paid with federal funds) in order to allow for the proper identification of indirect costs.

42. Direct Medical Services Time Study Percentages

43. Direct Medical Services Time Study Percentages • Direct medical service staff have other LEA specific responsibilities other than delivering direct medical services and CMS requires a mechanism (RMTS) to apportion these costs. • The RMTS direct medical service percentage is applied to allowable costs to determine what portion of these costs pertain to the provision of direct medical services.

44. Direct Medical Services Time Study Percentages • The direct medical service percentage is calculated by PCG from the results of the quarterly Random Moment Time Study (RMTS). • The percentage will determine how much time direct service and personal care providers spend performing allowable direct medical services. • There is one, statewide direct medical service percentage used for the purpose of cost reporting. • The direct medical service percentage is a statewide percentage and is not LEA specific. • The direct medical service percentage used within the Medicaid cost report is the combination of the three quarterly time study periods (Oct – Dec, Jan – Mar, and Apr – Jun) that occurred during the state fiscal year.

45. Direct Medical Services Time Study Percentages Example: • If the direct medical services percentage was 41.96% and a LEA paid a Physical Therapist $60,000 per year, the direct medical service costs would be $25,176. • $60,000 x .4196 = $25,176

46. Individualized Education Program Ratio

47. Individualized Education Program Ratio • The purpose of the IEP ratio is to allocate direct medical service costs to the Medicaid program. • It is used to determine Medicaid’s portion of direct medical service costs incurred by LEAs. • The IEP ratio will be calculated on an annual basis for use the annual cost report. • This ratio will differ from the Medicaid Eligibility Ratio (MER) used for the quarterly MAC claims. Total Number of Medicaid Eligible Special Education Students with a Prescribed Direct Medical Service in their IEP IEP Ratio = Total Number of ALL Special Education Students with a Prescribed Direct Medical Service in their IEP

48. Individualized Education Program Ratio • The IEP ratio will be LEA specific and based on student count data. • To establish the IEP ratio, LEAs need to submit a count of each student with at least one direct medical service in their IEP (denominator), based on student enrollment as of the first Monday of October during each July – June school year, to PCG. • PCG will then determine the total number of Medicaid Eligible students with at least one direct medical service in their IEP (numerator) based on paid claims data from EasyTrac.

49. Calculating Direct Service Medicaid Allowable Costs

50. Calculating Direct Service Medicaid Allowable Costs • Direct service costs entered in the Cost Reporting System by the LEA and unrestricted indirect costs will be apportioned by the Direct Medical Service Percentage and the IEP Ratio to calculate the Medicaid allowable costs. • The identified Medicaid allowable costs on the cost report will be used to determine the cost settlement, in addition to any reported transportation costs.