CMS Updates on Total Pass-Through Amounts for Medicare Advantage Payments
Relevant to: Audit Protocol, Part D
Each week, we scan the latest CMS memos to find the most important ones that apply for PACE programs. Below is a summary of what you need to know.
Disclaimer: The content provided on this site is a summary for informational purposes only, and Grane PBM, Inc. assumes no liability for any errors or omissions in the site’s content. The information does not constitute legal or regulatory advice or replace the original CMS memo. Readers are advised to consult the CMS memo in its entirety and to verify information independently before making any decisions based on this information.
For more information, please refer to the complete memo from CMS.
Introduction
The Centers for Medicare & Medicaid Services (CMS) has updated guidance for Medicare Advantage Organizations (MAOs) regarding their use of Provider Specific Files (PSFs) and the Inpatient Prospective Payment System (IPPS). A key issue highlighted is the past inclusion of Bad Debt amounts in the Total Pass-Through Amount field for certain jurisdictions, which could skew hospital payment calculations. CMS has released corrected data to address this, ensuring compliance and accurate reimbursements moving forward.
Key Dates and Deadlines
- Memo Release Date: July 12, 2024
- CY 2022: Exclusion of Bad Debt from TOT-PTA field starting May 2022
- December 2023: Data provided on Bad Debt amounts for CY 2018-2022
- 2024: Release of corrected PSFs for CY 2018-2022 with Bad Debt removed
PACE Compliance
This memo is relevant to PACE programs due to its implications on the reimbursement calculations and compliance with CMS regulations. While PACE organizations are not directly mentioned in relation to the Provider Specific Files (PSFs) under Medicare Advantage Organizations (MAOs), the updates regarding Total Pass-Through Amounts (TOT-PTA) and exclusions of Bad Debt amounts may influence how PACE programs align with CMS’s reimbursement structures.
PACE organizations should ensure:
– They are aware of the corrected data for CY 2018 through 2022, specifically for jurisdictions 15 J and M, which have had Bad Debt amounts removed from the PSFs.
– Compliance with all CMS regulations and guidance as these updates may affect cost calculations for services provided to their beneficiaries.
– Any internal tools or systems used for payment calculations should be updated to reflect the changes in the TOT-PTA field to avoid unintended discrepancies similar to those experienced by MAOs.
This alignment will ensure accurate reimbursement processes and adherence to the contractual agreements with CMS. Failure to comply with these updated data regulations may lead to financial discrepancies and compliance issues.
Required Actions
This memo is to notify Medicare Advantage Organizations (MAOs) about updates related to Provider Specific Files (PSFs) and the Inpatient Prospective Payment System (IPPS). PSFs are maintained by the Medicare Administrative Contractors (MACs) and contain provider-specific information affecting computations for the IPPS for Medicare Fee-for-Service (FFS). The data in these files are derived from CMS operational data and records used by CMS for operational purposes; CMS does not guarantee that the files are free from error or appropriate for purposes other than CMS’s own operations. These files are available for public use and we are aware that MAOs may use these PSFs to determine payments they make to hospitals. For several years prior to 2022, the contents of one particular field may have led to potential unintended payments made by plans.
As background, the PSF contains an informational Total Pass-Through Amount (TOT-PTA) field that is intended to approximate the cost-based payments a hospital receives in addition to, but separate from, their IPPS payments. The TOT-PTA field includes a summation of payments across a variety of payment streams, such as Organ Acquisition Costs and Direct Medical Education costs, and formerly included Bad Debt amounts. However, in CY 2022, CMS became aware that the PSFs for Jurisdictions 15 J and M retained Bad Debt in the informational TOT-PTA field. While this information does not affect Medicare FFS reimbursement, we are aware that MAOs may utilize this field in the PSFs when using the IPPS Web Pricer in determining provider reimbursement. For this reason, the inclusion of Bad Debt amounts in the TOT-PTA field in the PSF could result in discrepancies in MA payments to hospitals from MAOs using Jurisdictions 15 J and M PSFs.
This issue was addressed in CY 2022 to exclude Bad Debt amounts from the TOT-PTA field for all jurisdictions starting in May 2022 and going forward. In December 2023, CMS also provided data on per diem Bad Debt amounts for Jurisdictions 15 J and M for CY 2018 through 2022. CMS has now released corrected PSFs for CY 2018 through 2022 for Jurisdictions J and M with the Bad Debt amounts removed. This information is available on CMS’ website: https://www.cms.gov/medicare/payment/prospective-payment-systems/provider-specific-datapublic-use-text-format. In accordance with their contract with CMS, MAOs must comply with all existing CMS regulations and guidance regarding reimbursement to providers and beneficiary cost sharing.
FAQs
- “What are Provider Specific Files (PSFs) and how do they impact Medicare Advantage Organizations?”
- “What is the Total Pass-Through Amount (TOT-PTA) field and its significance for hospital payments?”
- “How did the inclusion of Bad Debt in the TOT-PTA field affect Medicare Advantage payments?”
- “What changes were made to the TOT-PTA field in 2022 to address discrepancies?”
- “Where can corrected PSFs for 2018-2022 be accessed?”
For more information, please refer to the complete memo from CMS.