Health Care Reform Act (HCRA) Hospital Conference

February 15, 2011

Seminar Purpose

To Gain a Better Understanding of the Health Care Reform Act (HCRA) to Effectively Fulfill your Hospital´s Obligations

Seminar Overview

  1. Evolution of HCRA
  2. Basics of HCRA
  3. Common Issues
  4. Delinquency Process
  5. Audit Issue
  6. Contact Information

1. Evolution of HCRA

NYPHRM was Established in the Early ´80´s

Public Health Law §2807-c Established:

  1. Hospital Inpatient Reimbursement System for All Payors Except Medicare
  2. Surcharges on Hospital Rates
  3. 1 % Assessment on Hospitals to Fund BDCC

HCRA January 1, 1997 Established:

  1. Negotiated Rates
  2. Assured Quality and Access to Care
  3. Continued Financing for Public Policy Objectives
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2. Basics of HCRA

Sources of HCRA Revenue:

  1. 1% Hospital Statewide Assessment
  2. Surcharge on Net Patient Service Revenue
  3. GME Alternative Per Unit of Payment Surcharge
  4. Covered Lives Assessment

HCRA Disbursements:

  1. Medicaid Costs
  2. Child Health Plus Program
  3. Family Health Plus Program
  4. Workforce Recruitment & Retention
  5. Hospital Indigent Care
  6. EPIC Program
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3. Common Issues

Elector List

  1. Pool´s Secure Web Site´s Elector List: Allows You to View:
    • Alphabetical and downloadable list of all current and past electing payors and their electing third party administrators
    • Employer Identification Number of electing payors and their electing third party administrators
    • Former names that payor has been known by or that you may still know them by
    • Payor´s and third party administrator´s elector effective date, end date and current status information
  2. Upcoming Elector List Enhancements
    • Historical Payor Merger Information

Insurance ID Cards

  1. Properly Identifying the Payor Can Sometimes Be a Challenge Due to:

    • Difficulty in differentiating the payor from their third party administrator when the administrator is also a payor
  2. The Two Systems Third Party Administrators Use When Issuing Insurance Cards:

    • "The Card System" - Lists the name of the payor, aka their client
    • "The Identifier System" - places a "non-elector" sticker or imprint in the absence of the payor name (less likely alternative)
  3. Indentifying the Election Status of Your Payors At Registration Ensures Against:

    • Erroneous payor information keyed to your database, that may lead to:
      • Surcharge underpayments owed by your hospital

Elector vs Nonelector

  1. AKA Direct vs Nondirect

  2. Definition of an Electing Payor:

    • A third party payor, as defined in PHL Section 2807-j(1)(c), who has made an election to the Public Goods Pool to pay surcharges at a reduced surcharge rate (currently 9.63%) directly to the Public Goods Pool on surchargeable claims paid to HCRA designated providers
  3. Definition of a Nonelector:

    • A third party payor, as defined in PHL Section 2807-j(1)(c), who has NOT made an election to the Public Goods Pool to pay surcharges at a reduced surcharge rate, and therefore must pay substantially higher surcharges to the provider, if assessed, (currently 37.90%, and if applicable, a GME Alternative Per Unit of Payment Surcharge). Hospitals are responsible to pay the Public Goods Pool surcharges owed on revenue received from a nonelector
  4. Hospital´s Obligations

    • Surcharges owed by the provider are legally triggered by the type of patient revenue they receive
    • Common patient revenue that hospitals are responsible to pay surcharges to the Public Goods Pool:
      • Patient Portion Coinsurance (at current rate of 9.63% if insurer is an elector)
      • Uninsured Patient Revenue (at current rate of 9.63%)
      • Unspecified Payor Revenue (not a third party payor as defined in the PHL; at current rate of 9.63%)
  5. Nonelectors and Inpatient Claims (PHL §2807-s(1)(b))
    Specified third party payors, that meet the following criteria, will be subject to the GME Alternative Per Unit of Payment Surcharge, at percentage rates based on the region of the state where the hospital resides:

    • Defined as payors in the PHL that are subject to the GME
    • That are nonelectors
    • That provide inpatient coverage
    • That incur an inpatient bill

Nonelectors Subject to the GME:

  1. Corporations Organized and Operating in Accordance with Article 43 of the NYS Insurance Law

    • Not for Profit Insurers
  2. Corporations Operating in Accordance with Article 44 of the NYS PHL

    • HMOs in NYS
  3. Self Funded Plans Providing Expense Incurred Inpatient Coverage for Health, Non-NYS Workers Comp, or Non-NYS Motor Vehicle Coverage

    • Regardless of Domicile
  4. Commercial Insurers Licensed to do Business in NYS and Authorized to Write Accident and Health

    • For Profit Insurers Licensed to Sell Accident and Health in NYS

Fixed Dollar Patient Portions

  1. Hospital´s Responsibility to Determine if Obligated to Surcharge on Fixed Dollar Patient Portion

    • In fixed dollar patient portions such as fixed dollar co-pays or deductibles, electing payors have a choice between two options on how to pay the associated surcharge
    • Hospitals are obligated to determine which option they´ve chosen, otherwise are obligated themselves
  2. The Electing Payor´s Choices of Surcharge Payment Options:

    1. Payor pays claim by utilizing the second billing example found on the DOH website. Hospital pays the surcharge out of fixed dollar amount and gets reimbursed by payor
    2. Payor pays the associated surcharge on the fixed dollar amount directly to the Public Goods Pool via payor report
  3. Proper Reporting of Copays:

    1. If payor chooses #1 above, hospitals will report the fixed dollar payment received from the insured patient on Line #10 of their PGP report, entitled: "Self-Pay Uninsured..."

      Hospital pays the surcharge out of the fixed dollar amount and gets reimbursed by payor
    2. If payor chooses #2 above, and notifies hospital of such choice, the hospital will report the fixed dollar payment received from the patient on the following lines:
      • On Hospital Inpatient portion of the PGP report: Line 17
      • On Hospital Outpatient portion of the PGP report: Line 19
    3. In the absence of the electing payor notifying the hospital that they have chosen option #2 above, the hospital´s "default" is to report the fixed dollar payment on line 10 of the PGP
    4. A nonelecting payor must utilize option #1 above, and the hospital must report on line 10

Example of $200 Patient Co-payment

  1. Regular hospital bill = $1,000

    Hospital bill with applicable surcharge amount:
    $1,000 × 1.0963 = $1,096.30
    ($1,000 plus surcharge of $96.30)
    $1,096.30 − $200 = $896.30 ($200 paid by the patient to the hospital)
    $896.30 ÷ 1.0963 = $817.57 (paid by the electing payor to the hospital)
    $896.30 − $817.57 = $78.73 (paid by the electing payor to the Public Goods Pool)

    Upon receipt of the $200 co-payment from the patient, the hospital uses the same formula:
    $200.00 ÷ 1.0963 = $182.43 (kept by the hospital)
    $200.00 − $182.43 = $17.57 (paid by the hospital to the Public Goods Pool )
  2. Hospital receives:

    $ 817.57 paid by electing payor
    $ 182.43 paid by patient
    $1,000.00 Total
  3. Public Goods Pool receives:

    $78.73 paid by electing payor
    $17.57 paid by hospital
    $96.30 Total

Discrete Physician Billing

  1. Criteria

    Public Health Law section 2807-j (3)(a)(v) excludes revenue received from physician practice or faculty practice plan discrete billings for private practicing physician services;
  2. Acceptable Documentation

    A letter from the hospital on hospital letterhead that states that physician billings using the hospital´s federal tax identification number for discreetly billed physician´s services are private practicing physician services and are exempt from the HCRA surcharge as defined in Public Health Law section 2807-j (3)(a)(v).
    If only some physicians meet this criteria they should be specifically listed in the letter.


    For hospitals that employ their physicians the letter should include the following;

    The Department has instructed the auditors to extend all reasonable deference to hospitals who, having reviewed all relevant information, formally advise the DOH or auditors that its employment arrangements with its physicians meet the revenue exclusion criteria contained in the statute.

    We have reviewed the applicable statutes and other relevant materials regarding the nature of physician billings incorporated into hospital payment rates (such as DRG´s or APG´s) as distinguished from discrete billings for physician services (which occur on separate claim forms than claims for hospital services) and confirmed our analysis with our counsel.

    Accounting Private practice physician revenues are included in the total revenues reported in our audited financial statements. Our Institutional Cost report (ICR) reflects only revenues for hospital services and revenues (if any) for physician services which are not private practicing and thus indeed recorded as hospital revenues.

    Billing For purposes of your data reviews during the audit, private practicing physician revenues are identified by having been billed on a physician claim form such as CMS 1500, ANSI 837P or patient statements (for patients with no payor) which are designated for physician use.

    Accordingly, based on the above review, our employment arrangements with our physicians meet the revenue exclusion criteria contained in the statutes and are, therefore exempt from the HCRA surcharges and assessments as " ...revenue received from physician practice... discrete billings for private practicing physician services..."

Foreign Payors and Patients

  1. Foreign Insurance Companies and Medical Assistance Companies

    • Foreign insurance companies are insurers licensed in other countries
    • Medical assistance companies act as the conduit for claim payments between the foreign
    • insurance company and providers in U.S.; administer travel policies for expatriates
    • Must make an election like any payor in order to pay current elector rate to the PGP
    • If no election is made, Hospital must pay the nonelector rate to the PGP currently at 37.90% but no Alternative Per Unit of Payment Surcharge on inpatient claims
  2. Foreign Countries with Nationalized Health Plans or Paid Directly by Foreign Governments

    • Deemed Unspecified payor; pay directly to hospital at self pay rate currently at 9.63%
    • Examples: Canada and Israel
  3. Foreign Diplomatic Agents

    • Exempt from all surcharges if protected under their diplomatic mission Those protected by the diplomatic mission carry exemption paperwork

Surchargeability of Personal Items

  • Recent Decision on the Exemption of Personal Items

    • Revenue from billed patient personal items such as TVs, telephones, and private rooms are no longer subject to the HCRA surcharge

Out of State Medicaid

  1. Obliged to Elect for Reduced Surcharge Percentage

    • Out of state Medicaid programs are considered third party payors and must make an election in order to pay the reduced surcharge percentage
    • As a nonelector, must pay 37.90% Indigent Care surcharge but no GME Per Unit of Payment Percentage for inpatient claims
  2. Acceptance of the State´s Election

    • States that are listed on the Elector List by the state´s name, are deemed to be electors for their state´s Medicaid program

Point of Service Revenue from Insureds

  1. Your Obligations to Pay the Surcharge

    • Where insured patients are to be billed directly for services, the hospital must remember to assess the surcharge on the bill, based on the election status of the primary payor
    • It becomes the hospital´s obligation to submit the surcharges
  2. Patient Requests for Surcharge Refunds

    • If the patient pays the entire bill, they will seek reimbursement from their electing payor
    • Payors are often confused about their responsibility to the Public Goods Pool on the associated surcharge on the claim and refer member back to provider to seek surcharge refund, contending that they are obligated to pay the surcharge directly; this is incorrect
    • Hospitals may then erroneously refund surcharges to patient based on this
    • Since hospitals are obligated to pay the surcharges in such situations, any reimbursement to patient must come from the payor


  1. Traditional Medicare Exemptions:

    • Revenue received for Medicare covered services is exempt from surcharge; includes revenue received from:
      • the Medicare program
      • an insurer contracted to administer on behalf of the Medicare program
      • a supplemental plan such as a Medigap policy, or,
      • the beneficiary themselves
  2. Medigap/Supplemental Policies

    • Pay for certain out-of-pocket expenses that Medicare covers but does not pay in full
    • Also can cover certain services that are not payable by Medicare due to:
      • Non-covered services
      • Exhaustion of benefits
    • Surcharges apply to services not covered, at rates based on election status of payor, but no GME Per Unit of Payment Surcharge
  3. Medicare Advantage Part C

    • Medicare Advantage Part C plans supply a person with all of their Part A and Part B benefits, plus, depending on the plan chosen, may cover services that traditional Medicare will not, like dental, vision, and unlimited inpatient days
    • ANY service for which Medicare Advantage pays for, is exempt from the surcharge
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4. Delinquency Process

  • 1. Delinquency Notice

    • Delinquency notifications are sent via email and hardcopy mailing around the 10th of each month (adjusted for weekends and holidays)
  • 2. Estimated Billing Process

    • Delinquency letters and bills are mailed on a quarterly basis. The hospital has sixty days from the date of the letter to file delinquent report(s) and submit payment
    • A final notice is mailed with updated bill giving hospitals thirty additional days
      • If delinquencies are not resolved within that time period, amount is deemed final and is not subject to revision
    • Action is taken on the outstanding liability
    • Action Taken for Non-Compliance
      • Recoup from future Medicaid claim cycle checks paid by the state
      • Offset against Medically Indigent/High Need distributions
      • Submit referral to the state´s Attorney General´s Office to pursue legal collection
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5. Audit Issue

"Miscellaneous" Bucket of Payors

  • Documenting Direct and Nondirect Payors

    When the auditors review a hospital´s records, they seek to determine if the surcharge should be assessed at the direct (electing) payor rate or the non-direct (non-electing) or enhanced rate.

    Since most hospitals do not have the payors Federal Employment Identification Number (FEIN) the auditors have to perform an alphabetic name to name match between the hospital´s files and the elector list maintained by the Public Goods Pool (PGP) website.

    It becomes extremely important that the hospital´s files match the PGP list as closely as possible to avoid potentially direct (electing) payors being identified as non-direct (non-electing) and thus be subjected to the enhanced surcharge rate.

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6. Contact Information

  1. Contact the Office of Pool Administration:

    Telephone: (315) 671-3800

    For Questions Relating To:
    • Electronic website for report submission questions
    • Obtaining a user ID and password, or trouble with logging on
    • Setting up file transfer Pool payments
    • Questions relating to receipt of Pool payments

  2. Contact the Department of Health:

    Telephone: (518) 474-1673

    For Questions Relating To:
    • The surchargeability of revenue and distributions
    • Interpretation of the Public Health Law on HCRA
    • Specific report line questions about reportable revenue and deductions
    • Any questions regarding the 1% Statewide Report
    • Any delinquencies, Medicaid recoupments or referrals to the state´s Attorney General´s Office based on HCRA delinquencies
    • Electing Payors or Third Party Administrators
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