To: Chief Financial Officers
From: Tom Evert, Chief Financial Officer; Andrew Busz, Policy Director, Finance
Staff Contact: Tom Evert, tome@wsha.org (206) 216-2502; Andrew Busz, andrewb@wsha.org (206) 216-2533
Purpose
This memorandum is intended to update guidance to hospitals concerning financial reporting of hospital safety net assessment program-related expenses and payments. This update provides information on a recent Center for Medicare & Medicaid Service’s (CMS’s) approval of the Medicaid managed care contracts for the period ending December 31, 2013.
Applicability/Scope
This applies to all hospitals which receive managed care payments under the hospital safety net program. (It does not apply to certified public expenditure hospitals, critical access hospitals, out-of-state hospitals, or long-term care hospitals.)
Recommendations
On March 11, the state received confirmation that CMS approved the managed care contract rates and language for the contract period ending December 31, 2013. (See links below for copies of Amendment 11 and the related CMS approval.) Based on discussions with members of our hospital advisory group (which includes representatives from a number of Washington hospitals as well as two accounting firms), we believe that, effective March 2015, there is support for recognizing managed care revenue and associated assessment expenses for the period July 1, 2013 through December 31, 2013. We recommend hospitals review the available information regarding this matter and, as appropriate, contact your external audit firms to discuss.
WSHA, hospitals and the accounting firms continue to explore the question of recognition of payments from the managed care plans for contract periods after December 31, 2013. The length of time needed for CMS to approve managed care contracts is typically quite lengthy because the review and approval process also includes changes unrelated to the assessment program. WSHA, hospitals and the accounting firms will discuss if there needs to continue to be separate treatment for the hospital safety net revenue versus other Medicaid managed care revenue. We have requested additional information from the Health Care Authority and have identified a group including representatives of hospitals and external audit firms to research this matter. We will update you with the results of our research as soon as it is available.
Please contact either of us if you have questions on this bulletin.
Links:
- CMS approval letter for time period May 1- December 31, 2013 linked here
- Managed Care Amendment for May 1- December 31, 2013 linked here
- Health Care Authority communication linked here
- July 9, 2014 WSHA Bulletin with additional background and guidance linked here
