ERS Approval Process (Rev. 12346;

50.3 - ERS Approval Process (Rev. 12346; Issued:11-01-23; Effective:10-30-23; Implementation:10-30-23) Contractors shall not approve any Extended Repayment Schedule (ERS) if any of the following apply: 1. When there is reason to suspect that the provider may: a) file for bankruptcy; b) cease to do business; c) discontinue participation in the program; or d) when there is an indication of fraud or abuse committed against the program. 2. When any of the following is not submitted with request: a) a signed request agreement; b) all required documents; c) a proposed term and installment schedule; and d) the first installment payment (per the proposed installment schedule). 15 months or less ERS The contractor shall review and confirm that none of the scenarios listed above apply. The contractor shall review 12 months of claims and payment history and consider whether it supports full payment of the overpayment within 15 months or less. Once the contractor determines ability to repay, it shall examine the status of any outstanding overpayments, cost report settlements, advanced payments and accelerated payments. In the case any of these overpayments are excessive, in default or delinquent, the contractor shall determine if an ERS for 15 months or less is appropriate. 16 months or more ERS The contractor shall review and confirm that none of the scenarios listed in the beginning of this section apply. The contractor shall analyze the financial data submitted by the provider to determine the availability of cash, marketable securities, accounts receivable, restricted and unrestricted endowment funds, or special funds, and considers whether these funds could be used for partial or full payment of the overpayment (see Exhibits 1-4 below). The contractor shall review 12 months of claims and payment history, and considers whether it supports full payment of the overpayment within the requested months. Once the contractor determines ability to repay, it shall examine the status of any outstanding overpayments, cost report settlements, advanced payments and accelerated payments. In the case any of these overpayments are excessive, in default or delinquent, the contractor shall determine if an ERS is appropriate. The contractor shall reference and complete the ERS protocol sheet (see Exhibit 1) while reviewing and once a decision is made. The contractor should alter the length of time when approving an ERS request, based on its analysis of the provider’s submitted documentation. For example, if a provider requests 24 months, but the contractor determines that 12 months is sufficient, the contractor can deny the 24 month request and extend an offer of a 12 month repayment plan. The contractor should request additional financial information from the provider, if needed. It should also request financial information from the owner if the owner is requesting to submit personal capital to help repay the Medicare debt. The contractor shall provide a recommendation to the RO; shall deny or approve for terms under its authority; or shall request additional information from the provider within 30 days of receipt of the completed ERS request. If the provider is unable to furnish all of the required documentation listed in 50.1 and 50.2 of this chapter, a full explanation shall be provided as to why this is the case. All documentation shall be received within 30 days of the date of the request (see § 50(2) of this chapter). Where the provider’s explanation is reasonable and the documentation is otherwise acceptable, the contractor shall forward the request for extended repayment to the RO with its recommendation, within 30 days receipt of the completed request. The contractor shall comply with Chapter 4 §40 regarding recouping the overpayments pending receipt of the provider’s documentation and the contractor’s decision on the extended repayment request. If the provider is able to furnish all of the required documentation listed in 50.1 and 50.2 of this chapter timely, the contractor shall approve, counter or deny the request within 30 days receipt of the completed request. If the contractor determines that the provider DOES meet the requirements for an ERS, it shall: a) notify the provider in writing, within 5 calendar days of making the decision; b) include the amortization schedule showing principal and interest payment amounts and dates payments are due; and c) include approval information on the quarterly report (see § 50.4 of this chapter). If the contractor determines that the provider DOES NOT meet the requirements for an ERS, it shall: a) notify the provider in writing, within 5 calendar days of making the decision; and b) include the denial reason, in the notification. In the case the provider: Rejects: If a provider rejects the approved terms, it shall submit a written and signed rejection notice to the contractor. In this case, the contractor shall close out the request and follow normal recoupment policy and procedures, at a recoupment rate of 100% of the provider’s payments. Disagrees: If a provider requests additional month(s) due to hardship, the contractor shall elevate the request to the RO for further review. When needed, the RO should contact CO for additional guidance. No Response: If the provider has not responded, the contractor shall proceed with the ERS as outlined in the approved schedule. Exhibit I – Protocol for Reviewing Extended Repayment Schedule (ERS) Provider _______________________________________________________ Provider Number _________________________________ (Part A Only) Cost Report ___________________________ FYE (Part B Only) Date(s) ___________________________ Overpaid Overpayment ______________________________ Amount $ ____________________________________ Date of Demand Letter _________________ No. of Months Requested for ERS ___________ Date of Request Received ___________________ Bankrupt ___ Terminated ___ Suspended ___ Revoked ___ Fraud ___ Documented ____ Decision Date (36 Months or less) _______ (36 or more) ______ # of Mos. Apprvd. ________ Date Referred to RO for Consideration __________________ Name of Contractor ____________________________ Decision Reason __________________________________________________________ Reviewed By ______________________________________________ Contractor Analyst __________________________________________ Supervisor Review __________________________________________ Date _______________________________________ 1. Contractor shall summarize the major reasons why the overpayment occurred. 2. Contractor shall review the documentation the provider submits to determine whether it is complete. (Refer to §50.1 and 50.2 for required documentation.) Contractor analyzes the financial data submitted (for an ERS over 12 months) to determine the availability of cash, marketable securities, accounts receivable, restricted and unrestricted endowment funds, or special funds, and considers whether these funds could be used for partial or full payment of the overpayment. 3. Contractor shall perform the following calculations by using the most current financial data that the provider submitted to determine whether the provider qualifies for an ERS. (a) Current Ratio The current ratio relates the dollar value of current assets to the dollar value of current liabilities in order to evaluate an organization's ability to pay its current debt. Derived as: CURRENT ASSETS_______ = CURRENT LIABILITIES This ratio defines the number of dollars held in current assets per dollar of current liabilities (e.g., it relates current assets to current liabilities). Multiple coverage of liabilities is desirable. Generally, high values for the current ratio imply a good ability to pay short-term obligations and, thus, a low probability of technical insolvency. Normally, the contractor considers a current ratio of 2:1 adequate to meet current liabilities. However, a provider with a current ratio of 2:1 or greater) can have short-term payment problems if its current assets are not expected to be in liquid form (cash or short-term investments) in time to meet the expected payment dates of the current liabilities. (b) Quick Ratio A liquidity ratio which measures the number of dollars of liquid assets (cash plus marketable securities plus accounts receivable) available per dollar of current liabilities. Derived as: CASH + MARKETABLE SECURITIES + ACCOUNTS RECEIVABLE = CURRENT LIABILITIES This is a more stringent measure of liquidity than the current ratio. The contractor uses it to determine the adequacy of cash, accounts receivable, and marketable securities to pay current liabilities. Normally, the contractor considers a quick ratio of 1.5:1 adequate to meet current liabilities. However, a provider with a high quick ratio can have short- term payment problems if it has excessive amounts of slow-paying or doubtful accounts receivable, which it cannot turn into cash soon enough to meet maturing current liabilities. Conversely, a low quick ratio might not imply a future liquidity crisis if current liabilities include terms that will not require payment from existing current assets. 4. The contractor for institutional providers shall determine whether there are any settlements (interim rate adjustments or cost report) in process which could be used to offset the outstanding overpayment. 5. Based upon the previous steps, the contractor shall summarize whether or not it should approve or deny, or recommend approval of a repayment plan. If it recommends approval, it indicates the number of months, how it calculated the monthly payment and the reason(s) for the approval. If it recommends denial, it indicates the reason(s). Exhibit 2 - Cash Flow Statement Period Covered CASH FLOW STATEMENT FOR THE PERIOD Cash provided by: Operations (net) (Schedule A) (See Exhibit 4) $XXXX Cash donations (unrestricted) XXXX Long-term borrowing XXXX Investment earnings (cash dividends, interest) XXXX Sale of long-term investments XXXX Sale of equipment XXXX Issuance of bonds XXXX Decrease in current assets – other than Accounts Receivable, Prepaid Expenses, and Inventory XXXX Increase in current liabilities – other than Accounts Receivable, Prepaid Expense, and Inventory XXXX Others XXXX Total Cash Provided $XXXX CASH FLOW STATEMENT FOR THE PERIOD Cash applied to: Purchase of equipment $XXXX Payment of long-term debt XXXX Purchase of long-term investments Payment of dividends Purchase of land and/or building XXXX (Purchase price less mortgage, capital stock and non-cash assets given toward purchase) Increases in current assets - other than XXXX Accounts Receivable, Prepaid Expenses, and Inventory Decreases in current liabilities – other than XXXX Accounts Payable and Prepaid Income Other XXXX Total Cash Applied XXXX Increase (Decrease) in Cash $XXXX - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Cash at end of period (date) $XXXX Less: Cash at beginning of period (date) XXXX Increase (Decrease) in Cash XXXX Exhibit 3 - Projected Cash Flow Statement Cash from Operations (Schedule A) Period Covered PROJECTED CASH FLOW CASH FROM OPERATIONS (SCHEDULE A) Net Income (or Net Loss) $XXXX Increases: Depreciation expense $XXXX Loss from sale of equipment XXXX Decrease in net Accounts Receivable XXXX Decrease in Prepaid Expense XXXX Decrease in Inventory XXXX Increase in Accounts Payable XXXX Increase in Prepaid Income XXXX Others XXXX XXXX Gross Cash from Operations Decreases: Gain from sale of equipment $XXXX Increase in net Accounts Receivable XXXX Increase in Prepaid Expense XXXX Increase in Inventory XXXX Decrease in Accounts Payable XXXX Decrease in Prepaid Income XXXX Others XXXX XXXX Net Cash from Operations XXXX $XXXX Requirements to be Completed Before Approval or Denial 15 Months or Less 16 Months or More Received and Reviewed all required documentation X X Received and Applied submitted payments while under review X X Complete ERS Protocol (See Exhibit 1) X Analyzed Financial Statements X Reviewed last 12 months Claim History X X Reviewed last 12 months Payment History X X Reviewed status of Additional Outstanding Overpayments X X Confirmed No Active Bankruptcy X X Confirmed Enrollment Status is not– Terminated, Revoked, Suspended X X Reviewed status of Outstanding Advance/Accelerated Payments X X Part A- Reviewed status of Outstanding Cost Report Settlements X X Confirmed No Outstanding Fraud Investigations with CPI Staff X X Sent to RO/CO for opinion (if needed) X X