Monthly Archives: January 2014


EHR Incentive Programs/Supporting Documentation For Audits

Contact Matthew L. Kinley, Esq at Tredway, Lumsdaine & Doyle if you are subject to audit or need advice about your compliance program.


According to the Centers for Medicare and Medicaid Services, about 10% of the healthcare providers who took advantage of the meaningful use incentives will be audited by a private contractor hired to look for errors.


Under the 2009 HITECH Act, health care providers who demonstrate meaningful use of certified electronic health records will receive incentive payments through Medicaid and Medicare. States can receive a 90% federal funding match for incentive payments distributed to Medicaid providers who adopt EHRs under the meaningful use criteria.  Eigible physicians who see Medicare and/or Medicaid patients, as defined by the HITECH Act summary, will be compensated from $44,000 to $63,750 over a 5 year term for fulfilling the recently defined ‘meaningful use’ criteria. To further promote the use of certified systems, if these same physicians do not utilize healthcare IT that meets the Federal requirement by 2015, they will be faced with increasing penalties of up to 5%.

Providers started receiving Medicare or Medicaid bonuses for using certified EHR technology in 2011 and will get around $20 billion over five years. The meaningful use incentive program requires hospitals and eligible professionals (e.g., physicians) to use EHRs to improve patient safety, quality of care and patient-provider communication. Providers must buy EHRs from vendors on the Certified Health IT Product List (see If they don’t, they face a Medicare payment reduction after 2015.


Documentation to support attestation data for meaningful use objectives and clinical quality measures should be retained for six years post-attestation. Documentation to support payment calculations (such as cost report data) should continue to follow the current documentation retention processes.


States and their contractors will perform audits on Medicaid providers. When providers are selected for an audit, they will receive an initial request letter from the auditor. The request letter will be sent electronically from a CMS email address and will include the audit contractor’s contact information.

The initial review process will be conducted at the audit contractor’s location, using the information received as a result of the initial request letter. Additional information might be needed during or after this initial review process, and in some cases an onsite review at the provider’s location could follow. A demonstration of the the EHR system could be requested during the on-site review

If there is any deficiency in the audit, providers will have to give back their entire meaningful use incentive payment.  That means their payments for the audit period are at risk unless their electronic health records show they kept every promise they made to the government when they accepted the money.

One letter from the EHR HITECH Incentive Payment Center said a meaningful use audit had determined that “an overpayment of HITECH funds has been determined and is owed.” CMS gave the provider 30 days to repay the money, although it had the right to appeal.

Most providers are having negative audit findings and owing the money back, often because they thought they met most of the core elements, but they didn’t get them all done, or they weren’t all properly documented. If you miss a core element, they ask for all the money back.


The security risk analysis is a problem area in meaningful use. Providers must attest that they conducted a risk analysis, which is a core measure as well as required by the HIPAA security regulation.  Most providers fail to do such an analysis.


The following practices should be employed as soon as possible by all providers.  Those who worked for and obtained benefits for meaningful use are particularly vulnerable.

Best Practices

• Enter accurate numbers when you attest to meaningful use of an electronic health record (EHR).

• Keep your supporting documentation.

• Know that dated screen shots provide a good source of documentation.

• Save paper or electronic copies of reports used to attest if the practice’s EHR automatically changes numerator and denominator values after the reporting period ends.

• Turn on, for the entire reporting period, EHR features that track functionality issues, such as drug interaction checks and clinical decision support.

• Understand that the security risk analysis must be specific to the EHR and the practice and is required every year.

By Matthew L. Kinley

Human Resources is for Physician Offices, too


TUESDAY  •  JANUARY 21, 2014

Matt Kinley, Tredway, Lumsdaine & Doyle
Audrianne Adams Lee, HR NETwork, Inc.

Location/Sponsored by:

Long Beach City College
4901 Carson St, Long Beach, CA 90808
Room # – TBA upon Registration

No cost to attend this event.
A box lunch is included.

8:30         Registration
9:00-12:00     2014 Workplace Compliance – New Laws and Trends
12:00-12:30    Box Lunch – Presentation by
10,000 Small Businesses
12:30-2:30     Health Care Reform – What Now?
2:30-3:00     Health Care/Vendor Panel for Q&A

To register, call 714.799.1115 or email to
2014 Workplace Compliance –
New Laws and Trends
A wave of new employment legislation, case law developments, and other employment law trends stand to significantly impact the California workplace in 2014. With many of these new laws taking effect on January 1, employers with California operations must take prompt action to ensure compliance and to mitigate workplace law risk.

We discuss the critical changes in law, the impact of the new regulations, and recommendations for employers. Topics covered will include:

•     Legislative developments
•     Trends and significant decisions in California employment law
•     Cases to watch for 2014

Health Care Reform –
What Employers Need to Know

In this portion of the seminar, we will respond to these and many other questions you have surrounding Health Care Reform:

•    Meeting the threshold in 2015
•    What are my options to offer/not offer coverage (Under/over 50 employees)?
•    Calculating my FTE count
•    HIPAA Compliance – What I am responsible for?
•    Reporting requirements for Employers
•    How to assist and communicate the ACA to your employees



There is a tremendous amount of information about the Patient Protection and Affordable Care Act (ACA) and it is difficult to understand what the tax implications are.  Essentially under the ACA, health insurance is now tied to taxes.  There are two important tax implications of the ACA to individuals: 1) there is a tax credit to help pay for insurance premiums if one qualifies and 2) there are tax penalties if one does not have health insurance. For employers, the same basic principal applies and the tax implications vary depending upon whether the employer is small or large.


Beginning in 2014, ACA provides a Premium Tax Credit, which is a refundable credit to help offset the cost of health insurance premiums for qualifying taxpayers.  A qualified taxpayer can take an advance payment of the advanced credit based upon his/her estimated income and family size for the year.  An equal portion of the estimated credit is paid directly to the insurance company each month during the tax year.

When filing his/her tax return, the taxpayer must compare the prepaid credit against the actual credit allowed.  If there is a difference in the prepayments and the actual credit, the taxpayer could be owed more Premium Tax Credit or alternatively, the taxpayer could be required to repay the IRS the amount of any excess prepaid credit.  A qualified individual could also choose to pay premiums out-of-pocket each month and collect the full credit when he/she files taxes.

The amount of credit available for prepayment is calculated by the Health Insurance Marketplaces, known as the Exchanges.  During enrollment through the Marketplace, using information that the taxpayer provides about his/her projected income and family composition for 2014, the Marketplace will estimate the amount of the Premium Tax Credit he/she will be able to claim for the 2014 tax year that he/she will file in 2015.  It is important to report changes and income to the Marketplace through the year.  Reporting changes will help assure a taxpayer that they will have the accurate amount of credit.  Changes in family size can include the birth or adoption of a child, a child moving out of the household, parents moving into the household, marriage or divorce.

The Premium Tax Credit is not allowed if the taxpayer files using the Married Filing Separately status, if they are eligible for coverage under their state’s Medicaid program (which is free), or if they are enrolled in an insurance plan through their employer.

If a taxpayer does not have insurance after February 15, 2014, he/she may be assessed a tax penalty under the Shared Responsibility Provision, which allows a penalty assessment on certain taxpayers and qualified employers who do not offer insurance.  In 2014, the penalty is either $95 for adults and $47.50 for children or one percent of taxable income, whichever is greater.  The penalty will increase annually and by 2016, it will be the greater of $695 or 2.5 percent of the total household’s taxable income, whichever is greater. The penalty will show up as tax owed when the taxpayer files his/her income tax return.

For tax year 2013, contributions to flexible spending accounts are limited to $2,500, which previously had no cap.  However, employers can offer employees a choice between rolling over up to $500 to use in the next year or a 2.5 month grace period to spend it.  In 2014 and after, the contribution cap will increase with inflation.

For those who itemize deductions for out-of-pocket medical expenses, the expenses must total 10 percent of their adjusted gross income, which is up from 7.5 percent in prior years.  There is an exception until 2016 for taxpayers age 65 and older or if one spouse reaches age 65 for married couples filing jointly.

Furthermore, there is an additional 0.9 percent Medicare tax for married couples filing jointly earning above $250,000, $200,000 for single filers, and $125,000 for married couples filing separately. This applies to wages, compensation and self-employment income.

For high income taxpayers, there is an additional 3.8 percent net investment income tax, which includes interest, dividends, and rental income.  Tax is owed if the taxpayer has net investment income and modified adjusted gross income over $250,000 (married filing jointly); $125,000 (married filing separately); $200,000 (single); $200,000 (head of household with a qualifying person); and $250,000 (qualifying widow or widower with a dependent child).  It applies only to net profits that exceed $500,000 for married couples filing jointly and $250,000 for single filers.

Small Employers

Small employers are defined as fewer than 50 full-time employees or equivalents.  Fewer than 25 full-time equivalent employees may be eligible for a Small Business Health Care Tax Credit to help cover the cost of providing coverage.  Generally, employers with 50 or fewer employees may be eligible to buy coverage through the Small Business Health Options Program (SHOP).  Small businesses may be eligible for tax credits up to 50 percent of their cost of employee premiums through the SHOP.

Large Employers

For large employers, who are generally defined as those with 50 or more full-time time equivalent employees, effective for calendar year 2015, they may be subject to a non-deductible excise tax under Internal Revenue Code §4980H.  Full-time employee is defined as an employee who is employed on average 30 hours of service per week, per month.

Although the ACA does not require an employer to offer coverage to its employees, a large employer can be subject to the excise tax if at least one full-time employee receives a premium tax credit for Exchange coverage, and the employer:

•    Fails to offer coverage to full-time employees and their dependents (tax equals $2,000 times the total number of full-time employees)


•    Offers coverage to full-time employees that does not meet the law’s affordability or minimum value standards (tax equals $3,000 times the number of full-time employees receiving tax credits for Exchange coverage) To be considered affordable, an employee’s share of the self-only premium for the employer’s lowest-cost plan that provides minimum value cannot exceed 9.5 percent of household income, or the employee may be eligible for a premium tax credit to purchase health insurance exchange coverage. The Treasury Department has proposed a safe harbor based on the employee’s current W-2 wage.
Employers also will face a host of new reporting requirements to the IRS under the ACA in order to demonstrate the value of coverage offered to employees, communicate to employees’ their coverage options, and certify compliance with the employer coverage provisions. Large employers will need to file an annual return reporting whether and what health insurance they offered employees. In addition, they are subject to the Employer Shared Responsibility provisions.  Many employers are undertaking compliance reviews to have their health plan offerings audited and certified to mitigate the potential risk for tax penalties.

 By Pamela Tahim of Tredway, Lumsdaine & Doyle