EXHIBIT 10.2
Settlement Agreement
This Settlement Agreement is entered into by and between the Centers
for Medicare and Medicaid Services, United States Department of Health and Human
Services ("CMS") and Xxxxxxx Enterprises, Inc. ("Xxxxxxx"), through their
authorized representatives (collectively referred to as the "Parties"), to
resolve the Medicare reimbursement issues set forth below.
Xxxxxxx is a corporation that operates, through subsidiaries, nursing
facilities that are providers under the Medicare program. CMS is the agency of
the federal government that administers the Medicare program. CMS, through its
fiscal intermediary, is auditing certain Medicare costs reported by Xxxxxxx for
certain years. In order to avoid the delay, inconvenience, uncertainty, and
expense of concluding those audits and of subsequent protracted litigation of
the results thereof, the Parties have reached a full and final settlement as set
forth below. By entering into this settlement, Xxxxxxx does not admit to any
liability or otherwise concede the accuracy of any reimbursement position taken
by CMS or its fiscal intermediary.
In consideration of the mutual promises, covenants, and obligations set
forth below, and for good and valuable consideration as stated herein, the
Parties hereby agree as follows:
1. Xxxxxxx agrees to pay to CMS the sum of Thirty-five Million Dollars
($35,000,000) within thirty days of execution of this Settlement
Agreement.
2. CMS and Xxxxxxx agree that payment of the amount set forth in Paragraph
One (1) above is in full and final satisfaction of any and all
outstanding CMS administrative claims that were specifically excluded
from the prior settlement agreement between the United States of
America and Xxxxxxx entered into on or about February 3, 2000 (the "DOJ
Agreement") involving "Covered Conduct", as that term is defined in the
DOJ Agreement, including, without limitation, all of the facility
specific rate recalculations and routine cost limit exception request
revisions described in paragraphs nine through eleven (9-11) of the DOJ
Agreement.
3. CMS and Xxxxxxx agree that payment of the amount set forth in Paragraph
One (1) above is in full and final satisfaction of any and all
outstanding claims involving cost reporting issues for all of Beverly's
cost reporting periods ending on or before December 31, 2000,
including, without limitation, all of the administrative claims
described in paragraph eight (8) of the DOJ Agreement and any and all
outstanding claims involving Medicare reimbursement for bad debt to
Xxxxxxx for Beverly's fiscal years 1999 and 2000.
4. (a) CMS and Xxxxxxx agree that Beverly's Medicare claims for
reimbursement of bad debt for fiscal year 2001 and afterwards shall be
made based upon the policies, procedures, and documentation agreed upon
by Xxxxxxx and CMS in the protocol attached to this Agreement as
Exhibit A, the terms of which are hereby incorporated by reference into
this Agreement. The Parties acknowledge that all or part of the bad
debt protocol attached as Exhibit A may be modified or superceded by
statutory, regulatory or policy changes regarding bad debt
reimbursement, but that in any event, Xxxxxxx will be treated no
differently than any Medicare provider of skilled nursing facility
services with respect to reimbursement for bad debt.
(b) CMS and Xxxxxxx further agree that Xxxxxxx has provided CMS with a
written description of how Xxxxxxx calculates bad debt reimbursement
and reports 75% of that amount for purposes of interim payments so that
CMS can verify that this process is consistent with the protocol
attached as Exhibit A. CMS agrees to complete that verification as soon
as reasonably practicable, but within no more than 180 days after
execution of this Agreement. Upon verification that Beverly's process
is consistent with Exhibit A, CMS will instruct the fiscal intermediary
to include in Beverly's next interim payment reimbursement for bad debt
as reported on Beverly's Periodic Interim Payment submissions from
January 1, 2001 through the date of verification, and to include
payments to Xxxxxxx for bad debt claims in subsequent interim payments
made to Xxxxxxx.
(c) CMS and Xxxxxxx further agree that Beverly's Medicare bad debt
claims for fiscal year 2001 and subsequent years shall be audited and
final settlement made through review of a sample of bad debt
documentation.
5. CMS will instruct its fiscal intermediary to issue Beverly's Home
Office Cost Statements for fiscal years 1996 and 1997, which had been
completed as of February 28, 2002, to the state Medicaid programs set
forth on Exhibit B to this Agreement.
6. CMS will direct its fiscal intermediary to inform state Medicaid
programs in writing that Beverly's Medicare cost reports as filed (and
Home Office Cost Statements as filed other than those referred to in
paragraph 5 above that were completed as of February 28, 2002) for
fiscal years 1996 through 2000 represent final, settled cost
statements, and that no further adjustments will be made by Medicare
through audit for those fiscal years.
7. At a time and place to be mutually agreed upon, CMS shall facilitate a
meeting between representatives of CMS, Xxxxxxx, and CMS' fiscal
intermediary in order to discuss record keeping, cost reporting, cost
allowance, audit, and other issues.
8. This Agreement and the Exhibits hereto constitute the entire agreement
between the Parties, and this Agreement may not be amended except in a
writing signed by both Parties.
9. The undersigned represent and warrant that they are authorized to
execute this Agreement and, for those signing on behalf of CMS, that
they do so in their official capacities.
10. This Agreement may be executed in counterparts, each of which
constitutes an original and all of which constitute one and the same
agreement.
11. This Agreement is effective on the date of the signature of the last
signatory to this Agreement, and is binding on the successors,
transferees, agents and assigns of the parties.
Centers for Medicare and Medicaid Services
Date:
---------------------
By:
-----------------------
[name and title]
Xxxxxxx Enterprises, Inc
Date:
---------------------
By:
-----------------------
[name and title]
EXHIBIT A
BAD DEBT REPORTING, DOCUMENTATION, AND AUDITING PROTOCOL
XXXXXXX ENTERPRISES WILL PROVIDE THE CENTERS FOR MEDICARE AND MEDICAID SERVICES
("CMS"), AND/OR ITS DESIGNATED AGENTS, THE FOLLOWING INFORMATION RELATED TO BAD
DEBTS CLAIMED ON ANY XXXXXXX ENTERPRISES COST REPORTS TO BE FILED FOR PERIODS
BEGINNING WITH THE YEAR 2001 WITH CMS FOR PAYMENT UNDER THE MEDICARE PROGRAM:
REPORTING AND DOCUMENTATION
o Medicare bad debt listings (inpatient, outpatient and ESRD) that
support the amounts claimed in the cost report. The listings should
contain the following information that is necessary to determine the
allowability of the bad debts:
1. Beneficiary's name and account number (health insurance number);
2. Date of covered service;
3. Date the first xxxx was sent to patient, or the party responsible for
the patient's personal financial obligations, if billing is required
under the procedures for Medicare patients entitled to Medicaid;
4. Date of write-off of bad debt;
5. Amount written off as bad debt; and
6. Deductible and coinsurance amounts charged to beneficiary.
o Bad debt collection policy that describes, for all classes of patients:
(1) when the first xxxx is to be sent to the patient or responsible
party, if applicable, (2) the time intervals when the follow-up letters
are to be sent and/or telephone calls are to be made if the provider
uses an internal collection process, (3) the dollar thresholds for
accounts that are to be sent to the outside collection agency, and (4)
the point at which the account is written off.
If the patient files are stored electronically, the collection policy should
contain codes that are used on the electronic print screens to identify the type
of action (e.g., first xxxx, first follow-up notice, referral to collection
agency) taken on the account.
o If the patient accounts are referred to an outside collection
agency(s), a copy of the contract with the collection agency(s) is
needed to determine whether both Medicare and non-Medicare
uncollectible accounts are handled in a similar manner.
o Medicare, and if necessary non-Medicare, patient files containing the
documentation of the collection effort.
If the patient files are stored electronically, capability to access the print
screen that details the charges to the patient, the billing date, to whom the
xxxx was sent, and the number/code and the date of the follow-up letters or
phone calls, and/or referral to
collection agency (if any). Also, on request by auditor, capability to print a
sample of the actual letters to the patient.
o If a collection agency(s) is used at any time during the collection
process, a copy of the collection agency report(s) that shows for each
patient account: the name of the patient, date account placed with the
agency(s), and balance at the end of the provider's fiscal year.
o If no collection effort was exerted on some or all of the bad debts
claimed, documented evidence that the patient(s) was indigent.
o For Medicaid patients, when there is satisfactory documentation that
the state payment formula would result in zero payment, then the
write-off may occur before 120 days have passed.
FOR MEDICARE PATIENTS WHO ARE ENTITLED TO MEDICAID:
In general, the following information must be provided:
o Evidence that the patient is eligible for Medicaid (Title XIX) at the
time services were rendered.
o Copies of the bills for Medicare deductible and/or coinsurance amounts
that were sent to the state Medicaid Agency.
o Copies of the remittance advice from the state Medicaid Agency showing
that the provider's claims for the Medicare deductible and coinsurance
amounts were denied.
The procedures that shall be followed for documenting bad debt amounts claimed
for indigent residents will be those outlined in section L of the HCFA form 339
instructions, as follows:
Evidence of the bad debt arising from Medicare/Medicaid crossovers may include a
copy of the Medicaid remittance showing the crossover claim and resulting
Medicaid payment or non-payment. However, it may not be necessary for a provider
to actually xxxx the Medicaid program to establish a Medicare crossover bad debt
where the provider can establish that Medicaid would have no responsibility for
payment under the state plan. In lieu of billing the Medicaid program, the
provider must furnish documentation of:
o Medicaid eligibility at the time services were rendered, and
o Non-payment that would have occurred if the crossover claim had
actually been filed with Medicaid. Non-payment must be evidenced by a
reference to the pertinent sections of a Medicaid state plan or
precedent records of denial of previous claim submissions for the same
service and same category of payment.
The payment calculation will be audited based on the State's Medicaid plan in
effect on the date that services were furnished. Providers should be aware of
any changes in the Medicaid payment formula that might impact the crossover
calculation, and ensure that these changes are reflected in the claimed Medicare
bad debt.
FOR INDIGENT MEDICARE PATIENTS WHO ARE NOT ENTITLED TO MEDICAID:
The following information must be provided:
o Medicare patients' files containing documentation that the provider
used customary methods based on the guidelines in the PRM-1, section
312 to determine patient indigence. A patient's signed declaration of
inability to pay medical bills cannot be considered as proof of
indigence.
o Backup information showing that the provider considered the patient's
totals resources (e.g., analysis of assets that are convertible to cash
and unnecessary for the patient's daily living, liabilities, income and
expenses) in making the determination of indigence.
o Evidence that the provider determined that no source other than the
patient (e.g., Title XIX, local welfare agency, guardian) would be
legally responsible for the patients medical xxxx.
AUDITING
o Audits of claims for reimbursement of bad debts will be performed in
accordance with the "Hospital and Skilled Nursing Facility Audit
Program (revised and issued November, 1999)," Government Auditing
Standards (GAS) or Generally Accepted Auditing Standards (GAAS). Any
changes in CMS audit protocols will be incorporated into this
agreement.
The provider must comply with any changes that are made to governing CMS
statutes, regulations or manual instructions regarding bad debt policy
subsequent to the effective date of a settlement agreement entered into between
CMS and Xxxxxxx Enterprises. All or part of this protocol may be superceded by
any such CMS statutory, regulatory or policy changes regarding bad debt policy.
Xxxxxxx Enterprises
Summary of all Home Office
Cost Report Addresses
STATE FILING ADDRESS
----- --------------
AL Xx. Xxxxx Xxxxxx
Director or Provider Audit and Reimb. Div
000 Xxxxxx Xxx.
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
AR Xxxx Xxxxx
Chief Program Administrator
Department of Human Services
Division of Medical Services
Office of Long Term Care
X.X. Xxx 0000-Xxxx 000
Xxxxxx Xxxx, XX 00000-0000
AZ Xxxx Xxxxxx, CPA, CIA
Arizona Dept. of Hlth Srvcs.
Office of Cost Reporting and Review
000 X. Xxxxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
CA Xx. Xxxx Xxxx
Dept. of Health Services
Auditor Review Analysis
000 Xxxxx 0xx Xxxxxx
P.O. Box 943732
Sacramento, CA 94234-7320
DC Xx. Xxxxxxx Xxxxxx, Commissioner
Commission of Health Services
Dept of Human Services
000 Xxxxx Xxxxxxx Xx, XX
Xxxxxxxxxx, XX 00000
GA Mr. Xxxx Xxxxx
Georgia Nurs. Hme Reimb Div
0 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000-0000
000-000-0000 Phone
HI Xx. Xxxx X. Mizuno
Manager
Audit and Reimbursement
Hawaii Medical Srvc. Assoc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
IL Xxxxxx X. Pellicord
Illinois Department of Public Aid
000 X. Xxxxx Xxx. Xxxx - 0xx Xxxxx
Xxxxxxxxxxx, XX 00000
ID Xx. Xxxxx Xxxxxxx
000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxx, XX 00000
IN Xxxxxx Xxxx
Xxxxx and Xxxxxxxx
0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
(Rate Setting Contracters for the State)
Xxxxxxx Enterprises
Summary of all Home Office
Cost Report Addresses
STATE FILING ADDRESS
----- --------------
KS Kansas Department on Aging
New England Building
000 X. Xxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Director, Nurs Fac Rate Setting
XX Xxxxx and Xxxxxxxx, XX
Certified Public Accountants
Attn: Xxx X. Xxxxxxxx
00 Xxxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
LA Xxxx X. Xxxxxxxx
State of Louisana
Dept of Hlth and Hosp
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxx Xxxxx, XX 00000-0000
MA Xx Xxxxx Xxxxxx
Health Data Policy Group
Division of Health Care Finance & Policy
Two Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
MD H. Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxx and Company
Xxxxx 000
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
MI Xx. Xxxxxx Xxxxxxxxxx
Budget and Fin Admin
Bureau of Audit and Rev. Enhanc.
000 Xxxxx Xxxx
X.X. Xxx 00000
Xxxxxxx, XX 00000-0000
MN Xxxx Mo
Human Services Building
Audit Division
000 Xxxxxxxxx Xxxx
Xx. Xxxx, XX 00000-0000
MO Xxxxxx Xxxxxxxxxxxx
Department of Social Services
Division of Medical Services
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx Xxxx, XX 00000-0000
Xxxxxxx Enterprises
Summary of all Home Office
Cost Report Addresses
STATE FILING ADDRESS
----- --------------
MS Xx. Xxxxxxx Xxxxxxx
Medicaid Fin. Prog. Coord.
The Division of Medicaid
Office of The Governor
Suite 801, Xxxxxx X. Xxx Building
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
NC Xxxxx Xxxxx, Audit Manager
Desk Audit Section
Division of Medical Assistance
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
NE Xxxx Schallenburger
State of Nebraska
Department of Social Services
000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
NJ Xxxxx X. Alamzor, Director
Hlth Fac Rate Setting - Rm 600 CN 360
Trenton, NJ 08625-0360
OH Xx. Xxxx Xxxxx
Ohio Department of Human Services
Audits and Reimbursement Section
00 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000-0000
PA Xxxxx X. Xxxxxxx, Director
Department of Public Welfare
Office of Medical Assistance
Division of Long Term Care
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
SC Xxxxxxx X. Xxxxx, Director
St Hlth and Hmn Svcs. Fin. Co.
Div of Long Term Care Reimb
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx Xxxxxxxxx Center
Xxxxxxxx, XX 00000
SD Xxxxxx Xxxxxx
Program Administrator
Department of Social Services
Off of Provider Reimb Auditing
000 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
TN Xxxxx Xxxxxxxx
Department of State Auditing
Suite 1500
Xxxxx X. Xxxx Xxxxx Xxxxxx Xxxxxxxx
Xxxxxxxxx, XX 00000-0000
Xxxxxxx Enterprises
Summary of all Home Office
Cost Report Addresses
STATE FILING ADDRESS
----- --------------
TX Xxxxxx Xxxxxxx
Data Development Specialist
Texas Dept. of Human Services
Rate Analysis Department
000 Xxxx 00xx Xxxxxx
Mail Code W-425
Xxxxxx, XX 00000
VA Xxxxxxx Xxxxxxxxx, P.L.L.C.
0000-X XXXXXXXX XXXXX
Xxxx Xxxxx, XX 00000-0000
WA Xxx Xxxxxxx
Dept of Social Health Services
Office of Rates Management
Aging and Adult Srvcs. Admin
000 Xxxxxxxx Xxxxxx Xxxx XX
Xxxxx, XX 00000
WI Xxxxxxx X. Xxxxxxxx, Senior Auditor
Bureau of Health Care Financing
Nursing Home Section
X.X. Xxx 000
Xxxxxxx, XX 00000-0000
WV Xxxxxxx X. Xxxxxxx, Xx., Director
Office of Audit, Research and Analysis
0000 XxxXxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
