Responses_to_60Day_Comments

COMMENT/RESPONSE FOR CMS-224-14

We received several comments on the proposed Federally Qualified Health Center Cost Report
(FQHC), form CMS-224-14. Comments were either general in nature or very specific requests
for clarification, changes, and additions to the various worksheets throughout the proposed cost
report and the related instructions. We will address the general comments first.
I.

General Comments

COMMENT: Two commenters were concerned that some FQHCs may not be able to prepare
their cost report in the revised format on a retroactive basis. Therefore, the commenters request
that the form CMS-224-14 be effective on a prospective, versus a retrospective basis.
RESPONSE: The Centers for Medicare & Medicaid Services (CMS) acknowledges the
commenters’ concerns regarding the effective date of the new FQHC prospective payment
system (PPS) cost report; proposed form CMS-224-14. The change in payment system from cost
based reimbursement to PPS reimbursement prevents CMS from delaying the use of the new cost
report for any cost report beginning on or after October 1, 2014. No substantial changes were
made to the proposed Worksheet A cost centers and most of the proposed cost centers are
currently captured or recorded on form CMS-222-92. The type of visit and the practitioner who
performed a visit should be readily available, since the FQHC is required to furnish this
information on the claim submitted to CMS for reimbursement under the FQHC PPS.
COMMENT: Two commenters were concerned that the calculation of the cost per visit on the
proposed form CMS-224-14 does not include the costs of the FQHC in a similar manner as were
included in the cost per visit on the form CMS-222-92, which would not allow a comparison of
costs under the all-inclusive rate system (AIR) and costs under the FQHC PPS. As examples, the

commenters noted that costs will appear to increase if pharmacy costs are moved from “Costs
Other Than FQHC” to “General Services Cost Centers”, and costs will appear to decrease as a
result of where medical supplies and medical staff transportation costs are reported.
RESPONSE: We understand the commenters’ concerns regarding the regrouping of the
“pharmacy,” “medical supplies,” and “medical staff transportation” cost centers in the proposed
form CMS-224-14 compared to the form CMS-222-92. The proposed revisions to form CMS224-14 are designed to improve the clarity and accuracy of the data, while making as few
changes as possible to minimize confusion and recordkeeping requirements. For example, we
proposed that pharmacy costs be included under “general service” cost centers because these
costs apply to the FQHC as a whole and are treated as overhead costs under the Medicare
program, this same rationale is applied to costs associated with medical supplies and staff
transportation costs. This change will ensure proper allocation of all overhead costs to the direct
care cost centers, resulting in a more precise cost per visit. The costs associated with medical
supplies are split between the general service costs and the medical supply costs that are cost
reimbursed as part of the administration of a pneumococcal and/or influenza vaccines, thereby
capturing all medical supply costs associated with operating the FQHC.
While we understand the concerns of the commenters in desiring to compare multi-year
data, we believe that the new payment system requires some adjustments in how costs are
reported, and that these changes will provide higher quality cost reporting data.
COMMENT: Two commenters believe that the Medicare FQHC PPS established in section
10501 of the Affordable Care Act, P.L. 111-148, changed the manner in which FQHCs are
reimbursed relative to their costs but did not change the way in which their costs are calculated.
Therefore, they believe that the proposed changes will significantly alter FQHC payments in

ways that were not intended by Congress, and that future analyses, and possible policy decisions,
will be jeopardized by the inability to compare the cost data.
RESPONSE: CMS appreciates the concerns expressed by the commenters. Section 10501 of
the Affordable Care Act required the development of a prospective payment system (PPS) that
included a process for appropriately describing the services furnished by FQHCs, and established
payment rates based on descriptions of such services, without application of the productivity
standards that were required under the AIR system.
In accordance with these requirements, beginning on October 1, 2014, payment to
FQHCs is based on the lesser of the national encounter-based FQHC PPS rate, or the FQHC’s
total charges, for primary health services and qualified preventive health services furnished to
Medicare beneficiaries, with some adjustments. The national encounter-based rate will be
adjusted in calendar year 2016 by the Medicare Economic Index (MEI), and subsequently by
either the MEI or a FQHC market basket. Therefore, changes to the cost report will not alter the
FQHC PPS rate. The cost report will be used for payment of the costs of Graduate Medical
Education, bad debt, and influenza and pneumococcal vaccines and their administration.
Payment for these services will not be affected by changes in the cost report groupings.
II.

Comments Pertaining to Worksheets and Instructions
The following comments are specific to select proposed worksheets included in the

proposed form CMS-224-14 and include specific requests for clarification, changes and additions
to the proposed worksheets and the related instructions. Our responses will address each
proposed worksheet and all comments pertaining to that proposed worksheet in a single
response.

COMMENT: Two commenters requested that a check off box for a “no Medicare utilization
cost report” be added to the proposed Worksheet S, Part I.
RESPONSE: We appreciate the commenters’ suggestion; however, we do not believe it is
necessary to include a check off box for a “no utilization Medicare cost report” because CMS
Pub. 15-2, Chapter 1, §110(A) instructs providers to submit a written statement to the Medicare
Administrative Contractor (the contractor) in lieu of a full cost report, where there is no
Medicare utilization.
COMMENT: Two commenters suggested that the words “balance sheet” be removed from the
certification statement included on proposed Worksheet S, Part II.
RESPONSE: We appreciate the commenters’ suggestion to remove the term “balance sheet”
from the certification statement, however, we are unable to modify the certification statement
because the language has been adopted through notice and comment rulemaking (see 42 CFR
413.24(f)(4)(iv)).
COMMENT: Two commenters suggested that only one FQHC could be reported on proposed
Worksheet S, Part III, therefore the language “… for the element of the above complex
indicated” should be removed.
RESPONSE: We agree with the commenters’ suggestion and have removed the language from
the worksheet.
COMMENT: A few commenters made various requests for clarification, additions, and
deletions to proposed Worksheet S-1, Part I. These included: deletion of the date the FQHC
requested and was granted approval to file a consolidated cost report, except for sites approved
following the adoption of the form CMS-224-14; clarification of whether or not an FQHC can
elect to file consolidated contemporaneously with the filing of its cost report; addition of the

number assigned to a home office by CMS, if applicable; and clarification as to whether or not
question 19 relates to “moonlighting” interns and residents.
RESPONSE: CMS acknowledges the commenters’ concerns and agrees that the inclusion of
the date the FQHC requests and is granted approval to file a consolidated cost report (in
accordance with Chapter 9, section 30.8 of the Medicare Claims Processing Manual, CMS Pub.
100-04) will only apply to sites approved following the adoption of the proposed form
CMS-224-14. FQHCs that use the proposed form CMS-224-14 and elect to file a consolidated
cost report that was approved prior to the adoption of proposed form CMS-224-14 will not be
required to furnish the date the FQHC requested and was granted approval to file a consolidated
cost report. A contractor cannot accept or approve a request to file a consolidated cost report at
the time an FQHC files its cost report. An FQHC must make a request in advance of the
reporting period for which the consolidated cost report is to be used in accordance with the
manual provision.
We agree that an FQHC that is part of a chain organization may choose to file a home
office cost statement. Therefore, we will add a question to the proposed Worksheet S-1, Part I,
including a box for the home office CMS certification number (CCN), to collect this information.
The questions that have been added to the proposed Worksheet S-1, Part I, involving
interns and residents are general in nature. Therefore, we will address the commenters’ concerns
regarding the proper reporting of moonlighting interns and residents in our response to the
comments on the proposed Worksheet A below.
COMMENT: Two commenters requested that we eliminate the reporting of site specific
information relating to funding type, medical malpractice and interns and residents from the

proposed Worksheet S-1, Part II because they consider these to be organization, not site specific
issues.
RESPONSE: CMS appreciates the commenters’ suggestions that site specific information
relating to funding types, medical malpractice, and intern and residents be eliminated from the
proposed Worksheet S-1, Part II, however, this site specific information is needed by CMS to
ensure proper development of the FQHC market basket as required by section 10501 of the ACA
and to provide estimates of total facility and Medicare margins that will be used in future
payment update activities.
The data derived from the proposed questions about interns and residents ensure
appropriate payments are made to the FQHC and that there are no duplicate payments pertaining
to intern and resident costs paid by the Medicare program and also by grants funded by the
Health Care Resources and Services Administration (HRSA).
COMMENT: A few commenters made various requests for clarification, additions and
deletions to proposed Worksheet S-2. Two commenters requested that the instructions for lines
11 and 12 of the proposed Worksheet S-2 be modified to eliminate the references to charges
since the proposed cost report does not require the reporting of detailed FQHC charges; one
commenter asked whether FQHCs are required to file a separate proposed Worksheet S-2 and
answer each question for each CMS CCN included in a consolidated cost report; one commenter
requested clarification of the instructions for allowable graduate medical education (GME) costs,
specifically the reporting of costs for HRSA funded GME training, and programs that would be
considered nonallowable under the Medicare program; and one commenter asked that CMS
clarify the Federal Health Insurance Portability and Accountability Act (HIPAA) requirements
that would apply to protected health information or individually identifiable health information

(PHI/IIHI), on the bad debt listing included as Exhibit 1, included in the instructions to question
8.
RESPONSE: CMS thanks the commenters for recognizing that the proposed form CMS-224-14
does not collect data on charges. The calculation of the Medicare cost per visit for a medical
visit and a mental health visit requires the total cost and the total visit count for each direct
service cost center. Consequently, total charges and Medicare charges are not required to be
captured in the proposed form CMS-224-14. We have reviewed the existing requirement in light
of the changes to the FQHC PPS and have determined that a crosswalk is still necessary in order
to ensure proper payments; however, the crosswalk has been modified to match revenue codes
with visits.
We are clarifying that only the primary FQHC responds to the questions set forth on the
proposed Worksheet S-2 when filing a consolidated cost report. Questions relating to a change
of ownership and/or certification/decertification of an FQHC included in a consolidated cost
report are included on the proposed Worksheet S-1, Part II, line 1, columns 2, 4, 5 and 6 for each
FQHC CCN included in the consolidated cost report.
We will address the commenters concerns about HRSA funded GME programs in our
response to the comments on the proposed Worksheet A.
We thank the commenter for expressing their concern with the privacy of the information
reported as part of Exhibit 1, known more commonly as the bad debt listing. The listing is a
suggested format for providing information relevant to payment for Medicare bad debt and is not
part of the electronic cost report. This Exhibit 1 takes the place of the Exhibit 5, formerly
included in the form CMS-339. The Exhibit 1 is not part of the electronic cost report and
continues to be a separate data collection. To the degree the information included on Exhibit 1,

the bad debt listing, constitutes commercial or financial information that is confidential and/or is
of a highly sensitive personal nature, the information will be protected from release under the
Freedom of Information Act.
COMMENT: A few commenters made various requests for clarification, additions and
deletions to the proposed Worksheet S-3, Part I. Two commenters requested that we eliminate
collection of visit data by medical, mental health and interns and resident visits for Title V and
XIX recipients and clarify whether Medicare Advantage (MA) visits are to be included in the
visits reported on this worksheet. One commenter requested that we clarify whether medical and
mental health visits include visits by interns and residents and also clarify whether interns and
residents in non-approved GME programs or HRSA funded programs are reported on lines 5 and
6.
RESPONSE: We thank the commenters for their suggestions. CMS is sensitive to the burden
associated with the record keeping requirements that FQHCs are required to maintain to
complete the proposed form CMS-224-14. However, we have determined that we are unable to
remove the requirement to report visits by program for two reasons. First, CMS requires the
identification of the visits by program to properly isolate the Medicare visits for purposes of
calculating allowable GME and second, this breakdown is also necessary to provide estimates of
total facility and Medicare margins that may be used in future payment update activities.
We are clarifying that MA visits are to be included in the total visits for all patients
reported in column 4 on the proposed Worksheet S-3, Part I. The reporting of medical and
mental health visits in column 2 is limited to visits of beneficiaries receiving their Medicare
benefits under the fee for service program.

We are also clarifying that medical and mental health visits performed by interns and
residents who are funded by a Teaching Health Center (THC) or Primary Care Residency
Expansion (PCRE) grant from HRSA must be excluded from proposed Worksheet S-3, Part I,
lines 5 and 6. Instead, the visits performed by an intern and/or resident funded by a THC or
PCRE grant from HRSA will be reported on proposed Worksheet S-1, Part I, lines 25 and 26 and
Worksheet S-1, Part II, lines 13 and 14.
COMMENT: A few commenters requested that we merge the labor and benefit costs associated
with physician services under agreement included on proposed Worksheet S-3, Part II, line 3,
with physician services on line 2; and, that we merge the FTE counts for physician services
under agreement on line 16 with physician services on line 15 on proposed Worksheet S-3, Part
III. Two commenters requested that we remove the words “top level management services”
from the related instructions to proposed Worksheet S-3, Parts II and III.
RESPONSE: CMS acknowledges the commenters’ concerns and agrees that it is not necessary
to separately identify physicians under agreement on the proposed Worksheet S-3, Parts II and
III; therefore, we have removed the “physicians under agreement” line from the proposed
Worksheet S-3, Parts II and III. However, we have maintained the physicians under agreement
cost center on the proposed Worksheet A and the proposed Worksheet B, as these costs must be
separately identified in order to properly calculate the payment for pneumococcal and influenza
vaccines paid on a reasonable cost basis.
We appreciate and acknowledge the commenters request to remove the words “top level
management services” from the proposed instructions. We agree with commenters request and
have removed the phrase “top level management services” from the proposed instructions.

COMMENT: A few commenters made various requests for clarifications, additions and
deletions to the proposed Worksheet A form and the instructions. Two commenters were
concerned with the consistency and interpretation of the cost data found on the Worksheet A
included in the existing form CMS-222-92 cost report and the proposed Worksheet A included in
the proposed form CMS-224-14 cost report, as the data from the Worksheet A reported on the
form CMS-222-92 was used to establish the base payment rates under the FQHC PPS. These
commenters specifically requested that we move the proposed “capital-related moveable
equipment” cost center to direct costs; combine the proposed “plant operation and maintenance”
and “janitorial” cost centers; clarify that the cost of implementation and maintenance of
electronic health records systems is to be reported in the proposed “medical records” cost center;
move the proposed “pharmacy” cost center to other FQHC services; move the proposed medical
staff transportation and medical supply costs to direct costs; clarify that venipuncture costs
should be included as a direct care cost; add visiting nurse services as a separate cost center
under direct care costs; provide examples of other allied health personnel in the instructions for
line 36; and reserve line 23 for the sole reporting of physician services. One commenter asked
that we clarify, in the instructions for the proposed Worksheet A, the definition of allowable and
nonallowable GME costs and address if the costs for approved training under the HRSA PCRE
or THC grants should be reported on line 47, “allowable GME costs”, and address where
moonlighting interns and residents are reported.
RESPONSE: CMS appreciates the commenters’ suggestions and is sensitive to their concerns
relative to how payment rates may or may not be affected by the changes to the proposed
Worksheet A included in the proposed form CMS-224-14.

CMS does not believe that a revised sequence/order of the cost centers contained on the
proposed Worksheet A included in the proposed form CMS-224-14, will have a material effect
on payment rates. The proposed sequence/order of the cost centers ensure that cost centers
previously reported on the form CMS 222-92 under the headings “other health care costs”,
“facility overhead-facility costs”, and “facility overhead-administrative costs” are grouped
according to 42 CFR 413.24(d)(1) and are also consistent with other cost reports applicable to
other types of providers under the program.
We have rearranged the cost centers for capital-related moveable equipment, medical
staff transportation and medical supply costs to the proposed “general service” cost centers
because they are overhead costs that apply to the FQHC as a whole and are not directly related to
care provided to an individual beneficiary. This modification will ensure our ability to develop a
unit cost multiplier to be applied on the proposed Worksheet B, Part I to properly include these
costs in the calculation of the Medicare cost per visit.
We appreciate the commenters’ suggestion for reporting costs associated with electronic
health records; however, the costs associated with electronic health records must not be included
in the “medical records” cost center. We are clarifying the proposed definition for capital-related
movable equipment included in the proposed Worksheet A cost reporting instructions, that the
costs associated with capital related movable equipment, such as depreciation, lease and rental,
insurance, taxes, and hardware/software updates attributable to electronic health records systems,
must be reported in the proposed “capital-related movable equipment” cost center.
We are sensitive to the burden associated with the record keeping requirements that
FQHCs are subject to when completing their cost report and we appreciate the suggestion to
merge the proposed cost centers “plant operation and maintenance” and “janitorial” into a single

cost center. The function of these cost centers separately ensures appropriate reporting of
specific costs associated with operating the FQHC. The proposed cost center “plant operation
and maintenance” contains costs associated with the physical plant and equipment used to
operate the FQHC while the proposed “janitorial” cost center accounts separately for costs
associated with everyday cleaning activities within the FQHC. Therefore, we do not believe it
would be appropriate to merge these two cost centers into a single cost center.
We agree with the commenters’ suggestion to separately identify the costs associated
with nurses who provide visiting nurse services. Accordingly, we have revised the cost center
description and proposed instructions for proposed lines 27 and 28 on the proposed Worksheet A
by adding “visiting” to “registered nurse” and “licensed practical nurse”. The revised lines will
include only those direct care costs associated with a registered nurse (RN) or licensed practical
nurse (LPN) who provides visiting nurse services in accordance with the Medicare Benefit
Policy Manual, CMS Pub. 100-02, Chapter 13, §180. A similar change has been made to the
proposed Worksheet B, Part I, lines 5 and 6. Costs associated with RNs or LPNs who provide
services incident to a physician, physician’s assistant, nurse practitioner, certified nurse midwife,
clinical psychologist, or clinical social worker (see CMS Pub. 100-02, Chapter 13, §§110, 120,
and 140) must be reported on proposed Worksheet A, line 36, which we have renamed “nursing
and other allied health personnel.” The proposed instructions for line 36 have also been revised
to reflect this change.
Commenters also requested clarification on the proper reporting of venipuncture costs on
the proposed form CMS-224-14. The medical supplies associated with the venipuncture
procedure, or those used during a home visit, are reported in the proposed “medical supplies”
cost center.

Commenters requested an example of “other allied health personnel”. A medical
assistant is an example of “other allied health personnel”. We have added this example to the
cost reporting instructions.
We appreciate and agree with the commenters’ suggestion to remove the cost associated
with a nurse practitioner performing physician services from the proposed “physician services”
cost center. We have added this language instead to the description of the proposed cost center
for “nurse practitioner services”. This change ensures that all nurse practitioner costs will be
reported in a single cost center.
We appreciate the request for clarification regarding the proper reporting of intern and
resident costs involving HRSA grants and moonlighting residents. An FQHC must include all
allowable direct costs, including those direct costs associated with an intern and/or resident
funded by a THC and/or PCRE grant from HRSA in the proposed “allowable GME” cost center
on line 47, only if the program meets the requirements set forth in 42 CFR 405.2468(f). Direct
costs associated with an intern/resident who is funded by a THC and/or PCRE grant included in
line 47, must be reclassified to line 78, the proposed “nonallowable GME costs” cost center.
This reclassification is necessary to ensure that payment is not made twice for the same services;
CMS will not reimburse the FQHC for the direct costs of GME funded by a grant from HRSA.
We will add this clarification to our instructions for lines 47 and 78 of the proposed Worksheet A
to ensure proper completion of the cost report. Costs associated with intern and resident
programs that do not meet the requirements set forth in 42 CFR 405.2468(f), are reported in the
“nonallowable GME costs” cost center.
A “moonlighting” resident or fellow is a postgraduate medical trainee who is practicing
independently, outside the scope of his/her residency training program and would be treated as a

physician within the scope of the privileges granted by the FQHC. This cost is neither an
allowable GME cost, nor a nonallowable GME cost. These costs are reported as physician
service costs included under the proposed direct care cost centers.
COMMENT: Two commenters requested that we publish the description of cost center coding
and table of cost center codes for notice and comment prior to adoption.
RESPONSE: CMS acknowledges the commenters’ concerns surrounding the ability to provide
comments on the cost center coding and table of cost center codes that are part of the electronic
reporting specifications that will be used to operationalize the proposed form CMS-224-14 in an
electronic or automated format. However, the electronic reporting specifications are not
developed until the proposed cost report is final. While CMS is sensitive to the request to
provide for notice and comment prior to their adoption, CMS believes that the electronic
specifications are not subject to notice and comment rulemaking, because they are not related to
the burden associated with the recordkeeping and data gathering requirements required by
FQHCs to comply with filing the proposed form CMS-224-14.
COMMENT: Two commenters made various requests for clarification, additions and deletions
to the proposed Worksheet B, Part I and the instructions. Two commenters requested that we
add a cost center for ‘visiting nurses’ to the proposed worksheet; suggested that CMS limit the
collection of visit data to that previously reported on the form CMS-222-92; and add a line for
‘other-direct care’ costs. One commenter requested that we clarify if intern and resident visits
are included by practitioner type on this proposed worksheet.
RESPONSE: CMS acknowledges and appreciates the suggestions submitted by the
commenters and we understand the commenters’ concerns with the record keeping burden and
data gathering associated with completion of the proposed Worksheet B, Part I. With the advent

of a new payment system, CMS is seeking to obtain a more accurate account of the costs
associated with the types of visits that are covered in an FQHC and the actual cost of such visits
attributable to Medicare beneficiaries. The types of practitioners included in the proposed
Worksheet B, Part I, as revised, are all permitted to provide and bill for a visit to a beneficiary in
an FQHC, very much like the existing Worksheet B, Part I that is included in the form CMS222-92. In addition, because this data is readily available to the FQHC for inclusion in the
proposed Worksheet B, Part I, we do not believe there will be an increase in burden.
In addition, in order to properly determine the costs associated with all overhead services
applicable to a visit, we have added a column for other direct costs that will be calculated by
taking the sum of the costs associated with the proposed cost centers titled “nursing and other
allied health personnel,” “laboratory technicians,” “physical therapist,” and “occupational
therapist” and multiplying those costs by the ratio of visit count by practitioner to total visits.
We believe this change to the proposed Worksheet B, Part I addresses the commenters’ concerns
regarding those direct care costs that are associated with the cost per visit.
We also want to clarify that all visits performed by interns and residents would be
included in the total visits by practitioner, column 2, on the proposed Worksheet B, Part I by
practitioner type. That is, if the intern or resident is providing services under the direction of a
teaching physician, the visit would be included as a physician visit. Only those title XVIII visits
from the proposed Worksheet S-3, Part I, column 2 will be used in the calculations in columns 9
and 10 of proposed Worksheet B, Part I for determination of the Medicare cost per visit.
COMMENT: Two commenters believe that CMS has changed the reporting of allowable GME
overhead costs.

RESPONSE: CMS appreciates the commenters’ observation regarding the change involving
the proper payment of overhead costs associated with intern and resident programs. We did
remove an erroneous adjustment that was included in the form CMS-222-92 to properly reflect
the payment policy on overhead costs associated with GME provided in an FQHC as set forth in
42 CFR 405.2468(f). An FQHC may claim direct overhead costs associated with operating an
approved program in its costs related to allowable GME. However, payment for all overhead
costs included in the proposed “general service” cost centers is excluded because it is already
reimbursed as part of the payment received by the FQHC under the FQHC PPS.
COMMENT: Two commenters requested that CMS revise the instruction in proposed
Worksheet S-3, Part III to refer to total FTEs in column 3.
RESPONSE: CMS thanks the commenters for their suggestion, and has revised the proposed
cost reporting instruction accordingly.
COMMENT: Two commenters requested that we remove the reporting of MA Plan
supplemental payments from the proposed Worksheet E because the Provider Statistical and
Reimbursement (PS&R) report does not include this information.
RESPONSE: We acknowledge the commenters' request; however, we have confirmed that the
MA Plan supplemental payments are reported in the PS&R, report type 778. We further note
that we have modified the instructions and this data will be reported for informational purposes
only.
COMMENT: Two commenters believe the data collected on the proposed Worksheet F-1 is
repetitive of the data included on proposed Worksheet S-2 and therefore should be eliminated.
RESPONSE: CMS acknowledges the commenters’ concerns; however, the financial statements
submitted as part of the filing of the cost report pursuant to the proposed instructions for the

proposed Worksheet S-2 are not part of the provider’s electronic cost report file. In order to
reduce administrative burden we specifically limited the data to be collected on proposed
Worksheet F-1 to a high level summary of the revenues and expenses of the FQHC. The purpose
of the data collection on the proposed Worksheet F-1 is to provide estimates of total facility and
Medicare margins that will be used in future payment update activities and discussions with the
Medicare Payment Advisory Commission (MedPAC) to ensure the accuracy of payments to
FQHCs.