Reconciliation of Wrap Payments

Posted on October 12, 2022October 17, 2022

AAFCPAs would like to make clients aware, effective January 1, 2022, Massachusetts Medicaid (MassHealth) launched an alternative payment methodology (APM) for Community Health Centers who are licensed as a freestanding clinic and not financially or physically an integral part of a hospital.

Under the APM, there is a quarterly wrap reconciliation completed by MassHealth which is based on payments made to the Health Center in the respective quarter compared to the Health Center’s individual prospective payment system (PPS) rate. If, upon reconciliation, the APM yields a higher reimbursement, in total, than what was paid for services during the quarter, a payment is due to the Health Center. If the APM yields a lower reimbursement, in total, no amounts are owed back to MassHealth.

Upon receipt of the reconciliations, AAFCPAs advises Health Center clients to ensure they understand the methodology used and verify the encounter and payment information documented by MassHealth using the statistics and other information from their electronic medical record (EMR) system to confirm they agree with the settlement amount.

Health Centers should begin estimating unsettled quarters using their EMR data and record them as revenue and receivables monthly, or at a minimum, quarterly as a best practice.

AAFCPAs is available to help strategize the best way to estimate the unsettled quarters and determine an effective reconciliation methodology.

If you have any questions, please contact Pauline Legor, CPA, MBA, at 774.512.4158, plegor@nullaafcpa.com; Courtney McFarland, CPA, MSA at 774.512.4051, cmcfarland@nullaafcpa.com; or your AAFCPAs Partner.

About the Authors

Pauline Legor, CPA, MBA

Pauline is a leader in AAFCPAs’ Healthcare practice, providing assurance and consulting solutions for Federally Qualified Health Centers (FQHCs) and behavioral health providers. Pauline has extensive expertise overseeing audits in accordance with Uniform Guidance/Single Audit and Government Auditing Standards, state-specific filing requirements, such as the Massachusetts’ Uniform Financial Report (UFR), as well as U.S. Department of Health and Human Services (HHS), and the Centers for Medicare and Medicaid Services (CMS). Additionally, she has deep expertise in the federal 340B Drug Pricing Program helping clients ensure 340B Program integrity and maintain accurate records documenting compliance with all 340B Program requirements. Beyond audits, she provides specialized analysis & advisory services for healthcare organizations to optimize their reimbursements. This includes revenue cycle assessments, fee structure analysis, Sliding Fee Discount Program assessments, Medicaid and Medicare Cost Reporting, denials prevention and management, as well as data analysis and benchmarking.

Courtney McFarland, CPA, MSA, 340B ACE

Courtney is an audit partner in the firm’s Healthcare Practice with over 15 years of assurance experience and a comprehensive understanding of the nuances of the healthcare industry. She delivers a full range of solutions solving the challenges that AAFCPAs’ healthcare clients face, including: audits in accordance with Uniform Guidance/Single Audit and Government Auditing Standards, 340B pharmacy program requirements, best practices for reconciliation & analysis of statistical and programmatic data, tracking and monitoring risk-based contracts, maximizing reimbursements, and guidance on healthcare reform. Courtney is a member of AAFCPAs’ Revenue Recognition Task Force, dedicated to helping the firm and clients understand best practices for an efficient and effective implementation of the robust new framework.