CMS Pub. 100-04, ch. 24, § 90.1

Assessments

(Rev.: 4388; Issued: 09-06-19; Effective: 10-07-19; Implementation: 10-07-19)

A “small provider” is defined at 42 CFR section 424.32(d)(1)(vii) to mean A) a provider

of services (as that term is defined in section 1861(u) of the Social Security Act) with

fewer than 25 full-time equivalent (FTE) employees; or B) a physician, practitioner,

facility or supplier that is not otherwise a provider under section 1861(u) with fewer than

10 FTEs. To simplify implementation, Medicare considers all providers that have fewer

than 25 FTEs and that are required to bill a Medicare A/B MAC (A)to be small; and

considers all physicians, practitioners, facilities, or suppliers with fewer than 10 FTEs

and that are required to bill a A/B MAC (B) or DME MAC to be small.

The ASCA law and regulation do not modify pre-existing laws or employer policies

defining full time employment. Each employer has an established policy, subject to

certain non-Medicare State and Federal regulations, that define the number of hours

employees must work on average on a weekly, biweekly, monthly, or other basis to

qualify for full-time benefits. Some employers do not grant full-time benefits until an

employee works an average of 40 hours a week, whereas another employer might

consider an employee who works an average of 32 hours a week to be eligible for full-time benefits. An employee who works an average of 40 hours a week would always be

considered full time, but employees who work a lesser number of hours weekly on

average could also be considered full time according to the policy of a specific employer.

Everyone on staff for whom a health care provider withholds taxes and files reports with

the Internal (Revenue Service (IRS) using an Employer Identification Number (EIN) is

considered an employee, including if applicable, a physician(s) who owns a practice and

provides hands on services and those support staff who do not furnish health care services

but do retain records of, perform billing for, order supplies related to, provide personnel

services for, and otherwise perform support services to enable the provider to function.

Unpaid volunteers are not employees. Individuals who perform services for a provider

under contract, such as individuals employed by a billing agency or medical placement

service, for whom a provider does not withhold taxes, are not considered members of a

provider’s staff for FTE calculation purposes when determining whether a provider can

be considered as “small” for electronic billing waiver purposes.

Medical staff sometimes work part time, or may work full time but their time is split

among multiple providers. Part time employee hours must also be counted when

determining the number of FTEs employed by a provider. For example, if a provider has

a policy that anyone who works at least 35 hours per week on average qualifies for full-time benefits, and has 5 full-time employees and 7 part-time employees, each of whom

works 25 hours a week, that provider would have 10 FTEs (5+[7 x 25= 175 divided by

35= 5]).

In some cases, the EIN of a parent company may be used to file employee tax reports for

multiple providers under multiple provider numbers. In that instance, it is acceptable to

consider only those staff, or staff hours worked for a particular provider (National

Provider Identifier (NPI)) to calculate the number of FTEs employed by that provider.

For example, ABC Health Care Company owns hospital, home health agency (HHA),

ambulatory surgical center (ASC), and durable medical equipment (DME) subsidiaries.

Some of those providers may bill A/B MACs or DME MACs. All have separate provider

numbers but the tax records for all employees are reported under the same EIN to the

IRS. There is a company policy that staff must work an average of 40 hours a week to

qualify for full time benefits.

Some of the same staff split hours between the hospital and the ASC, or between the

DME and HHA subsidiaries. To determine total FTEs by provider number, it is

acceptable to base the calculation on the number of hours each staff member contributes

to the support of each separate provider by provider number. First, each provider would

need to determine the number of staff who work on a full-time basis under a single

provider number only; do not count more than 40 hours a week for these employees.

Then each provider would need to determine the number of part-time hours a week

worked on average by all staff who furnished services for the provider on a less than full-time basis. Divide that total by 40 hours to determine their full-time equivalent total. If

certain staff members regularly work an average of 60 hours per week, but their time is

divided 50 hours to the hospital and 10 hours to the ASC, for FTE calculation purposes, it

is acceptable to consider the person as 1 FTE for the hospital and .25 FTE for the ASC.

In some cases, a single provider number and EIN may be assigned, but the entity’s

primary mission is not as a health care provider. For instance, a grocery store’s primary

role is the retail sale of groceries and ancillary items including over the counter

medications, but the grocery store has a small pharmacy section that provides

prescription drugs and some DME to Medicare beneficiaries. A large drug store has a

pharmacy department that supplies prescriptions and DME to Medicare beneficiaries but

most of the store’s revenue and most of their employees are not involved with

prescription drugs or DME and concentrate on non-related departments of the store, such

as film development, cosmetics, electronics, cleaning supplies, etc. A county government

uses the same EIN for all county employees but their health care provider services are

limited to furnishing of emergency medical care and ambulance transport to residents.

For FTE calculation purposes, it is acceptable to include only those staff members of the

grocery store, drug store, or county involved with or that support the provision of health

care in the FTE count when assessing whether a small provider waiver may apply.

Support staff who should be included in the FTE calculation in these instances include

but are not necessarily limited to those that restock the pharmacy or ambulance, order

supplies, maintain patient records, or provide billing and personnel services for the

pharmacy or emergency medical services department if under the same EIN, according to

the number of hours on average that each staff member contributes to the department that

furnishes the services or supplies for which the Medicare provider number was issued.

Providers that qualify as “small” automatically qualify for waiver of the requirement that

their claims be submitted to Medicare electronically. Those providers are encouraged to

submit their claims to Medicare electronically, but are not required to do so under the

law. Small providers may elect to submit some of their claims to Medicare

electronically, but not others. Submission of some claims electronically does not negate

their small provider status nor obligate them to submit all of their claims electronically.

In the event that a provider uses a clearinghouse or a billing agent to submit claims, it is

the number of FTEs on the provider’s staff, not those on the staff of the billing agent or

the clearinghouse, that determine whether the provider may be considered small for

Medicare paper claim submission purposes.