Reconciliation of Wrap Payments

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@aafcpa.com; Courtney McFarland, CPA, MSA at 774.512.4051, cmcfarland@aafcpa.com; or your AAFCPAs Partner.