Transcript Health Care Board Presentation template

{Breathe easy.}
Hospital Cost Report Update and Review Strategies
Introduction
Chris Walski
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Healthcare Consulting Manager
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Healthcare Reimbursement
Consulting and Compliance
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[email protected]
Learning Objectives
The following presentation will focus on cost reporting
updates and strategies focusing on PPS hospitals:
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Critical Access Hospitals
Trial Balance Review and Mapping
Hospital Wage Index
Low Volume Adjustment
Medicare Dependent Hospital
Medical Education
Disproportionate Share Hospital (DSH)
Cost Reimbursed Cost Centers
Medicare Bad Debt Reimbursement
HIT Reimbursement
Sequestration
Potential Protested Items
Analytics
Other General Suggestions
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Critical Access Hospitals
DISCLAIMER - The following presentation will focus on PPS hospitals. For
CAH hospitals, the majority of the cost report amounts, statistics and
allocations have a direct impact on reimbursement. All of these areas
should be reviewed for accuracy and to ensure that the hospital is
optimizing reimbursement.
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Trial Balance Review and
Mapping
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Trial balance mapping is usually the first step in ensuring consistency
across the cost report
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Proper mapping can ensure that all cost center expenses are mapped
consistently with related revenue
Reviewer Notes:
• Ensure all departments (especially new departments) are properly
classified on the cost report as either provider based or nonprovider based. This is especially important for hospitals
participating in the 340B Drug Discount Program.
• With any new departments, ensure that the B-1 statistics are updated
to ensure these departments are appropriately allocated overhead.
• Map accounts to avoid unneeded reclassifications
• Ensure the preparer has a clear understanding of the hospital’s
account structure to ensure that expenses are consistently mapped
with the related revenue.
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Wage Index
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No major changes to the cost report wage index forms.
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Intermediaries have requested more supporting documentation than
they have in the past.
Reviewer Notes:
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Ensure supporting workpapers are well organized and easy to
follow
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List all contract labor by invoice and be prepared to provide
support
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Review Defined Benefit Pension Plan calculation to ensure it
complies with current regulations
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Review the allocation of wage related costs. Consider
specifically allocating or allocating based on FTEs instead of
using gross salaries
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Medicare Low Volume
Adjustment
• The ACA loosened the criteria for a hospital to be eligible to receive
a low volume add-on to their Medicare IP Reimbursement. This was
extended through September 30, 2013.
• The 2014 IPPS final rule reverted back to the more strict criteria
• The Bipartisan Budget Act of 2013 extends the loosened criteria
through April 1, 2014.
• Applies to hospitals with 1,600 or less total discharges. Total benefit
is up to 25% (hospitals with less than 200 discharges).
Reviewer Notes:
• Review manual workpapers or software worksheets to
ensure proper split based the federal fiscal year
• Review add-on rates to ensure they agree to the final
rule supporting table
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Medicare Low Volume
Adjustment
• IPPS Final Rule Table 14
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Medicare Dependent Hospital
Status
• The MDH program had been extended through September
30, 2013
• The 2014 final rule did not extend the program
• The Bipartisan Budget Act of 2013 extends the program
through April 1, 2014.
Reviewer Notes:
• Review the hospital specific amount reported in the
cost report ensuring you are using an updated
hospital specific rate
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Medical Education
• Medicare reimburses hospitals for the direct cost of providing
medical education through Direct Graduate Medical Education
(DGME) and for the indirect costs of providing education through
Indirect Medical Education (IME) reimbursement.
• Effective with the 2014 Final Rule, Medicare is including labor and
delivery days in the Medicare share to determine DGME costs. This
change in policy will reduce payments to hospitals.
Reviewer Notes:
• Ensure that Medicare Advantage days are properly reflected on
worksheet S-3 Part I. This may also entail reviewing the PS&R
Report Type 118 to ensure all shadow billed claims are
reflected
• Review allowable I&R FTEs, I&R FTE Caps and Per Resident
Amounts
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Disproportionate Share
• CMS is required by the ACA to reduce hospital DSH payments
based on the expectation that there will be a smaller uninsured
population
• Based on the 2014 final rule:
• Hospitals will receive 25% of the DSH amount calculated under the
original methodology
• The remaining 75% under the original calculation will be pooled
with other hospitals receiving DSH. The total pool will be reduced
by the estimated reduction of uninsured (factor of .943 for 2014)
and then redistributed back out to the hospitals based on their
relative level of uncompensated care
• Under final rule, although the intent is to use S-10 of the cost report
to determine uncompensated care in the future, the 2014 final rule
will use Medicaid plus Medicare SSI days to redistribute the pool
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Disproportionate Share (Con’t)
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Distributing funding dedicated to uncompensated
care payment:
Use low-income patient days as proxy
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Medicaid days and Medicare SSI days
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Numerators of current DSH % calculation
CMS may use cost report worksheet S-10 in future years
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CMS cites unreliable data as hospitals still are not
consistent in reporting bad debt and charity care in
terms of hospitals costs (% of charges) vs. payment
from government or other payors. Therefore, the S-10
will not be used for 2014
Calculate uncompensated care payment factor
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Hospital's low-income patient days relative to all DSH
hospital low-income patient days
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Disproportionate Share (Con’t)
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IPPS Final Rule Table
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Disproportionate Share (Con’t)
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Illustration of the DSH Impact
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Disproportionate Share (Con’t)
Reviewer Notes:
• Ensure the cost report appropriately splits between
the traditional methodology and the revised
methodology
• Ensure the hospital is continuing to identify additional
Medicaid eligible days
• Review the data reflected on S-10 to ensure that it is
accurate as this will likely be used in the future for
distribution of the 75% pool
• Ensure that the DSH reimbursement is calculated for
all PPS hospitals for each year. Hospitals that have
historically not qualified may qualify in the current
year
• Review the calculation for 340B Drug Program benefit
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Cost Based Reimbursed Cost
Centers
• In a PPS hospital, there may be cost centers that are cost based
reimbursed (such as RHC or FQHCs)
• Proper allocation of cost to these cost centers is important.
Reviewer Notes:
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Review B-1 statistics to ensure the hospital is using the most
beneficial statistics to optimize reimbursement. Ensure that this is
reviewed ensuring the hospital is keeping in mind any potential
caps on reimbursement as well as the impact of changes on other
areas of reimbursement (such as Medicaid or commercial rate
setting)
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Review the factors that feed into the calculation of reimbursement
to ensure they are proper
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Consider the potential to group separate cost centers (such as
separate RHCs) to increase reimbursement
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Medicare Bad Debt
Reimbursement
• Medicare bad debt reimbursement will decrease from 70% to 65% for
hospitals whose cost reporting period begins in the 2013 federal fiscal
year.
• The intermediaries are very particular on the format of the bad debts that
are submitted.
Reviewer Notes:
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Review the requirements for submitting bad debts and ensure all
necessary fields are complete before filing
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Review the listing and ensure all bad debt that can be claimed is
captured. This includes bad debt related to Medicare Advantage as
well as non-crossover bad debt
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Medicare Bad Debt
Reimbursement
• Medicare bad debt reimbursement will decrease from 70% to 65% for
hospitals whose cost reporting period begins in the 2013 federal fiscal
year.
• The intermediaries are very particular on the format of the bad debts that
are submitted.
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HIT Reimbursement
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The rules are fairly complex regarding the cost report that is used for HIT
reimbursement.
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Generally speaking, a hospital would follow these steps to determine
which cost report to use for the Year 1 payment:
• Determine the ending date of the attestation of the 90 day Stage 1
Period
• Determine in which federal fiscal year the date above falls
• Use the cost report that begins in the federal fiscal year above as the
Year 1 cost report period
• The calculation is based on an “Initial Amount” that is $2 million plus an
adjustment for hospitals with at least 1,150 discharges. The hospital
gets the “Medicare Share” of his amount times a transition factor.
• Ensure that the interim payments received are reflected on the proper
cost report to calculate an accurate settlement.
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HIT Reimbursement
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Meaningful Use Timeline
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HIT Reimbursement
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Initial Amount Table
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HIT Reimbursement
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Transition Factor Table
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HIT Reimbursement
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Cost Report Worksheet S-2, Part I
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Cost Report Worksheet E-1, Part II
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HIT Reimbursement
Reviewer Notes:
• Ensure that Medicare and Medicare Advantage days are properly
reflected on S-3, Part I
• Ensure that Charity Care gross charges on S-10 reflect the gross
patient responsible portion and not just the charity care write-off
• Obtain copies of all related attestations to ensure proper reporting
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Sequestration
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2% cut was applied to Medicare payments beginning for dates of
service on/after April 1, 2013
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The 2% reduction is after coinsurance and deductibles
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This has been incorporated as an automatic calculation within
the cost report for most (but not all) settlement worksheets.
Reviewer Notes:
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Review each settlement worksheet, including subunits to
ensure this is properly reflected
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Since the PS&R amount is based on a per claim basis and
the automatic calculation within the cost report is based on
days, there will likely be at least a small settlement
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Potential Protested Items
• Two Overnight Rule Related Rate Adjustment
o CMS clarified that generally when a physician expects a
beneficiary to require care that spans two midnights and admits a
beneficiary based on that expectation, payment under Medicare
Part A is appropriate. If less than two midnights, than payment
under Part A is generally inappropriate. CMS implemented a .2%
reduction based on the expected additional expenditures under
this policy change.
• Sequestration Implementation
o Legislation indicates that the sequestration should be made
related to payments for services after April 1, 2013. The
implementation of the rule within the cost report is not based on
actual date of services, but is instead prorated based on days.
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Analytics
• Analytics can be powerful tools in the review process to ensure accuracy
and consistency
• Properly designed analytics should have the following elements
• Easy to update
• Compare current year data with multiple years
• Summarize only the key elements within the cost report
• Be tailored to include all significant elements of reimbursement
including subunits
• Analytics can also be used to compare hospital data to others in their peer
group.
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Analytics (Example)
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Other General Suggestions
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Review the process of compiling information and ensure that the most
efficient and accurate method is utilized
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Analyze the templates used to document the support for amounts. Look
for ways to link data to ensure consistency within the cost report and
reduce the likelihood for potential errors
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When possible, have other people review the cost reports for accuracy
and potential areas to optimize reimbursement
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Always keep in mind external impacts of the Medicare cost report such
as for Medicaid, Commercial payor rate setting, 340B, or other programs
under Medicare (Such as Low Volume Payment Adjustment).
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The review of subsequent settlements and comparison to the filed cost
report is very important
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Make sure to understand the drivers behind each type of reimbursement
to ensure the hospital is getting the most benefit they can under the
program
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Thank you!
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