Presenter: William T. Cuppett, CPA. NAHC - October 20, Effective for cost reporting periods beginning on or
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- Bernice Stevens
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1 10/7/2014 How to Prepare Your Hospice for the Revised Cost Reporting Requirements (Part 2) Presenter: William T. Cuppett, CPA 1 Final Report Released Effective for cost reporting periods beginning on or after October 1, 2014 (freestanding providers only) Facility (provider) based hospice cost reports delayed pending design and comment period (will look like freestanding cost report) Guidance/Guidance/Transmittals/2014-Transmittals- Items/R1P243.html 2 1
2 10/7/2014 Key Issues Advance Preparation Three components to the cost report: o General service costs o Patient care costs o Non-reimbursable costs Chart of Accounts: o o General service costs and non-reimbursable costs; no requirements regarding the composition of those costs except that salaries and wages must be segregated from non-salary and wage expenses Patient care costs: Accounting records need to segregate costs by LOC (level of care) or Reclassifications of costs will be required in the accounting records or Reclassifications of costs will be required in the cost report Reclassifications will require the use of the best statistical information available. 3 General Issues Room and board revenue and expenses are separately reported Form 339 (Provider Reimbursement Questionnaire) eliminated pertinent questions built into the cost report itself Expansion of statistics: o Pharmacy charges o Square footage (detail will be needed) o Hours of patient care (allocation of nursing administration costs) o Contracted general inpatient and inpatient respite care days o Dollar value of equipment (depreciation expense plus operating lease expense) Definition? Most talked about: Level of Care reporting of patient care expenses 4 2
3 10/7/2014 Worksheet Summary Worksheet A Summary of all costs, reclassifications, and adjustments Worksheets A-1, A-2, A-3, A-4 (patient care service costs by level of care) Worksheet A-6 (reclassifications) Worksheet A-8 (adjustments to costs) Worksheets B and B-1 allocation of general service costs based on statistics i Worksheet C (new) costs by payor source Worksheets F Series (financial statements) 5 General Service Cost Centers General Service Cost Centers expanded from 6 cost centers to 16 cost centers: Capital related building Capital related - equipment Employee benefits Administrative - general Plant operations & maintenance Laundry and linen services Housekeeping Dietary Nursing administration Routine medical supplies Medical records Staff transportation Volunteer services coordination Pharmacy Physician administrative Patient/residential care 6 3
4 10/7/2014 Patient Care Cost Centers Inpatient care contracted Physician services Nurse practitioner Registered nurse LPN/LVN Physical therapy Occupational therapy Speech therapy Medical social services Spiritual counseling Dietary counseling Other counseling Aide and homemaker DME/Oxygen Patient transportation Imaging services Labs and diagnostics Medical supplies non routine Outpatient services Palliative radiation therapy Palliative chemotherapy 7 Non Reimbursable Cost Centers Bereavement program Residential care Volunteer program Advertising Fundraising Telehealth/telemonitoring Hospice/Palliative fellows Thrift store Palliative care program Nursing facility room and board Other physician services 8 4
5 10/7/2014 Sample for Planning Salaries and Wages REGISTERED NURSES If not costed by LOC all Salaries and Wages Continuous Care costs will be reported on Salaries and Wages Routine Home Care Worksheet A 2 and Salaries and Wages Inpatient Respite Care reclassified based on Salaries and Wages General Inpatient Care applicable patient days, General Supplies patient visits, or Contracted RN time records. Contracted RN Continuous Care General supplies will be reclassified based Contracted RN Routine Home Care Contracted RN Inpatient Respite Care on patient days regardless of ability to Contracted RN General Inpatient Care Auto Allowances Auto Allowances Continuous Care Auto Allowances Routine Home Care Auto Allowances Inpatient Respite Care Auto Allowances General Inpatient Care cost other costs by LOC. 9 Planning for Patient Care Service Costs 1. Allocated non-loc expenses in the accounting records based on statistic to be determined or 2. Reclassify non-loc expenses on Worksheet A-6 of the cost report based on statistic to be determined Example Nursing Home Team - inability to segregate respite care salaries and wages from routine home care in nursing homes (hospice will use respite care days/total of respite care and routine home care days in nursing homes to reclassify on the cost report) 10 5
6 10/7/2014 Reporting Inpatient/Residential Facility Costs Hospice cannot track, or it would be cost prohibited to patient care costs by LOC at freestanding inpatient facilities Staff and other costs of inpatient/residential facilities should be segregated in the accounting records. Initial reporting on Worksheet A-2 (general inpatient costs) or general service costs (Worksheet A) reclassification of patient care costs on Worksheet A-6 based on in-facility days: o Inpatient o Respite care o Routine 11 DME/Oxygen This cost center includes the costs of DME and Oxygen furnished to patients. Instructions provide that DME/Oxygen is to be costed based on the LOC of the patient when the DME/Oxygen is delivered. If the LOC changes, these costs can be reported proportionally based on routine home care and continuous care days. Our recommendation is generally to report on Worksheet A-2 and make a reclassification to Worksheet A-1 based on in-home patient days. 12 6
7 10/7/2014 Sample Cost Report Reclassifications The Hospice records all DME/Oxygen costs to routine home care costs. To reclassify a portion of DME/Oxygen costs to continuous care. o Routine home care days xxxxxxx o Continuous home care days xxxxxxx Total days xxxxxxx o Reclassification of applicable costs (A-1) xxxxxxx 13 Significant Level 1 Edits If patient days are reported for any Level of Care ( LOC ), costs must be reported on the applicable LOC worksheet (A-1, A-2, A-3, and A-4) and vice versa. Costs are required to be reported on Worksheet A for Employee Benefits, Administrative and General, Plant Operation & Maintenance, Volunteer Services Coordination, Pharmacy, Registered Nurses, Aides and Homemakers, DME/Oxygen, and Labs and Diagnostics. If contracted inpatient costs are reported, contracted days must be reported and vice versa. 14 7
8 10/7/2014 Square Footage Records Capital-related building, Plant Operation and Maintenance, and Housekeeping costs are allocated on the basis of square footage (Capitalrelated equipment separately discussed) o Using schematic or other source prepare detailed list of square footage o Each building should be segregated in the accounting records and square footage detail Sample follows 15 Square Footage Detail Room Dimensions Sq Feet Use Cost Center Cost Report Conference Room Administration Administration Physical Therapy Physical Therapy Nursing Admin Clergy Spiritual Counseling Nursing Admin Volunteers Volunteer Coord. Volunteer Coord Nursing Admin. Nursing Admin Nursing Admin Administrator Adminstrative Gen Adminstrative Gen Dir of Fundraising Fundraising Fundraising 16 8
9 10/7/2014 Patient Day Statistics Days by LOC by payor source In-facility days by LOC Contracted IP days Contracted respite care days Contracted routine home care days in nursing facilities 17 Capital Related Movable Equipment CMS We are retaining the proposed statistical basis of dollar value to allocate costs for Movable Equipment on Worksheets B and B-1. While that statistical basis is the recommended basis of allocation, if a more accurate result is obtained by allocating costs on an alternative basis (i.e. square feet), the hospice must request approval in accordance with CMS Pub. 15-1, chapter 23, We are not aware of any hospices using dollar value Consider request to change to square footage 18 9
10 10/7/2014 Plant Operation and Maintenance Plant operation and maintenance costs are allocated on the basis of square feet, which is fine. Potential problem Plant operation and maintenance costs are allocated after administrative-general costs. Administrativegeneral expenses will get no portion of Plant operation and maintenance expenses. Impact may be to over allocate expenses to nonreimbursable programs. Decision order of allocation change? 19 Volunteer Services Coordination Volunteer Services Coordination is allocated after Administrative and General Service costs These activities are allocated on the basis of direct volunteer hours. These are level of care hours. In-home hours will generally be treated as routine home care hours. Volunteer hour records are critical. Order of allocation potential problem (more so for taxexempts) o Volunteer hours focus on administrative activities, aides/homemakers/fundraising. o Too much expense may get charged to fundraising as a result of when these costs are allocated. Options: o o Order of allocation change Reclassification 20 10
11 10/7/2014 Tracking Volunteer Hours Activity Administrative and General Laundry and Linen Service Housekeeping Dietary Nursing Administration Medical Records Inpatient Facility Contracted Inpatient Facility Patient Residence Patient Support Bereavement Fundraising Palliative Care Program Marketing and Advertising Thrift Store Total Volunteer Hour Summary Hours 21 Volunteer Coordination Work Around Accumulate Volunteer Service Coordination costs on Worksheet A. Reclassify a portion of Volunteer Services Coordination costs to Administrative and General Service Costs based on volunteer hours. (salaries and other why?) This is an enhancement to cost finding. Allow remaining costs to be subjected to the regular allocation process as the Administrative and General component has already been removed
12 10/7/2014 Reclassification of Volunteer Coordination Volunteer Coordination Salaries and wages (Worksheet A, Column 1, Line 13) $ 80,000 Other (Worksheet A, Column 2, Line 13) $ 21,000 Total (Worksheet A, Column 3, Line 13) $101,000 Volunteer hours Administration 1,400 Other 2,900 4,300 Reclassification to Administration (Worksheet A 6) Salaries $ 26,047 Other $ 14,163 Total $ 40, Volunteer Hours Inpatient Volunteer hours provided in freestanding inpatient units need to be tracked These hours will be recomputed, unless tracked by level of care, based in in-facility days: o Inpatient o Respite o Routine home care 24 12
13 10/7/2014 Requests Change in order of allocation rules - 90 days before the end of cost reporting year (where the cost center would fall in the allocation process) Statistics rule 90 days before the end of cost reporting year (change in the recommended statistic, i.e.square feet) Recommended changes requested as soon as possible to be able to plan MAC has 60 days to respond or change is automatically approved (sample letter). 25 Basis of Allocation Medicare Administrative Contractor ( MAC ) ABC Hospice ( Hospice ), PTAN is a Medicare-certified hospice and is required to submit Hospice Cost & Data reports on an annual basis. The Hospice hereby requests, in accordance with CMS Pub. 15-1, Chapter 23, Paragraph 2313 to change the base for allocating Capital Movable Equipment costs on Worksheet B-1 from equipment dollar value to square feet. The revised Hospice Cost & Data Report (CMS ) is effective for cost reporting years beginning on or after October 1, The recommended statistic for the allocation of Capital Movable Equipment costs on Worksheet B-1 is equipment dollar value. The Hospice has not retained property and equipment records that would enable the Hospice to sufficiently accumulate and use equipment dollar value for purposes of causing an effective or accurate allocation of Capital Movable Equipment costs on Worksheet B-1. The Hospice s principal use of items of equipment is administrative and patient care related. Accordingly, ABC Hospice hereby requests the use of square feet on Worksheet B-1 as the statistical basis for the allocation of Capital-Movable equipment costs. Like other Medicare providers, i.e. home health agencies and hospitals, the use of square feet would cause these costs to be more appropriately allocated to reimbursable and non-reimbursable activities than poorly constructed records attempting to reflect equipment dollar value. This request for the alternative base for allocating Capital-Movable Equipment costs is requested for, and would be applicable to the cost reporting year beginning on January 1, 2015 and ending on December 31, The Hospice understands that upon approval the change will be effective for this year and subsequent years
14 10/7/2014 Order of Allocation Medicare Administrative Contractor ( MAC ) ABC Hospice ( Hospice ), PTAN is a Medicare-certified hospice and is required to submit Hospice Cost & Data reports on an annual basis. The Hospice hereby requests, in accordance with CMS Pub. 15-1, Chapter 23, Paragraph 2313 to change the order in which cost centers are allocated on Worksheets B and B-1 on its Hospice Cost & Data Report effective for the cost reporting year beginning on January 1, The revised Hospice Cost & Data Report (CMS ) is effective for cost reporting years beginning on or after October 1, The cost center, Plant Operation and Maintenance, is allocated immediately after the allocation of Administrative and General Costs. This allocation of Plant Operation and Maintenance costs is made on square feet. The majority of Plant Operation and Maintenance costs relate to square footage used for administrative activities. Accordingly allocating Plant Operation and Maintenance costs subsequent to the allocation of Administrative and General costs would significantly distort the allocation of these facility related costs. The Hospice hereby requests that effective for cost report periods beginning on or after January 1, 2015 that Plant Operations and Maintenance costs be allocated immediately prior to the allocation of Administrative and General costs. This change in the order or allocation of costs on Worksheet B significantly enhances the quality of the financial information reported in the Hospice Cost & Data Report of ABC Hospice. 27 Allocation of Administration to Contracted Inpatient Costs When the hospice contracts for general inpatient or inpatient respite care, the amount of the contracted payment is used to reduce the accumulated cost statistic on Worksheet B-1, column 4A, line 52 or 53. The impact is to reduce the amount of administrative-general costs that will be allocated to contracted general inpatient and respite care costs (important based on rate setting)
15 10/7/2014 Order of Allocation Medicare Administrative Contractor ( MAC ) ABC Hospice ( Hospice ), PTAN is a Medicare-certified hospice and is required to submit Hospice Cost & Data reports on an annual basis. The Hospice hereby requests, in accordance with CMS Pub. 15-1, Chapter 23, Paragraph 2313 to change the order in which cost centers are allocated on Worksheets B and B-1 on its Hospice Cost & Data Report effective for the cost reporting year beginning on January 1, The revised Hospice Cost & Data Report (CMS ) is effective for cost reporting years beginning on or after October 1, The cost center, Volunteer Services Coordination, is allocated after the allocation of Administrative and General Costs. This allocation of Volunteer Services Coordination costs is made on the basis of volunteer hours. A substantial portion of the volunteer hours are provided in support of administrative activities of the Hospice. Accordingly allocating Volunteer Services Coordination costs subsequent to the allocation of Administrative and General costs would significantly distort the allocation of these costs. The Hospice hereby requests that effective for cost report periods beginning g on or after January 1, 2015 that Volunteer Services Coordination costs be allocated immediately prior to the allocation of Administrative and General costs. This change in the order of allocation of costs on Worksheet B significantly enhances the quality of the financial information reported in the Hospice Cost & Data Report of ABC Hospice. 29 Pharmacy Costs Pharmacy costs remain as a General Service Cost Center rather than a Patient Service Cost Center Pharmacy costs are allocated on the basis of charges: o Routine home care o Continuous care o Inpatient respite care o General inpatient care o Non-reimbursable activities (palliative care) o Unrelated to terminal illness (non-reimbursable, can be removed as expense adjustments) Do you have charges (standard charges by level of care? If so, you can use this statistic) 30 15
16 10/7/2014 Pharmacy Costs Do you have a per-diem contract? If so, you can use the contract to identify the cost by level of care (Patient Days). Costs can be substituted for charges (gross-up) or you can possibly reclassify these costs to Other Patient Care Services by LOC on Worksheet A-6 to A-1, A-2, A-3, and A-4 Otherwise, you will need a new statistic 31 Pharmacy Statistical Basis (All or Part) Medicare Administrative Contractor ( MAC ) ABC Hospice ( Hospice ), PTAN is a Medicare-certified hospice and is required to submit Hospice Cost & Data reports on an annual basis. The Hospice hereby requests, in accordance with CMS Pub. 15-1, Chapter 23, Paragraph 2313 to change the base for allocating Pharmacy costs on Worksheet B-1 from charges to patient days. The revised Hospice Cost & Data Report (CMS ) is effective for cost reporting years beginning on or after October 1, The recommended statistic for the allocation of Pharmacy costs on Worksheet B-1 is charges. The Hospice has not established a charge structure encompassing all hospice pharmacy charges and charges for all payors. Accordingly the current charge structure and charge records are insufficient to enable the Hospice to sufficiently accumulate and use charges for purposes of causing an effective or accurate allocation of Pharmacy costs on Worksheet B-1. ABC Hospice hereby requests the use of patient days on Worksheet B-1 as the statistical basis for the allocation of Pharmacy costs. Many hospices incur pharmacy charges on a per-diem basis and report their costs accordingly. The use of patient days would cause these costs to be more appropriately allocated than incomplete pharmacy charges and consistent with many providers being billed on a per-diem basis by pharmacy suppliers. This request for the alternative base for allocating Pharmacy costs is requested for, and would be applicable to the cost reporting year beginning on January 1, 2015 and ending on December 31, The Hospice understands that upon approval the change will be effective for the requested year and subsequent years
17 10/7/2014 Nursing Administration Supervised hours is the statistic to be used to allocate Nursing Administration costs. These are LOC hours. If hours can be accumulated for all disciplines by level of care, nothing else required. If not, supporting schedule can be developed: o Salaries and wages (A-1, A-2, A-3, A-4) o Average rate per-hour used to estimate hours, which then becomes the statistic (Average rate from year-to-date payroll registers) 33 Conversion of Salaries to Hours Salaries Salaries Salaries Salaries A 1 A 2 A 3 A 4 Registered Nurses $ 12,000 $850,000 $ 2,500 $ 35,000 Aides $ 1,000 $ 95,000 $ 1,000 $ 6,000 Wage Rate Registered Nurses $ 35 $ 35 $ 35 $ 35 Aides $ 13 $ 13 $ 13 $ 13 Computed Hours Registered Nurses , ,000 Aides 77 7,
18 10/7/2014 Correction Requested for Housekeeping Costs The Health Group, LLC requested CMS make a technical correction to the revised Hospice Cost & Data Report. This technical correction would allow for Housekeeping costs to be allocated to Patient/Residential Services, which are subsequently allocated based on in-facility patient days. The final Cost Report currently requires Housekeeping costs to be allocated on the basis of square feet directly to Level of Care. Square feet are not available based on Level of Care. This represents a minor technical change involving opening up a field on the Cost Report which is currently unavailable. CMS has already indicated that they will be making this change in Transmittal #2. 35 Combining Requests If requests are combined can it be rejected in total? Partially? Recommendation: o Request statistics separately each request should stand on its own remember requests must improve cost finding. o o Request change in order together. The order of allocation request should support each of the respective changes. Request at the earliest possible opportunity in order to be prepared at the beginning of your cost reporting year
19 10/7/2014 Direct Assignment of General Service Costs The costs of a general service cost center need to be allocated to the cost centers receiving service from that cost center. CMS Pub 15, Paragraph 2307 Direct Assignment of General Service Costs o Written request no later than 90 days prior to the beginning of the cost reporting period for which the change is to apply. 37 Direct Assignment of Cost Statistics may not be used. All applicable costs must be direct costed. Example, Salaries paid to housekeeping based on time records maintained continuously. Example, depreciation on equipment physically present or used in each of the cost centers. Example, laundry and linen costs based on invoices identifying each benefitting cost center
20 10/7/2014 Direct Assignment to Provider Components The direct assignment of costs of a general service cost center by subdividing the cost center, i.e. two buildings of differing ages and depreciation. Additional general service cost centers or supporting worksheets. Where applicable multiple facilities? Where applicable inexpensive non-reimbursable facilities? 39 Multiple Inpatient Units Direct Assignment of Costs-Multiple Inpatient Units o Request Additional General Service Cost Centers for Line 17: Inpatient Facility 1 Inpatient Facility 2 Inpatient Facility 3 o Allocation of costs would be based on in-facility days for each of the Inpatient Facilities 40 20
21 10/7/2014 Inherent Costing Problems Pharmacy costs may not include all pharmacy costs (pharmacy in hospice may be part of contract); care in the use of days Similar problems with DME, oxygen, and other ancillary services. You cannot direct cost any inpatient facility costs without being creative or requesting direct assignment of costs. Line 17 could be very helpful if opened on Worksheet A. Can you direct cost facility-related expenses to nonreimbursable cost centers? Yes and no; however, can improve cost finding especially for tax-exempts. Watch square footage if this is attempted. 41 Remember Chart of Accounts review with cost report preparer (others with other reporting responsibility). Identify reclassifications of costs to be made (plan) Request statistic changes (ASAP but upon careful consideration) Request change in order of allocation (ASAP but upon careful consideration) Direct Assignment of Costs (when, with careful consideration) some providers (September 30 yearends are already late). File approvals or request (no approval received) with initial applicable cost report filing. Do not want a cost report rejection
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