Making Sense (Not Cents) of Your Cost Report

Transcription

1 Making Sense (Not Cents) of Your Cost Report Presented by Mike Trostel, CPA Director, Healthcare Advisory Services October 27, 2016

2 Questions We ll Address Why is the cost report important? Why are there different cost reports? What do I need to know is in it? How can I identify a problem area? Where can I find [fill in the blank]? 2

3 Why Is the Cost Report Important? Still some cost report settlement for critical access hospital (CAH) and some prospective payment system (PPS) programs Federal compliance: must be filed yearly within 150 days of cost reporting period end (5/31 for 12/31 period ends) Data used by the Medicare Payment Advisory Commission (MedPAC) to set diagnosis-related group (DRG), ambulatory payment classification (APC), and outlier payment rates Determine wage index rates worksheet S-3, part III Worksheet S-10 will be used more heavily starting in 2018 for the Medicare disproportionate share hospital /uncompensated care (DSH/UC) calculation Main source of statistical and financial hospital data used by Centers for Medicare & Medicaid Services (CMS) State Medicaid programs may use cost data for DSH/upper payment limit (UPL) calculations Payment trend is moving towards quality and cost indicators 3

4 Why Are There Different Cost Reports? The cost report takes into consideration different payment methodologies On the inpatient side, there are differences between Inpatient Prospective Payment System (IPPS) IPPS with Sole Community Hospital (SCH) or Medicare Dependent Hospital (MDH) CAH On the outpatient side, there are differences between IPPS CAH There are program differences between Medicare Part A Medicare Part B 4

5 Medicare Inpatient Reimbursement Methodology IPPS DRG CAH Cost Based Interim Payments DRG Per Diem Cost Report Settlement Bad Debts, DSH Bad Debts, All Costs 5

6 Medicare Outpatient IPPS CAH Reimbursement Methodology Interim Payments Cost Report Settlement Outpatient APC Cost Based Clinical Lab / Therapies Outpatient Clinical Lab / Therapies Outpatient Clinical Lab / Therapies Fee Schedule APC Fee Schedule Bad Debts No Cost Based Percentage of Charges Percentage of Charges Bad Debts, All Costs YES 6

7 Medicare Parts A and B Coverage Medicare Part A Medicare Part B Hospital Based Outpatient Physician Inpatient Services Services Clinic Services Services Routine Services IP Ancillary Services Outpatient Services On/Off Site Clinics Clinics & MD Offices Medicare Part A Intermediary-Novitas Medicare Pt B Carrier-Novitas Medicare Cost Reports-UB Bills 1500 Bills Cost Report Part A Settlement Cost Report Part B Settlement 7

8 What Do I Need to Know Is in It? The first thing you need to know is that it is very important to report accurate data Your cost report is public information It is there to be seen Costs Direct costs worksheet A Allocated costs worksheet B, part I Per diem = nursing areas (worksheet D-1) Total cost/total days Calculated for routine, ICU, sub-providers, etc. 8

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11 What Do I Need to Know Is in It? (Continued) Cost-to-charge ratio (CCR) ancillary and outpatient areas Total cost/gross revenue Calculated for each CMS cost center E.g., Lab, MRI, Radiology, Surgery, Supplies, Clinic 11

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13 What Do I Need to Know Is in It? (Continued) Days and discharges worksheet S-2 (Medicaid days used in the DSH calculation) and S-3, part I Wage index information worksheet S-3, parts II and III Uncompensated care worksheet S-10 Financial information Balance sheet worksheet G Income statement worksheet G-3 13

14 Days Worksheet S-2 Worksheet S-2 14

15 Days Worksheet S-3 15

16 Wage Index Worksheet S-3 Part III 16

17 Uncompensated Care Worksheet S-10 17

18 Balance Sheet Worksheet G 18

19 Income Statement Worksheet G-3 19

20 What Do I Need to Know Is in It? (Continued) Settlement amounts Inpatient PPS worksheet E, part A Outpatient PPS worksheet E, part B Swing Beds worksheet E-2 Critical Access worksheet E, part V Home Health H Series worksheets Rural Health Clinic M Series worksheets 20

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26 How Can I Identify a Problem Area? First and most obvious, look at the first page of the cost report. Is there a large payable or receivable that was unexpected? If so, determine which program it is, e.g., I/P, O/P, etc. Next go to the relevant worksheet as noted above and look for potential flags. Note: One thing I do is create a settlement summary that shows where the settlement differences are. Usual suspects are bad debts, DSH, hospital-specific payments for SCH and MDH, costs for CAH, low volume payments, health information technology (HIT) 26

27 Settlement Page Worksheet S 27

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29 How Can I Identify a Problem Area? (Continued) Cost settlement problems can come from several areas Look at cost-to-charge ratios and compare to prior year (PY) Identify the anomalies and determine the source costs or charges Cost variances Lower cost than PY check worksheet A and cost per diem /day fluctuations A-6 reclasses check for PY consistency A-8 adjustments check for PY consistency B-1 cost allocations check for any changes from PY 29

30 How Can I Identify a Problem Area? (Continued) Charge variances Did charges increase or decrease? Are charges being grouped to the same cost report line as costs? Are charge codes all on the same CR line? Other areas of caution Medicaid days reported on worksheet S-2? Impacts DSH Medicare HMO days reported on worksheet S-3, part I? Impacts HIT 30

31 How Can I Identify a Problem Area? (Continued) Wage index Does your average hourly wage (AHW) look reasonable? There are several areas of input that can impact this. The impact of a lower AHW may not show up on the current year (CY) cost report but will impact your future payments. Home Health Agency (HHA) and Rural Health Clinic (RHC) cost per visit impact certain hospitals You should look at this and verify reasonableness For HHA, CPV is found on Worksheet H-3 For RHC, CPV is found on M-3 31

32 Where Can I Find.? Where in the cost report do I find this? Here are a couple reminders Non-allowable cost A-8 Physician-allowable cost A-8-2 Square footage B-1 Some others from before?????? 32

33 Mike Trostel, CPA Direct: Cell: Any advice or information in the body of this presentation is subject to, and limited by, the terms in the applicable engagement letter or statement of work, including provisions regarding tax advice. LaPorte is not responsible for, and no person should rely upon, any advice or information in the body of this presentation unless such advice or information relates to services contemplated by an engagement letter or statement of work in effect between such person and LaPorte. 33