Cost Report 101 – It’s
Not Just for Accountants
Cost Report 101:
History of Transplant Related Legislation
1968 – Uniform
Anatomical Gift Act
(revised 2006)
1960s
1956 –
Social
Security
Act
1970s
1972 – Medicare
Benefits extended
to ESRD patients
1984 – NOTA
(revised
1988 &
1990) Final
rule 2000
1999 –
Medicare
coverage
for
pancreas
1991 –
Medicare
coverage
for liver
1990s
1980s
1987 –
Medicare
coverage
for heart
2007 Medicare
conditions of
coverage for
participation
for transplant
centers
1995 –
Medicare
coverage
for lung
2000s
2001 –
Medicare
coverage for
intestine
Cost Report 101:
CMS
Conditions of Participation
• Reimbursement
•
•
•
•
DRG
Cost report
Physician
What is the Medicare Cost Report and
Why does it exist?
• It
is how hospitals who serve Medicare
beneficiaries report costs to CMS
• It exists so that my friend who is a
Congressman and my nephew who is an
accountant always have jobs
What is the Medicare Cost Report and Why
does it exist??
(Real Answers)
• Established in 1965 with the Social Security Act
• Intended to pay hospitals for the cost of
providing services to Medicare beneficiaries
• Became less important when CMS adopted the
PPS method of reimbursement
• All Medicare participating hospitals submit
once a year (in general)
What is the Medicare Cost Report and Why
does it exist??
•
Establishes cost to charge ratio and wage index
Outlier payments
• PPS geographic adjustments
•
•
Enables hospitals to recover some costs
(settlement):
Medicare Bad Debts
• Critical Access Hospitals
• GME
• Disproportionate Share reimbursement
• AND organ acquisition costs on the D 6 Worksheet
• Medicare secondary payments
•
So what is this “pass-through” talk about ?
• Hospitals
“pass-through” their costs to
Medicare
• It also generally is meant that FULL COSTS are
reimbursed
• It does not really work this way for transplant
• Why? Because transplant costs are reimbursed
by way of a Standard Acquisition Charge or SAC
What is a Standard Acquisition Charge (SAC)
•
Not a charge representing the cost of a specific organ but a charge
that represents the AVERAGE cost associated with acquiring that
type of organ
•
All-inclusive (direct & indirect)
•
Includes physician services up to the admission to the hospital for
donation
•
Medicare settles with the transplant hospital for its share of the
costs
5
Standard Acquisition Charge
All organ-specific acquisition costs
# of organs transplanted
=
organ SAC for your institution
This is a COST not a CHARGE
The actual charge on the patient’s bill is usually marked
up (so this is a CHARGE not a COST)
6
WHAT? It is a called a charge but it is
really a cost?
I am confused!
• Join
the club….
• Remember the Cost Report establishes the Cost
to Charge Ratio – so the CHARGE is reduced to
cost with the ratio
WAIT? Don’t OPOs have a SAC also??
•
YES – and it works the same way
•
You record the OPO SAC on your
cost report
5
WAIT? What do I put on the Patient’s Bill?
Isn’t that a SAC also?
•
Well, yes but this SAC should be a charge
•
Your full cost plus mark-up
•
Medicare does not pay this but uses cost report to reimburse
hospital
•
Only relevant for “fee for services” or “discount off charges”
payors
5
So what kind of costs can I put on this cost
report?
•
•
Includes costs for acquisition of live donor and deceased donor
organs
Allowable transplant center organ acquisition costs include:
• Salaries of staff
• Rent associated with acquisition activities
• Procurement related costs – the OPO SAC
• Procurement related costs – your costs (transportation, etc)
• Evaluation testing - facilities fee and professional fees
• UNOS registration fees
• Tissue typing, including by an independent laboratory
• Costs associated with professional and patient education
(pre)
Transplant 101:
What’s MY Role?
• Allocate
costs correctly
• Separate
Cost Centers
• Disease Management vs. Evaluation
• Pre vs. Post transplant
• Assign
Costs to Recipients
• Reasonable Costs
• Special Considerations
• Time
studies
• Physician reimbursement
• Live Donors
How do the costs get to the Cost Report?
Acquisition Cost Center
OPO
EVALUATION
TESTING
SACs
Immunology
Testing
Cost Report
What’s MY Role? Allocating Costs
Cardiac
Catheterization
Now
WHERE
should this go?
Hepatitis
C
treatment
Vascular
Access
Care
TB
Treatment
Disease Management
Evaluation
testing
Procurement
Professional
fees
Cost report
What’s MY Role? Assigning Costs
This belongs
to
John Smith
OPO
EVALUATION
TESTING
SACs
Immunology
Testing
UNOS
Registry Fee
Cost Report
What’s MY Role? Reasonable Cost
• WHAT
does that mean?
• For costs incurred at your facility, it
means full cost as determined by
your cost report
• For costs that you pay others for on
behalf of your recipient, it is
whatever you paid
Generally, this is interpreted as
Medicare participating rate BUT not
necessarily
• Key is consistency
•
What’s MY Role? Reasonable Cost –
Physician Payments
Physician reimbursement:
• Reasonable
Cost
- Use hourly practice rate OR benchmark
(AAMC)
• Must be for evaluation services only
• Medical directors:
- Job description with evaluation duties
- Must report actual hours – time studies
• Evaluation services:
- Must be able to identify a specific service
given to a specific patient
-Examples: Selection Committee, patient
visits, consultation to RNs
• No provider services once recipient OR live
donor enter hospital for transplant event
What’s MY Role? Reasonable Cost
Accounts Payable – Payment policy
What’s MY Role? Salaries
•Time Studies
Name of PA:
Sunday
Month:
Monday
Tuesday
Wednesday
February
2006
Thursday
1
Acquisition
Hours: 0
Friday
2
Acquisition
Hours: 0
Saturday
3
Acquisition
Hours: 6
4
Acquisition
Hours:
Non-Acquisition
Non-Acquisition
Non-Acquisition
Non-Acquisition
Vasc Access Hours:
Vasc Access Hours:
5
Vasc Access Hours:
2
Vasc Access Hours:
TX Recipient
Surgery
Hours:
TX Recipient
Surgery
Hours:
TX Recipient
Surgery
Hours:
TX Recipient
Surgery
Hours:
Non-TX Surgery
Hours:
Non-TX Surgery
Hours: 3
Non-TX Surgery
Hours:
Non-TX Surgery
Hours:
Floor Coverage
Hours:
Floor Coverage
Hours:
Floor Coverage
Hours:
Floor Coverage
Hours:
What’s MY Role: Management Strategies
• Should
I record costs that are related to
recipients with commercial payors?
• Should payor mix be considered in overall cost
report strategy?
• What about KPD? How does that work?
What’s MY Role: Management Strategies
• Should
I record costs that are related to
recipients with commercial payors?
• YES!!!!!
• Medicare settles for their share of the
acquisition costs
• So if you ONLY record Medicare recipients'’
costs what is going to happen?
Little Pie
BIG Pie
What’s MY Role: Management Strategies
• Should
payor mix be considered in overall
cost report strategy?
What’s MY Role? Live Donors General
Principles
What’s MY Role? Live Donor
•
Donor Evaluation:
•
•
•
Donor Hospitalization:
•
•
•
•
Facility Costs – recipient center cost report
Professional Fees – recipient center cost report
Facility costs - recipient center cost report
Professional fees – recipient Medicare part B
Live donor transportation and housing not allowable
After Donation:
•
•
•
Routine follow-up
Complications must ALL be billed directly (NOT cost report)
Physician unchanged
What’s MY Role: Special Considerations in
KPD
Donor
Costs Can Be Recorded
in 2 ways
Standard
Acquisition
Charge
(SAC)
CMS preferred
Departmental
charges
What’s MY Role: Special Considerations in
KPD
Standard Acquisition Charge – PDE
All live donor costs (donor only NO recipient costs)
# of live kidneys successfully donated
=
live donor SAC for your institution
6
What’s MY Role: Special Considerations in
KPD
Advantages
of SAC

Disadvantages
of SAC
Maximizes CMS reimbursement

Provides for costs in pre-emptive,
not yet on Medicare

Eliminates questions of when
individual donor costs were incurred

Dilutes issues of multiple donors
for a single recipient, etc…

Can be transparent between
centers as soon as match is made (PDE)

Differences in overhead could cause
difficulties in PDE

How are “extra” costs treated
( i.e. recipient center requests
additional tests in PDE)?

Isolating donor costs may represent
new administrative processes
for some centers (PDE)
What’s MY Role: Special Considerations in
KPD
Departmental Charges
•
Itemized bill for costs associated with a specific
donor for a specific recipient can be billed to the
recipient transplant center
•
Transplant centers must bill SAC to Medicare or
third-party payors for organs acquired and
transplanted
9
What’s MY Role: Special Considerations in
KPD
Departmental Charges
SAMPLE INVOICE
Name: Sally Jones
Patient ID #: 99999999
Address: Any town, USA 99999
Transplant donor evaluation and acquisition services for recipient:
Name: Lucky O’Malley
HI #: 00000000
Address: Big Transplant Center, USA 99999
Tissue Typing
Chest X-ray
EKG
Chem 20
CBC
Operating room minutes, etc…
10
What’s MY Role: Special Considerations in
KPD
Advantages
of DC

Maximizes commercial
Reimbursement

Allows for exact costing of the
specific donor in PDE
Disadvantages
of DC

May reduce reimbursement
opportunities from Medicare

Adds complexity in determining
when/which donor costs should be
Included in PDE

Assigning overhead may represent
new administrative processes
for some centers (PDE)
I Don’t Believe You – Who else can I talk
to ?
CMS Reference Documents
•
Provider Reimbursement Manual
2771.A
•
Medicare Claim Processing Manual
Publication 100-04, Chapter 3,
Section 90.1.1 – 90.1.3
•
Program Memorandum 9-26-2003
3
Cost Report 101:
QUESTIONS?