Cost Report Audits, Auditors, Issues
and Group Discussion
HFMA Southern California
Education Session #3
February 21, 2013
Presented by - Judi Berry
J. Berry Consulting Services, Inc.
Topics for Discussion
 Wage Index
 DSH
 Bad Debts
 S-10
 Medi-Cal
 Other Items
J. Berry Consulting Services, Inc.
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Wage Index
 Wage Index – Requesting Payroll register if submitted excel
spreadsheet. Auditors were adjusting to payroll register and not
taking accruals into consideration.
 Wage Index - Sampling of Invoices – ask the auditors to do a
sample rather than letting them ask for all of the invoices.
 Timing of notifications and requested response times –many
auditors are sending letters to the providers that are received after
the requested due date. You need to contact them and get them
to set a new date they need the information.
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Wage Index
 Wage Index – Hours for Contracted Services – Dietary &
Cafeteria (success with some vendors to give this information.
Purchased Services – auditors requesting contracts when hours
are not on invoices.
 Wage Index – S-3, IV will be required for a tentative settlement
under T-4, but it was not required for filing on 11/30/2012.
Original instructions and structure of form made it look like they
wanted the benefits for contract labor, but what they want is
actually the total contract labor for the whole facility in column 1,
both allowable and non allowable, and in column 2 they want the
benefits by category in this column
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DSH
 DSH SSI% - 2006 and some 2007 NPRs have been issued. CMS was
holding the remaining NPRs while awaiting the Supreme Court
Decision. They are now beginning to issue the 2008 and later NPRs.
Be sure to appeal the SSI% to protect appeal rights. Can add to a
group later. Appeal inclusion of Medicare Managed Care Days, Dual
Eligible days, or accuracy of SSI data.
 DSH Eligible Days – requests for UBs and RAs. Also requesting TARs
– this is not needed for Code 1 patients, check audit workpapers
carefully.
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DSH
 DSH – Filing of cost report – include the paid days and the
estimated eligible days. This amount will be used in tentative
settlement and also used for rates for Medicare Managed Care.
Disclose in cover letter.
 DSH – Reopenings – Be sure to request reopenings for any cost
reports that were settled prior to the 13 month period for the
hospital to get the eligible day information from the State. Also,
you should file an appeal if you do not receive a notice of
reopening within the 180 day timeframe. This may be important
since we are changing to a new MAC, and things tend to get lost.
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Bad Debts
 Bad Debts – timeliness of billing, FCSO using arbitrary 60 days
after payment by Medicare. This may not take into account other
insurance, Medi-Cal eligibility, etc.
 Bad Debts – timeliness of write-offs. FCSO will accept the Med-
Cal RA date as write-off date, but must write-off the system. One
month is OK, but 1 year is not. Some auditors disallowing
anything over 30 days. Nothing in writing from FCSO, so it is
auditor dependent.
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Bad Debts
 Bad Debts – 10% reduction in MCal payments for Inpatients for the period
10/1/2010 – 4/7/2011. Regulations state that if not part of State Plan,
Medicare won’t pay. Need to appeal this. It will be a group appeal, but not
until they issue NPRs for 2010.
 Bad Debts – Share of Cost Computation
 Originally FCSO used 2% of unpaid cross-overs based on testimony in late 90s.
 Told by CMS they could not use the 2%, had to check each patient for SOC.
 FCSO is accepting the Aide codes as methodology for determining potential
share of cost. Some hospitals have SOC in their system.
 Problems – SOC not a static amount, SOC on admission may not be SOC on
discharge. Access to old records if looking after the fact can be a problem.
 Bad Debts – Moratorium – eliminated for cost reports beginning after October
1, 2012.
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S-10
 HIT reimbursement – Charity number used in calculation for
Medicare payment. Also, now a level 1 error to not fill in S-10.
 DSH Section 3133 – Uncompensated care amounts used for
amount and share of allocation? Be sure to separate insured vs.
uninsured charity.
 Bad Debts – Medicare Bad Debts are deducted from the bad debt
amount on S-10, so make sure you know if your GL bad debts are
net or gross of Medicare.
 Who will be auditing these amounts?
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Medi-Cal and Other
 Medi-Cal HIT reimbursement - Unlike Medicare, Medi-Cal used cost
report and OSHPD data to calculate the incentive payments. They do not
change based on future cost reports or OSHPD reports. Does anyone
know if these amounts will be audited subsequent to the computation?
 One auditor suggested that they may be auditing to insure that the HIT
amounts you received from DHCS was actually used for HIT
implementation. They say it is like auditing grant money. I disagreed with
that saying it was an incentive, not a grant. Any thoughts?
 Medi-Cal DRG simulated payment letter sent out 1/30/2013. No hospital
will get less than 50% of what they were previously receiving.
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Other
 Other Items -Any updates on when we will transfer from FCSO
(Palmetto GBA) to Noridian?
 Revenue and Expense matching for CCR for outlier calculations.
 Services between SNF and Residential – how to get correct data.
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