Advanced Medicare Cost Reporting
Mike Nichols
Managing Director
Chad Krcil
Director
Mike Nichols
• 28+ years of Healthcare Experience
-
Cost Reporting (auditing, preparing, reviewing)
Contractual Allowance and Settlement Analysis Determinations
Reimbursement Opportunities and Strategies
• RSM McGladrey
–
Healthcare Advisory Services
-
Managing Director (consulting partner)
Regulatory Reporting and Recovery Service Line
Great Lakes Health Care Consulting Leader
• Healthcare Financial Management Association
-
First Illinois HFMA Chapter
Past Chapter President
Advanced Member (FHFMA)
2
Chad Krcil
• 18+ years of Healthcare Experience
-
Cost Reporting
Contractual Allowance and Settlement Analysis Determinations
Reimbursement Strategies for all provider types and sizes
• RSM McGladrey
–
Healthcare Advisory Services Consulting Practice
-
Director
Regulatory Reporting
Quality Assurance Reviewer
• Healthcare Financial Management Association
-
Colorado HFMA Chapter
Reimbursement Committee
3
Synopsis
1. PPS Hospital Medicare Margin Calculation
2. Cost Report Update
3. Charity Care Connection to Cost Report
4
What is the Hospital’s Medicare
Margin?
5
Medicare Margin Analysis:
General Definitions
• Margin/(Deficit)
Reimbursement > Cost: Margin
Reimbursement < Cost: (Deficit)
6
Medicare Margin Analysis
• Comparison of Medicare Cost Report Information
– Charges
– Medicare Defined Fully Allocated Cost
– Reimbursement
• Reports
– Contractual Allowance
– Margin or Deficit
• High Level Executive Summary
– Senior Financial Executives
– Corporate Governance
– Education
7
Health System
FPE 2009
Consolidated Medicare Reimbursement and Cost Analysis
2009 As-Filed Cost Reports Analysis
Charges
Inpatient Acute
Cost
Reimb.
616,550,535 145,525,197 140,859,190
Margin
Contractual
(Deficit)
Allowance
Reimb % Contractual
of Charges % Charges
(4,666,007)
475,691,345
22.85%
77.15%
Inpatient Capital
0
15,391,642
13,572,904
(1,818,738)
(13,572,904)
2.20%
0.00%
IME
0
0
39,327,677
39,327,677
(39,327,677)
6.38%
0.00%
G M E (@ load factor)
0
28,921,536
16,679,163 (12,242,373)
(16,679,163)
2.71%
0.00%
Disproportionate Share
0
0
6,149,953
6,149,953
(6,149,953)
1.00%
0.00%
Nursing/Allied Health (full cost)
0
3,581,266
3,618,851
37,585
(3,618,851)
0.59%
0.00%
Psych Unit(PPS)
9,592,774
3,678,606
3,565,192
(113,414)
6,027,582
37.17%
62.83%
Rehab Unit(PPS)
18,575,675
7,739,996
7,334,156
(405,840)
11,241,519
39.48%
60.52%
Outpatient ( in cost report)
168,711,400
35,020,894
32,262,704
(2,758,190)
136,448,696
19.12%
80.88%
Home Health
Total
3,591,516
1,934,208
1,992,597
817,021,900 241,793,345 265,362,387
58,389
23,569,042
1,598,919
551,659,513
55.48%
32.48%
44.52%
67.52%
8
Health System
FPE 2009
Consolidated Medicare Reimbursement and Cost Analysis
2009 As-Filed Cost Reports Analysis
Managed Care IME included above:
20,518,627
Managed Care GME included above:
7,999,834
Manage Care Nursing & Allied Health included above:
2,131,963
Total Managed Care Impact on Medicare Margin
Load Factor Impact on Margin
30,650,424
Full
Load Factor
Net
61,873,887 28,921,536 32,952,351
7,196,585 3,581,266 3,615,319
Total
69,070,472
32,502,802 36,567,670
9
Area Hospital
FYE 2009
Medicare Reimbursement and Cost Analysis
Days/
visits
Inpatient Acute (w MDH)
4,680
Charges
12,240,950
Cost
6,762,261
Reimb.
Margin
(Deficit)
Contractual
Allowance
Reimb %
of Charges
Contractual
% Charges
Cost/Charge
Ratio
6,194,943
(567,318)
6,046,007
50.61%
49.39%
625,033
625,033
(625,033)
5.11%
-5.11%
392,940
489,978
97,038
(489,978)
4.00%
-4.00%
772,131
506,434
453,657
(52,777)
318,474
58.75%
41.25%
65.59%
Outpatient (PPS)
7,962,477
2,963,791
2,331,457
(632,334)
5,631,020
29.28%
70.72%
37.22%
Fee Screen Amounts
2,641,392
843,412
464,020
(379,392)
2,177,372
17.57%
82.43%
31.93%
Disproportionate Share
Inpatient Capital
Psychiatric Unit(PPS)
601
55.24%
Home Health (PPS)
2,182
323,408
369,018
271,576
(97,442)
51,832
83.97%
16.03%
114.10%
Swing Bed services
1,279
1,854,556
1,158,843
410,137
(748,706)
1,444,419
22.12%
77.88%
62.49%
343
729,921
781,180
576,865
(204,315)
153,056
79.03%
20.97%
107.02%
26,524,835
13,777,879
11,817,666
(1,960,213)
14,707,169
44.55%
55.45%
51.94%
Rehab Unit (full year PPS)
Total
Inpatient:
DRG
Outlier
Medicare Dependent Hospital
Total
5,975,455
464
219,024
6,194,943
10
Great Question:
(The Answer)
• Understanding the key reimbursement drivers will
identify many potential opportunities
• Asking the right questions will create a strategy
for implementing change
• Communicating results to constituencies will
influence their behavior and thought process
11
What opportunities exist to (legally)
improve the hospital’s Medicare
margin?
• Cost
• Pricing Strategy
• Reimbursement Opportunities
12
Patient Days: Medicaid Fraction
•
Medicare’s long standing policy is to count both Medicaid & Total days based on
discharge date, but realize Medicaid data from States comes in varied formats
•
FFY 2010: – Utilize 3 diff methodologies for Medicaid days in the Numerator: date of
admission, date of discharge, & dates of service.
•
Effective for CR periods beginning on/after 10/01/2009
•
Hospital would have to notify their FI\MAC in writing 30 days prior to the cost
reporting period it is to apply if they wish to change their methodology
•
If Hospital changes its methodology, CMS has the authority to adjust for “double
counting” in subsequent periods
•
CMS would expect changes between years to be “rare”
13
Patient Days: Labor Room Days
•
Medicare’s long standing policy is to exclude L&D days from both Medicaid
& Total Days
•
FFY 2010 Inpatient Rule – include in DSH calc L&D days in both Medicaid
& Total Days effective for CR periods beginning on\after 10/01/2009
•
LRDs generally payable under IPPS; Therefore, days SHOULD be counted
in DPP once the patient has been admitted as an inpatient:
•
May be considered in settling prior year cost reports or other “open” cost
reporting periods.
•
LRDs now reported on S-3 pt 1, Line 29 (Although reported separately,
patient day totals should still agree to census totals)
•
Refer to CR instructions for LRDs and Observation
14
Patient Days: Observation Days
Medicare’s long standing policy is to treat observation services as ancillary
versus routine services
 Pre CRP< 10/1/2004: Days not included in DSH and IME Calculation
 For CRP 10/1/2004><10/1/2009 Admitted observation ADDED to
numerator and denominator of DSH Calculation
 For IME non-admitted days REDUCE available beds
 Pre CRP> 10/1/2009: Days not included in DSH and IME Calculation
15
Worksheet C Issues
• Objective is to improve how hospitals categorize
Medicare charges, total charges and total costs into
departments
- Mismatch with the CCR and/or mismatch between
CCR and Medicare charges
- Mismatch between how hospitals categorize on the
cost report and how CMS categorizes on MedPAR file
16
Cost Report Changes
• Provider CCRs will vary from
national.
• Values:
– Mark-up formula.
– Cost center groupings.
• CMS groupings outlined .
– Why is EEG grouped
w/Lab?
• Can this information be used
to evaluate pricing strategy
beyond Medicare?
Group
Routine Days
Intensive Days
Drugs
Supplies & Equipment
Therapy Services
Laboratory
Operating Room
Cardiology
Radiology
Emergency Room
Blood and Blood Products
Other Services
Labor & Delivery
Inhalation Therapy
Anesthesia
CCR
0.539
0.473
0.202
0.345
0.403
0.155
0.272
0.169
0.152
0.263
0.415
0.416
0.470
0.200
0.128
17
Charge Compression
•
•
•
Higher % markup over costs to lower cost items; lower % markup over costs to
higher cost items.
Cost based weights undervalue high cost items and overvalue low cost items.
Potential distortions to the cost-based weights resulting from inconsistent reporting
between the cost reports and the Medicare claims.
Cost
Mark up Formula
Charge
Cost/Charge Ratio
Medicare Widget
Medicare Gadget
Profit /(Loss)
Widget
995
6
5970
16.67%
Gadget Total
1005
2000
4
4020
9990
25.00%
0.2002
5970
1195
200
4020
805
-200
18
Medical Supplies v Implantable Devices
 Medical Supplies (UB 270-274; 621-623) (Line 55/71)
 Implantable Devices (UB 275-278; 624) (Line 55.30/72)
 Classify all billable supply cost and charges based on
UB codes
 Accommodate through general ledger or through an
A-6 reclassification based on volume or charges in
the revenue usage report
 Highly recommended for CRP> 5/1/09
 Mandated CRP>2/1/2010
19
Medicare Bad Debts
• Unpaid deductible and coinsurance amounts related to
covered hospital services
• Reimbursed @ 70% of the amount (100% for CAH)
• Reasonable collection efforts consistent among all
payers
• Debt actually uncollectible when claimed as worthless
- Cannot be claimed as bad debt until returned from collection
agency, unless subject to OBRA ’87 Moratorium
20
Medicare Bad Debts
• Collection effort must be documented in patient
file
• Collection may include use of a collection
agency in addition to or in lieu of subsequent
billings
• 120 day rule – beginning on the date of the first
bill sent to the patient
- “Presumed uncollectible” after 120 days
21
Medicare Bad Debts
• Medicare/Medicaid crossover patients (must bill
requirement)
• Indigent patients (Hospital must establish indigence)
• Deceased patients (Must document lack of estate)
• Bankrupt patients (Must document court filings etc)
• May all be claimed without collection effort (no 120-day
rule) (varies with intermediary)
22
Medicare Bad Debts
• Recoveries must be netted against bad debt
expense claimed – even if the claim was
originally included in a prior year bad debt
submission
• Prorate recoveries not specifically identified as
payment for covered/non-covered services
23
Medicare Bad Debts
• May 2, 2008 CMS memorandum
• Contractors to disallow bad debts if not returned
from collection agency
• Settlements issued after May 2, 2008
24
Documentation/Listing
Required Fields per 339 Exhibit 5
Suggested Additional Fields
Last Name
Patient Account Number
First Name
Medical Record Number
M.I.
Total Covered Charges
HIC. NO.
Non covered charges (includes PC and FS)
DOS from MM/DD/YYYY
DOS to MM/DD/YYYY
Indigency & Wel. Recip. (Ck If Appl)
Hospital Charity Care Determination
Medicaid Number
Date 1st Bill to Beneficiary
120 day (from last payment) test (non X/0)
Write off date
Date Ret. from Coll. Agencies (non X/O)
Remittance Advice Date (MC)
MA Remittance Date and or MA RA #
Deductibles (excludes PC and FS amounts)
Co-Ins (excluded PC and FS amounts)
Total
25
Interns & Residents
Direct graduate medical education
(GME)
Indirect graduate medical education
(IME)
26
Simplified DGME Calculation
1996 allowable FTEs
Current (3-year average) FTEs
Current allowable FTEs
Per resident amount (PRA)
x
Medicare utilization
x
Medicare GME reimbursement =
15
20
15
$60,000
40%
$360,000
• Amount is allocated to inpatient and outpatient based on total
Medicare costs (generally about 80% Part A; 20% Part B)
• Current period Medical Education costs not considered
• Special Rules apply for:
- New Programs
- Dental & Podiatry Residents
- Residents Redistributed
27
IME Formula
• 1.32 x [(1 + (I&R Count/Available Beds)).405 - 1] = IME Factor
– Intern-to-bed ratio is limited to the lesser of the current year or prior year
– Rolling average count of residents (current year, plus two previous
years)/3
– Available beds adjusted for observation services
– Multiplier changes reflected in Final PPS rule update
– Different factors may apply to portion of cost reporting period)
– Special Treatment for:
• New Programs
• Dental & Podiatry Residents
• Residents Redistributed
– The IME factor is then multiplied by the DRG payment, excluding any
outliers to calculate reimbursement for IME (includes “simulated DRG”
for MC enrollees)
28
IME Rule Updates
•
Amending Patient Days / Available bed counting impacting Internto-bed ratio.
•
CMS/MedPac finds little correlation between statutory IME formula
and incremental operating costs incurred by having a medical
education program.
MedPAC asserts that the current level of the IME adjustment factor,
5.5 % for every 10% increase in resident-to-bed ratio, overstates IME
payments by more than twice the empirically justified level, resulting in
approximately $3 billion in overpayments. The empirical level of the
IME adjustment is estimated to be 2.2 percent for every 10 percent.
29
Counting Residents (How)
• Must be part of an approved program
• Count no resident as more than one FTE
• Count the resident as a partial FTE in proportion to the time
spent in an allowable setting
• GME only – residents not within the initial residency period and
certain foreign medical graduates must be appropriately
weighted
• Information captured in IRIS (filed with cost report)
30
Counting Residents (When/Where)
• Hospital Rotations:
– Related to Patient Care (includes didactic time and patient
specific research)
– PPS component (IME)
• Non-provider setting (clinics, private physician offices)
provided that:
• Patient care activities are undertaken
• Written agreement with the outside entity and hospital pays
the resident’s stipend and fringe benefit
• Teaching compensation is identified
31
Counting Residents (Issues)
•
Reimbursement Issues:
•
Double counting of residents (related to new programs and slots vacated
from one program to the other).
•
Counting residents rotating to off-site locations.
•
Matching compensation agreements to resident time-sharing
arrangements.
•
Rural Hospital Exception –
•

Allows cost reimbursement for medical rotations to Critical Access
Hospitals.

May obtain new program exemption at any time (for new programs).
New Programs – New programs are exempt from 1996 Resident count
limitation.
32
“New Programs”

Characterization by accrediting body (CMS says receiving
initial accreditation for the first time).

New Program director.

New Faculty (teaching staff).

Only New Residents.

Relationship between hospitals.

Degree to which the hospital with the original program
continues to operate its own program in the same specialty.
33
“Affiliated”
 “New Programs” (new provider agreement).
 Temporary adjustment to cap for programs that begins
other than July 1.

Temporary adjustment cannot be applicable prior to
effective date of new provider agreement.

Requires hospital to submit a new affiliation agreement
before end of cost reporting period.

Requires other hospitals in affiliated group to also file
amended affiliation agreements.
34
Disproportionate Share (DSH)
• Hospitals may qualify for an additional payment per
discharge for serving a disproportionate share of low
income patients:
• DSH patient percentage defined as:
Medicaid utilization (based on patient days)
+ Supplemental Security Income
(SSI) percentage (obtained from CMS)
= DSH percentage
35
IPPS: DSH
• Medicaid utilization:
•
•
•
•
Medicaid paid days (per provider or state records)
Medicaid HMO paid days
Out-of-state Medicaid paid days
Additional eligible days (in and out of state)
• SSI Component recalculation
• Based on provider fiscal year
• Based on internal verification/validation process
(compared to CMS calculation)
36
SSI
2000
2001
2002
2003
2004
2005
2006
2007
2,579
2,671
2,231
2,007
1,648
2,358
2,476
2,184
Change in SSI between 06 & 07
Impact on Mcare DSH calculation
Potential reduction in DSH factor
16,003
15,374
15,814
14,208
14,734
14,507
15,416
16,102
16.116%
17.373%
14.108%
14.126%
11.185%
16.254%
16.061%
13.564%
-2.498%
0.825
-0.02061
37
IPPS: DSH
• Hospitals > 100 beds - Little correlation between statutorily required
DSH add-on adjustment and implied higher-cost of treating lowincome patients.
• Hospitals < 100 beds - No correlation…
• Future Considerations – Currently frozen by statue, but could
incorporate DSH payment into DRG payment for larger
hospitals and eliminate payment for smaller hospitals.
Suggested payment formula would represent a material
reduction in payments to large DSH hospitals.
MedPAC found that costs per case increase about 0.4 percent for each
10 percent increase in the low income patient percentage. (According
to MedPAC, in RY 2004, about $5.5 billion in DSH payments were
made above the empirically justified level.)
38
New Rules for PRRB Appeals
www.cms.hhs.gov/PRRBReview/Downloads/PRRBRules2008.pdf
 Effective Date: For appeals pending or filed on or after
Aug. 21, 2008
 Reasons for change:
1. Update 30 year old regulations
2. Reduce PRRB case backlog
3. Codify existing PRRB practices
39
New Rules for PRRB Appeals:
Process
Due Dates (Group Appeals-Time from group being fully formed)
Provider’s Preliminary PP:
2 months
Intermediary’s Preliminary PP: 6 months
Provider’s Rebuttal (Optional): 9 months
Position Paper Process:
Provider’s Final PP:
Intermediary’s Final PP:
Provider’s Final Rebuttal:
90 days prior to hearing
60 days prior to hearing
30 days prior to hearing
Appeal Criteria (Generally the same):
1. Provider dissatisfied with final determination
2. Timing-Within 180 days from the NPR
3. Amount in controversy $10,000 or more for individual appeal and
50,000 or more for group appeal
40
New Rules for PRRB Appeals:
Add/Change
Adding issues to Appeal:
1. Request must be received by the Board no later than 60 days after the
expiration of the initial 180 day filing period instead of prior to hearing date
2. For appeals pending as of Aug 21, 2008 the deadline is the later of:
a . 60 days after the expiration of the 180 day filing period (240 days) or
b. Oct. 20, 2008
Changes to Initial Filing:
For cost reports ending on or after 12/31/08, providers will not be able to appeal an
item unless they can show an audit adjustment or demonstrate they followed
applicable procedures for filing a cost report under protest. (Little Company of
Mary…)
Timeliness:
Board must receive the appeal no later than 180 days after NPR.
41
Cost Report Update
 ACA Rural Hospital Changes
 2552-96 to 2552-10 Crosswalk
 Cost report Connection to Charity Care
42
ACA Rural Hospital Changes
 OP hold harmless (TOPS) through 12/31/10
 All SCH (now includes SCH>100 beds)
 Small rural providers (<100beds)
 Cost reimbursement for certain clinical diagnostic lab services for
hospitals in rural areas
 MDH program through 10/1/2012 (rural<100 beds; 60%)
 Low volume payment (sliding scale ; rural hospitals<1600 total
discharges)
 CAHs paid @ 101% of reasonable cost for all services
43
Other Cost Report Items/Update
General








CR periods beginning 5/1/10
New redesigned cost report 2552-10
Obsolete lines/columns and worksheets deleted and
renumbered
Standard subscripts eliminated (wage index, settlement etc)
New or revised worksheets added
S-2 reorganized to group info together (i.e. All CAH questions
will be in one section)
S-2 PT II incorporates Exhibit 1 of CMS 339 (part of ECR)
All SNF Info will be on S-7 instead of S-2 and S-7
44
2552-96 to 2552-10 Changes
Old Form CMS 2552-96
New Form CMS-2552-10
Reason for the Change
S
S, Parts I, II & III
Added Part I for cost report status, Part II now certification and Part III is now the certification
summary.
S-2
S-2, Part I
Expanded the questions that will generate other worksheets on the cost report generate other
worksheets on the cost report
S-2, Part II
Included the Hospital Cost Report Questionnaire FORM CMS-339 (OMB NO. 0938-0301) into
CMS-2552-10.
S-3,
S-3, part I
Re-designated the subscripted lines and columns into whole number lines and columns.
S-3, Parts II & III
S-3, Parts II & III
Re-designated the subscripted lines and columns into whole number lines and columns.
S-3, Part IV
New worksheet to capture wage related that was formerly on the hospital cost report questionnaire
FORM CMS-339.
S-3, Part V
New worksheet to capture Contract labor and Benefit Cost.
S-4
S-4
Re-designated the subscripted lines and columns into whole number lines and columns.
S-5
S-5
Re-designated the subscripted lines and columns into whole number lines and columns.
S-6
S-6
Re-designated the subscripted lines and columns into whole number lines and columns.
S-7
S-7
This new redesigned worksheet provides all of the statistics for hospital based skilled nursing facility
(SNFs).
S-8
S-8
Minor changes
S-9
S-9
No Change
S-10
S-10
Redesigned the whole worksheet
45
2552-96 to 2552-10 Changes
Old Form CMS 2552-96
New Form CMS-2552-10
Reason for the Change
A
A
Eliminated “Old Capital” “New Capital” designation. Re-designated the subscripted lines and columns
into whole number lines and columns.
A-6
A-6
A-7, Part I - III
A-7, Part I - III
Minor changes to conform to Worksheet A.
A-8
A-8
Minor changes to conform to Worksheet A.
A-8-1
A-8-1
Minor changes to conform to Worksheet A.
A-8-2
A-8-2
No change
A-8-3, Parts I-VII
A-8-3, Parts I-VII
A-8-4
Eliminated column 10, for cross reference to Worksheet A-7
Designated the worksheet for cost reimbursed providers.
Eliminated
B, Part I
B, Part I
Eliminated “Old Capital” “New Capital” designation. Re-designated the subscripted lines and columns
into whole number lines and columns.
B-1
B-1
Eliminated “Old Capital” “New Capital” designation. Re-designated the subscripted lines and columns
into whole number lines and columns.
B-2
B-2
Minor changes to conform to Worksheet A.
C, Part I-II
C, Part I-II
C, Parts III - IV
C, Parts III - IV
Eliminated “Old Capital” “New Capital” designation. Re-designated the subscripted lines and columns
into whole number lines and columns.
Eliminated
46
2552-96 to 2552-10 Changes
Old Form CMS 2552-96
New Form CMS-2552-10
Reason for the Change
D, Parts I - V
D, Parts I - V
Minor changes.
D-1
D-1
Minor changes
D-2
D-2
Minor changes
D-4
D-3
Renamed D-4 to D-3 and made minor changes.
D-6
D-4
Renamed D-6 to D-4 and made minor changes
D-9
D-5
Renamed D-9 to D-5 and made minor changes
47
2552-96 to 2552-10 Changes
Old Form CMS 2552-96
New Form CMS-2552-10
Reason for the Change
E, Part A
E, Part A
Re-designated the worksheet to eliminate obsolete lines and convert subscripted lines into whole number lines.
E, Part B
E, Part B
Re-designated the worksheet to eliminate obsolete lines and convert subscripted lines into whole number lines.
E, Part C
Eliminated
E, Part D
Eliminated
E, Part E
Eliminated
E-1
E-1
Minor changes
E-2
E-2
Minor changes
E-3, part I
E-3, part I
Major changes. The worksheet is now to be used exclusively by TEFRA reimbursed providers.
E-3, Part II
New worksheet to be used exclusively by IP Psych Providers
E-3, Part III
New worksheet to be used exclusively by IP Rehab Providers
E-3, Part IV
New worksheet to be used exclusively by LTC Providers
E-3, Part II
E-3, Part V
Major changes. The worksheet is now to be used by cost reimbursed providers only.
E-3, Part III
E-3, VI
Major changes. The worksheet now applies to Title XVIII SNF reimbursement.
E-3, VII
New worksheet for Title V & XIX SNF Reimbursement.
E-3, Part IV
E-4
New worksheet to calculate Direct Graduate Medical Education and ESRD Direct Graduate Medical. Education
48
2552-96 to 2552-10 Changes
Old Form CMS 2552-96
New Form CMS-2552-10
G, G-1, G-2, and G-3
G, G-1, G-2, and G-3
H
H
Reason for the Change
Minor changes. Re-designated the subscripted lines and into whole number lines.
No Change
H-1
Eliminated worksheet. Data is now included on Worksheet H.
H-2
Eliminated worksheet. Data is now included on Worksheet H.
H-3
Eliminated worksheet. Data is now included on Worksheet H.
H-4, Parts I & II
H-1, Parts I & II
Renamed the worksheet and Eliminated “Old Capital” “New Capital” designation. Re-designated the
subscripted lines and columns into whole number lines and columns
H-5, Parts I & II
H-2, Parts I & II
Renamed the worksheet and Eliminated “Old Capital” “New Capital” designation. Re-designated the
subscripted lines and columns into whole number lines and columns
H-6
H-3
Redesigned and renamed the worksheet to eliminate obsolete data requirements.
H-7
H-4
Re-designated the worksheet to eliminate obsolete lines and convert subscripted lines into whole
number lines.
H-8
H-5
Renamed the worksheet with some minor changes
I-1, I-2, I-3, I-4, & I-5
I-1, I-2, I-3, I-4, & I-5
Eliminated “Old Capital” “New Capital” designation. Re-designated the subscripted lines and columns
into whole number lines and columns.
J-1, J-2, J-3, & J-4
J-1, J-2, J-3, & J-4
Eliminated “Old Capital” “New Capital” designation. Re-designated the subscripted lines and columns
into whole number lines and columns. These WS are now only applicable to CMHC
K, K-1, K-2, K-3, K-4 Parts I&II, K, K-1, K-2, K-3, K-4, Parts I&II, K-5, Eliminated “Old Capital” “New Capital” designation. Re-designated the subscripted lines and columns
K-5 Parts I-III & K-6
Parts I-III & K-6
into whole number lines and columns.
L
L
Updated the worksheet re-designated the subscripted lines into whole lines and eliminated the whole
harmless section.
L-1, Parts I –II
L-1, Parts I –III
Eliminated “Old Capital” “New Capital” designation. Re-designated the subscripted lines and columns
into whole number lines and columns.
M-1, M-2, M-3, M-4 & M-5
M-1, M-2, M-3, M-4 & M-5
Eliminated “Old Capital” “New Capital” designation. Re-designated the subscripted lines and columns
into whole number lines and columns.
49
Uncompensated Care Discussion
 What percentage of uncompensated
care does your organization incur
annually?
 What percentage of your organization's
uncompensated care is charity?
50
Importance of identifying charity
NFP Status –
Property tax,
federal,
state and sales tax exemptions
Community benefit reporting in annual
report
HIT funding – Real dollars
DSH Reallocation
51
Charity Care Criteria
• How do you determine the amount of charity care to
write-off?
– Hospital policy
– Federal poverty guidelines
– Sliding scale
– Based on sliding scale developed by NHA years
ago
52
Charity Care Documentation
• What supporting documentation is required to be
submitted with your facility's charity care application?
– Tax return
– W-2
– Medicaid denial
– Bills, sources of income tax return
53
Hospital Uncompensated Care S-10

Supplemental Disclosure (Pre 2552-10)
 Post 2552-96: DSH; HIT implications

Medicare cost report calculated cost of
uncompensated care based on overall CCRs
54
Definitions
55
HIT Funding
($2 Million + Discharge Amount) X Medicare Share X Transition Factor
56
HIT Reimbursement and charity levels
of impact
Discharges
Total Days
Medicare Days Includes HMO
Total charges
Charity
Charity percent
2,000
6,000
3,000
60,000,000
1,000,000
1.67%
Base amount
2,000 less 1,149
$ 2,000,000
$
851
200.00
Medicare days
Total days
Total Charges
Less charity charges
Charity Adjustment Factor
Adjusted total days
Medicare share
Incentive payment
Increase
2,000
6,000
3,000
60,000,000
2,000,000
3.33%
$
851
$ 200.00
170,200
2,170,200
2,000
6,000
3,000
60,000,000
3,000,000
5.00%
2,000,000
$ 2,000,000
851
$ 200.00
170,200
2,170,200
3,000
3,000
6,000
3,000
6,000
60,000,000
(1,000,000)
59,000,000
60,000,000
6,000
60,000,000
(2,000,000)
58,000,000
60,000,000
0.98
170,200
2,170,200
60,000,000
(3,000,000)
57,000,000
60,000,000
0.97
0.95
5,900
5,800
5,700
50.85%
51.72%
52.63%
$
1,122,517
$
19,026
$ 1,142,211
$
19,693
$
38,719
$ 1,103,492
57
CAH HIT Reimbursement
• Cost in the current year times Medicare
utilization plus 20%
• Effective 1/1/2012
• Includes net book value of HIT placed in
service prior to 2012.
58
ACA Impact on DSH Payment
• Reduced 75% Beginning in FFY 2014
• “Savings” Returned as an Additional
Payment for Continued Uncompensated
Care Costs
59
ACA DSH Impact: Criteria
1. Funds available (potentially $7.9B)
2. Percentage Change in Uninsured Population
from 2013 (based on CBO estimates)
3. Hospital’s % of aggregated uncompensated
care costs (Estimated by HHS based on
reportedS-10 data)
60
Criteria 2 Explanation
Year
Percent
Uninsured
2013
17%
2014
Change
Difference
Inverse
9%
8%
47%
53%
2015
7%
10%
59%
41%
2016
5%
12%
71%
29%
2017
5%
12%
71%
29%
2018
5%
12%
71%
29%
2019
6%
11%
65%
35%
61
Land Mines





Different timing and definitions used by each “authority”:
Audit: 3-4 months after year end
Cost report: due five months after year end.
IRS 990: may be filed up to 11 months after year end
Prepare a reconciliation between each reporting
mechanisms:
GAAP
Cost Report
IRS
State
62
Conclusion
• Understanding the key reimbursement drivers
will identify many potential opportunities
• Asking the right questions will create a
strategy for implementing change
• Communicating results to constituencies will
influence their behavior and thought process
63
Contact Information:
Mike Nichols
Office: (847) 413 6360
Email: mike.nichols@mcgladrey.com
Chad Krcil
Office: (303) 298 6463
Email: chad.krcil@mcgladrey.com
64