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									 Advanced Medicare Cost Reporting



Mike Nichols        Chad Krcil
Managing Director   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
                                                                                       Margin        Contractual    Reimb % Contractual
                                         Charges           Cost          Reimb.       (Deficit)      Allowance      of Charges % Charges
Inpatient Acute                         616,550,535 145,525,197 140,859,190          (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                               3,591,516   1,934,208   1,992,597              58,389        1,598,919      55.48%    44.52%
Total                                   817,021,900 241,793,345 265,362,387          23,569,042      551,659,513      32.48%    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                                     30,650,424

Load Factor Impact on Margin                             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/                                                 Margin         Contractual      Reimb %      Contractual Cost/Charge
                              visits   Charges          Cost          Reimb.        (Deficit)      Allowance       of Charges    % Charges        Ratio

Inpatient Acute (w MDH)        4,680   12,240,950        6,762,261     6,194,943       (567,318)      6,046,007         50.61%        49.39%         55.24%

Disproportionate Share                                                   625,033        625,033        (625,033)         5.11%        -5.11%

Inpatient Capital                                         392,940        489,978         97,038        (489,978)         4.00%        -4.00%

Psychiatric Unit(PPS)            601      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%

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%

Rehab Unit (full year PPS)       343      729,921         781,180        576,865       (204,315)        153,056         79.03%        20.97%        107.02%

Total                                  26,524,835       13,777,879    11,817,666     (1,960,213)     14,707,169         44.55%        55.45%         51.94%

Inpatient:
DRG                                                                    5,975,455
Outlier                                                                      464
Medicare Dependent Hospital                                              219,024
Total                                                                  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
                                           Group            CCR
• Provider CCRs will vary from
                                 Routine Days                0.539
  national.
                                 Intensive Days              0.473
                                 Drugs                       0.202
• Values:
                                 Supplies & Equipment        0.345
   – Mark-up formula.            Therapy Services            0.403
   – Cost center groupings.      Laboratory                  0.155
                                 Operating Room              0.272
• CMS groupings outlined .       Cardiology                  0.169
   – Why is EEG grouped          Radiology                   0.152
     w/Lab?                      Emergency Room              0.263
                                 Blood and Blood Products    0.415
• Can this information be used   Other Services              0.416
  to evaluate pricing strategy   Labor & Delivery            0.470
  beyond Medicare?
                                 Inhalation Therapy          0.200
                                 Anesthesia                  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.

                                             Widget      Gadget Total
                    Cost                         995       1005      2000
                    Mark up Formula                6          4
                    Charge                     5970        4020      9990
                    Cost/Charge Ratio        16.67%      25.00%   0.2002

                    Medicare Widget             5970
                    Medicare Gadget                         4020
                                                1195         805
                    Profit /(Loss)               200        -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                             15
    Current (3-year average) FTEs                   20
    Current allowable FTEs                          15
    Per resident amount (PRA)     x              $60,000
    Medicare utilization          x                  40%
    Medicare GME reimbursement =                 $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 Intern-
    to-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                 2,579     16,003   16.116%
     2001                 2,671     15,374   17.373%
     2002                 2,231     15,814   14.108%
     2003                 2,007     14,208   14.126%
     2004                 1,648     14,734   11.185%
     2005                 2,358     14,507   16.254%
     2006                 2,476     15,416   16.061%
     2007                 2,184     16,102   13.564%

Change in SSI between 06 & 07                 -2.498%
Impact on Mcare DSH calculation                  0.825
Potential reduction in DSH factor            -0.02061
                                                         37
                         IPPS: DSH
• Hospitals > 100 beds - Little correlation between statutorily required
  DSH add-on adjustment and implied higher-cost of treating low-
  income 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:            90 days prior to hearing
        Intermediary’s Final PP:        60 days prior to hearing
        Provider’s Final Rebuttal:      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           Eliminated column 10, for cross reference to Worksheet A-7

   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   Designated the worksheet for cost reimbursed providers.

        A-8-4                                  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      Eliminated “Old Capital” “New Capital” designation. Re-designated the subscripted lines and columns
                                               into whole number lines and columns.
   C, Parts III - IV       C, Parts III - IV   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                                                  Reason for the Change

      G, G-1, G-2, and G-3                  G, G-1, G-2, and G-3           Minor changes. Re-designated the subscripted lines and into whole number lines.

                H                                      H                   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                                                    2,000                                     2,000                                  2,000
 Total Days                                                    6,000                                     6,000                                  6,000
 Medicare Days Includes HMO                                    3,000                                     3,000                                  3,000
 Total charges                                            60,000,000                                60,000,000                             60,000,000
 Charity                                                   1,000,000                                 2,000,000                              3,000,000
 Charity percent                                               1.67%                                     3.33%                                  5.00%


 Base amount                                             $ 2,000,000                            $    2,000,000                            $ 2,000,000
 2,000 less 1,149                                  851                                    851                                       851
                                            $   200.00       170,200                 $ 200.00          170,200                 $ 200.00       170,200
                                                           2,170,200                                 2,170,200                              2,170,200

 Medicare days                                                 3,000                                    3,000                                   3,000

 Total days                                      6,000                                  6,000                                    6,000
 Total Charges                60,000,000                               60,000,000                                60,000,000
 Less charity charges         (1,000,000)                              (2,000,000)                               (3,000,000)
                              59,000,000                               58,000,000                                57,000,000
                              60,000,000                               60,000,000                                60,000,000
 Charity Adjustment Factor                        0.98                                   0.97                                     0.95
 Adjusted total days                                           5,900                                    5,800                                   5,700

 Medicare share                                               50.85%                                   51.72%                                  52.63%

 Incentive payment                                       $ 1,103,492                            $    1,122,517                            $ 1,142,211
                                                                                                                                          $    19,693
 Increase                                                                                       $      19,026                             $    38,719




                                                                                                                                   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
        Percent
Year   Uninsured   Change   Difference   Inverse

2013    17%
2014     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

								
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