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					                                                             8/13/2010




          National Association for Home Care & Hospice

                The HHA Medicare Cost Report

             “What You Don’t Know Is Dangerous”




                             October 5, 2010
                           8:00 am to 9:30 am
                              Session 602




                   Thomas E. Boyd, MBA, Principal
                       Boyd & Nicholas, Inc.

               Dave Macke, MBA, FHFMA, Shareholder
                    VonLehman & Company Inc.

                   Barry Gold, CPA, FHFMA, CFO
                          Mays Home Care                 1




                      Objectives

• Describe the process of preparing the cost
  report worksheets and related documents

• Articulate the rules as they apply to the
  preparation of your cost report

• Discuss different ways in which the Medicare
  cost report can be used for management
  decisions
                                                         2




                                                                    1
                                                8/13/2010




    MedPAC Report to Congress, March 2010

• In 2008, 3.2M Medicare beneficiaries,
  10,026 HHAs, - $17B reimbursement
• 6.1M episodes
• 1.9 episodes per user
• $5,337 avg. payment per user
• 21.6 visits per episode
• www.medpac.gov

                                            3




        MedPAC Report to Congress

• Home Health access: very good
• G    th in HHA i             f     i
  Growth i HHAs, increase of 476 in 2009
• Program integrity issues in California
• Abuse with outlier payments
• Decrease in LUPA episodes: 15% in 2002,
  10% in 2008
• Case mix increase in 2008: 2.4%
• Cost per episode increase: 3.8%

                                            4




                                                       2
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      MedPAC Report to Congress

• Refinement change resulted in therapy
   tili ti     h
  utilization changes
• 2008 Medicare margin for freestanding
  providers: 17.4%




                                          5




      Key Tables – MedPAC Report




                                          6




                                                     3
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Key Tables – MedPAC Report




                             7




Key Tables – MedPAC Report




                             8




                                        4
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      Key Tables – MedPAC Report




                                                9




     MedPAC Report – Conclusions

• Beneficiaries access to home health care is
  very goodd
• Number of HHAs continues to increase but at
  a slower rate
• Quality: improvement in functional measures
  but unchanged in adverse events
• Payments are more than adequate
• Predicting margin of 13.7% in 2011
                                                10




                                                            5
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MedPAC Report – Recommendations




                                  11




MedPAC Report – Recommendations




                                  12




                                              6
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            What is Rebasing?


• Change prospective rates based on more
  current cost data
   – President
      • Improve Medicare home health payments
        to align to costs
   – MedPAC
      • Rebase rates for home health care services
        to reflect the average cost of providing care

                                                   13




      Home Health Rebasing

          Base Year- ??
        • B    Y
        • Proposed Approaches
          – MedPAC
          – President
          – Health Care Reform
             • Senate
             • House

                                                   14




                                                               7
                                                           8/13/2010




             Methods of Rebasing

•   Provider specific vs. all providers
•   Ownership type vs. all ownership types
•   Provider type vs. all provider types
•   Regional vs. national
•   Phase-in vs. one-time adjustment
•   Ceiling/floor vs. no limits
•   Cost report methodology vs. IRS standards

                                                      15




     False Claims Act - § 3729. False Claims


  (a) Liability for Certain Acts.— A person who—
• ( ) Li bilit f C t i A t            Any          h
  (1) knowingly presents, or causes to be presented, to
  an officer or employee of the United States
  Government or a member of the Armed Forces of the
  United States a false or fraudulent claim for payment
  or approval;




                                                      16




                                                                  8
                                                               8/13/2010




     Management Use of Cost Report
• The MCR is NOT just a “compliance” requirement
  that must be filed with CMS but can be a valuable
  tool to assist in budgeting, pricing and strategic
  analysis

• Direct and indirect costs by discipline (per hour and
  per visit)

• Fixed and variable costs

• Non-routine medical supplies
                                                          17




     Management Use of Cost Report

• When looking at total cost, you should add back non
                     (marketing donations
  allowable expenses (marketing, donations, etc)

• Cost per episode / Medicare margin

• Cost, revenue and margin by payer

• Service utilization per episode

                                                          18




                                                                      9
                                                                       8/13/2010




                   Cost Report Indicators
• Average Visits per Episode
   »   Full episodes w/o Outliers (228 episodes)
            SNC                2,200        9.65
            PT                 1,281        5.62
            OT                   436        1.91
            ST                     27        .12
            HHA                1,114        4.89
            TOTAL              5,058       22.18

   »   Total episodes (302 episodes)
           SNC                 2,655
                               2 655       8 79
                                           8.79
           PT                  1,369       4.53
           OT                    499       1.65
           ST                     27        .09
           HHA                 1,137       3.76
           TOTAL               5,687      18.83

                                                                  19




                   Cost Report Indicators

• Percent of Episodes by Type

   »   Full w/o Outliers                           228   75.50%
   »   Full with Outliers                            6    1.99%
   »   LUPA                                         64   21.19%
   »   PEP                                           4    1.32%
   »   Total                                       302




                                                                  20




                                                                             10
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              Cost Report Indicators

• Cost per Visit
               Direct         Indirect   Total

   »   SNC     $54.49         $23.17     $ 77.66
   »   PT      $75.00         $29.98     $104.98
   »   OT      $72.00         $28.78     $100.78
   »   ST      $73.06         $29.20     $102.26
   »   MSW      N/A            N/A        N/A
   »   HHA     $33.14         $13.71     $ 46.85



                                                    21




              Cost Report Indicators
• Medicare Profit Margin

   » Medicare PPS Reimbursement          $649,607

   » Medicare PPS Cost
       Visit Cost                        $456,223
       NRS Cost                          $ 8,678
       Total Cost                        $464,901

   » M di     P fit M i
     Medicare Profit Margin              $184 706
                                         $184,706

   » Medicare Margin %                     28.4%



                                                    22




                                                               11
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                 Cost Report Indicators

                            Profit By Episode Type
                Full w/o     Full with    LUPA          PEP       Total
                Outliers     Outliers



 Revenue         $600,270      $26,195    $14,789       $8,353    $649,607


 Cost            $411,501      $35,133    $12,606       $5,661    $464,901


 Profit          $188,769     ($8,938)    $ 2,183       $2,692    $184,706

                                                                          23




                 Cost Report Indicators

• Total Profit Margin

    »     Total Patient Revenue                      $1,809,392
    »     Total Operating Expense                    $1,779,886
    »     Net Operating Margin                       $ 29,506
    »     Profit Margin %                                 1.6%




                                                                          24




                                                                                     12
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                  Cost Report Indicators

• Cost Analysis
   »   Capital                                      55 500
                                                 $ 55,500
   »   Plant Operation / Maint                   $ 10,400
   »   Administration                            $ 464,218           26.08%
   »   Total Overhead Costs                      $ 530,118           29.78%

   » Direct Costs                                $1,249,768          70.22%

   » T t l Costs
     Total C t                                   $1,779,886
                                                 $1 779 886

   » Total Patient Revenue                       $1,809,392

   » Admin Costs as % of Revenue                 25.66%

                                                                                      25




               Cost Report Certification
CERTIFICATION BY OFFICER OR ADMINISTRATOR OF
  PROVIDER(S)

  I HEREBY CERTIFY that I have read the above statement and that I have
  examined the accompanying electronically filed or manually submitted cost report
  and the Balance Sheet and Statement of Revenue and Expenses prepared
  by____________________________________________(Provider Name(s) and
  Number(s)) for the cost reporting period beginning                           and
  ending                        and that to the best of my knowledge and belief, it is a
  true, correct and complete statement prepared from the books and records of the
  provider in accordance with applicable instructions, except as noted. I further
  certify that I am familiar with the laws and regulations regarding the provision of
  health           i      d h h         i     id ifi d i hi                         id d
  h l h care services and that the services identified in this cost report were provided
  in compliance with such laws and regulations.




                                                                                      26




                                                                                                 13
                                                                    8/13/2010




           Cost Report Requirements

• General Requirements
  »   Cost reports are filed annually - electronically
  »   Cost reports due 5 months after FYE
  »   Cost report period is 12 months – may not match fiscal year
  »   Cost report period can be from 1 to 13 months
  »   Medicaid use in some states
  »   Less than full cost report
         No Medicare Utilization
         Low Medicare Utilization (W/S S and F series)
           √ Palmetto GBA (was $100K, now $200K)
           √ NGS ($200K)
           √ Cahaba ($100K)
                                                               27




           Cost Report Requirements

• Filing Requirements
  » Financial Statements
  » Working Trial Balance
  » Trial Balance crosswalk
  » Support for reclassifications, adjustments and
    related party costs
  » Must have original ink signature (blue ink?)
  » CMS Form 339 Questionnaire

                                                               28




                                                                          14
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               Cost Report Data

• Accrual Basis of Accounting
  » Under the accrual basis of accounting, revenue is
    recorded in the period when it is earned, regardless
    of when it is collected, and expenditures for
    expense and asset items are recorded in the period
    in which they are incurred, regardless of when they
          id         15 1     ti 2302 1)
    are paid. PRM 15-1, section 2302.1)
  » Accrued liabilities must be liquidated within one
    year after the end of the cost reporting period

                                                      29




               Cost Report Data

• All costs incurred by the provider are reported
     the     t      t( t        t          t b
  on th cost report (cost report expenses to be
  reconciled to any financial statements)
• Costs are categorized as Overhead, HHA
  Reimbursable or HHA Non-Reimbursable
  based upon the nature of the expenses and the
  activities being conducted


                                                      30




                                                                 15
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                 Cost Report Data

• Modifying and adjusting costs to conform to
  Laws, Regulations, and Instructions
  L     R l ti         d I t ti
  »   Trial Balance of expenses
  »   Reclassification / adjustment of costs
  »   Allocation of overhead costs
  »   Attribution of costs




                                                             31




                 Cost Report Data

• Worksheet S-3, Part I
  » Patient visit statistics
       i     ii       i i
        Number of visits and patients by discipline
          √ Separate counts for Medicare & Other patients
          √ Count visits “As rendered” basis – date of service
        Medicare Advantage patient are considered as “Other /
        Non Medicare” for cost report purposes
        Non like kind services (line 7) – what are NLK
        services?
        Unduplicated census count – Medicare & Other
        Home Health Aide hours – Medicare & Other
                                                             32




                                                                        16
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                  Cost Report Data

• Like vs. Non like kind visits
  » Non like kind services

       Home health services that do not meet Medicare eligibility criteria
        √ Confined to home
        √ Under the care of a physician
        √ Intermittent SNC, PT, ST or continuing OT
        √ Under a plan of care
        √ Furnished by or under arrangement by participating HHA

       HCFA Program Memorandum AB-97-11.60
       Can be considered “like kind” if homebound only criteria missing

                                                                          33




                  Cost Report Data

• How to count visits on the MCR?
  » Only report “billable” visits
  » Supervisory visits should not be included unless
    skill rendered at same time
  » Can be more than one billable visit on the same
      y
    day
  » Count visits, not hours – very important



                                                                          34




                                                                                     17
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               Cost Report Data




                                                               35




               Cost Report Data

• Worksheet S-3, Part IV- PPS Activity Data
  » Summary of episodes completed during the cost
    reporting period on the accrual basis – can take
    from the PS&R report
      Medicare visits and charges by discipline and episode
      type (Full w/o outlier, Full w/ outlier, LUPA and PEP)
      Number of Medicare episodes
      Medical Supply Charges ($$)



                                                               36




                                                                          18
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                Cost Report Data




                                                             37




                Cost Report Data

• Worksheet A Categories (columns 1 to 5)
  » Salaries – by cost center
  » Employee Benefits / Payroll Taxes
       Direct assignment or allocate based on salaries
  » Transportation (mileage reimb) – by cost center
  » Contracted Services – by cost center
  » Other Costs

       Chart of accounts should be in sufficient detail to
       facilitate crosswalk from trial balance to MCR

                                                             38




                                                                        19
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                     Cost Report Data

• Worksheet A – Cost Centers
  » General Service Cost Centers / Overhead costs (lines 1 to 5)

        Capital Costs – Bldg
        Capital Costs – MME
        Plant Operation & Maintenance
        Transportation
        Ad i i t ti & General
        Administrative G       l

          √ Be sure to classify all like overhead type costs together (like
            and non like kind)

                                                                                        39




                     Cost Report Data

• Worksheet A – Cost Centers
  » HHA R i b    bl Services / Di
        Reimbursable S i              Patient Care (lines 6 to 14)
                               Direct P i C (li
        Skilled Nursing Care
        Physical Therapy
        Occupational Therapy
        Speech Therapy
        Medical Social Services
        Home Health Aide
        Medical Supplies – Non Routine only (routine supplies goes to Admin & General
        costs or direct)
        Drugs – Flu, Pneumococcal and calcimar injections – vaccine supply cost only
        (administration cost in nursing)
        DME



                                                                                        40




                                                                                                   20
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                   Cost Report Data

• Medical Supplies
   » Routine (non billable)
        Small quantities – not patient specific
   » Non Routine (billable)
        Patient specific illness or injury
        Separately identifiable in patient records (POC)
        Must be ordered by the physician
        Separate charge
        S      t h
        Notes:
          √ All payments for Medicare PPS episodes includes NRS Add-On
          √ Many agencies still not billing for NRS


                                                                         41




                   Cost Report Data

• Worksheet A – Cost Centers
   » HHA Non Reimbursable Services (non Like Kind)
        Private Duty (line 17)
        Homemaker (line 22)
        Other services (non like kind) (line 23)
        Telemedicine (line 23.20)
        T l     di i (li 23 20)



                                                                         42




                                                                                    21
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Cost Report Data




Cost Report Data




                         22
                                                            8/13/2010




                Cost Report Data

• Worksheet A-4 - Reclassification of
  Expenses
   » Move costs between cost centers
   » Should do on the trial balance rather than this
     worksheet
• Worksheet A-5
   » Adjustments to Expenses
       Other income offsets
       Non allowable expenses
                                                       45




                Cost Report Data
• Costs identifiable to the Medicare Program as being
  part of the p
  p                       p               y
              provider’s operation in a way that it
  utilizes overhead departments, such as administrative
  and other important central functions to effectively
  perform its task(s)
• Expenses related to services that may be furnished by
  a provider or required to be furnished, but that the
  Medicare program would not pay for
• These costs must remain on the cost report as a non-
  reimbursable cost center to share in the overhead
  allocations

                                                       46




                                                                  23
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             Adjustments to costs
• Adjustments to cost
  » Other Income
       Make sure subject to offset
       Does not include misc patient revenue such as flu
       vaccines
  » Purchase discounts
  » Expense refunds
  » Patient revenue refunds should be used to reduce
    revenue
                                                           47




               Non Allowable Costs

• Non allowable costs
  » Costs that are identified by the Medicare Program
    as not being related to patient care
  » It should be offset on applicable worksheet and
    removed from the cost report
  » These would not be set up as a non reimbursable
    cost center as the expense does not relate to other
    central functions of the provider and should not
    draw overhead

  » Source: United Government Services, May 2005

                                                           48




                                                                      24
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  Allowable vs. Non allowable costs
• Allowable vs. Non allowable costs
  » General principle
       Must be reasonable and necessary and related to
       patient care
       Prudent Buyer
  » Objective
       Cost of providing services to Medicare based upon
       average cost
  » If no specific Medicare rule, defer to GAAP
  » Some differences from IRS

                                                                       49




  Allowable vs. Non allowable costs
• Allowable costs
  » Depreciation expense
       Straight line method only
       AHA Useful Lives – 2004 edition (2008 lives have been issued)
  » Capitalization Policy - $5,000 and 2 or more year life
       Cannot have higher $$$ threshold – may have lower
       Different than IRS
  » Repairs and improvements – capitalize or expense?
  » Leased Assets – capital vs. operating
  » Interest Expense
                                                                       50




                                                                                  25
                                                          8/13/2010




  Allowable vs. Non allowable costs
• Allowable costs
  » Compensation to owners and key management
  » Deferred Compensation and Pension Plans
  » Sick Pay, Vacation Pay, and PDO Plans
  » Organization costs
  » Reorganization costs (vs. reengineering
    R       i ti       t (         i    i
    expense)
  » Start Up Costs (amortize 60 months)
                                                     51




  Allowable vs. Non allowable costs
• Allowable costs
  » Transportation costs
        Personal vehicle
        Company vehicle
  »   Medical Supply costs – routine & non routine
  »   Board Fees
  »   Medical Director Fees
  »                         y
      Professional Advisory Group  p
  »   Contract billing costs
  »   Orientation and on the job training
  »   Education related costs

                                                     52




                                                                26
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  Allowable vs. Non allowable costs
• Allowable costs
  »   Franchise Fees - limited
  »   Credit card costs – service fees
  »   Collection agency costs
  »   Life Insurance premiums
                            p y
        Term insurance – employee benefit
        Key man insurance - maybe
  » Taxes - Property or franchise

                                                                           53




  Allowable vs. Non allowable costs
• Allowable costs
  » M        t Patient Care Service Contracts
    Management / P ti t C S i C t t
        Must be necessary and related to patient care
        Not in excess of 5 years
        Contingency contracts - ?
        Payment based upon percentage of revenue or profit
        Control of policies and procedures retained by provider
        Stated contract duration
        Detailed listing of services to be rendered and those available on an
        as-needed or standby basis
        Amount of fees reasonable
        Provision for access to contractor records ($10,000)

                                                                           54




                                                                                      27
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  Allowable vs. Non allowable costs
• Common non allowable costs
  » M b hi d                liti l l bb i        ti
    Membership dues – political / lobbying portion
  » Political contributions and lobbying activities /
    contributions
  » Country club dues
  » Alcoholic beverages
  » Costs of buying or selling a b siness
              b ing              business
  » Non compete agreements
  » Goodwill

                                                        55




  Allowable vs. Non allowable costs
• Common non allowable costs (con’t)
  »   Gifts or donations
  »   Entertainment including meals
  »   Marketing / promotional giveaways
  »   Health Fairs
  »   Fines and Penalties
  »   Spousal or dependent education
       p            p
  »   Bad Debts
  »   Loss on disposal of assets
  »   Income Taxes
                                                        56




                                                                   28
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  Allowable vs. Non allowable costs
• Marketing / Advertising costs
  » Allowable – help wanted, yellow pages, informational,
    good public image, activities involving professional
    contacts with physicians, hospitals, public health agencies,
    nurses associations, etc. (referral sources) – information
    about availability of services
  » Non allowable – fundraising, promotional, advertising to
     h         l bli hi h         k      i           i
    the general public which seeks to increase patient
    utilization of provider’s services
  » Health fairs
  » Private inurnment regulations – gifts, etc.
                                                               57




                 Cost Report Data

• Worksheet A-6
  » Related Organizations and Home Office Costs
       Report “amount charged” and “amount allowable”
       Identify related party by name and type of
       relationship
       Identify ALL related party costs even if qualify for
       Section 1010 Exception (amount charged = amount
       allowable)
       Compare to AFS footnotes

                                                               58




                                                                          29
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                  Cost Report Data

• Related party transactions
  » Related through common ownership or control
  » Family relationships create relatedness
  » Adjust cost report to “related party” costs
       Direct and indirect
  » Interest on related party loans
  » Exceptions to cost conversion (Section 1010)
       Supplier – bona fide separate organization
       Substantial     t fb i        ith th          l t d titi      Key
       S b t ti l part of business with other non related entities - K
       Commonly obtained from other organizations
       Charge is in line with open market
       If meet the 1010 exception criteria – no adjustment is necessary


                                                                           59




                  Cost Report Data

• How to compute related party costs?
  » Medical Supply & Home Health
      di l S    l            lh
       Expense on Home Health books = revenue
       on Medical Supply company books
       HHA is 30% of revenue of Medical Supply
       HHA should record 30% of total expenses of
       Medical Supply company
       Effect is to eliminate profit of medical
       supply company
                                                                           60




                                                                                      30
                                                                               8/13/2010




                       Cost Report Data

• Medical Supply Company
  » Medical Supply Revenue                                   $300,000
  » Medical Supply Expense                                   $250,000
  » Medical Supply Profit                                    $ 50,000

• Home Health Agency (Medical Supply
  Expense)
  »   Amount Charged                                         $ 90,000
  »      A ($90,000 $300 000
      HHA % ($90 000 / $300,000 = 30%)
  »   Amount Allowable ($250,000 * 30%)                       $ 75,000
  »   Cost Report Adjustment                                 ($ 15,000)

       (30% of total expense, not just raw supply expense)

                                                                          61




                       Cost Report Data




                                                                          62




                                                                                     31
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       Allocation of Overhead Costs

• Worksheets B and B-1
  » Allocation of overhead costs to patient care cost
    centers (Stepdown)
  » Statistical basis (unit cost multiplier)
      Capital Costs – Bldg – square footage
      Capital Costs – MME – square footage or $ value
      Plant Operation – square footage
      Transportation – mileage
      Administrative and General – accumulated costs

                                                        63




       Allocation of Overhead Costs




                                                                   32
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Allocation of Overhead Costs




Allocation of Overhead Costs




                                     33
                                                    8/13/2010




          Allocation of Overhead Costs

• Alternative methods for Cost Report
   ll ti
  allocations
• Distorted allocation of A&G costs
• More sophisticated methods (PRM 15-1,
  section 2310)
•F         t d            i      t    t
  Fragmented A&G or unique cost centers
  (PRM 15-1, section 2313 and PRM 15-2,
  section 3214)
                                               67




          Allocation of Overhead Costs

• Example of Fragmented Admin & General
• Overhead Costs                 $1,800,0000

• Direct Costs
          Home Health            $2,000,000
          Non Reimb              $1,000,000
          Total Direct           $3,000,000

• Allocation of Overhead Costs
          Home Health            $1,200,000
          Non Reimb              $ 600,000

                                               68




                                                          34
                                                    8/13/2010




      Allocation of Overhead Costs

• Multiple Administrative Cost Centers

  » Breakdown of Admin overhead
      Shared                $ 990,000
      Home Health           $ 660,000
      Non Reimb             $ 150,000

      Total                 $1,800,000


                                               69




      Allocation of Overhead Costs

• Multiple Administrative Cost Centers
  » All ti
    Allocation
      Home Health
        √   Shared                $ 660,000
        √   A&G Reimb             $ 660,000
        √   A&G Non Reimb         $ -0-
        √   Total                 $1,320,000
      Non Reimb
        √   Shared                $ 330,000
        √   A&G Reimb             $ -0-
        √   A&G Non Reimb         $ 150,000
        √   Total                 $ 480,000
                                               70




                                                          35
                                                         8/13/2010




       Allocation of Overhead Costs

• Comparison of Overhead Allocation
  » H    Health
    Home H lth
       Multiple A&G                    $1,320,000
       Single A&G                      $1,200,000
       Difference                      $ 120,000


  » Non Reimb
       M lti l A&G
       Multiple                          480,000
                                       $ 480 000
       Single A&G                      $ 600,000
       Difference                     ($ 120,000)


                                                    71




                Cost Report Data

• Worksheet C
  » Average cost per visit
  » Cost of non routine medical supplies
  » Cost of drugs (calcimar, flu vaccines, etc.)




                                                    72




                                                               36
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         Reimbursement for Vaccines

• Special items Home Health cost report
  » Flu, Pneumococcal, and Hepatitis B vaccines
        Vaccine (#636) – cost reimbursed
        Administration (#771) – OPPS fee schedule
          √ 2 separate charges for Medicare
  » Calcimar injections (osteoporosis)
        Injection (#636) – cost reimbursed

  » Bill type 34X




                                                                            73




         Reimbursement for Vaccines

• Medicare Vaccines / Injections
  » These services are reimbursed through the Drugs cost center (line 13)
  » Charges must be the same for all payers
       Cash versus accrual basis (gross up if not the same)
  » Subject to lower of cost or charge
  » No coinsurance amounts




                                                                            74




                                                                                       37
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         Reimbursement for Vaccines

• Seasonal Flu Vaccine
  » Vaccine – Revenue Code 636
  » Administration – Revenue Code 771
          √ HCPCS G0008
          √ OP Fee Schedule




• H1N1 Vaccine
  » Administration – Revenue Code 771
          √ HCPCS G9141
          √ OP Fee Schedule
  » Vaccine – no separate billing since HHA has no cost


                                                               75




         Reimbursement for Vaccines

• Vaccine Administration (HCPCS G0008)
  »   Vaccine Admin Rate (2010)                       $25.67
  »   Labor Portion (60%)                             $15.40
  »   Wage Index (Dallas)                             0.9853
  »   Labor Amount                                    $15.18
  »   Non Labor Portion (40%)                         $10.27
  »   Total Reimb – Admin                             $25.44
                                                      $25 44

  » Not subject to lower of charge or fee



                                                               76




                                                                          38
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       Reimbursement for Vaccines

• Vaccine Supply

  » Agency Specific Charge                        $20.00
  » Cost to Charge Ratio                             .95
  » Vaccine Supply Cost                           $19.00

       Cost to charge ratio is based on total cost (direct +
       overhead)
       Reimbursement is subject to lower of cost or charge


                                                               77




       Reimbursement for Vaccines

• Total Vaccine Reimbursement

  » Administration                 $25.44

  » Supply                         $19.00

  » Total                          $44.44



                                                               78




                                                                          39
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Cost Report Data




                   79




Cost Report Data




                   80




                              40
                                                                    8/13/2010




                Cost Report Data

• Worksheet D
  » M di           P      t b    i d t      (b
    Medicare PPS Payments by episode type (base payment  t
    and outlier portion)
  » Lower of cost or charge comparison for Drugs services on
    Worksheet C (vaccine supply only #636)
  » Computes Medicare settlement on Drugs
• Worksheet D-1
  » Total Medicare interim payments
  » Part A and B – include Drug payments with Part B PPS
    payments (vaccine supply only #636)

                                                               81




                Cost Report Data

• Medicare Settlement Data
  » All Medicare settlement data should be on the accrual basis
    meaning that all claims data associated with episodes
    completed during the cost report period should be included
    even if paid in the subsequent year
  » Reality, most agencies use the most recent available PS&R
    report for Medicare settlement data
  » FI’s / MAC’s will adjust at final settlement – no
    reimbursement impact



                                                               82




                                                                          41
                        8/13/2010




Cost Report Data




                   83




Cost Report Data




                   84




                              42
                                                                     8/13/2010




                  Cost Report Data

• Worksheet F – Balance Sheet
• Worksheet F-1 – Income Statement
• Worksheet F-2 – Statement of Changes in
  Fund Balance
  » Must match internal financial statements


                                                                85




                  Cost Report Data

• Common Cost Report Problems
  » Improper accounting method

  » Inaccurate visit statistics

  » “Like-kind” and “non like-kind” services not segregated –
                 like-kind services?”
    What are non like kind services?

  » Inaccurate FTE calculations


                                                                86




                                                                           43
                                                                    8/13/2010




                  Cost Report Data

• Common Cost Report Problems

  » Improper use of the PS&R report

  » Costs not properly segregated on the trial balance

  » I         l ifi i        f di       d i di
    Improper classification of direct and indirect expenses

  » Telemedicine costs not properly reported

                                                               87




                  Cost Report Data

• Common Cost Report Problems

  » Costs not in the correct cost center

  » Incorrect adjustments to adjust costs on W/S A-5

  » Failure to identify all related party transactions

  » Proper reporting of non-routine medical supply costs and
    charges
                                                               88




                                                                          44
                                                                        8/13/2010




                 Cost Report Data

• Common Cost Report Problems

  » Costs and utilization statistics not properly matched

  » Cost per visit by discipline is unreasonable

  » Worksheet F series not reconciled (Balance Sheet, Income
    Statement and S
    S                         f Changes i F d B l
                d Statement of Ch       in Fund Balance

  » Prior year adjustments made after cost report is filed (i.e.
    tax return extended)
                                                                   89




                 Cost Report Data

• Common Cost Report Problems

  » Missing data

  » Hospital-based agencies – failure to charge all direct costs
    to HHA (using stepdown)

  » Allocation of overhead from Hospital to HHA that do not
    relate to HHA

                                                                   90




                                                                              45
                                                               8/13/2010




                          CMS Form 339

• CMS Form 339 Questionnaire – sections that apply to
  Home Health

    »   A.   Provider organization and operation
    »   B.   Financial data and reports
    »   E.   Approved education activities
    »   I.   Medicare bad debts
    »   J.
        J    Bed complement
    »   K.   PS&R data




                                                          91




                         PS&R Redesign
• What is the PS&R report?
•   g y S&          p         g
  Legacy PS&R report no longer available
• PS&R used to complete the MCR
• CMS issued Transmittal 153 (CR 6519) dated June 12,
  2009
• Need to register with IACS
• All providers should have begun registration process by
  October 1, 2009
• Don’t wait until last minute – process take several weeks



                                                          92




                                                                     46
                                                                                        8/13/2010




                   PS&R Redesign
• Registration process
  » Individuals Authorized Access to the CMS Computer
    Services (IACS)
       Security Official (SO) – required
        √ 1st person to register
        √ Submit all required documentation
               IRS Form CP 575 or alternate, or
               IRS Federal Tax Deposit Coupon or
               IRS 147C letter, or
               Other official IRS documentation – legal business name and taxpayer ID
                                                    g                        p y
               #
        √ IRS Phone # 1-800-829-4933
        √ Approve end users
        √ If you require access to the PS&R report, DO NOT register as the
          SO


                                                                                   93




                   PS&R Redesign

• Registration process
  » B k     Security Official (BSO) – optional
    Back-up S     i Offi i l             i l
      Absence of SO
  » User Group Administrator
  » End Users / Registry End Users – more than 1
      Can access to PS&R system
      Must be employees, not contractors
      Same person on more than one provider only if
      chain

                                                                                   94




                                                                                              47
                                                 8/13/2010




                 PS&R Redesign

• PS&R FAQ’s
  » Summary reports directly online
  » Detail reports – FI / MAC authorizes
        Turnaround time within 30 days
        Format – “.pdf” or “.csv”
  » FI / MAC’s will no longer mail PS&R
    reports
  » Home Office – obtain through provider
                                            95




                 PS&R Redesign
• Home Health Reports
  »   329   Part B Episodes
  »   339   Part A Episodes
  »   399   Part A & B Episodes
  »   342   Part B Vaccine (Supply)
  »   34P   Part B OPPS (Admin)

  »   322   Part B RAP
  »   332   Part A RAP
  »   32M   Part B MSP
  »   33M   Part A MSP


                                            96




                                                       48
                                                                               8/13/2010




                       PS&R Redesign

• Passwords must be changed every 60 days
• Must be h          t l
  M t b 8 characters long
• At least 2 letters and 1 number
• Letters must be mixed case – upper / lower
• Must not contain your user ID
• Must not contain 4 consecutive characters from any of
            i
  your previous 6 passwords d
• Must be different from your previous 6 passwords


                                                                          97




                       PS&R Redesign

• CMS Transmittal 153 (CR 6519), June 12,
  2009
    » http://www.cms.hhs.gov/transmittals/downloads/R153FM.pdf



• Overview of PS&R System
    » http://www.cms.hhs.gov/PSRR/



• Registration Tips
    » http://www.cms.hhs.gov/psrr/downloads/Registration_Tips_Providers.pdf


                                                                          98




                                                                                     49
                                                                        8/13/2010




                   PS&R Redesign

• Overview of IACS
  » http://www cms hhs gov/IACS/
    http://www.cms.hhs.gov/IACS/
  » http://www.cms.hhs.gov/IACS/04_Provider_Community.as
    p#TopOfPage
• PS&R FAQ’s
  » http://www.cms.hhs.gov/psrr/downloads/Frequently_Asked_Questions.
    pdf


• PS&R Quick Guide
  » http://www.cms.hhs.gov/psrr/downloads/QuickGuideProvi
    ders.pdf

                                                                   99




                   PS&R Redesign

         pp
• IACS Support
  » External User Services
        San Antonio, Texas
        1-866-484-8049
        EUSSupport@cgi.com


                                                                  100




                                                                              50
                                                                 8/13/2010




                            Links

• Provider Reimbursement Manual (PRM 15-1)

• Medicare Cost Report Forms and Instructions (PRM 15-2)

   » CMS Form 339 – Chapter 11

   » Home Health CMS Form 1728-94 – Chapter 32



   »   http://www.cms.hhs.gov/Manuals/PBM/list.asp

                                                           101




         Questions and Other Topics




                                                           102




                                                                       51
                                                        8/13/2010




                             Contact Info
Tom Boyd, MBA
Principal
Boyd & Nicholas
   y
(877) 424-6527
tboyd@boydandnicholas.com


Dave Macke, MBA, FHFMA
Shareholder, Director of Reimbursement Services
VonLehman & Company
(859) 331-3300
dmacke@vlcpa.com

Barry Gold, CPA, FHFMA
Chief Financial Officer
Mays Home Care
903-784-4211
Bgold@MaysHomecare.com

                                                  103




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