FOCUSED FINANCIAL RESULTS

Cost Reporting in the 21st Century

February 28, 2019

Agenda

• The New Reality

• Finding the Best Staffing Solutions

• Blocking and Tackling – Standardization, Automation, and Compliance

• New and Forgotten Cost Report Compliance Rules

• Recent Developments with the CMS 2552-10 Forms and Hot Topics

• Q&A

The New Reality

Out with the old . . .

The New Reality

Out with the old . . . and in with the new.

The New Reality

From physical storage . . .

The New Reality

From physical storage . . . to cloud servers and storage.

The New Reality

From paper manuals . . .

The New Reality

From paper manuals . . . to online tools.

The New Reality

From microfiche . . .

The New Reality

From microfiche . . . to anything!

The New Reality

Paper filing of cost report(wet signature, FedEx/UPS)

CURRENT STATE FUTURE STATE

MCReF and e-Signatures (new process and access)

Hard-copy source data (RAs, UB-04s, time studies)

Electronic records/systems(reports and audit support)

Less patient detail(using available reports)

Greater patient detail(PHI, big data, WI / S-10)

Simple solutions(better methods = $$)

More complex solutions(deeper research = $$)

Finding the Best Staffing Solutions

Staffing Challenges

Experienced Staff Leaving/Retiring

New Professionals Not

Interested in Healthcare

Finance

Mix of Employees and Contractors

Different Skill Sets Needed

(analytics, programming,

data)

Finding the Best Staffing Solutions

But what should the composition of your Reimbursement Team be?

Data and “Light”

Programming

Competence

Analytical and

Accounting Skills

Regulatory Expertise

Finding the Best Staffing Solutions

FILL THE GAPS

(Training can supply missing

piece for otherwise good

candidates)

RELEVANT INFORMATION

(Delivering the appropriate

levels of education at the

right time)

JOB SATISFACTION

(Employees want to learn

and grow)

Quality education can help you hold it all together!

Moving Beyond Staffing to Focus on Processes

Improving our processes allows us to . . .

Increase

Productivity

Allows for more time to

focus on analysis as

opposed to compilation

Reduce Errors

Reduces the risk of

errors, and allows for

corrections with a

“tweak”

Identify

Opportunities

Built to support quick and

accurate analysis using

trends and benchmarks

Standardization, Automation, Compliance

Data Standardization

Process Automation

Compliant Reporting

• Reduces work-up time

• Requires less knowledge transfer; training becomes easier

• Ensures consistency and minimizes variety

• Supports other uses of data, requiring less collection of data

• Allows for automation to occur

• Reduces time spent on compilation of data means more time available to analyze the reasonableness of the numbers

Data Standardization

Process Automation

Compliant Reporting

• Standard workpaper format and elements

• Consistent data formats (flat files, normalize your data, etc.)

• Structured network directory and standard file names

• Compilation and review procedures for all of your department’s functions

• Cost report application (if minimal reimbursement impact):• Consider simplifying statistics or at least standardizing across your hospitals

• Collapse fragmented/componentized A&G lines

• Eliminate multiple regional home offices and accomplish in one HOCS

Data Standardization

Process Automation

Compliant Reporting

• Fewer errors; better controls

• Faster response times

• Improved analysis through BI platforms and data visualization

• Single access point for reporting and analysis

• Paired datasets

Data Standardization

Process Automation

Compliant Reporting

• Excel – “Old Tried and True”; “Blank Slate” for developing ideas; has difficulty handling large amounts of data

• Access – “One-Stop Shop” for housing data, querying/filtering, and reporting; powerful; not too many individuals know how to use it well

• SQL – Industry is leaning in the direction of large, web-based data warehouses (e.g., Clarity) and query software to simply pull raw data

• Business Intelligence platforms (e.g., Power BI/Tableau) – Once you have the data set you need, these tools can easily query, manipulate, and report the data in visualizations that help to explain the numbers

Data Standardization

Process Automation

Compliant Reporting

• Use standard queries to pull data for all hospitals

• Promote your Excel, SQL, and BI power users’ knowledge by tasking them with making data retrieval, queries, and reports more efficient

• Develop macros to automate steps for faster processing

• Use BI to analyze data with greater flexibility

• Explore automation available within the cost report software

• Investigate automated workpaper tools

Data Standardization

Process Automation

Compliant Reporting

• Improved accuracy of data

• Increased time for analysis and review

• Reduced risk and exposure

• Enhanced audit support

Data Standardization

Process Automation

Compliant Reporting

New Compliance Requirements

• New Requirements (83 FR 8/17/2018, p. 41677–41686)• Effective with cost reporting periods beginning on or after October 1, 2018

• Documentation must agree with amounts reported on the cost report and must be submitted along with the cost report• Medicare bad debt listings

• For DSH-eligible hospitals, Medicaid-eligible days listings

• For DSH-eligible hospitals, detailed listings of charity care and uninsured discounts provided• CMS will be developing a standard format of required fields for this dataset

• For providers that are part of a healthcare system, a completed home office cost statement• A copy of the HOCS should be submitted directly to the servicing MAC and to each MAC servicing its

chain providers

• No need to submit a copy of the HOCS with every cost report submission

• For providers that have a different fiscal year from their home office:

• Amounts allocated from the HOCS must correspond to the appropriate portion of each fiscal period

60-Day Overpayment Rule

• Reporting and Returning Overpayments Final Rule (81 FR 7654, 2/12/2016 and 42 CFR 401.301-305)• An overpayment must be reported and returned by the later of:

• 60 days after the date on which the overpayment is identified; OR

• Date any corresponding cost report is due, if applicable

• A person has “identified” an overpayment when the person has or should have, through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment

• 60-day clock starts:• When reasonable diligence is completed (limited to 180 days); OR

• If the person fails to conduct reasonable diligence, on the day the person received credible information of a potential overpayment

Important Cost Report Topics

• Recent Developments• T14 – Effective for cost reporting periods ending on or after 1/31/2018

• Sec. 5503 Redistribution 5-year Eval Period is over (W/S S-2 Pt I, Lines 61 to 61.20)

• NAHE Program Eligibility (W/S S-2 Pt I, Lines 60.xx and B-2, if applicable)

• T15 – Effective for cost reporting periods ending on or after 9/30/2018• Wage Index data detail must now be reported “by individual”?

• “Other” wage-related costs (W/S S-3 Pt II, Line 18 and S-3 Pt IV, Line 25) may no longer be reported for cost reporting periods beginning on or after October 1, 2018

Important Cost Report Topics

• Worth Reviewing – Questionnaire (W/S S-2 Pt I)• Empirical DSH and UCC DSH (Lines 22 and 22.01)

• WI geographic reclassifications/redesignations (Line 22.03)

• Low Volume Adjs (Line 39)• New Reqs effective 10/1/2018 (was >1,600 Medicare; now >3,800 total discharges)

• HAC Reduction Adjs (Line 40)

• PPS Capital, especially for urban hospitals that fluctuate around 100 beds (Line 45)

• NAHE program eligibility (Lines 60 – 60.xx)

• Provider tax or HQAF in GL for almost all non-governmental hospitals (Line 122)

• B-1 statistical changes (Lines 146-149)

• Section 1876 Medicare days (Line 171)

Important Tip: Compare to prior year for any changes but also spot check other answers periodically.

Important Cost Report Topics

• Worth Reviewing – Wage Index (W/S S-3 Pt II & IV)• Physicians (Lines 4 and 5) – not an issue in CA

• Interns and Residents (Lines 7 & 7.01)

• Home Office personnel in GL (Line 8)

• Contract labor, including contracted interns and residents (Line 11)

• Allowable Home Office amounts (Line 14.01 & 25.50)

• A&G contract labor (Line 28)

• Wage-related costs with proper split (Lines 17 to 24) and within proper benefit category (W/S S-3 Pt IV)• Qualified vs. Nonqualified benefit plan costs

• Self Funded Health Insurance

• No more reporting “Other” wage-related costs

Important Tip: Check AHW on each line for reasonableness and compare to prior year.

Important Cost Report Topics

• Worth Reviewing – UCC DSH (W/S S-10)• Overall CCR is reasonable (Line 1)

• Informational Only (Lines 2 through 19)

• Uninsured Patients – true self pay and full charity (Col. 1)

• Insured Patients – should only be copays after insurance (Col. 2)

• Payments – don’t forget to identify these (Line 22)

• Total Bad Debt Expense – include Medicare bad debts (Line 26)

Important Tip: Compare to prior year for significant changes and compare by % to total. Insured patient amounts should be much smaller than Uninsured amounts.

Important Cost Report Topics

• Worth Reviewing – GL and Mapping (W/S A)• Reconcile total expenses to GL

• Review mapping and explain changes

• Don’t forget HCRIS codes

• Proper placement of clinics (90.xx v NRCC) and impact to 340B

• Review treatment of cost-based areas (NAHE, Organ Transplant, Base Year Capital, Base Year GME, and CAHs)

Important Tip: Compare to prior year by CMS Line for significant changes and review for reasonableness.

Important Cost Report Topics

• Worth Reviewing – Adjustments (W/S A-8)• Use a checklist to ensure completeness and consistency

• Rebates/Discounts

• Non-operating expenses/income

• Other non-allowable expenses or revenue

• Don’t forget to adjust for provider tax (HQAF), if reported on your GL

Important Tip: During the year, identify non-allowable items to look for and discuss with your Accounting team.

Important Cost Report Topics

• Worth Reviewing – Statistics (W/S B-1)• Do not change statistics without MAC approval

• Compare Unit Cost Multipliers• Quickly identifies changes in either costs or statistics

• Look for miskeyed statistics on incorrect lines

• Consider performing an updated square footage study

• Review statistical allocations to cost-based areas• NAHE and Organ Transplant typically require pro-ration based on time studies and/or

relevance to the programs

Important Tip: Proper planning can help you reduce difficulties gathering statistics and avoid continued reliance on prior year figures.

Important Cost Report Topics

• Worth Reviewing – Settlement (W/S E Series)• Breakdown settlement by component (e.g., IME, DSH, etc.)

• Review settlements for reasonableness

• Compare to estimated accruals booked on GL

• Shouldn’t be any surprises; if there are, continue to improve your modeling

• Review PPS areas to ensure $0 settlement• After identifying settlements by component, ensure no other unexplained variances

• Could indicate a keying error in PS&R data, if you’re still keying this data into the cost report

Important Tip: Build robust settlement estimator (for interim accruals) and reconciliation for cost report preparation.

Important Cost Report Topics

• Frequently Missed Opportunities• Complacency with schedules not directly impacting cost report settlement

• Wage Index (W/S S-3 Pt II to V)

• UCC DSH (W/S S-10)

• Sub-provider schedules (S Series and Settlement Series)

• Bed count reviews – They’re not just for improving IME reimbursement anymore• RHCs, MDH status, Operating and Capital DSH, and RRC status

• NAHE MA calculations

• Poor quality, non-compliant, or non-existent time studies

• Low Volume and Volume Decrease adjustments

• Testing for ESRD add-on reimbursement

Questions?

Thank you for your participation!

Dave Yoder, Toyon Associates, Inc. (dave.yoder@toyonassociates.com)

Susan McCabe, Sutter Health (mccabes@sutterhealth.org)

TOYON UNIVERSITY