The Medicare Cost Report: A Tool for Decision Making and Strategic Development

Transcription

1 2014 MEGA Conference The Medicare Cost Report: A Tool for Decision Making and Strategic Development January 30, :30 a.m. 12:00 p.m. Date or subtitle Kathy LaBrake, CPA, Partner Holly Pokrandt, CPA, Partner Wipfli Health Care Practice Wipfli LLP Wipfli LLP 0

2 If you had to make a decision and your Medicare cost report was your only tool, how would you begin to... a. Analyze your cost b. Compare a contract c. Calculate contribution margins d. Determine unit cost Wipfli LLP 1

3 Agenda Cost Report Mechanics Routine Cost Analysis Ancillary Cost Analysis Contracting Contribution Margin Outsourcing Services Benchmarking Wipfli LLP 2

4 Cost Report Mechanics How are reimbursable costs determined? Wipfli LLP 3

5 Cost Report Flow Worksheet S Worksheet A Worksheet B Worksheet C Worksheet D Worksheet E S-3 A, A-6, A-8, A-8-1, A-8-2, A-8-3 B Part I, B-1 C D Part V, D-3, D-1 Parts I, II, III E Part B, E-1, E-2 E-3 Part V Statistics Costs adjusted: Added and subtracted Allocated to revenueproducing departments Dept. revenue = Cost-tocharge ratios X Dept. Medicare charges = Medicare cost Compared to Medicare Payments = Settlement Wipfli LLP 4

6 Routine Cost Analysis Wipfli LLP 5

7 Routine Cost Analysis 2013 Adults & Peds Direct cost per day $ 535 Total cost per day $ 1,164 Gross charge per day $ 1,134 Observations: Direct cost is 46% of total cost Overhead cost is $629 per day or 54% of total cost Costs exceed gross charges by $30 per day Cost-to-charge ratio is 1.03 Wipfli LLP 6

8 Routine Cost Analysis Calculation for ratios: Department Worksheet B Part I Column 0 Direct Cost Worksheet B Part I Column 26 Total Cost Worksheet C Part I Column 8 Charges Worksheet S-3 Part I Column 8 Days Direct Cost/Day Total Cost/Day Total Charge/Day Overhead Percent Sample HOSPITAL Adults & Peds $ 3,167,300 $ 6,890,400 $ 6,712,900 5,920 $ 535 $ 1,164 $ 1,134 54% Department Worksheet B Part I Column 0 Direct Cost Worksheet B Part I Column 26 Total Cost Worksheet C Part I Column 8 Charges Worksheet S-3 Part I Column 8 Days Direct Cost/Day Total Cost/Day Total Charge/Day Overhead Percent Your Hospital Adults & Peds Wipfli LLP 7

9 Routine Cost Analysis 2013 Adults & Peds Direct cost per day $ 535 Total cost per day $ 1,164 Gross charge per day $ 1,134 Overhead percent 54% Your Hospital Thoughts: Is it reasonable that more than 50% of the total cost is overhead? Are these results comparable to or as expected when compared to prior years? Wipfli LLP 8

10 Routine Cost Analysis Adults & Peds Observations: Direct cost per day $ 422 $ 488 $ 535 Total cost per day $ 881 $ 1,070 $ 1,164 Gross charge per day $ 905 $ 1,049 $ 1,134 Days 7,140 6,400 5,920 From 2011 to 2013, direct cost per day increased $113 or 27% From 2011 to 2013, total cost per day increased $283 or 32% From 2011 to 2013, gross charge per day increased $229 or 25% From 2011 to 2013, days decreased 1,220 or 17% Wipfli LLP 9

11 Routine Cost Analysis Direct cost per day - Adults & Peds 7,500 Adults & Peds days $600 $500 $400 $300 $200 $100 Direct cost per day D a y s 7,000 6,500 6,000 5,500 Adults & Peds days $ , Thoughts: If your days decrease and your direct cost remains the same or increases, direct cost per day will increase. If days decreased, why didn t direct cost decrease in some proportion... what could be causing this? Wipfli LLP 10

12 Routine Cost Analysis Adults & Peds Observation: Direct cost per day $ 422 $ 488 $ 535 Total cost per day $ 881 $ 1,070 $ 1,164 Gross charge per day $ 905 $ 1,049 $ 1,134 Days 7,140 6,400 5,920 Overhead cost per day $ 459 $ 581 $ 629 From 2011 to 2013, overhead cost per day increased $170 or 37% Wipfli LLP 11

13 Routine Cost Analysis Adults & Peds Direct costs $ 3,011,800 $ 3,124,400 $ 3,167,300 Indirect costs: Capital - Building 425, , ,600 Capital - MME 140, , ,700 Employee benefits 409, , ,000 Communications - 45,600 45,100 Data processing - 41,400 39,400 Purchasing - 3,200 2,900 Admitting - 40,400 37,100 Cashiering - 47,600 52,400 Other admin 411, , ,100 Operation of plant 411, , ,500 Laundry 68,800 77,100 73,600 Housekeeping 135, , ,700 Dietary 355, , ,900 Cafeteria 133, , ,000 Nursing administration 614, , ,900 Medical records 153, , ,900 Social service 190, , ,300 Total indirect costs 3,448,600 3,727,600 3,723,100 Total costs $ 6,460,400 $ 6,852,000 $ 6,890,400 Thoughts: Was there a capital project completed in 2012? A & G department was fragmented in 2012 What could happen in your dietary to reduce the costs by half? Source: Direct Costs: Medicare cost report Wkst. B, Part I, Col 0, Line 30 Source: Indirect costs: Medicare cost report Wkst. B, Part I, Overhead Columns, Line 30 Wipfli LLP 12

14 Routine Cost Analysis Adults & Peds Direct cost per day $ 422 $ 488 $ 535 Total cost per day $ 881 $ 1,070 $ 1,164 Gross charge per day $ 905 $ 1,049 $ 1,134 Days 7,140 6,400 5,920 Overhead cost per day $ 459 $ 581 $ 629 Gross charge greater (less) than cost $ 24 $ (21) $ (30) Cost-to-charge ratio 97% 102% 103% Observation: Charge exceeded cost in 2011, but cost exceeded charge in 2012 and 2013 Thoughts: If my total charge per day is less than my total cost per day... Do I have a pricing issue? Wipfli LLP 13

15 Routine Cost Analysis Consider calculating your other routine departments Department Worksheet B Part I Column 0 Direct Cost Worksheet B Part I Column 26 Total Cost Worksheet C Part I Column 8 Charges Worksheet S-3 Part I Column 8 Days Direct Cost/Day Total Cost/Day Total Charge/Day Sample HOSPITAL Adults & Peds $ 3,167,300 $ 6,890,400 $ 6,712,900 5,920 $ 535 $ 1,164 $ 1,134 Nursery $ 202,400 $ 380,300 $ 511, $ 302 $ 568 $ 763 SNF $ 3,248,900 $ 5,630,100 $ 6,994,700 30,200 $ 108 $ 186 $ 232 Wipfli LLP 14

16 Routine Cost Analysis Summary: Do your costs exceed charges? Does overhead look reasonable? Is the percent of direct costs to total costs consistent between the years? What s happening to the direct costs as your days change? Is there something you need to investigate? Wipfli LLP 15

17 Ancillary Cost Analysis Wipfli LLP 16

18 Ancillary Cost Analysis Sample HOSPITAL - Current Year Department Cost-to- Charge Ratio Operating room Radiology - Diagnostic Laboratory Respiratory therapy Physical therapy Medical supplies charged to patients Observations: Cost-to-charge ratio over 1.0 means costs exceed charges. Cost-to-charge ratio near zero means charges greatly exceed cost. Drugs charged to patients Emergency Observation beds (nondistinct part) Wipfli LLP 17

19 Ancillary Cost Analysis Calculation of Cost-to-Charge Ratios Sample HOSPITAL - Current Year Department Worksheet C Part I Column 5 Total Cost Worksheet C Part I Column 8 Total Charges Worksheet C Part I Column 9 Total Cost-to- Charge Ratio Operating room $ 3,530,400 $ 9,775, Radiology - Diagnostic $ 5,866,700 $ 24,845, Laboratory $ 3,866,700 $ 12,259, Respiratory therapy $ 859,900 $ 980, Physical therapy $ 2,351,900 $ 6,587, Medical supplies charged to patients $ 1,686,600 $ 4,230, Drugs charged to patients $ 5,070,500 $ 12,610, Emergency $ 4,228,200 $ 3,839, Observation beds (nondistinct part) $ 508,600 $ 318, Wipfli LLP 18

20 Ancillary Cost Analysis Typical Departments With Cost-to-Charge Ratio Over 1.0: 1. Low volume departments such as labor and delivery or speech therapy 2. High cost departments such as emergency room, clinic, and observation 3. Cost report preparation errors such as: Anesthesia Calculation of professional component costs Medical supplies Expense reported in medical supply department while charges reported in department utilizing the supply Laboratory Lab gross-up not completed 4. Start-up departments such as operating room with a new surgeon Wipfli LLP 19

21 Ancillary Cost Analysis Sample HOSPITAL - Current Year Department Cost-to- Charge Ratio Operating room Radiology - Diagnostic Laboratory Respiratory therapy Physical therapy Medical supplies charged to patients Drugs charged to patients Emergency Observation beds (nondistinct part) Your Hospital Thoughts: For a cost-to-charge ratio of 1.0 or greater, can costs be reduced to improve margin (look at cost allocation)? For a cost-to-charge ratio significantly less than 1.0, have prices been increased to a level that the hospital is no longer competitive for the service provided? Wipfli LLP 20

22 Ancillary Cost Analysis Cost-to-Charge Ratios Department Operating room Radiology - Diagnostic Laboratory Respiratory therapy Physical therapy Medical supplies charged to patients Drugs charged to patients Emergency Observation beds (nondistinct part) Questions to Consider: Are the results of the historical comparison as expected? Are the results supported by operational activity? What is the percent change in each of the years presented? Wipfli LLP 21

23 Ancillary Cost Analysis Cost-to-Charge Ratios Percent Change Department Operating room 5.7% -22.8% Radiology - Diagnostic 6.8% -6.9% Laboratory 5.2% 33.2% Respiratory therapy -5.9% 0.5% Physical therapy -27.3% -12.3% Medical supplies charged to patients 8.4% 7.1% Drugs charged to patients 8.1% -6.5% Emergency 3.6% 4.6% Observation beds (nondistinct part) 22.1% -14.7% Thought: What reasons could be causing the change in the above highlighted departments? Wipfli LLP 22

24 Ancillary Cost Analysis Cost-to-Charge Ratios Department Operating room Percent change 5.7% -22.8% Wipfli LLP 23

25 Ancillary Cost Analysis Direct costs $ 2,479,200 $ 2,763,800 $ 1,688,300 Indirect costs: Capital - Building 139, , ,800 Capital - Movable equipment 200, , ,300 Employee benefits 103, , ,900 Communications - 35,100 34,800 Data processing - 56,800 63,600 Purchasing - 69,400 98,500 Admitting - 55,400 60,000 Cashiering - 65,300 84,700 Other admin 461, , ,400 Operation of plant 134, , ,800 Laundry 24,000 28,700 34,900 Housekeeping 45,500 51,100 47,300 Cafeteria 30,200 46,300 44,200 Nursing administration 138, , ,900 Medical records 210, , ,000 Total indirect costs 1,488,000 1,723,500 1,842,100 Total costs $ 3,967,200 $ 4,487,300 $ 3,530,400 Percent change 13.1% -21.3% Charges $ 8,956,200 $ 9,590,100 $ 9,775,000 Operating Room Observations: Direct costs increased 11% from 2011 to 2012 but decreased 39% from 2012 to 2013 Indirect costs increased 16% from 2011 to 2012 and 7% from 2012 to 2013 At the same time, charges increased 7% from 2011 to 2012 and 2% from 2012 to 2013 Percent change 7.1% 1.9% Source: Direct: Wkst. B, Part I, Col 0, Line 50 Source: Indirect: Wkst. B, Part I, Overhead Columns, Line 50 Wipfli LLP 24

26 Ancillary Cost Analysis Salary expense $ 642,200 $ 843,700 $ 944,800 Other expense 1,837,000 1,920, ,500 Total direct cost $ 2,479,200 $ 2,763,800 $ 1,688,300 Charges $ 8,956,200 $ 9,590,100 $ 9,775,000 Salary expense / Charge 7.2% 8.8% 9.7% Other expense / Charge 20.5% 20.0% 7.6% Operating Room Observations: By drilling down further, we can see that the change has occurred in other expenses. This will require further analysis to understand why. Source: Salaries: Wkst. A, Col 1, Line 50 Source: Total direct cost: Wkst. B, Part I, Col 0, Line 50 Source: Other expense: Difference between total direct cost and salaries Wipfli LLP 25

27 Using the Cost Report at a High Level to Evaluate Contracts Wipfli LLP 26

28 Contracting Total Medicare inpatient cost per day: Total Medicare inpatient charge per day: Wkst. D-1, Line 49 (Routine & Ancillary) $ 8,471,900 Wkst. D-3, Col 2, Lines $ 15,848,400 Days: Wkst. S-3, Col 6, Line 1 + Applicable Lines ,500 Days: Wkst. S-3, Col 6, Line 1 + Applicable Lines ,500 Total Medicare inpatient cost per day $ 2,420 Total Medicare inpatient charge per day $ 4,530 Assume Medicare reimburses the Hospital $ 2,445 Wipfli LLP 27

29 Contracting Total Medicare inpatient cost per day $ 2,420 Total Medicare inpatient charge per day $ 4,530 Assume Medicare reimburses the Hospital $ 2,445 Percent of charge 54% XYZ Contract per day $ 3,000 Percent of Medicare reimbursement 123% Thoughts: How do your current contracts compare? What can you negotiate? Percent of Medicare charge 66% Wipfli LLP 28

30 Contracting Outpatient Medicare costs (Wkst. D, Part V, Col 6, Line 200) $ 4,839,700 Outpatient Medicare charges (Wkst. D, Part V, Col 3, Line 200) $ 15,369,700 Percent 31% Assume Medicare reimburses the Hospital 35% XYZ Contract 50% Thoughts: How do your current contracts compare? What can you negotiate? Wipfli LLP 29

31 Contribution Margin Wipfli LLP 30

32 Contribution Margin Contribution margin represents: The amount remaining after revenue less allowances and discounts less direct expenses The amount remaining, or contribution margin, is the amount available to cover fixed and overhead expenses and profit Wipfli LLP 31

33 Contribution Margin Calculating Contribution Margin for Hospital Departments #1 Challenge How do you determine contractual adjustments by department? While it is not perfect... One option is to use an average contractual adjustment percent from Medicare cost report Worksheet G-3 Wipfli LLP 32

34 Contribution Margin Average Contractual Adjustment % Total gross patient service revenue (Wkst G-3, Line 1) $ 119,149,800 $ 126,727,900 $ 144,677,900 Total contractual adjustments (Wkst G-3, Line 2) $ 58,169,500 $ 61,925,800 $ 75,053,800 C/A % 48.8% 48.9% 51.9% Wipfli LLP 33

35 Contribution Margin Medicare Cost Report Reference Revenue: Radiology Department Considerations: Contractual adjustment % Wkst. C, Part I, Col 8, Line 54 Radiology revenue $ 16,693,100 $ 17,915,200 $ 19,845,400 From Internal Records * Less - C/A & discounts 8,149,700 8,754,300 10,295,100 Subtotals Net Radiology revenue 8,543,400 9,160,900 9,550,300 Expenses: Wkst. A, Col 1, Line 54 Direct salary expense 1,261,700 1,294,500 1,397,400 Wkst. A, Col 2, Line 54 Direct other expense 1,094,600 1,153,900 1,091,400 Wkst. B, Part I, Col 4, Line 54 Employee benefits 202, , ,000 Subtotals Total direct expenses 2,558,900 2,650,900 2,726,800 * Or calculated average Contribution margin $ 5,984, % $ 6,510, % $ 6,823, % Cost report excludes professional revenue and expense Other information to consider: FTEs and volume statistics Wipfli LLP 34

36 Contribution Margin Physical Therapy Department Medicare Cost Report Reference Revenue: Wkst. C, Part I, Col 8, Line 66 PT revenue $ 3,261,400 $ 3,184,400 $ 3,952,500 From Internal Records * Less - C/A & discounts 1,591,600 1,557,200 2,051,300 Subtotals Net PT revenue 1,669,800 1,627,200 1,901,200 Expenses: Wkst. A, Col 1, Line 66 Direct salary expense 545, , ,900 Wkst. A, Col 2, Line 66 Direct other expense 156, , ,700 Wkst. B, Part I, Col 4, Line 66 Employee benefits 87,600 85, ,500 Subtotals Total direct expenses 789, , ,100 * Or calculated average Contribution margin $ 880, % $ 789, % $ 974, % Question: If the hospital would contract PT services to a nursing home, how could this analysis be used to assist with structuring a rate? Wipfli LLP 35

37 Contribution Margin There s not a magic contribution margin: Contribution margin depends on your operations and charge structure. Within a hospital, we would expect the contribution margin to stay relatively similar to prior periods or understand why any changes have occurred. Wipfli LLP 36

38 Outsourcing Services Wipfli LLP 37

39 Outsourcing Services Sample Hospital Your Hospital Cost Center Description Unit Cost Multiplier Statistic Unit Cost Multiplier Statistic From Wkst B-1, Line 203 Cap Rel Costs - Bldg & Fixt $ Square feet Operation of plant $ Square feet Housekeeping $ Hours Dietary $ Meals Represents: Cost Per Unit (Unit Cost Multiplier) = Fully Allocated Cost Total Statistical Unit (i.e. square feet) Wipfli LLP 38

40 Outsourcing Services A local clinic comes to the hospital wanting to rent space. How can you use the cost report to estimate what you should charge? Building cost per square foot per the Medicare cost report, assuming no utilities or maintenance: Cap Rel Costs - Bldg & Fixt $ Wkst. B-1, Col 1, Line 203 Wipfli LLP 39

41 Outsourcing Services A local clinic comes to the hospital wanting to rent space including utilities. How can you use the cost report to estimate what you should charge? Wipfli LLP 40

42 Outsourcing Services Cost Center Description From Wkst B-1, Line 203 Unit Cost Multiplier Statistic Cap Rel Costs - Bldg & Fixt $ Square feet Operation of plant $ Square feet Housekeeping $ Hours Dietary $ Meals Wipfli LLP 41

43 Outsourcing Services Cap Rel Costs - Bldg & Fixt $ Operation of plant Amount per square foot $ Thoughts: If we add the building depreciation and the operation of plant unit cost multipliers together amount looks high Why would this be occurring because the operation of plant department may include more than the utility cost Wipfli LLP 42

44 Outsourcing Services Calculation for Utilities Cap Rel Costs - Bldg & Fixt $ Wkst. B-1, Col 1, Line 203 Total square feet 33,000 Wkst. B-1, Col 1, Line 1 Total costs for utilities $ 300,000 Wkst. A, Col 2, Line 7, or internal records Amount per square foot $ 9.09 ($300,000 / 33,000 square feet) Wipfli LLP 43

45 Outsourcing Services Cap Rel Costs - Bldg & Fixt $ Utilities per square foot 9.09 Estimated cost per square foot $ Thought: Is $31.08 a reasonable estimate of the costs for rent and related utilities (example 1,500 square feet would approximate $47,000 a year or $3,900 per month)? Wipfli LLP 44

46 Outsourcing Services The hospital is approached to provide housekeeping services for a clinic what should the hospital consider charging? Cost Center Description From Wkst B-1, Line 203 Unit Cost Multiplier Statistic Cap Rel Costs - Bldg & Fixt $ Square feet Operation of plant $ Square feet Housekeeping $ Hours Dietary $ Meals Wipfli LLP 45

47 Outsourcing Services Calculation of the Cost of Providing Housekeeping Services Housekeeping cost per hour $ From Wkst. B-1, Col 9, Line 203 Total square feet 33,000 Wkst. B-1, Col 1, Line 1 Total costs for housekeeping $ 692,000 Wkst. B, Part I, Col 9, Line 9 Estimated cost per square foot $ ($692,000 / 33,000 square feet) Thought: If housekeeping services are provided for 1,500 square feet, the annual estimated cost is approximately $31,500, or $2,600 per month.this represents about 3 hours a day is this a reasonable starting point? Wipfli LLP 46

48 Outsourcing Services The Hospital currently provides an outside meal program What is the direct cost of the program compared to the revenue received? What is the total cost of the program compared to the revenue received? Wipfli LLP 47

49 Outsourcing Services Direct Cost Analysis Example Outside Meals Outside Meals Revenue (10,000 x $5.00) $ 50,000 Revenue (10,000 x $5.00) $ 50,000 Number of meals 10,000 Number of meals 10,000 Direct cost per meal (A) 6.44 Total cost per meal (B) Total direct cost 64,400 Total direct cost 109,900 Loss, excluding overhead $ (14,400) Loss, including overhead $ (59,900) (A) Direct costs per Wkst. B, Part I Total Cost Analysis Example (B)Total costs per Wkst. B, Part I Column 0, Line 10 $ 451,000 Column 10, Line 10 $ 769,000 Total meals per B-1 70,000 Total meals per B-1 70,000 Direct cost per meal (A) $ 6.44 Total cost per meal (B) $ Meals on Wheels Program Assumption: Contract rate $5.00 per meal Observation: The Meals on Wheels program loses money based on direct costs and loses more when including overhead costs. Thought: Is there a better way to provide this service? Wipfli LLP 48

50 Benchmarking Your Hospital and Your Competition Wipfli LLP 49

51 Benchmarking After spending time analyzing and dissecting your cost report data, consider developing a summary of benchmarks comparing to your historical data and to your hospital s competitors. Medicare cost reports can be requested through the Freedom of Information Act from the Centers for Medicare & Medicaid Services or your fiscal intermediary. Wipfli LLP 50

52 Benchmarking Benchmark Hospital Benchmark Adults & Peds occupancy percentage 19.7% 18.2% 21.6% ALOS - Adults & Peds Hospital Medicare Utilization: Routine - Total 49.0% 47.2% 38.5% Ancillary - Total 23.5% 23.2% 26.8% Operating room 44.8% 30.0% 38.5% Emergency room 30.0% 25.9% 33.7% Overhead expenses as a percentage of total expenses 48.7% 49.8% 50.5% Outpatient charges as a percentage of total charges 69.5% 72.0% 71.6% Cost per diem for hospital routine $ 1, $ 1, $ 1, Cost per diem for SNF $ $ $ Medicare cost per diem for total inpatient services $ 1, $ 1, $ 1, Medicare outpatient cost-to-charge ratio 43.5% 41.7% 44.6% Net income from service to patients $ 401,200 $ (277,100) $ 491,957 Contractual adjustment and discounts % 38.3% 41.0% 36.5% Wipfli LLP 51

53 Benchmarking Benchmark Competition (Sample: 12 competitors) Lowest Median Highest Benchmark Hospital Performer Performer Performer Adults & Peds occupancy percentage 21.6% 19.8% 31.5% 41.9% ALOS - Adults & Peds Hospital Medicare Utilization: Routine - Total 38.5% 36.7% 38.1% 24.4% Ancillary - Total 26.8% 19.7% 24.0% 30.0% Operating room 38.5% 44.4% 30.8% 20.5% Emergency room 33.7% 24.1% 24.8% 31.5% Overhead expenses as a percentage of total expenses 50.5% 41.0% 44.9% 46.7% Outpatient charges as a percentage of total charges 71.6% 59.1% 56.0% 79.8% Cost per diem for hospital routine $ 1, $ 1, $ 1, $ 1, Cost per diem for SNF $ $ - $ $ - Medicare cost per diem for inpatient services $ 1, $ 2, $ 1, $ 2, Medicare outpatient cost-to-charge ratio 44.6% 48.5% 40.8% 65.0% Net income from service to patients $ 491,957 $ (1,604,803) $ (57,899) $ 2,660,396 Contractual adjustment & discounts % 36.5% 36.4% 39.2% 34.4% Wipfli LLP 52

54 Benchmarking Benchmark Formula - Cost Report Adults & Peds occupancy percentage (and others) Worksheet S-3, Part I, Column 8, Line 1 / Column 2, Line 1 (Beds) * 365 ALOS - Adults & Peds Worksheet S-3, Part I, Column 8, Line 1 / Column 15, Line 1 Hospital Medicare Utilization: Routine Worksheet S-3, Part I, Column 6, Line 1 / Column 8, Line 1 Ancillary Worksheet D, Part V, Column 2-4 plus D-3 (Hospial and Swing Bed), Column 2 for Department Line or Total Line / Worksheet C, Part I, Column 8 for Department Line or Total Line less Lines Overhead expenses as a percentage of total expenses Worksheet B, Part I, Column 0, Lines1-29 / Column 0, Line 202 Outpatient charges as a percentage of total charges Worksheet C, Part 1, Column 7, Line 202 / Column 8, Line 202 Cost per diem for hospital routine Worksheet D-1, Part II (Hospital), Line 38 Cost per diem for SNF Worksheet D-1, Part III, (SNF), Line 71 Worksheet D-1, Part II (Hospital), Line 49 / Worksheet S-3, Part I, Column 6, Medicare cost per diem for inpatient services Line 1 + Applicable Lines 8-12 Medicare outpatient cost-to-charge ratio Worksheet D, Part V, Column 6, Line 202 / Column 3, Line 202 Net income from service to patients Worksheet G-3, Line 5 Contractual adjustment & discounts % Worksheet G-3, Line 2 / Line 1 Wipfli LLP 53

55 Questions Wipfli LLP 54

56 Wipfli LLP 55

57 Speaker Information Kathy LaBrake, CPA Partner, Health Care Practice Wipfli LLP 11 Scott St., PO Box 8010 Wausau, WI Holly Pokrandt, CPA Partner, Health Care Practice Wipfli LLP 3703 Oakwood Hills Pkwy., PO Box 690 Eau Claire, WI Wipfli LLP 56

58 Wipfli LLP 57