Cost Report Compliance Issues for Critical Access Hospitals

Cost Report Compliance Issues for Critical Access Hospitals

OIG s Compliance Guidance Model Compliance Plan Published February 23, 1998 Supplemental Guidance: January 31, 2005 False or Fraudulent Cost Reports Mentioned in original and supplemental guidance as a high risk area Not just for CAHs Goal of cost reporting compliance: ensure full compliance with applicable statutes, regulations and program requirements and private payor plans.

Documentation of Costs Costs claimed must be supported by appropriate and accurate documentation Provider Reimbursement Manual, Part I, 2304 Especially important for CAHs,, since reimbursement is cost-based General accounting and A/P policies and procedures should cover this Test to make sure they re working No good reason for lack of documentation adjustments!

Overhead Cost Allocation Allocations of costs to various cost centers are accurately made and supportable by verifiable and auditable data Cost allocation statistics Worksheet B-1B PRM-II, 3617 Review and test documentation Gather statistics during the year to improve accuracy Avoid rolling forward prior year statistics Changing statistic: File written request with FI 90 days before end of C/R period (PRM-II, 2312)

Overhead Cost Allocation Common Issues with Cost Allocation Statistics Square feet: Often dated, incorrect and poorly documented Time studies: 1 week per month (PRM-I, 2313.2E) Dietary: Use equivalent meals to allocate cost to cafeteria Be sure to allocate to user departments (A&G), and to non-reimbursable cost centers Allocate costs to non-reimbursable cost centers, where applicable

Unallowable Costs Unallowable costs must be removed from the cost report Become familiar with PRM, Part I Where to look? PRM, Part I, Chapters 1 23 CMS web site Case Law PRRB, Federal courts Prior year cost reports Prior year audit adjustments

Unallowable Costs Analyze accounts containing both allowable and unallowable costs Train staff to recognize non-allowable costs Department heads, Accounts Payable, Accounting Separate G/L accounts to capture non- allowable costs Advertising costs (PRM-I, 2136) Document, document, document!

Medicare Audit Adjustments Hospitals are obligated to carry forward Fiscal Intermediary audit adjustments If the adjustment applies to the current year Disclose treatment in cover letter Include prior years adjustment report in current year workpapers If using protested items line, must submit documentation when filing cost report

Related Party Transactions Disclose all related parties on CMS 339 and cost report PRM-I, 1000 C/R Worksheet A-8-1A Reduce related party expenses to related party s s cost, unless the relationship qualifies for the exception PRM-I, 1010 Disclosure required, even if there is no adjustment

Medicare Bad Debts The hospital s s procedures for reporting of bad debts on the cost report are in accordance with Federal statutes, regulations, guidelines and policies PRM-I, 304-326 Annual Review: Assure proper reporting of bad debts to Medicare Review all Medicare bad debts claimed, to ensure compliance with Medicare regulations

Medicare Bad Debts Issue for CAHs: : FI can change bad debt auditing requirements when your provider number changes One FI now requires that Medicare bad debt accounts are not claimed for reimbursement until they are returned by outside collection agency as uncollectible

Purchase Discounts Purchase discounts a vendor participating in a GPO should be disclosed and adjusted on the cost report Although there is a safe harbor for payments made by a vendor to a GPO the safe harbor does not protect the discount received by the individual or entity.

Home Office Costs Allocations from a hospital chain s home office cost statement to individual hospital cost reports are accurately made and supportable by verifiable and auditable data Report on Worksheet A-8-1A Must agree to home office cost report

Cost Report Errors Providers must promptly notify the FI, TRICARE, and/or Medicaid of errors discovered after the submission of the cost report Report on Worksheet A-8-1A Must agree to home office cost report

ER Physician Issues On Call Costs Costs (42 CFR 413.70) On call costs are reimbursable, if Effective 1/1/2005, applies to MDs, DOs,, physician assistants, nurse practitioners, and clinical nurse specialists Written contract Immediately available by radio or phone On-site within 30 minutes, 24/7 485.618(d)

ER Physician Issues On Call Costs Costs (42 CFR 413.70) On call costs are reimbursable, if Not providing services anywhere else Not on call at another facility

ER Physician Issues Availability Cost (PRM (PRM-I, 2109) Time spent waiting for next patient Must be on-site, not on call! Allowable Part A cost No feasible alternative for coverage Must document that you tried!

ER Physician Issues Availability Cost (PRM Documentation (PRM-I, 2109) Copy of contract & allocation agreement Permanent record of payments to physicians Record of time physically on site Record of all patients seen, and related bills Schedule of physician charges

ER Physician Issues Availability Cost (PRM Calculation See PRM-I, 2109.4 (PRM-I, 2109) Costs Costs allocated based on professional charges (actual and imputed) RCE RCE Limits do not apply to CAHs Discuss method and documentation with your FI