FAQ's - HmsOffice.com

MEDICARE

Q.When is my Medicare Cost Report due?
A. That depends on your fiscal year end for cost reporting. Regulation requires each Medicare Provider to file a cost report as follows:

Cost reports are due on or before the last day of the fifth month following the close of the cost reporting period. For cost reports ending on a day other than the last day of the month, cost reports are due 150 days after the last day of the cost reporting period.
No extensions will be granted except when provider’s operations are significantly adversely affected due to extraordinary circumstances over which the provider has no control. An example would be a flood or fire that forces a provider to cease operations and to transfer its patients temporarily to other providers outside of the impacted area. The contractor (MAC) would still be required to obtain CMS approval (see §413.24(f) (2) (ii))
The provider must receive the Provider Statistical and Reimbursement Report (PS& R) on or before the 120th day. If the contractor (MAC) is late mailing the PS& R, the provider will have 30 days from the date of receipt of the PS& R to file its cost report, even if it extends beyond the 5 month due date. No interest will be assessed against the provider for filing the cost report beyond the 5 month period if the cost report is late due to late receipt of the PS& R.Caution, this condition is in the process of changing as more Providers are added to the “Individuals Authorized Access to the CMS Computer Services” (IACS) system. With IACS in place the PS& R reports are no longer mailed to the Provider. It is the Providers’ responsibility to order and download the PS& R in a timely manner so the cost report can be prepared and filed timely.
A cost report is considered to be timely filed if the cost report is postmarked by the due date. This requirement applies regardless of whether the provider furnishes a hard copy or a diskette version. If a cost report is due on a Saturday, Sunday, or Federal holiday, the cost report is considered timely filed if postmarked by the following working day.
Failure to timely file a Medicare cost report will result in suspension of interim payments from Medicare to the facility until a cost report is filed AND accepted by the Medicare Administrative Contractor (MAC)

Q.Is there any benefit to filing a Medicare Cost Report before the due date?
A. Medicare regulations provides for a Grace Period for Early Cost Report Filers.–Effective for cost reporting periods ending on or after June 30, 1997, providers submitting their cost reports prior to the due date (5 months after the end of the cost reporting period) and whose cost report has been subsequently rejected have the benefit of a grace period equal to the number of days the cost report was filed and the end of the required due date of the cost report. This one time grace period is based on the date the contractor (MAC) receives the cost report and not the postmark date. These grace days could be used to resolve the reason for rejection and resubmit the cost report before withholding of interim payments, or the assessment of interest or penalties, by the contractor (MAC). For example, if the provider’s cost report is rejected and the provider had 15 day grace period for filing early, its late penalty does not commence until the 16th day after written notification of the cost report rejection. If the resubmitted cost report is subsequently rejected, no additional grace period is afforded the provider and the contractor institutes the withholding of interim payments and/or assessment of interest and penalties.

Q. What steps does a MAC go through to accept or reject my cost report?
A. The MAC has 30 days from the date of receipt of the provider’s cost report to make a determination of acceptability. In order for a cost report to be acceptable, a provider must complete and submit the required cost reporting forms, including all required signatures to the MAC.

An acceptable cost report from providers filing electronic cost reports (ECRs) means that all the following items have been included in the submission:

A diskette, compact diskette (CD) or a flash drive of the ECR utilizing a CMS-approved cost report software vendor with the current specification date submitted.
An ECR that passes all level 1 edits.
A submitted print image file of the cost report except when using CMS free software. Effective for cost reporting periods ending on or after September 30, 1994, until further notice, CMS no longer supplies free software for electronic filing of the Form CMS-2552 (Acute) cost report. Providers who previously used the free software will be given a waiver for cost reporting periods ending on or after September 30, 1994, and prior to October 1, 1997, if required. If waiver is required after this period, providers may apply under §130.3.
The certification page (Worksheet S) of the ECR file with the actual signature of an officer (administrator or chief financial officer).
An exact match of the encryption code, date and time for the ECR displayed on the certification page to that of the ECR file encryption code, date and time. The date and time printed on the signed certification page must match the date and time in the ECR file’s type 1 record.
An exact match of the encryption code, date and time for the print image displayed on the certification page to that of the print image file encryption code, date and time except when using CMS free software. The date and time printed on the signed certification page must match the date and time within the print image file.
For teaching hospitals, a complete Intern and Resident Information System (IRIS) diskette that will pass all IRIS system edits.
The settlement summary on the electronic certification page agrees with the settlement summary or applicable worksheeton the Medicare cost report produced from the electronic file.
A completed, signed and submitted Form CMS-339 (Formally CMS-339).

An acceptable cost report from providers that do not file ECRs means that all the following items have been included in the submission:

A completed and legible cost report on the proper forms.
A general information and certification page which includes the original signature of an officer (administrator or chief financial officer).
A completed , signed, and submitted Form CMS-339 with an original signature.

If the cost report does not contain the information/documentation described in Items 1-9 or 1-3 above, the contractor will reject the cost report immediately. However, if the cost report diskette is bad or damaged, the MAC will not reject the cost report immediately but will return it with instructions that a good diskette must be resubmitted within 15 days from the date of the letter. The contractor will mail this letter shortly after receipt of the cost report because the cost report must still be accepted or rejected within 30 days from the date of the original cost report submission (i.e., the 15-days to resubmit a bad or damaged diskette does not extend the acceptability period to 45 days). If a good diskette is not received within 15 days from the date of the request letter, the MAC will reject the cost report.

If the submitted cost report is considered unacceptable for reasons other than a bad or damaged cost report diskette, or because a good cost report diskette is not resubmitted by the provider within 15 days of the request letter, the contractor/contractor returns the cost report to the provider with a letter explaining the reasons for rejection. If the due date for the cost report has expired, the contractor/contractor will institute withholding of the interim payments and/or assessment of interest and penalties and issue a demand letter as soon as possible but no later than 30 days after the due date of the cost report.

Additionally, the MAC is to verify that, where appropriate, the provider has also submitted the following items with its cost report:

Correctly updated graduate medical education (GME) per resident amounts.
All applicable documentation required per Form CMS-2552-96.
All required documentation per Form CMS-339.
Documentation supporting exceptions to level 2 ECR and hospital cost report information system(HCRIS) edits.
A copy of the working trial balance.
A copy of the audited financial statements where applicable.
The supporting documentation for reclassifications, adjustments, related organizations, contracted therapists, and protested items, where applicable.

If any of those items are not submitted with the cost report, the MAC will request that the provider submit significant missing documentation/information within a certain time-frame. The MAC will adjust the tentative settlement amount to disallow the reimbursement affected if the provider does not submit the requested documentation/information.

Q. What is the penalty if the Medicare cost report is not filed timely?
A. Should your facility not timely file (on or before the 5th month after your fiscal year end) the Medicare Administrative Contractor (MAC) will suspend 100% of the Medicare interim payments to your facility. The 100% payment suspension will be in place until two events occur (1) a cost report is filed for the fiscal year currently due and (2) that filed cost report is ACCEPTED for processing by the MAC. This latter event is one that can take up to 30 days to complete. This means that if your Medicare cost report is not timely filed your facility needs to be prepared to operate without cash from Medicare for a minimum of 30 days.

Q. Does Medicare reimburse 100% of Medicare Bad Debts?
A. No, for the majority of Medicare providers Medicare bad debts are reimbursed at 70% of the total allowed amount. There are a few select provider types that can qualify for a higher reimbursement level and these require special certification by Medicare.

Q. What is a MAC?
A. A “MAC” is the acronym for a Medicare Administrative Contractor. These are organizations that contract with CMS to process claims for Medicare beneficiaries and process cost reports and interim payments for Medicare Providers. Please click here to download the A/B MAC Jurisdiction Map. This can be helpful in determining which MAC serves your facility.

Q.I think our facility is being under paid for Medicare DSH or Medicare bad debts. Can we get the Medicare Administrative Contractor (MAC) to increase my reimbursement?
A. That depends on the MAC and it depends on the adequacy of the documentation that can support a change in the interim rate. In the case of DSH, if you maintained a log of Medi-Cal patient days taken from the paid claims remittance advices or purchased a paid claim summary from Medi-Cal, and you had a detailed recap of total patient days by department maintained on a monthly basis recapped for the fiscal year in question, and obtained from the MAC a paid claim summary (PS& R) of what Medicare has paid for Medicare DSH versus your calculation using the current patient day information (noted above), there is a high probability the intermediary will take that information into consideration and make the appropriate change.

In the case of bad debts you need to maintain a log of your Medi/Medi bad debts summarizing data from the Medi-Cal remittance advices (Click Here to download a suggested format in maintaining that log). This request does not include regular Medicare bad debts. In addition to your bad debt listing, you will need to obtain from the MAC a list of your biweekly pass through payments to determine the under/(over) payment.

In both of these cases (DSH and Bad Debts), your last audited cost report needs to be “clean” in both of these areas. For example, let us assume during your last Medicare audit they threw out 15% of your bad debts. Even if your current log is super clean, they will not give you 100% of what you are asking for. This also goes for DSH as well.

Please click here if you would like to contact HMS for assistance in evaluating your Medicare DSH and/or Medicare Bad Debt reimbursement.

Q.Can I use the cost report to evaluate other third party payors to see if I am making money or losing money under their contract?
A. The cost report is an excellent and quick tool in making such a determination. Starting with the cost report Worksheet A-8 take out the non-allowable expenses that the hospital incurs but the government program does not allow, such as: patient use of telephone, television, the cost of guest meals, payments to doctors, etc. Next go to Worksheet S-3 Part I and take out the Medi-Cal patient days and put in the patient days by department for the third party payor you are evaluating. Next, go to Worksheet S-2, Line 2, Column 6 and change the Payment System for Medi-Cal (Title XIX) to “O” if it is not already set to this type. Next go to Worksheet D-4, take out the Medi-Cal charges and put in the departmental charges from the third party payor for both inpatient and for outpatient on D-5, incurred during the period you are evaluating. For the last piece of information go to Worksheet E-1 and put in the interim payments you have received from this program during the period.

Barring any peculiarities to the program being evaluated this should give you a reasonable picture as to whether you are being over paid or underpaid. Please click here if you would like to contact HMS for assistance in evaluating your other 3rd party reimbursement.

Q. Both the cost report and the OSHPD report call for a lot of statistics that are difficult to maintain. Do you have any simple ideas on how to maintain or capture these statistics?
A. The government loves statistics. And quite frankly you should too. As for the government they are often used as a yard stick to develop “cost per unit” amounts. And yes you do have to maintain them. We strongly recommend you require each department to collect and maintain the statistics required by regulation be submitted to one central gathering point on a monthly basis. For example, the laundry & linen (L& L) department would submit departmental clean dry pounds of laundry processed each month. L& L would need to compute or track the pounds of laundry for Med/Surg Acute, Surgery, Emergency Room, Cafeteria, etc.

From the advantage point of financial analysis, most of the statistics are a great second look at your financial picture. Let us look at a few examples; surgery revenue is down in a particular month but the number of minutes in surgery and the number of surgeries is up. Chances are you have a problem. This simple test would apply to every revenue-producing department. In the overhead area, laundry and linen cost is up but the pounds of laundry are down but there is no change in the contract price to clean the laundry. You may find sheets and towels are disappearing. This type of comparison can go on throughout the hospital. Thus, it is worthwhile for statistics to be maintained monthly and compared to the financial activity for each applicable department.

Please click here if you would like to contact HMS for assistance in evaluating your statistical record keeping.

MEDI-CAL (MEDICAID)

Q. When is my Medi-Cal Cost Report due?
A. That depends on your fiscal year end for cost reporting and when you file a Medicare cost report. State regulation requires each Medi-Cal Provider file a cost report within five months after their fiscal year end or when the facility files a Medicare cost report. There are no extensions to this due date. Failure to timely file a Medi-Cal cost report will result in suspension of interim payments from Electronic Data Systems (EDS), the Fiscal Intermediary for Medi-Cal, to the facility until a cost report is filed AND accepted by the Department of Health Care Services (DHCS) for the State of California. We strongly recommend you make every effort to file you Medi-Cal cost report timely. The process to restore payments to your facility can be lengthy and there is no “quick fix”. Remember you are dealing with a State bureaucracy, it does not move quickly, ever.

Q. What is the penalty if the Medi-Cal cost report is not filed timely?
A. Should your facility not timely file (on or before the 5th month after your fiscal year end) Electronic Data Systems (EDS) will suspend 100% of the Medi-Cal interim payments to your facility. The 100% payment suspension will be in place until two events occur (1) a cost report is filed for the fiscal year currently due and (2) that filed cost report is ACCEPTED for processing by the Department of Health Care Services. This latter event is one that can take up to 90 or longer days to complete. This means that if your Medi-Cal cost report is not timely filed your facility needs to be prepared to operate without cash from Medi-Cal for up to 90 days or longer.

Q. Our facility is cost based reimbursed for Medi-Cal (or thinking of switching from contract to cost based). What do I need to know?
A. Under cost based reimbursement you are paid on a percent of charges by Medi-Cal. Cost reimbursement relationships between Providers and Medi-Cal can also be called “non-CMAC”. The cost to charge ratio in each revenue producing department times Medi-Cal charges in that department determines what your Medi-Cal cost is. If during the year you raise your charges and/or lower your costs you very well could owe a lot of money back to the Medi-Cal program at the end of the year. When cost based reimbursement is involved it is strongly recommended you prepare an interim cost report to know in advance the estimated reimbursement impact to changes in costs and or charges during the year.

The cost settlement discussed above is but one of four steps to which each cost based facility must succumb. Each Medi-Cal cost settled provider will be paid the lesser of; (1) cost (as noted above), or (2) charges, or (3) all-inclusive rate per discharge limitation, or a (4) peer grouping rate per discharge better known as PIRL (Peer Group Inpatient Reimbursement Limitation) (for a web site reference see http://files.medi-cal.ca.gov/pubsdoco/newsroom/newsroom_9508_1.asp). The impact to reimbursement of (3) and (4) above can be applied by the Department of Health Care Services (DHCS) up to several years after a cost report has been audited and the report of findings issued.

Another interesting point, while a provider receives reimbursement from Medi-Cal based upon a California Medical Assistance Commission (CMAC) contract the provider may not pay much attention to Medi-Cal audit adjustments made to the cost report. Historically this is due to the fact that adjustments to expenses, patient days, or charges do not have a direct impact to reimbursement as the facility was paid a CMAC (fixed) rate. The practice of not fighting adjustments in CMAC reimbursed periods can lead to a reduction in the PIRL limit discussed above should a facility decide to change to a non-CMAC or cost based reimbursement relationship with Medi-Cal. What happens? Medi-Cal will use several prior years audited cost reports to establish a PIRL limitation for the new cost reimbursed reporting periods. If you have typically “passed” on adjustments this practice will now come back to “bite you”. Unfortunately, Medi-Cal regulation only allows for a short period, 60 days, from the date DHCS issues a report of audit findings in which adjustments can be appealed. If prior year cost reports used in the PIRL calculation have passed this 60 day period you will not have an opportunity to correct the impact in reimbursement.

Please click here if you would like to contact HMS for assistance in evaluating the cost reimbursement option with Medi-Cal.

OSHPD

Q. When is my OSHPD report due?
A. The OSHPD Annual Disclosure Report for both Acute and Skilled Nursing facilities is due within 120 calendar days after the fiscal year end for the facility. Up to 90 days extension of the due date is available. If an extension is needed the first extension will be for 60 days. The 2nd and final extension is for 30 days. Extension requests must be filed timely. Failure to do so can result in a $100 per calendar day penalty. Please refer to the OSHPD reporting manual for further information or click here to contact HMS regarding OSHPD reporting.

Q. What is the penalty if our OSHPD report is not filed by the due date?
A. OSHPD does have available extensions to the due date for an Acute or Skilled Nursing Facility Annual OSHPD Report. Should you find your facility in the situation where you have either missed the initial due date of 120 days after the fiscal year end or you missed filing an extension request the penalty is $100 per calendar day for each day the report is filed beyond the due date or the extended due date. Please refer to the OSHPD reporting manual for further information or click here to contact HMS regarding OSHPD reporting.

Q. As a California hospital, does our facility have to be using the OSHPD chart of accounts in the accounting system?
A. No. However, you must have an approved Modification Request (cross-walk) where the chart of accounts used in your facility is matched to the corresponding account number within the OSHPD chart of accounts. Failure to have an approved Modification available upon request (usually during an audit) could cost you as much as a $5,000 fine. The requirement to file a request for Modification of the system of accounts can be found at:

http://www.oshpd.ca.gov/HID/Products/Hospitals/AnnFinanData/Manuals/appendxa.pdf (see page 47 of this document). The complete OSHPD accounting manual can be found on http://www.oshpd.ca.gov/HID/Products/Hospitals/AnnFinanData/Manuals/index.html

Please click here if you would like to contact HMS for assistance in developing and filing a Modification Request with OSHPD.

Q.Both the cost report and the OSHPD report call for a lot of statistics that are a pain to maintain. Do you have any simple ideas on how to maintain or capture these statistics?
A. The government loves statistics. And quite frankly you should too. As for the government they are often used as a yard stick to develop “cost per unit” amounts. And yes you do have to maintain them. We strongly recommend you require each department to collect and maintain the statistics required by regulation and law be submitted to one central gathering point on a monthly basis. For example, the laundry & linen (L& L) department would submit departmental clean dry pounds of laundry processed each month. L& L would need to compute or track the pounds of laundry for Med/Surg Acute, Surgery, Emergency Room, Cafeteria, etc.

Please click here if you would like to contact HMS for assistance in evaluating your statistical record keeping.

OTHER

Q. What web sites are available to get data to compare my facility to others?
A. There are a number of areas you can visit on the web that can quickly provide you with data regarding both your facility and others. Below is a brief list of the links we find helpful:

To get quality of care data visit www.hospitalcompare.hhs.gov
For Statewide OSHPD report data comparisons visit http://www.oshpd.ca.gov/HID/Products/Hospitals/AnnFinanData/PivotProfles/default.asp or for a specific facility you can visit at http://www.oshpd.ca.gov/afpdfs/. This latter link will allow you to download a PDF copy of either the “filed” or “audited” OSHPD Annual Disclosure Report for a selected fiscal year.
To acquire a copy of the most current audited Medi-Cal cost report visit http://www.dhcs.ca.gov/dataandstats/reports/Pages/AIReportLinks.aspx