Medicare Cost Report Preparation

We (Toyon) are at the peak of our cost report preparation cycle for FYE 12/31/13 hospitals.   There are a couple of preparation issues we came across that we want to make you aware of:

• Medicare PS&R – Other Adjustment

We found that for several of our hospitals, there is an “Other Adjustment” reduction to reimbursement (See below):

In our follow-up, we spoke to Luke Disabato from HFS who filled in the mystery of the amounts in this field.  Luke shared that when the sequestration was first implemented, there was some communication that the sequestration was being specifically applied to the Outliers and therefore reflected 98% of the actual Outlier amount in the PS&R.  The PS&R systems staff to correct this grossed up the Outlier amounts by 2%.

It turns out that the Outliers were not actually reduced so that for a time the Outlier reimbursements on the PS&R are actually overstated.  The “Other Adjustment” was used as the other side of the entry to effectively reduce the Outliers to 100%.

Luke recommended for cost report filing purposes, that these “Other Adjustments” be summarized into the Outliers line of the cost report.  We (Toyon) have chosen to simply record this “Other Adjustment” on Line 70 of E Part A with a description of “Corrected Outlier” for our cost report filing.

One word of caution, there are certain MACs where the “Other Adjustment” for services on or after October 21, 2013 that contains the DSH Uncompensated Care payments.  We have not found this to be an issue for Noridian Healthcare Solutions and Luke informed us that this was also not an issue for NGS.

We appreciate Luke’s help in clarifying this issue.

• Bi-Weekly Payments (Noridian) Change

The bi-weekly payment summaries that have been issued by Noridian do not include any beginning or ending accrual.  This is a change to how the bi-weekly payments have been handled in California.  In our follow-up with Noridian, they confirmed that they do not plan to include any beginning or ending accruals for these bi-weekly amounts.

However, they do realize that for the prior cost report filing there was an accrual at the end of the year.  So the treatment for the FYE 12/31/13 cost reports that Noridian is now managing is to include the beginning of the year accrual based on the split from the prior year cost report but there will be no yearend accrual.

Here is an example to hopefully make this handling clearer:

The beginning accrual will be made only for the first year.  All future cost report years will be simply the 26 bi-weekly payments without accruals.