Further Review of your Submitted 2011 Medicare Cost Report May Generate Additional Revenue

For cost report periods of on or after May 2010, hospitals have submitted their Medicare cost reporting information utilizing the new 2552-10 forms. There were many updates to the forms, including cost center line changes, description updates and the removal of old capital, to name a few. There are two changes that warrant further review now that the deadline for filing the report has been finalized and facilities have more time to perform research. These two important changes include the preparation of the S-10 worksheet and the establishment of new distinct cost centers for CAT scans, MRIs, cardiac catheterization and implantable supplies.

The S-10 worksheet has evolved from an informational form to one of the most important worksheets included in the Medicare Cost Report. The Centers for Medicare & Medicaid Services (CMS) will utilize this worksheet to calculate HIT or electronic health record payments for participating facilities, and it also may be used to calculate future Medicare DSH payments. The Medicare DSH payment currently is based on a formula weighing SSI and Medicaid days compared to your total eligible days. CMS is proposing to utilize only 25 percent of the current formula, with the balance based on the provider’s share of uncompensated care recorded on the S-10 worksheet. Some hospitals currently receive millions of dollars in Medicare DSH payments, and this change may have a dramatic impact on their Medicare inpatient revenue. There are many other areas that providers also can review and refine, including all uncompensated care policies and data, bad debt listings, Medicaid eligibility and internal charity-care writeoffs.

CMS and the industry recently have debated about a better way to improve the cost finding methodology to make the prospective cost rates more accurate. They have identified specific cost centers that they feel, if mapped separately on the cost report, would achieve improved costing results. Again, the focused cost centers include CAT scans, MRIs, cardiac catheterization (CCA) and implantable supplies – CMS based its decision to report these departments separately on the high costs associated with implantable supplies and the excessive capital cost connected to equipment needed for CAT scans, MRIs and CCA. CMS has delayed the implementation of this refined cost finding but expects to utilize it for the calculation of more accurate payment rates in the future. This change also will have major implications on certain DRG and APC rates connected to these revenue centers. To complete the new Medicare cost reports, providers should ensure that all cost and revenue is mapped properly, including all new step-down cost finding statistics.

Panacea annually prepares Medicare cost reports and performs retrospective audits and reviews of cost reports for its clients. We would highly recommend revisiting and reviewing the S-10 worksheet, the new cost center redistribution and all other mandated changes required on the 2552-10 Medicare Cost Report to assess accuracy in anticipation of future Medicare revenue redistributions.

About the Author

John Manzi is Vice President, Financial Consulting Services of Panacea. John is a healthcare financial advisor who excels in providing qualified and timely advice. He has over 30 years’ experience in the healthcare field, primarily in financial management in hospital and consulting settings. His expertise includes Medicare Cost Report preparation and review, development of reimbursement software, charge setting enhancement tools, product line profitability management, RAC assessments and clinical compliance audits. Contact John at 866-926-5933 x709 or jmanzi@panaceahealthsolutions.com.