cost report 101 – it’s not just for accountants
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Cost Report 101 – It’sNot Just for Accountants
1970s 1980s 1990s1960s 2000s
1968 – Uniform Anatomical Gift Act(revised 2006)
1984 – NOTA (revised 1988 & 1990) Final rule 2000
1991 – Medicare coverage for liver
1972 – Medicare Benefits extended to ESRD patients
1987 – Medicare coverage for heart
2007 - Medicare conditions of coverage for participation for transplant centers
Cost Report 101:
History of Transplant Related Legislation
1999 – Medicare coverage for pancreas
1995 – Medicare coverage for lung
2001 – Medicare coverage for intestine
1956 – Social Security Act
CMS
• Conditions of Participation• Reimbursement
• DRG• Cost report• Physician
Cost Report 101:
What is the Medicare Cost Report and Why does it exist?
• It is how hospitals who serve Medicare beneficiaries report costs to CMS
• It exists so that my friend who is a Congressman and my nephew who is an accountant always have jobs
What is the Medicare Cost Report and Why does it exist?? (Real Answers)
• Established in 1965 with the Social Security Act• Intended to pay hospitals for the cost of providing services to Medicare beneficiaries
• Became less important when CMS adopted the PPS method of reimbursement
• All Medicare participating hospitals submit once a year (in general)
What is the Medicare Cost Report and Why does it exist??
• Establishes cost to charge ratio and wage index• Outlier payments• PPS geographic adjustments
• Enables hospitals to recover some costs (settlement):• Medicare Bad Debts• Critical Access Hospitals• GME• Disproportionate Share reimbursement• AND organ acquisition costs on the D 6 Worksheet• Medicare secondary payments
So what is this “pass-through” talk about ?
• Hospitals “pass-through” their costs to Medicare
• It also generally is meant that FULL COSTS are reimbursed
• It does not really work this way for transplant• Why? Because transplant costs are reimbursed by way of a Standard Acquisition Charge or SAC
What is a Standard Acquisition Charge (SAC)
• Not a charge representing the cost of a specific organ but a charge
that represents the AVERAGE cost associated with acquiring that type
of organ
• All-inclusive (direct & indirect)
• Includes physician services up to the admission to the hospital for
donation
• Medicare settles with the transplant hospital for its share of the costs5
Standard Acquisition Charge
All organ-specific acquisition costs
# of organs transplanted=
organ SAC for your institution
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This is a COST not a CHARGE
The actual charge on the patient’s bill is usually marked up (so this is a CHARGE not a COST)
WHAT? It is a called a charge but it is really a cost?
I am confused!
• Join the club….• Remember the Cost Report establishes the Cost to Charge Ratio – so the CHARGE is reduced to cost with the ratio
WAIT? Don’t OPOs have a SAC also??
• YES – and it works the same way
• You record the OPO SAC on your
cost report5
WAIT? What do I put on the Patient’s Bill? Isn’t that a SAC also?
• Well, yes but this SAC should be a charge
• Your full cost plus mark-up
• Medicare does not pay this but uses cost report to reimburse hospital
• Only relevant for “fee for services” or “discount off charges” payors
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So what kind of costs can I put on this cost report?
• Includes costs for acquisition of live donor and deceased donor organs
• Allowable transplant center organ acquisition costs include:• Salaries of staff• Rent associated with acquisition activities• Procurement related costs – the OPO SAC• Procurement related costs – your costs (transportation, etc)• Evaluation testing - facilities fee and professional fees• UNOS registration fees• Tissue typing, including by an independent laboratory• Costs associated with professional and patient education
(pre)
• Allocate costs correctly•Separate Cost Centers•Disease Management vs. Evaluation• Pre vs. Post transplant
• Assign Costs to Recipients• Reasonable Costs• Special Considerations
•Time studies•Physician reimbursement•Live Donors
Transplant 101:What’s MY Role?
How do the costs get to the Cost Report?
Cost Report
Immunology Testing
EVALUATION TESTING
OPO SACs
Acquisition Cost Center
What’s MY Role? Allocating Costs
Cost report
Professional fees
Procurement
Evaluation
testing
Cardiac Catheterization
Disease Management
TB Treatme
nt
Hepatitis C
treatment
Vascular Access
Care
Now WHERE
should this go?
Cost Report
Immunology Testing
EVALUATION TESTING
OPO SACs
What’s MY Role? Assigning Costs
UNOS Registry Fee
This belongs to
John Smith
What’s MY Role? Reasonable Cost• WHAT does that mean?• For costs incurred at your facility, it means full cost as determined by your cost report
• For costs that you pay others for on behalf of your recipient, it is whatever you paid
• Generally, this is interpreted as Medicare participating rate BUT not necessarily
• Key is consistency
Physician reimbursement:• Reasonable Cost
- Use hourly practice rate OR benchmark (AAMC)
• Must be for evaluation services only• Medical directors:
- Job description with evaluation duties- Must report actual hours – time studies
• Evaluation services:- Must be able to identify a specific service
given to a specific patient-Examples: Selection Committee, patient visits, consultation to RNs
• No provider services once recipient OR live donor enter hospital for transplant event
What’s MY Role? Reasonable Cost – Physician Payments
Accounts Payable – Payment policy
What’s MY Role? Reasonable Cost
• Time Studies
Name of PA: Month: February 2006
Sunday Monday Tuesday Wednesday Thursday Friday Saturday
1 2 3 4
Acquisition Acquisition Acquisition Acquisition
Hours: 0 Hours: 0 Hours: 6 Hours:
Non-Acquisition Non-Acquisition Non-Acquisition Non-Acquisition
Vasc Access Hours: Vasc Access Hours: 5
Vasc Access Hours: 2 Vasc Access Hours:
TX Recipient
Surgery Hours:
TX Recipient Surgery Hours:
TX Recipient Surgery Hours:
TX Recipient Surgery Hours:
Non-TX Surgery Hours:
Non-TX Surgery Hours: 3
Non-TX Surgery Hours:
Non-TX Surgery Hours:
Floor Coverage Hours:
Floor Coverage Hours:
Floor Coverage Hours:
Floor Coverage Hours:
What’s MY Role? Salaries
• Should I record costs that are related to recipients with commercial payors?
• Should payor mix be considered in overall cost report strategy?
• What about KPD? How does that work?
What’s MY Role: Management Strategies
• Should I record costs that are related to recipients with commercial payors?
• YES!!!!!• Medicare settles for their share of the acquisition costs
• So if you ONLY record Medicare recipients'’ costs what is going to happen?
What’s MY Role: Management Strategies
Little Pie BIG Pie
• Should payor mix be considered in overall cost report strategy?
What’s MY Role: Management Strategies
• Donor should not incur any hospital or physician costs
• All hospital and physician costs follow the recipient
• Payors generally follow CMS lead
What’s MY Role? Live Donors General Principles
• Donor Evaluation:• Facility Costs – recipient center cost report• Professional Fees – recipient center cost report
• Donor Hospitalization:• Facility costs - recipient center cost report• Professional fees – recipient Medicare part B• Live donor transportation and housing not allowable
• After Donation:• Routine follow-up• Complications must ALL be billed directly (NOT cost report)• Physician unchanged
What’s MY Role? Live Donor
Departmental charges
Standard Acquisition
Charge (SAC)
CMS preferred
Donor Costs Can Be Recorded
in 2 ways
What’s MY Role: Special Considerations in KPD
Standard Acquisition Charge – PDE
All live donor costs (donor only NO recipient costs)
# of live kidneys successfully donated=
live donor SAC for your institution
6
What’s MY Role: Special Considerations in KPD
Differences in overhead could cause difficulties in PDE
How are “extra” costs treated ( i.e. recipient center requests additional tests in PDE)?
Isolating donor costs may represent new administrative processes for some centers (PDE)
Disadvantages of SAC
Maximizes CMS reimbursement
Provides for costs in pre-emptive,not yet on Medicare
Eliminates questions of when individual donor costs were incurred
Dilutes issues of multiple donorsfor a single recipient, etc…
Can be transparent between centers as soon as match is made (PDE)
What’s MY Role: Special Considerations in KPD
Advantages of SAC
Departmental Charges
• Itemized bill for costs associated with a specific donor for a specific recipient can be billed to the recipient transplant center
• Transplant centers must bill SAC to Medicare or third-party payors for organs acquired and transplanted
9
What’s MY Role: Special Considerations in KPD
Departmental Charges
10
SAMPLE INVOICE
Name: Sally Jones Patient ID #: 99999999
Address: Any town, USA 99999
Transplant donor evaluation and acquisition services for recipient:
Name: Lucky O’Malley HI #: 00000000
Address: Big Transplant Center, USA 99999
Tissue Typing
Chest X-ray
EKG
Chem 20
CBC
Operating room minutes, etc…
What’s MY Role: Special Considerations in KPD
May reduce reimbursementopportunities from Medicare
Adds complexity in determining when/which donor costs should be Included in PDE
Assigning overhead may represent new administrative processes for some centers (PDE)
Disadvantages of DC
Maximizes commercial Reimbursement
Allows for exact costing of the specific donor in PDE
What’s MY Role: Special Considerations in KPD
Advantages of DC
• Provider Reimbursement Manual 2771.A
• Medicare Claim Processing Manual Publication 100-04, Chapter 3, Section 90.1.1 – 90.1.3
• Program Memorandum 9-26-2003
3
CMS Reference Documents
I Don’t Believe You – Who else can I talk to ?
QUESTIONS?
Cost Report 101:
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