Cost report 101 it s not just for accountants
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Cost Report 101 – It’s Not Just for Accountants. Cost Report 101:. History of Transplant R elated L egislation. 2007 - Medicare conditions of coverage for participation for transplant centers. 1984 – NOTA (revised 1988 & 1990) Final rule 2000. 1999 – Medicare coverage for pancreas.

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Cost Report 101 – It’s Not Just for Accountants

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Cost report 101 it s not just for accountants

Cost Report 101 – It’sNot Just for Accountants


Cost report 101 it s not just for accountants

Cost Report 101:

History of Transplant Related Legislation

2007 -

Medicare conditions of coverage for participation for transplant centers

1984 – NOTA

(revised 1988 & 1990) Final rule 2000

1999 – Medicare coverage for pancreas

1991 – Medicare coverage for liver

1968 – Uniform Anatomical Gift Act

(revised 2006)

2000s

1960s

1970s

1990s

1980s

1956 – Social Security

Act

1987 – Medicare coverage for heart

1995 – Medicare coverage for lung

2001 – Medicare coverage for intestine

1972 – Medicare Benefits extended to ESRD patients


Cost report 101 it s not just for accountants

Cost Report 101:

CMS

  • Conditions of Participation

  • Reimbursement

    • DRG

    • Cost report

    • Physician


What is the medicare cost report and why does it exist

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

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 exist1

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

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

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 costs

5


Standard acquisition charge

Standard Acquisition Charge

All organ-specific acquisition costs

# of organs transplanted

=

organ SAC for your institution

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)

6


What it is a called a charge but it is really a cost i am confused

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

WAIT? Don’t OPOs have a SAC also??

YES – and it works the same way

You record the OPO SAC on your cost report

5


Wait what do i put on the patient s bill isn t that a sac also

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

5


So what kind of costs can i put on this cost report

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)


Cost report 101 it s not just for accountants

Transplant 101:

What’s MY Role?

  • 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


  • How do the costs get to the cost report

    How do the costs get to the Cost Report?

    AcquisitionCost Center


    What s my role allocating costs

    What’s MY Role? Allocating Costs

    • Cardiac Catheterization

    Now

    WHERE

    should this go?


    What s my role assigning costs

    What’s MY Role? Assigning Costs

    • UNOS Registry Fee

    This belongs

    to

    John Smith


    What s my role reasonable cost

    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


    Cost report 101 it s not just for accountants

    What’s MY Role? Reasonable Cost – Physician Payments

    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 cost1

    What’s MY Role? Reasonable Cost

    Accounts Payable – Payment policy


    Time studies

    What’s MY Role? Salaries

    Time Studies


    Cost report 101 it s not just for accountants

    What’s MY Role: Management Strategies

    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?


    Cost report 101 it s not just for accountants

    What’s MY Role: Management Strategies

    Little Pie

    BIG Pie

    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?


    Cost report 101 it s not just for accountants

    What’s MY Role: Management Strategies

    Should payor mix be considered in overall cost report strategy?


    Cost report 101 it s not just for accountants

    What’s MY Role? Live Donors General Principles

    Donor should not incur any hospital or physician costs

    All hospital and physician costs follow the recipient

    Payors generally follow CMS lead


    Cost report 101 it s not just for accountants

    What’s MY Role? Live Donor

    • 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 special considerations in kpd

    Donor

    Costs Can Be Recorded

    in 2 ways

    What’s MY Role: Special Considerations in KPD

    • Standard

    • Acquisition

    • Charge

    • (SAC)

    • CMS preferred

    • Departmental

    • charges


    Standard acquisition charge pde

    Standard Acquisition Charge – PDE

    What’s MY Role: Special Considerations in KPD

    All live donor costs (donor only NO recipient costs)

    # of live kidneys successfully donated

    =

    live donor SAC for your institution

    6


    Cost report 101 it s not just for accountants

    Disadvantages

    of SAC

    Advantages

    of SAC

    What’s MY Role: Special Considerations in KPD

    • 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 donors

    • for a single recipient, etc…

    • Can be transparent between

    • centers as soon as match is made (PDE)

    • 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)


    Departmental charges

    Departmental Charges

    What’s MY Role: Special Considerations in KPD

    • 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


    Departmental charges1

    Departmental Charges

    What’s MY Role: Special Considerations in KPD

    10


    Cost report 101 it s not just for accountants

    Disadvantages

    of DC

    Advantages

    of DC

    What’s MY Role: Special Considerations in KPD

    • Maximizes commercial

    • Reimbursement

    • Allows for exact costing of the

    • specific donor in PDE

    • May reduce reimbursement

    • opportunities 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)


    I don t believe you who else can i talk to

    I Don’t Believe You – Who else can I talk to ?

    CMS Reference Documents

    • 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


    Cost report 101 it s not just for accountants

    Cost Report 101:

    QUESTIONS?


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