Critical Access Hospitals are typically located in rural communities with a limited employment base and small market area. These limitations result in a facility that is financially fragile and places more importance on Medicare and Medicaid reimbursement. This checklist is offered to provide a high-level review of issues and concerns that can have a significant impact on a facility’s cost report and interim payment rates.
- Cost report due date
- Medicare cost report is due 150 days after the hospital’s fiscal year-end.
- Changes in square footage
- Ensure all changes to offices and departments have been documented and the square footage change is reflected in the cost report. Significant overhead cost allocations are typically based on the hospital square footage measurements
- Review of overhead cost allocations
- Be sure all cost report overhead allocation statistics are updated
- If appropriate, a change in the overhead allocation methodology may be requested.
- Proper matching of revenues and expenses
- A mis-match of revenues and expenses by department can have a significant impact on cost to charge ratios that are used in calculation of reimburseable costs.
- Review mapping of charge and expense accounts and how the balances are reflected in the cost report.
- Review and investigate any departmental cost to charge ratios that are unusually high or low.
- Reclassifications of salary expense
- Review of salary expense assignment to departments. Example, nursing staff that float from routine inpatient care areas to cover in the emergency room.
- Emergency Room patient and provider components (time) for Physician and Non Physician Practitioners
- Costs associated with direct patient care are not reimburseable.
- Costs associated with provider administrative services and stand-by time is allowable
- Must maintain auditable records to support provider and patient time split
- Contracted Therapy Services
- Contracted therapy services are subject to Medicare limits on the amounts allowed for reimbursement
- Medicare bad debts
- Review bad debt list to ensure compliance with Medicare regulations
- Medicare bad debts related to unpaid deductible and coinsurance
- No difference in treatment between Medicare patients and others
- Must make a minimum of 3 or more billing attempts and 120 days from the date of discharge before write-off (unless the patient meets hospital indigency policy)
- Must be turned to collection agency before being considered ‘worthless’
- Have a documented Medicare bad debt policy
- Review bad debt list to ensure compliance with Medicare regulations
- Contributions and grant income
- Critical access hospitals typically rely on significant non-operating revenue sources to maintain profitability, including tax levies and contributions.
- Contributions to the hospital are not subject to offset
- Advertising
- Advertising that adheres to Medicare regulations can be reimbursed through the cost report
These points can have a significant issue on a critical access hospital rates and cost report settlement. Please contact Maxwell Healthcare Consulting if any of these issues are a concern.