Southwest Consulting Associates Blog

Being at the height of the fall cost reporting season, hospital reimbursement teams are busy compiling data to prepare cost reports in compliance with program laws, regulations and manual instructions. However, hospitals should not be turning a blind eye to changes CMS’ has signaled interest in but may not yet have fully enacted.

For example, in the 2015 IPPS Proposed Rules, CMS attempted to revise cost reporting regulations to require hospitals to appropriately claim costs in either the initial/as-filed cost report or an amended cost report (that must be accepted by the Medicare contractor to be of any value in this exercise), in order for a hospital to potentially be reimbursed for the specific item. Due to the number of comments on the issue, CMS delayed implementing this requirement, FOR NOW.  However, it is important to understand what CMS is trying to accomplish, its impact on cost reporting in general and its impact on Medicare DSH reimbursement.

To begin, let’s look at the specific language in the 2015 IPPS Proposed Rules:

“we are proposing to revise the cost reporting regulations in Part 413, Subpart B by adding the substantive reimbursement requirement  that a provider must include an appropriate claim for an item in its cost report.  The failure to account appropriately for the item in its cost report will foreclose payment for the item in the NPR issued by the contractor and in any decision, order, or other action by a reviewing entity (as defined in 405.1801(a) of the regulations) in an administrative appeal filed by the provider.” - CMS

By reading the exact language used by CMS, if a cost is not reported completely and accurately, the item will not be reimbursed in the cost report settlement, upon reopening, or upon appeal.  The only caveat to this is if the cost report is amended to correct the item and the amendment is accepted by the Medicare contractor - which of course is not a given with any of the MACs nationally.  Per CMS’ objective, if the hospital either properly claims the cost in the initial cost report filing or an amendment is filed to update the claim and accepted by the MAC, the hospital would then be reimbursed for that claimed or amended item. If not, the hospital would likely lose the right to claim dissatisfaction if an item is not reimbursed upon settlement.

This obviously has broad implications for cost reporting in general and specific Medicare DSH implications, as it is widely known that not all Medicare DSH “costs” can be claimed at the time of the cost report filing (i.e. Unknown Medicaid days).  Due to the conflicting nature of how CMS would like to handle this issue versus the reality that hospitals face, it is clear that hospitals must be diligent in how costs are documented, claimed and protested, even in light of the fact that CMS did not finalize this proposed change at this time.  

While this revision was not implemented this year, CMS made it clear in the 2015 Final Rules that the implementation of this rule was only “delayed”, therefore, it is imperative that hospitals prepare now for this requirement.  With regard to the Medicare DSH aspect of the proposed change, SCA has invested significant time and resources to develop and implement a best practice process that we believe will help hospitals mitigate the hurdles presented by this proposed requirement to claim costs.

The dominos are being set up.  Will your reimbursement team be prepared and protected when they start to fall?