Preparing the Cost Report

1
Preparing the Cost Report

• Alexsandra (Alex) Mullin
• Director of Reimbursement
• For the Health System
• UT Southwestern Medical Center
• And
• William (Bill) Vaughan
• Principal, Health Systems Concepts, Inc.
• TFCA Workshop
• October 1st - 3rd , 2008

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Why do solid organ transplant programs have a
more unique position in hospital cost reporting
than, lets say, Radiology Services or Cardiac
Care Unit?

• Organ acquisition is one of the very few services
  left that are reimbursed at cost on the Medicare
  cost report.
• The transplant programs involvement with a
  patient transcends through three different
  payment stages in the transplantation process.

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Organ acquisition is one of the very few services
left that are reimbursed at cost on the Medicare
cost report.

• All Medical Services were originally paid at cost
  but over the years, one by one, they have been
  moving to a prospective or fee rate payment
  system.
• The only service left paid at straight cost is
  organ acquisition cost and therefore subject to
  great scrutiny at time of cost report audit.
• Rural Health Clinic services and Sole Community
  Hospitals are still paid at cost but have an
  imposed cost limit/ceiling creating a maximum
  that will be paid for the service.

4
The transplant programs involvement with a
patient transcends through three different
hospital payment stages in the transplantation
process.

• Pre-transplant and organ acquisition charges are
  paid at cost through the cost report settlement.
• The transplant surgery and stay is paid at
  Inpatient PPS A DRG rates.
• Post transplant is paid according to services
  rendered OP APCs, Fee Schedule, Inpatient PPS
  A (if patient is admitted).

5

• Medicare Certified Solid Organs
• Kidney
• Pancreas
• Liver
• Heart
• Lung
• Intestinal and Multi-Visceral
• Reimbursed Cost Reimbursed

6

• Non Solid Organ Transplant Services
• Cornea
• Bone Marrow
• Stem Cell
• Reimbursed Prospective Payment Services

7
Hospital Accounting

• The cost report process actually starts with the
  hospital accounting process.
• Hospital services are represented on a hospital
  general ledger as departments with unique
  department numbers.
• Revenues and Expenses that occur within an a
  department are grouped into unique revenue and
  expense subcodes. The actual layout of each
  general ledger is subject to hospital design and
  the constraint of the software package managing
  the hospital general ledger.

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Hospital Accounting Contd

• Information from various expense and revenues
  subsystems interface into a hospital general
  ledger such as payroll, inventory and purchasing,
  accounts receivable, accounts payable, etc.
• Proper accounting and system controls must be in
  place in order to maintain the integrity of the
  millions of dollars that go into a hospital
  ledger.

9
CMS Expectations of Hospital Accounting

• Must follow G.A.A.P. (Generally Accepted
  Accounting Principles)
• General ledger and Financial Statements that are
  reported on a CMS cost report must be certified
  (for chain organization, entire organization
  certification is expected)
• Proper analysis of any amounts reported in the
  cost report as being pertinent to the providers
  operations and allowed under the Medicare program
  as a service related to the care of patients.
• Any information included in a Medicare cost
  report is subject to audit including non-ledger
  items such as statistics and the
  financials/ledger of anyone providing/ selling
  services to a Medicare Provider.

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Main sections of a cost report

• Overhead and support expenses (Administration,
  Dietary, Housekeeping, etc.)
• Routine Areas Inpatient Rooms such as Med/Surg,
  ICU, Nursery, etc.
• Ancillary Departments Operating Room,
  Radiology, Emergency Room, etc.
• Non-Reimbursable Cost Centers Medical Office
  Building, Marketing, non-certified programs, etc.

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Financial Functions Completed During the Year
that Impact Cost Reporting

• Work with Accounting Department reviewing all
  monthly financial reports provided to department.
• Review all invoices to be expensed to Organ
  Acquisition Department for accuracy and adequacy.
• Separate expenses between different organs/ organ
  programs whenever possible. This ensures they go
  on the correct lines of the cost report.
• Review all pre-transplant evaluation charges done
  outside facility (by other providers) for
  adequacy and expense to organ acquisition cost
  center.
• Review all in-house pre-transplant evaluation
  charges to ensure accuracy and recording in the
  pre-transplant log.
• Review all living donor charges during donation
  to ensure adequacy, accuracy and recording in the
  pre-transplant log.
• Maintain a patient transplant log listing.
• Work with the business office in the management
  of patient insurance information and billings for
  transplant patients.
• Work with logging to ensure accurate reporting of
  transplant patient charges, billing, payments,
  secondary billing, etc.

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Work with Accounting Department reviewing all
monthly financial reports provided to department.

• Department Operating Reports mini-financial
  statements for transplant program cost centers
• Payroll Reports make sure that time is recorded
  accurately for employees that float hours
• Accounts Payable Reports noting that expenses
  paid on your behalf are accurate (leads into item
  no. 2). Review all invoices to be expensed to
  Organ Acquisition Department for accuracy and
  adequacy

13
Separate expenses between different organs/ organ
programs whenever possible.

• Two cost centers are recommended, one for organ
  acquisition and one for post clinic/evaluation
  process.
• Second choice is one cost center for
  pre-transplant and evaluation expense and one for
  post transplant care.
• The organ invoice itself should be in an expense
  sub-code separate from all other acquisition
  expenses.
• Other expenses such as physician excision fees,
  special transport fee, i.e., expenses that are
  specific to one organ acquisition rather than
  general department expense should be in separate
  sub-codes also.
• If the facility has multiple organ programs then
  there should be a Transplant Administration Cost
  Center whose expense can later be assigned to the
  different organs using the cost report.

14
Review all pre-transplant evaluation charges
done outside facility (by other providers) for
adequacy and expense to organ acquisition cost
center
15
Review all in-house pre-transplant evaluation
charges to ensure adequacy, accuracy and record
to an Organ log (per organ) without billing
Medicare or global fee contractors.

• A pre-transplant log is a log like any other
  payor log whereby patients are entered into that
  log based on an insurance code for pre-transplant
  evaluation charges only, but the charges never
  get billed. Instead, the charges are written off
  to an administrative adjustment account. The
  patient also does not get billed for services as
  the address for the insurance code is generally
  the hospital itself.
• Should be a detail log with charge summary by
  hospital department and/ or UB billing code. This
  log will include
• Pre-transplant ancillary charges from other
  hospital departments
• Pre-transplant clinic evaluation charge (if
  applicable)

16
This Organ log can/should also include all donor
charges for evaluation and/or donation at the
facility

• Review all living donor charges during donation
  to ensure adequacy, accuracy and recording in the
  Organ pre-transplant log.
• As with pretransplant / evaluation charges
  charges should be listed hospital department
  and/or UB billing code
• It should also donor patient days by unit stayed
  in. (Surgical, ICU, etc.)

17
Maintain a patient transplant log listing

• Patient
• Organ transplanted
• Transplant date
• Status (living related, living unrelated,
  cadaver)
• Excision physician (if physician paid directly,
  organs other than kidney)
• Excision payment to physician or OPO if invoiced
  separately.
• Cadaver organ identifier if organ was harvested
  at facility or came from outside.
• OPO invoice number
• OPO invoice amount
• Other transport, special charges
• Patient I-Plan / Financial class

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Work with the Business Office in the management
of patient insurance information and billings for
transplant patients.
19
Work with logging to ensure accurate reporting of
transplant patient charges, billing, payments,
secondary billing, etc.
20
Administrative and Operational Functions During
the Year that Impact Cost ReportingMonitor
personnel completion of time studies to split pre
and post transplant duties on a quarterly basis
as necessary

• Complete monthly time studies rotating the week
  surveyed each month. Please discuss with your
  reimbursement personnel for proper instructions.
• Understand the job duties of your transplant
  coordinators and social workers should they also
  work with the patient during the transplant
  stay itself thus requiring their time studies be
  split between pre, during and post.

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• Maintain updated records of personnel job
  descriptions and other required record keeping
  functions. Whenever possible, try to separate
  positions by pre-transplant/evaluation and
  post-transplant.
• Ensure that when staff is completing time
  studies, job functions match job descriptions.

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• Monitor square footage usage (if transplant
  clinic is in the same area/cost center as organ
  acquisition department) for pre and post
  transplant usage.
• Work with Medical Directors to ensure their
  completion of time studies.
• Maintain operations according to Government and
  accrediting agencies.
• Maintain a transplant log (as listed in slide 15).

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Specific Information at Time of Cost Work paper
Completion

• Work with Accounting Department to ensure
  accurate analysis of organ expenses.
• Advise of expenses allocated to the department
  that may be non-allowable, such as advertising,
  or required to be listed under another area of
  the cost report such as post transplant expenses.
• Advise of any research functions/expenses.

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Provide statistics

• Organs transplanted
• Live and cadaver counts
• Excisions
• Organs harvested at facility
• Evaluation and other patient processing
  information

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Provide copies of any information/data maintained
by the Organ Department as requested.Respond to
questions about department functions to ensure
that organ expenses are adequately represented on
a cost report.

• Work with your facilitys Finance Department and
  your reimbursement coordinator in Government
  Programs that they may understand how your
  department operates so that costs are reflected
  accurately on the cost report.

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Questions?