Medicare & Medicaid Cost Reports
Financial Consultants of Alaska & Washington has highly qualified healthcare reimbursement consultants with extensive experience in preparing Medicaid and Medicare Cost Reports. Our firm has prepared CMS annual cost report for Acute Care, Long Term Care, co-located, Critical Access, facilities as well as Rural Health & Federally Qualified Health Clinics, Home Health Agencies, and Community Mental Health Care Centers. We have prepared more than 300 cost reports. We also prepare the Medicaid cost reports in several states. In conjunction with preparing and filing the cost report are reviews and responses to Medicare on the proposed audit adjustments
FCA&W prepares interim cost reports to assist a facility in making changes during the year.
Our firm can review the cost report filed by you or your consultant to look for improvements in Reimbursement or omissions.
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Critical Access Reimbursement
Our firm has specialized in assisting facilities with obtaining their Critical Access Designation, and obtaining the best billing method from Medicare (option II).
For critical access facilities, the cost report strategy for higher reimbursement largely depends on where statistics, revenue, and cost are recorded. Our firm has assisted hospitals in achieving the highest reimbursement on interim rates and cost reports. Our vast knowledge of rural and community hospitals has proven beneficial in improving facility’s bottom line. Our firm is willing to review your last cost report and highlight areas that can improve your reimbursement.
Critical Access facilities need to place emphasis on the Medicare interim reports. The purpose of the reports is to have Medicare pay your claims throughout the year, a rate that parallels the year end cost report rate. If a facility has a large receivable from Medicare on the cost report, they have lost the use of the money and the interest it would have accrued. On the other hand, if the facility owes a lot of money to Medicare at year end, their reserves may not be adequate to cover payback unless they develop a model that is updated quarterly.
Medicare allows Critical Access facilities to perform mini cost reports step downs to send in with the interim reports. This will give you the assurance that your quarterly rates will closely approximate the cost report payments.
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Fraud Audits
Medicare and Medicaid Fraud Billing Audits are on all healthcare providers’ screens. The various audits, PERM, SURS, and CERTS that are being performed by Medicare and Medicaid have made it difficult for providers to deal with the complexity of all the fraud audits. Our firm was hired as reimbursement consultants on nine of those Medicaid and Medicare audits in the last five years. We have been able to overturn $26 million of requested overpayments. On several of the audits, our providers paid nothing back to the Intermediary.
Myers & Stauffer LC were the contract auditors who performed DMA audits in Alaska. The purpose of DMA audits for this period and the previous cycles of audits, have been to recover millions of dollars of alleged improper payments made to Alaska providers by the Medicaid agency. The audits that have been issued also include large fines and penalties.
The contract auditors make mistakes, do not find the supporting data, or they misinterpret the regulations, statutes, Medicaid manuals or Intermediary’s practicing methodology. Frequently the auditors do not recognize the documents they are searching for.
Financial Consultants of Alaska & Washington defended a provider last year in a case where the Intermediary demanded $8,000,000 back from a facility. After a considerable effort we were able to get the case entirely dismissed and the facility was not required to pay anything back to the Intermediary. Recently we were hired to work on two audits for Community Mental Health Centers in Alaska; the Intermediary had demanded $879,000 from one of the Centers. After our firm audited the records, we were able to get the Center’s payback to the Intermediary reduced to $14,000.
Myers and Stauffer have started their fourth cycle of Medicaid Fraud Audits. In this fourth cycle, unlike prior audits, Medicaid plans to include IHS/Tribal facilities.
The U.S. Federal District Court in Washington recently affirmed CMS’s decision to require a Critical Access Hospital (CAH) to repay Medicare $275,000 noting that the facility’s recordkeeping did not support an increase of 731% in routine costs as listed in the facility’s Medicare Cost Report.
Unidentified Critical Access Hospital No. 1 v. Leavitt, No. 07–5020 RBL (W.D. Wash. Dec. 6, 2007). This court case underscores the importance and necessity of accurate and documented “data reporting on the Medicare Cost Reports.” There are also other lessons CAHs can learn from this case. In this particular case, the hospital changed its nursing staff reporting on its Medicare Cost Report from how it was calculated and reported in prior years. The change in reporting caused a 731% increase in routine costs for acute care over how this data was reported on the Medicare Cost Report for prior years. Not surprisingly, the Medicare fiscal intermediary challenged this dramatic increase.
CMS focused on the hospital’s lack of supporting records that would enable CMS to verify the accuracy of the 731% increase. While this case clearly underscores the need for thorough and accurate recordkeeping, it also contains other important lessons and warnings.
In today’s healthcare regulatory climate, healthcare providers should assume that any dramatic increase in any cost center will trigger a very high level of scrutiny from the state and federal governments. Given the increased activity of state Medicaid fraud control units, PERM audits, CERT audits, and the other audits performed by the state and federal governments, providers are well advised to make sure that they have all of the documentation necessary to support large increases in any cost center. If you are going to show a 700+% increase in routine costs you should just assume that either CMS will question this or you will be subjected to an audit. This type of increase invites additional scrutiny so you should be prepared to defend it. The good reimbursement firm will safeguard your facility when they prepare the Medicare and Medicaid cost reports. This will ensure that your facility will never encounter this situation.
Congress has appropriated over $160 million for Medicaid Fraud enforcement. This increased enforcement is expected to net over $1 billion in recovery from healthcare facilities. A new $8 million Medicare contract was issued in January 2008 to Price Waterhouse for the purpose of conducting Medicare Fraud Audits. The State of Washington like most states today also has a growing Medicare and Medicaid Fraud unit.
State’s Medicaid is conducting the following Fraud Audits:
- Payment Error Rate Measure Audits, Quality Assurance Audits
- DMA Audits
- Surveillance and Utilization Review Subsystem Audits
- Reimbursement Audits
Federal Medicare is conducting the following Fraud Audits:
- Noridian Billing Audits
- CERTS Audits
- CMS – Fraud Unit
- Pre-pay Noridian Audits
- Post Pay Audits
- Cert-post-pay/ Advanced Med Audits
- Reimbursement Audits
RAC Audits
|
Results of RAC Fraud Edit |
|
| Overpayments Collected | $992.7 |
| Less: Underpayments Repaid | $37.8 |
| Overturned on Appeal | $46.0 |
| RAC Re-reviews | $14.0 |
| Cost to Run Program | $201.3 |
| Returned to Medicare Trust Fund | $693.6 |
- In 2006, 3 RACs hired to perform Claim Review Functions (Claim RAC).
- In 2006, 3 RACs hired to perform Medicare Secondary Payor (MSP) functions.
- In 2006, 4.4% of Medicare dollars did not comply with Medicare coverage, coding, billing, or payment rules, resulting in excess of $12 billion in Medicare overpayments.
- In 2006, $303 million was linked to inpatient claims.
- The Improper Medicare Payment Report 2007 estimated that 3.9% of Medicare dollars paid did not comply with one or more Medicare coverage, coding, billing or payment rules. This equals $10.8 billion in Medicare overpayments.
- In 2006, Program safeguard contractors were established nationwide across all provider types. These very specialized fraud fighters perform data analysis to identify problems with fraud. Congress mandated the RAC program to detect and correct improper payments.
- The RAC auditors are required to use clinical staff, have a medical director, and are paid on a contingency fee, in the range of 20% of their recoveries.
- Medicare receives over 1.2 billion claims per year.
- Originally the RAC audits were a demonstration with 3 states: California, New York, and Florida.
- Now includes Critical Access Hospitals, except for the DRG coding.
- RAC auditors will not re-bill if they discover lost charges that were never billed for.
- RAC auditors that discover underpayments on a claim will adjust for the higher coding.
- Arizona, North Carolina, and Massachusetts have been added. Nine other states are projected to be added in 2008, with Washington, Oregon and Alaska being included in early 2009.
- By the end of 2007, $239.6 billion in claims were reviewed, for the period of October 2001 to September 30th 2006, resulting in $371.5 million recovered.
- If requested patient charts are not turned over within 45 days, the entire amount of the Medicare payment is taken back, and the Hospital is denied any appeal rights.
- Both Medicare and Medicaid have notified providers that they must write a letter notifying the intermediary, Medicare / Medicaid, who the Point of Contact (POC) person is for Fraud Audit requests and information.
- For many facilities, the information is being sent to the Medical Records or Billing departments, rather than the CFO, CEO, or Compliance Officer.
- Have a Response Plan and Response Team put together before the audit begins.
- All employees need to understand the Response Plan.
- Critical Access facilities are included in the current Recovery Fraud Audits. One of the areas being focused on in CAH hospitals is observation.
- For small rural facilities and CAHs with fewer than 100 employees, overpayments collected on fraud audits averaged just over $1 million.
- Since the program’s inception, the RACs were given nearly 1.2 billion claims to review. Inpatient hospitals represented 85% of overpayments. Rehabilitation represented 6%; SNF, 2%; Outpatient hospitals, 4%; Physicians, 2%; and other facilities 1%.
- Inpatient Focus on Audits:
- Medical necessity
- Observation and admissions
- Transfers and discharges
- One-day stays
- Lack of documentation
- Extensive procedures OR procedures unmatched to principal diagnosis
- Inpatient procedures eligible for outpatient surgical setting
- Unbundling procedure codes to obtain additional reimbursement
- Excisional debridement
- Joint replacement surgery
- Heart failure and shock
- Drugs and biologicals
- Chest pain/back pain
- Billing for items/services before they were delivered/performed
- Billing for non-covered services under a covered procedure code
- Outpatient focus on audits:
- Excess units
- Multiple claims
- Speech & therapy claims
- Infusion therapy
- Was your CFO made aware of the request?
- Before records are sent, has the Point of Contact team checked a list to assure:
- All records were copied correctly, two sided documents have legible dates and signatures, and information has not been cut off.
- For the patient’s record being requested, you have included every record required by regulation, including the UB and charge data.
- PERM Audits: Payment error audits
- Department is conducting billing audits through outside contracting firm, currently Meyers & Stauffer in conjunction with the Office of Inspector General. Each year 80 desk audits and 27 field site audits must be conducted.
- SURS Audits: Surveillance and Utilization Review
- First Health state payment contractor conducts these audits when fraud is identified.
- The audit is turned over to the State’s Attorney General Office to conduct a criminal investigation.
- Program Integrity Audits:
- Check different patterns on claims, check different patterns on type of patients or services billed.
- Quality Assurance Audits:
- Common findings are non-documented services, program violations such as family/guardians providing services, client rights ignored or violated, incorrect procedure codes and/or modifiers, duplicate claims payments, deficient financial records, certification/licensure issues, inaccurate provider enrollment information. Those audits have changed from prior QAA. Now they are being done to find errors for PERM audits to target specific areas.
- Reimbursement Audits (Alaska only):
- Performed by Meyers & Stauffer or Office of Rate Review on facility’s cost reports, year end conformance reports and budget reports. Their audit findings reduce facility rates.
- Medicare/Federal Audits:
- CPT procedures inconsistent with diagnosis time billing review / look at time needed to perform compared to time billed and high CPT codes. Looks if provider billing patterns and trends correlate to history billing. Checks utilization program admissions and discharges drawing more Medicare/Medicaid than previous or discharge high activity patients faster.
- CERTS Audits:
- Currently being conducted by AdvanceMed. AdvanceMed is a separate contractor from Noridian.
- The purpose of a CERT is to randomly select a sample of claims in a calendar year, request medical records from the providers who submitted claims, review the claim and medical records to see if the claims comply with the medical coverage, coding and billing rules. Errors will be assigned to claims paid incorrectly or denied. Facilities who do not submit all required documentation will be classified as non-responders and treated as errors.
- Noridian Billing Audits:
- The audits look for inadequate documentation, lack of necessity, unsigned physician orders, duplicate claims, improper coding or ordering services, billing improper services, review one day service, lesser over three day stays, admission criteria, observation, bundled services, APC, anesthesia and recovery.
- Financial Analysis and financial feasibility studies, Financial Wellness Plan
- Analysis of impacts on mergers, new service lines.
- Financial indicator graphs, Dashboards.
- Collections of Medicare/Medicaid claims deemed uncollectible.
- Calculation of contractuals to ensure proper payment from third parties.
- Educational Workshops
- Medicare Geographic Reclassification requests for inpatient Medicare rate maximization
- Maximizing DSH payments
- New Services Exception Requests for Sole Community Hospital payments
- Reimbursement for Medicare 5% volume decline reports
No records should be sent to the State of Alaska, First Health, Noridian, CMS, Livanta, or any other entity until the following issues are addressed:
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State of Alaska/Washington Medicaid
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Appeals and Supreme and Superior Court Cases
Unidentified Hospital / Long Term Care Facility
Impact $3,000,000
Assisted in preparing defense against allegations of fraudulent billing practices. Responded to State Search Warrant and provided expert testimony and guidance to hospital / long-term care facility concerning proper billing procedures for State Medicaid Program Personal Care Attendant (PCA) program. Case resulted in facility being fully cleared of all charges and all charges being dropped prior to trial.
Unidentified Hospital
Impact $4,000,000
Assisted in the preparation of an OIG Self-Disclosure concerning billing irregularities discovered during Chargemaster review. Assisted counsel with materials prepared pursuant to OIG Self-Disclosure protocols case resulted in facility having to pay back funds billed improperly with no additional fines or penalties or corporate integrity agreement being imposed.
Many thousands of claims were deemed duplicate billings by the fraud auditor.
We did not find one duplicate claim, and had all of them reversed.
Disallowances for undocumented services:
We were able to locate nearly all records.
One facility had all laboratory documents on the computer rather than in the patient records – auditors denied Lab charges on every patient audited
We sent all records to the auditors, and eliminated $1 million in disallowances.
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Strategic Planning
FCA&W can increase your bottom line with the following:
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Other Services
FCA&W also works in the following arenas:
Rural Health Clinics
Financial Consultants of Alaska & Washington has created financial feasibility models to determine the advantage of changing to freestanding or provider based clinic status.
Swing Bed
Our firm has performed feasibility studies to highlight reimbursement opportunities of swing bed reimbursement versus long term care payments under RUG scoring. Swing bed reimbursement for critical access facilities is cost base and there may be a significant benefit to converting some beds to swing bed status.
CON projects
Our firm has worked on many CON projects and testified for facilities to assist them in receiving the status or blocking other entities from not being held to CON requirements.
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