Cost Reporting

Presented by

Bill Lubaway

Paul Evers

Lubaway, Masten & Co.

Doug Horner

St. Mary’s of Michigan

2012 Annual Insurance & Reimbursement UpdateEastern Michigan Chapter HFMA

March 22, 2012

Agenda

I. Overview

II. Who Cares?

III. Worksheets

IV. Real Job Description

V. Audit Issues

VI. Wrap Up

Who Cares?

1. CMS uses the information submitted by hospitals in the aggregate to set future payment rates & as a basis for market basket updates.

2. Hospital specific information impacts certain payment factors (wage index, outlier RCC).

3. Each year could potentially be used as a base year for a future change in payment regulations.

4. Medicaid & BCBSM use for rate setting.

Who Cares? Blues Care

1. The Blue Cross Full Cost Model-Currently rebasing 2013 based on 2010

2. Piggybacks on the Medicare cost report

3. Uses Full Cost Method reimbursement principles as defined by Blue Cross

4. To calculate inpatient and outpatient rates

Cost Finding Objectives

1. Determine reimbursable cost

2. Establish full cost for rate setting

3. Provide management information such as profitability of services

Cost Finding Process1. Gather revenue and expenses by department

from general ledger and departmental statistical reports.

2. Make reclassifications to match expense to revenue.

3. Adjust to regulations vs. accounting differences, offset other revenue and eliminate non-allowable costs.

4. Allocate overhead cost centers to revenue producing departments.

5. Allocate cost to program.

Worksheet S-10

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Real Job Description includes

1. Bad debts2. Wage Index-pension & contract labor issues3. Medical Education4. Disproportionate Share5. Case Mix Index6. Value Based Purchasing7. Readmissions8. Transfers9. HIT

Provider Number Name CMI 2007 CMI 2010

Actual - Assumed

      6.1%

230089 BON SECOURS HOSPITAL 1.34 1.42 -0.1%

230151 BOTSFORD GENERAL HOSPITAL 1.36 1.40 -2.7%

230279 BRIGHTON HOSPITAL 0.66 0.78 11.9%

230259 CHELSEA COMMUNITY HOSPITAL 1.27 1.47 8.9%

230135 COTTAGE HOSPITAL 1.53 0.99 -41.4%

230254 CRITTENTON HOSPITAL MEDICAL CENTER 1.51 1.59 -0.7%

230273 DETROIT REC HOSP & UNIV HLTH CENTER 1.52 1.54 -4.9%

230230 EDWARD W SPARROW HOSPITAL ASSOCIATION 1.53 1.47 -9.7%

230244 GARDEN CITY HOSPITAL 1.47 1.42 -9.8%

230197 GENESYS REGIONAL MEDICAL CENTER 1.58 1.75 4.6%

230104 HARPER UNIVERSITY HOSPITAL 1.61 1.69 -1.6%

230275 HEALTHSOURCE SAGINAW 0.59 0.62 -1.4%

230204 HENRY FORD BI-COUNTY HOSPITAL 1.34 1.46 3.0%

230053 HENRY FORD HOSPITAL 1.67 1.73 -2.4%

230146 HENRY FORD WYANDOTTE HOSPITAL 1.41 1.41 -6.0%

230132 HURLEY MEDICAL CENTER 1.44 1.60 4.5%

230277 HURON VALLEY-SINAI HOSPITAL 1.42 1.59 5.4%

230297 KARMANOS CANCER CENTER 1.70 1.90 5.3%

230193 LAPEER REGIONAL MEDICAL CENTER 1.31 1.40 1.0%

230141 MCLAREN REGIONAL MEDICAL CENTER 1.62 1.68 -2.6%

230031 MERCY HOSPITAL - PORT HURON 1.40 1.52 2.6%

230099 MERCY MEMORIAL HOSPITAL 1.20 1.24 -3.1%

230227 MOUNT CLEMENS GENERAL HOSPITAL 1.51 1.58 -1.6%

230013 NORTH OAKLAND MEDICAL CENTERS 1.36 1.34 -7.4%

230142 OAKWOOD ANNAPOLIS HOSPITAL 1.27 1.41 5.2%

230270 OAKWOOD HERITAGE HOSPITAL 1.29 1.44 5.2%

230020 OAKWOOD HOSPITAL AND MEDICAL CENTER -DEARBORN 1.73 1.73 -5.9%

230176 OAKWOOD SOUTHSHORE MEDICAL CENTER 1.31 1.45 4.4%

Case Mix Index

Case Mix Index

Provider Number Name CMI 2007 CMI 2010

Actual - Assumed

      6.1%

230207 POH MEDICAL CENTER 1.39 1.45 -2.4%

230216 PORT HURON HOSPITAL 1.52 1.49 -8.1%

230019 PROVIDENCE HOSPITAL 1.68 1.66 -7.5%

230069 SAINT JOSEPH MERCY LIVINGSTON HOSPITAL 1.18 1.21 -3.6%

230212 SAINT JOSEPH MERCY SALINE HOSPITAL 0.99 1.01 -4.3%

230059 SAINT MARY'S HEALTH CARE 1.57 1.67 0.2%

230024 SINAI-GRACE HOSPITAL 1.75 1.69 -9.7%

230264 SOUTHEAST MICHIGAN SURGICAL HOSPITAL 1.90 2.20 9.7%

230165 ST JOHN HOSPITAL & MEDICAL CENTER 1.73 1.68 -9.1%

230195 ST JOHN MACOMB HOSPITAL 1.47 1.55 -0.6%

230257 ST JOHN NORTH SHORES HOSPITAL 0.97 0.99 -4.3%

230241 ST JOHN RIVER DISTRICT HOSPITAL 1.21 1.21 -5.4%

230156 ST JOSEPH MERCY HOSPITAL 1.63 1.68 -2.6%

230029 ST JOSEPH MERCY OAKLAND 1.64 1.73 -0.5%

230047 ST JOSEPH'S MEDICAL CENTER 1.43 1.56 3.3%

230002 ST MARY MERCY HOSPITAL 1.31 1.40 0.6%

230077 ST MARY'S OF MICHIGAN MEDICAL CENTER 1.90 1.89 -6.6%

230071 STRAITH HOSPITAL FOR SPECIAL SURGERY 1.03 1.24 14.0%

230046 UNIVERSITY OF MICHIGAN HEALTH SYSTEM 1.91 1.98 -2.3%

230092 WA FOOTE MEMORIAL HOSPITAL 1.36 1.43 -0.9%

230130 WILLIAM BEAUMONT HOSPITAL 1.75 1.73 -7.1%

230269 WILLIAM BEAUMONT HOSPITAL-TROY 1.50 1.45 -10.0%

Average 1.44 1.49 -2.3%

Audit Issue – Medicare sampling

1. Medicare uses one of the most punitive and harsh sampling methodologies.

2. There are 3 levels of errors that may be applied against a sample:a) Most Likely Errorb) Upper Error Limitc) Upper Error Limit plus the basic precision

3. The method used is based on auditor discretion.

4. It is important to receive the sampling error worksheets so you can determine how the adjustment was reached.

Stratified Sample

Range Number Amount Sample Column1 Error Dollar Error %-age Disallow< 200 2100 320,000 25 3,000 2 175 5.833% 18,667

200.01 - 500 1000 340,000 20 6,400 3 890 13.906% 47,281 500.0 - 1000 120 85,000 15 10,815 2 1,682 15.552% 13,220

1000.01 -2500 10 120,000 10 120,000 1 1,100 0.917% 1,100 > 2500.01 4 12,000 4 12,000 0 - 0.000% -

Total 3234 877,000 74 152,215 8 3,847 2.527% 80,268

Random ListingName 1 320 Name 2 175 Name 3 3,575 Name 4 100 Name 5 8 SampleName 6 192 Name 7 33 Name 8 938 Name 9 1,920 Name 10 253 Name 11 440

: :Total 125,285

Calculation of Error

Group Amount Error Std ErrorGroup 1 125,000 - Group 2 125,000 125,000 30,000 Group 3 125,000 - Group 4 125,000 - Group 5 125,000 - Group 6 125,000 - Group 7 125,000 - Group 8 2,000 -

877,000 125,000 30,000

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