cost reports refresher for skilled facilities...4/11/2016 3 medicaid cost report reminders 2015...

4/11/2016

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April 12, 2016

Cost Reports Refresher for Skilled Nursing Facilities

Presenters

Patrick Dooher, CPAPartner

Corinne English, CPASenior Manager

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Medicaid Cost Report Reminders

What’s Changed on the 2015 RHCF‐4


Take Note of These Items

Helpful Tips

Medicare Cost Report Reminders

Agenda

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2015 Medicaid RHCF‐4 and RHCF‐2 cost reports

Software is anticipated to be available on the Health Commerce System on April 15, 2016 (https://commerce.health.state.ny.us/public/hcs_login.html)

Failure to file on time will affect your quality points for determining quality pool quintile and result in a 2% decrease in your daily rate until submitted

Cost report filing and certifications from independent auditors and operators are all due by this date

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2015 Medicaid RHCF‐4 and RHCF‐2 cost reports

Related party financial statements‐submissions must be in PDF and to the designated bureau

NYS DOH has yet to communicate what bureau will be used. The [email protected] e‐mail account no longer exists

Failure to file an electronic copy will result in an incomplete cost report submission

Change in auditor or operator‐ be sure to update certification information by completing forms issued with the DAL and submitting to the designated bureau as soon as possible but no later than July 8, 2016

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Configure Screen:

Will be required in 2015 to enter Permanent Facility Identifier (PFI) Number (six digit number)

PFI was added in 2014, but optional that year

Schedule 10B‐Age of Facility

Has been removed this year from schedules

State indicated that it was not filled out correctly or consistently

Contained within accountants certification in electronic opinion erroneously, but most firms excluded it in accountants notepad

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Configure Screen:

Will be required to enter Permanent Facility Identifier (PFI) Number

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Your Medicaid cost report can still impact your facilities Medicaid rate in some capacity. While some costs are aggregated into one overall statewide price, certain costs are still facility specific, such as your capital.

Be mindful of these Schedules and Exhibits that impact capital reimbursement

Schedule 8D, 9, 10, 11, 15, 17, Exhibit I (RHCF‐4)

Part III – Related Company Capital Costs

Exhibit 11, Exhibit 18 & Exhibit 44 (RHCF‐2 & ICR)

For those Medicaid managed care companies that are paying you the benchmark rate, getting reimbursed for that accurate capital rate is important

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Capital Related Costs

Schedule 8D & 9 need your attention as these are key schedules for reimbursing your capital

Interest Expenses – Identify and capture separately interest by type (mortgage, working capital, or other).

Rentals – Capture all rentals‐big or small, including oxygen rentals. Has your accounts payable department coded rentals into supply accounts, when they are in fact rentals? (i.e. silverware, tables and chairs for a function).

Various insurances need to be broken out separately (make sure that property, boiler, and auto are identified and not lumped in with GLPL and D&O insurances)

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Schedule 9 Items to pay attention to, continued

Mortgage Insurance Premium

Real Estate Taxes

Telephone Equipment Depreciation‐favorite of OMIG auditors to disallow

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Schedule 8D & 9 items to pay attention to, continued

Working Capital Interest (WCI) (Schedule 8/8D) –Schedule should be completed in its entirety with all pertinent information as to the lender, purpose of the loan, interest rate and the amount of interest paid. Instructions clearly indicate that you should not include any working capital interest (i.e. interest paid to a related party, interest paid to DOH for recovery determinations) as these are non‐allowable. WCI is reimbursed up to a regulatory threshold and is generally not reimbursed if the facility reports a profit for the year.

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Schedule 8D & 9 items to pay attention to, continued

Complete Schedule 9 after the remainder of Part II is completed, as Schedule 9 must agree to numerous schedules in Part II including Schedule 10, 11, and 15.

Schedule 10 & 11 Items to pay attention to

Make sure that you retain your detailed fixed asset schedules and that they provide fixed asset detail by year with corresponding accumulated depreciation and depreciation by asset category. Amounts reported on Schedule 10 and 11 should agree to those detailed fixed asset schedules. Reconciling the asset categories from Schedule 10 and 11 to Balance Sheet Categories on Exhibit A ensures completeness and will assist when the OMIG auditors knock on your door.

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Schedule 10 & 11 Items to pay attention to

Are you able to roll forward last years Schedule 10 and 11 to this years cost report schedule. Your IPA certifying the cost report should be checking that as part of their review.

Be sure that you can identify and document any differences from the audited financial statements and these schedules in the event that you maintain different depreciation and amortization schedules (MATP issues)

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Schedule 15‐Non‐capitalized leased equipment information items to pay attention to:

Do not utilize cost centers 001 and 002 to report rentals, as it will result in your facility not being reimbursed for the rental.

The total amount by cost center should agree back to amounts reported on Schedule 9 and Exhibit H. DOH will take whichever number is the lowest during the rate setting process if they do not agree.

Have you captured the rentals in the appropriate cost center? If you have a facility that is paid under separate rate sheets such as adult day care, traumatic brain injury, or others utilizing different rate settings, there could be cost centers with different tracebacks, which makes it critical that you report your costs in the appropriate cost center.

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Schedule 17‐Capital Cost Financing Items to pay attention to:

Refinancing that has occurred during the year requires your special attention. Make sure that you just do not carry forward last years information, but rather update and add a new schedule with line 001, column 236 indicating a 2= Approved Refinancing. Be alert that you may be over reimbursed in your cost report year if you are being paid interest under old debt structure. Need for appeal if underpaid or overpaid.

If you have a variable rate mortgage, be sure to evaluate the interest expense reported on Schedule 17 yearly. This would require an appeal to correct.

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Capital Related Costs Schedule 17‐Capital Cost Financing

Items to pay attention to:

Be alert on refinancing for possible over mortgaging issues and the need to seek approval in advance. Better safe than sorry

Be sure to include mortgage insurance premiums on these schedules. Generally are provided by mortgage servicer for length of mortgage

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Exhibit I Recoveries Items to pay attention to:

Interest income offset‐is your interest income categorized properly on both Exhibit I and Exhibit E‐Statement of Revenues and Expenses? Unrestricted investment income should be reported on line 020 of this Schedule.

Common Error

Do not report restricted investment income (i.e. income earned on sinking funds, replacement reserves required by HUD, funded depreciation or donor restricted investment income) on this Exhibit.

Unrestricted investment income is utilized to offset interest expense within the capital component of the Medicaid rate.

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Part III Related Party Schedules to pay attention to:

Facilities that are provided capital related services (i.e. building or equipment leases) should make sure that they complete the schedules within these sections properly. Be sure to fill out the related company schedule 9, similar to the skilled nursing facility’s schedule 9.

Include all capital related costs (depreciation, rentals, etc).

The Facility is reimbursed their percentage of business with the related company of these costs.

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Exhibit 11, 18 & 44 (RHCF‐2 & ICR) Items to pay attention to:

Report all directly assigned capital costs on Exhibit 44.

Evaluate and be sure to report all capital costs on the capital cost lines.

If rentals are reported in other cost centers on the ICR, reclass them on Exhibit 12 to capital.

Working capital interest is typically included as part of administration and reported on Exhibit 18.

Ensure that all capital costs reported on Exhibit 11 flow to Exhibit 40

Be sure to evaluate and review statistics on Exhibit 19 and 20, as they are utilized to allocate all costs (not just capital costs).

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Non‐Comparable Costs

Medical Director’s Office

Volunteer Director

Hearing Therapy

Utilization Review (Be sure to report on Exhibit 18 of the ICR, if applicable

Dental

Medicine Cabinet Drugs (Schedule 6 – RHCF‐4 & Prescription Drug Schedule – RHCF – RHCF‐2)

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Wage Equalization Factor (WEF) Related Schedules

Schedule 4/5/5A & Exhibit H (RHCF‐4)

Direct Charge Salaries – RHCF Allocation of Expenses, Direct Charge Hours Paid, Exhibit 11, Exhibit 12, Exhibit 14, Exhibit 36 (RHCF‐2 & ICR)

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Wage Equalization Factor Schedules, continued

Schedule 4/Direct Charge Salaries

Make sure that you report all RN, LPN and Aides salaries properly. Also, if there are individuals in the nursing administration line that provide direct patient care, the portion of direct patient care should be allocated to the RHCF line.

Time studies should be utilized if you are allocating salaries.

For RHCF‐2 filers, the salary costs associated with the SNF, PT, OT and ST lines are included in the WEF calculation in its entirety.

All therapists and therapy aides should be reported in the Technical Specialists & Aides/Orderlies columns on Schedule 4. Including therapist time in management and supervision will result in that time not being included within the WEF calculation.

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Take Note of These Items Wage Equalization Factor Schedules, continued

Schedule 4/Direct Charge Salaries, continued

Hospital based skilled nursing facilities, benefit allocations are calculated by the Department of Health utilizing the information reported in the ICR and RHCF‐2.

Schedule 5/5A‐Full Time Equivalents & Hours Paid

Are the hours reported appropriate for salaries reported on Schedule 4? Do a reasonableness of rate per hour to see if there are any outliers or unusually low rates that alert you to errors in your data.

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Wage Equalization Factor Schedules, continued Direct Charge Hours Paid/Exhibit 36 Hours for hospital based WEF calculations are derived from

the direct charge employees wage schedule in the RHCF‐2 combined with an allocation of hours from Exhibit 36 of the ICR (for any areas not direct charge).

Exhibit H‐Statement of Functional Expenses Are your fringe benefit costs being allocated properly to the

various cost centers based on the correlation of the cost to the salary position? Workers compensation‐admin versus health care worker Pension costs Tuition reimbursement to healthcare worker versus

administrative Excluded departments or workers from certain types of

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Quality Pool Schedules (RHCF‐4 & RHCF‐2) Schedule O (1) & O (2) Important to obtain this information early from contracted

providers. Recommend keeping track of this throughout the year. Make sure that you fill in the appropriate lines and

columns properly for only contracted staff of RNs, LPNs and Aides. Utilized to compare FTEs contracted to total SNF FTEs

reported on Schedule 5. Be alert to your percentage of contracted FTEs to employed FTEs as facilities with significant contracted staff will receive zero points in quality pool measure for that category.

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Quality Pool Schedules (RHCF‐4 & RHCF‐2) Schedule O (2) requires facilities to fill out the number of

contracted employees, by cost center, as of the dates noted. Get HR to track this for you. Schedule P‐Staff Turnover Expected to be utilized for possible quality pool measures.

The schedule focuses on retention of staff. Make sure that you are reporting information properly in

the last three columns as it relates to retained employees, employees hired and employees fired. If reporting terminations, be sure they are employees who have left facility. How are you handling employees moving within a healthcare system?

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Helpful Tips

Utilize information already prepared from your Medicare Cost Report

Get in the zone and ready to tackle the Medicaid Cost report:

Obtain a listing of all items you need and who will provide them.

Review prior year cost report, Exhibit H and Natural Class Groupings.

Review all allocations – including payroll and benefit allocations.

Read the DAL and tackle some of the low lying fruit in preparing the cost report

Prefatory & configure data generally remains similar to prior year. Review for any changes. Any changes to schedules needed (i.e. Part III, Schedule 17/18) must be done in the configure screen.

Certain information can be imported from last years cost report ‐Schedule 17 & Prefatory Data

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Helpful Tips

If you haven’t already done so in the past, you can copy and paste from excel into the cost report software to avoid keying errors.

Provide individuals within finance and HR departments the cost report files and have them fill in the excel templates

Schedules that lend themselves to this type of process are listed below:

Part I ‐ Statistics

Exhibit H

Schedule 4/5/5A

Schedule 6

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Helpful Tips

Fly through the preparation of the financial statement exhibits by utilizing the final issued or draft financial statements. Be alert for those changes that the auditors require you to make each year and make those revisions

Does your current assets and current liabilities totals agree to the statements?

Have you put in the total bad debt and contractual allowance number on the balance sheet accurately?‐ common mistake

If you utilize any “other” lines, be sure to type in a description.

Are you filling numbers in lines that are not appropriate because there is not enough spaces on the balance sheet?‐put in other and use notepad

For Exhibit E‐are you placing the operating and non‐operating revenues on the proper lines so that they mirror the placement in your financial statements?

For Exhibit B‐if you have a restatement from prior year, are you utilizing the proper section of the Exhibit?

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Helpful Tips

Remember that certain benefits are only considered allowable costs if they are actually funded versus actuarial determined expenses. Do not include items such as minimum pension liabilities and other postemployment benefits if they are not funded on Exhibit H.

Utilize the general notepad as necessary

More information provided to NYSDOH can alleviate questions or issues that lead to possible future appeals

Renovation projects that came on line this year or repurposing of facility space should be a red flag that you need to brush off the square footage statistics that you have been carrying forward each year.

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Helpful Tips

If you continually have capital related errors in your rate sheets, review to see if there are reporting mistakes in past cost reports

Contact NYSDOH in advance to see what recommendations they can make

Utilize the notepad to make NYSDOH aware of past errors

Have you filed your formal capital appeal for those items that did not get corrected via email in November 2015 for 2016 capital?

Have until June 2016 to file capital appeal via electronic system per DAL letter

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Before you begin your cost report, research whether you meet the criteria for a waiver for low utilization

Skilled nursing facilities could be eligible to file a waiver for low utilization if they meet the following criteria according to National Government Services (NGS) guidelines:

Less than 10% Medicare Utilization, or

Less than $200,000 in Medicare A + B net reimbursement

If NGS is not the intermediary for your Facility, these criteria will not apply. The Facility should contact their intermediary to determine if they can file such a waiver.

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Waiver for Low Utilization, continued

If a facility decides to file a waiver for low utilization, the facility is only required to submit the following:

Certification page (Worksheet S)

Applicable S‐series worksheets (Worksheet S‐3, Part 1)

Request for Waiver of Electronic Filing of Medicare Cost Report

Balance Sheet and Income Statement (Can be the worksheets from the cost report)

Get approval by filing a waiver request via email and retain letter received back from NGS

Paper filing of schedules to the address indicated on the letter

Make sure that the certification page contains an original signature.

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Medicare Bad Debts submission with cost report

Have you determined if you have any Medicare bad debts for co‐insurance and NAMI’s that can be submitted for payment?

For calendar year 2015, Medicare bad debts are reimbursable at 65% of dual eligible coinsurance balances written off.

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Any Questions?

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Thank You!

PATRICK DOOHER, CPA, PARTNER

PDOOHER@FCC‐CPA.COM

CORINNE ENGLISH, CPA, SENIOR MANAGER

CENGLISH@FCC‐CPA.COM

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cost reports refresher for skilled facilities...4/11/2016 3 medicaid cost report reminders 2015...

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