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

2. Why do solid organ transplant programs have a more unique position in hospital cost reporting than, let’s 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 program’s involvement with a patient transcends through three different payment stages in the transplantation process.

3. 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 program’s 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 APC’s, 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.

8. Hospital Accounting Cont’d • 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.

10. 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.

11. 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.

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

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

14. Review all pre-transplant evaluation charges done outside facility (by other providers) for adequacy and expense to organ acquisition cost center

15. 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) 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.

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

18. 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 Reporting:Monitor 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.

21. 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.

22. 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).

23. 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.

24. Provide statistics: • Organs transplanted • Live and cadaver counts • Excisions • Organs harvested at facility • Evaluation and other patient processing information

25. 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 facility’s 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.

26. Questions?