There was a fairly significant change to the Medicare Home Health Cost Report for 2016. Do you know what that change was?
Worksheet S-2-1
Worksheet S-2-1 is new to the Home Health Cost Report for CY 2016 (i.e., a fiscal year-end of 12/31/16). This change also eliminated the need for home health agencies to file Form CMS 339; commonly called the Provider Reimbursement Questionnaire (aka: the PRQ). The top portion of Worksheet (W/S) S-2-1 (see below) replaces the old PRQ. The completing of the PRQ was always a bit of a chore, especially since a significant portion of the PRQ was not applicable to home health. W/S S-2-1 has eliminated the need to complete the pertinent questions of the PRQ and marking the rest N/A, by just including the pertinent questions on this worksheet. The bottom portion (follows below) of W/S S-2-1 might be an even more significant change; and, it might be one that many improperly prepare.
The bottom portion of W/S S-2-1 is for the identification of the individual and organization that prepares the Home Health Cost Report; whether as an outsourced service (such as by an outside consultant), or prepared by someone in-house to the agency (an employee thereof). I believe this is a start by CMS to try to identify those preparers that are not quite as diligent about ensuring compliance with the Cost Report filing requirements. I can tell you first-hand that there are widespread problems in this area, and as someone that prepares the Home Health Cost Report for clients, I do not like that one bit. This gives all of us that prepare the Home Health Cost Report a bad name, when that bad name is really only attributable to a portion of those that prepare Cost Reports.
You do not have to take my word for this, all you have to do is go back to the 2014 Proposed and FINAL Rules for HH PPS to see that CMS identified that they excluded almost 40% of all available Home Health Cost Reports for their rebasing calculations; and the biggest segment of these were excluded because the Cost Reports were inadequately and/or poorly prepared. Sometimes this can be the agency’s fault; but most of the time it would be the preparer’s.
A question one could ask could be: Why did the FI/MAC’s accept these Medicare Cost Reports to begin with? But, let’s leave the accountability discussion for another day.
Following is the top portion of W/S S-2-1 (this is the PRQ replacement):
Top of WS S-2-1 for CY2016
Following are the CMS instructions for completing the top portion of W/S S-2-1 (the CMS instructions are in red, and my comments are in black):
| 3204.1. | WORKSHEET S-2-1 – HOME HEALTH AGENCY REIMBURSEMENT QUESTIONNAIRE |
This worksheet collects organizational, financial and statistical information previously reported on Form CMS-339. Where instructions for this worksheet direct the HHA to submit documentation/information, mail or otherwise transmit the requested documentation to the contractor with submission of the electronic cost report (ECR). The contractor has the right under §§1815(a) and 1883(e) of the Act to request any missing documentation.
NOTE: The responses on all lines are “yes” or “no” unless otherwise indicated. When the instructions require documentation, indicate on the documentation the Worksheet S-2-1 line number the documentation supports.
Line 1
Indicate whether the HHA has changed ownership immediately prior to the beginning of the cost reporting period. Enter “Y” for yes or “N” for no in column 1.
- If column 1 is “Y”, enter the date the change of ownership occurred in column 2.
- Also, submit the name and address of the new owner and a copy of the sales agreement with the cost report.
Line 2
Indicate whether the HHA has terminated participation in the Medicare program. Enter “Y” for yes or “N” for no in column 1. If column 1 is “Y”, enter the date of termination in column 2, and “V” for voluntary or “I” for involuntary in column 3.
Line 3
Indicate whether the HHA is involved in business transactions, including management contracts, with individuals or entities (e.g., chain home offices, drug or medical supply companies) that are related to the HHA or its officers, medical staff, management personnel, or members of the board of directors through ownership, control, or family and other similar relationships. Enter “Y” for yes or “N” for no in column 1. If column 1 is “Y”, submit a list of the individuals, the organizations involved, and a description of the transactions with the cost report.
NOTE: A related party transaction occurs when services, facilities, or supplies are furnished to the provider by organizations related to the provider through common ownership or control. (See Pub. 15-1, chapter 10 and 42 CFR 413.17.)
Line 4
Indicate in column 1 whether the financial statements were prepared by a certified public accountant; enter “Y” for yes or “N” for no. If column 1 is yes, indicate the type of financial statements in column 2 by entering “A” for audited, “C” for compiled, or “R” for reviewed. Submit a complete copy of the financial statements (i.e., the independent public accountant’s opinion, the statements themselves, and the footnotes) with the cost report. If the financial statements are not available for submission with the cost report enter the date they will be available in column 3.
If column 1 is no, submit a copy of the internally prepared financial statements, and written statements of significant accounting policy and procedure changes affecting Medicare reimbursement which occurred during the cost reporting period. You may submit the changed accounting or administrative procedures manual in lieu of written statements.
Comment: There is much confusion regarding Audit, Compiled and Reviewed.
- Audit – This means that the CPA firm did not prepare your financials, but were in fact contracted by your agency to come in and do a financial audit of your financials to opine whether or not they represent fairly the operational results of your organization (in a simplistic sense). An Audit Report would be issued by the CPA with the financials. If you received (or will receive) an Audit Report, you would answer YES, otherwise your response is NO.
- Compiled – This is the one that is the most problematic; the most misunderstood. This is because of the word “Compiled”. The general public has one understanding of what this means, but it has an even more specific meaning to CPA’s. Because many HHAs have their financials put together by accounting/CPA firms/individuals, there is a tendency to mark this YES, but that doesn’t necessarily mean that they were Compiled from a CPA’s perspective. An accountant pulling a clients financial records together does compile them as per the Merriam-Webster Dictionary’s definition of compile. However, the CPA perspective goes a little further. If the CPA firm issued a Compilation Report, then the proper response to this question is YES; however, if they do not issue a Compilation Report, they did pull your financials together for presentation purposes, but they did not compile them, as this would require the CPAs to issue a Compilation Report. If they did not prepare and submit an official Compilation Report with the financials, the response to this question should be NO.
- Reviewed – This is another specialized engagement performed by a CPA firm that is over and above what ‘review’ means to the general public. A Review Engagement by a CPA firm is liken to a mini-audit. It is not as all-encompassing as an audit is, but generally follows most of the same processes, but within a very-limited scope. I have never seen or even heard of an HHA contracting for a Review engagement; as such, I would imagine that this would (almost) always be NO.
Keep in mind that an affirmative response (Yes) to any of the above requires that that report (i.e., Audit, Compilation or Review) be submitted to your FI/MAC with the Home Health Cost Report; meaning the report with the financial statements and any footnotes included therein.
Line 5
Indicate whether the total expenses and total revenues reported on the cost report differ from those on the filed financial statements. Enter “Y” for yes or “N” for no in column 1. If you answer “Y” in column 1, submit reconciliation with the cost report.
Line 6
Indicate whether you are seeking reimbursement for bad debts resulting from Medicare deductible and/or coinsurance amounts which are uncollectible from Medicare beneficiaries. (See 42 CFR 413.89(e) and CMS Pub. 15-1, chapter 3, §§306 – 324 for the criteria for an allowable bad debt.) Enter “Y” for yes or “N” for no in column 1. If you answer “Y” in column 1, submit a completed Exhibit 1 or internal schedule duplicating the documentation requested on Exhibit 1 to support the bad debts claimed.
Exhibit 1 displayed at the end of this section requires the following documentation:
Columns 1, 2, 3, 4.–Patient Names, Health Insurance Claim (HIC) Number, and Dates of Service (From – To)–The documentation required for these columns is derived from the beneficiary’s bill. Furnish the patient’s name, HIC number and dates of service that correlate to the filed bad debt. (See CMS Pub. 15-1, chapter 3, §314 and 42 CFR 413.89.)
Columns 5 & 6.–Indigency/Medicaid Beneficiary–If the patient included in column 1 has been deemed indigent, place a check in column 5. If the patient in column 1 has a valid Medicaid number, include this number in column 6. See the criteria in CMS Pub. 15-1, chapter 3, §§312 and 322 and 42 CFR 413.89 for guidance on the billing requirements for indigent and Medicaid beneficiaries.
Columns 7 & 8.–Date First Bill Sent to Beneficiary & Date Collection Efforts Ceased–This information should be obtained from the HHA’s files and should correlate with the beneficiary name, HIC number, and dates of service shown in columns 1, 2, 3 and 4 of this exhibit. The date in column 8 represents the date that the unpaid account is deemed worthless, whereby all collection efforts, both internal and by an outside entity, ceased and there is no likelihood of recovery of the unpaid account. (See CFR 413.89(f), and CMS Pub. 15-1, chapter 3, §§308, 310, and 314.)
Column 9.–Medicare Remittance Advice Dates–Enter in this column the remittance advice dates that correlate with the beneficiary name, HIC number, and dates of service shown in columns 1, 2, 3 and 4 of this exhibit.
Columns 10 & 11.–Deductibles & Coinsurance–Record in these columns the beneficiary’s unpaid deductible and coinsurance amounts that relate to covered services.
Column 12.–Total Medicare Bad Debts–Calculate the total bad debts by summing up the amounts on all lines of columns 10 and 11. This “total” must agree with the bad debts claimed on the cost report. Attach additional supporting schedules, if necessary, for bad debt recoveries.
Line 7
Indicate whether your bad debt collection policy changed during the cost reporting period. Enter “Y” for yes or “N” for no in column 1. If you answer “Y” in column 1, submit a copy of the revised policy with the cost report.
Line 8
Indicate whether patient coinsurance amounts were waived. Enter “Y” for yes or “N” for no in column 1. If you answer “Y” in column 1, ensure that they are not included on the bad debt listings (i.e., Exhibit 1 or your internal schedules) submitted with the cost report.
Line 9
Indicate whether the cost report was prepared using the Provider Statistical & Reimbursement (PS&R) Report only. Enter “Y” for yes or “N” for no in column 1. If column 1 is “Y” enter the paid through date of the PS&R in column 2. Also, submit a crosswalk between revenue codes and charges found on the PS&R to the cost center groupings on the cost report. This crosswalk will reflect a cost center to revenue code match only.
Line 10
Indicate whether the cost report was prepared using the PS&R for totals and provider records for allocation. Enter “Y” for yes or “N” for no in column 1. If column 1 is “Y” enter the paid through date of the PS&R used to prepare this cost report in column 2. Also, submit a detailed crosswalk between revenue codes, departments and charges on the PS&R to the cost center groupings on the cost report. This crosswalk must show dollars by cost center and include which revenue codes were allocated to each cost center. The total revenue on the cost report must match the total charges on the PS&R (as appropriately adjusted for unpaid claims, etc.) to use this method. Supporting work papers must accompany this crosswalk to provide sufficient documentation as to the accuracy of the provider records. If the contractor does not find the documentation sufficient, the PS&R will be used in its entirety.
Line 11
If you entered “Y” on either line 9 or 10, indicate whether adjustments were made to the PS&R data for additional claims that have been billed but not included on the PS&R used to file this cost report. Enter “Y” for yes or “N” for no in column 1. If column 1 is “Y”, include a schedule which supports any claims not included on the PS&R. This schedule should include totals consistent with the breakdowns on the PS&R, and should reflect claims that are unprocessed or unpaid as of the cut-off date of the PS&R used to file the cost report.
Line 12
If you entered “Y” on either line 9 or 10, column 1, indicate whether adjustments were made to the PS&R data for corrections of other PS&R information. Enter “Y” for yes or “N” for no in column 1. If column 1 is “Y”, submit a detailed explanation and documentation which provides an audit trail from the PS&R to the cost report.
Line 13
If you entered “Y” on either line 9 or 10, column 1, indicate whether other adjustments were made to the PS&R data. Enter “Y” for yes or “N” for no in column 1. If column 1 is “Y”, include a description of the other adjustments and documentation which provides an audit trail from the PS&R to the cost report.
Line 14
Indicate whether the cost report was prepared using HHA records only. Enter “Y” for yes or “N” for no in column 1. If column 1 is “Y”, submit detailed documentation of the system used to support the data reported on the cost report. If detail documentation was previously supplied, submit only necessary updated documentation with the cost report.
The minimum requirements are:
- Internal records supporting program utilization statistics, charges, prevailing rates and payment information broken into each Medicare bill type in a manner consistent with the PS&R report.
- A reconciliation of remittance totals to the provider’s internal records.
- The name of the system used and system maintainer (vendor or HHA). If the HHA maintained the system, include date of last software update.
NOTE: Additional information may be supplied such as narrative documentation, internal flow charts, or outside vendor informational material to further describe and validate the reliability of your system.
That’s all for the top portion of W/S S-2-1.
Now, we’ll start discussing the bottom portion of W/S S-2-1; which I believe will ultimately prove to be the bigger change!
Cost Report Preparer Contact Information
The bottom portion of W/S S-2-1 (see below) is a section to be completed to identify who it is that actually completes the Cost Report. Personally, I think that this is something that is long over-due.
As I had previously noted, almost 40% of all eligible Home Health Cost Reports were excluded by CMS when they did their rebasing calculations for HH PPS. Now, if you don’t think that’s a big deal, and liken me to Chicken Little shouting “the sky is falling” you can just ignore the rest of this post. The rest of you though, will want to pay attention to this. There’s not a lot of information here, but what information is, could ultimately prove quite valuable in helping to improve the accuracy and consistency of the Medicare Home Health Cost Report that is completed and submitted throughout the industry. See below for the bottom portion of W/S S-2-1, and then after that the CMS instructions, with my comments intermixed therein.
The Bottom of WS S-2-1 for CY2016
Following are the CMS instructions for completing this bottom portion of W/S S-2-1:
Line 15
Enter the first name, last name and the title/position held by the cost report preparer in columns 1, 2, and 3, respectively.
Comment: This is the name of the individual that actually prepared your Home Health Cost Report (i.e., the person that put your information into the software to create the Cost Report). If your preparer does not put their own name here, you have reason to be concerned about the integrity of your preparer and the quality of the Cost Report prepared.
Line 16
Enter the employer/company name of the cost report preparer.
Comment: This is the name of the organization that actually prepared your Home Health Cost Report (i.e., this should be the name of the organization that the individual identified in Line 15 works for). If your preparer does not put their organization’s name here, you have reason to be concerned about the integrity of your preparer and their organization AND the quality of the Cost Report prepared!.
- If the preparer is an employee of the HHA, the HHA’s name would go here
- If the preparer is individually, or part of an outside third party (like a consultant), then the name of that organization (not the HHA’s name) should go here
Line 17
Enter the telephone number and email address of the cost report preparer in columns 1 and 2, respectively.
Comment: This should be the contact information for the individual identified in Line 15
Conclusion
This new worksheet may not seem like a big change; but in reality it is. Lord knows, the Home Health Cost Report needs a lot more adjustments than this, because it is woefully inadequate in properly allocating costs between an agency’s Medicare and non-Medicare lines of business; but that is a topic for another day. The changes due to the inclusion of W/S S-2-1 will help simplify and streamline the Cost Reporting process and hopefully encourage all Cost Report preparers to be more diligent in their Cost Report preparation process. And for those that don’t really care about quality and are just in it for the money; here’s to hoping that you get exposed for the type of preparer you really are!
I, for one, think this change is long overdue!
Kudos to CMS for this change. But more are needed to improve the accuracy of what is reported in the Home Health Cost Report!
FYI: As we are in the 2016 Cost Reporting Season, I hope to have another post soon about the Home Health Cost Report; primarily focusing on the shortcomings of this report. I will point out numerous shortcomings and how these shortcomings are used to the industry’s detriment by CMS and MedPac in their presentation of Medicare Margins. The tentative title of this post is: The Home Health Cost Report: A Flawed but Required Document. Should be an eye-opener for many, if not most; so stay tuned.