CMS has published a new draft transmittal for the reporting requirements in submitting acute care hospital Medicare Cost Reports. If and when this draft transmittal becomes official (and it could be approved later this summer), a number of reporting requirements will have expanded, specifically with the details regarding supporting documentation of key add-on reimbursements. Providers will need to adapt to the new requirements or they could face a number of negative consequences, such as:
- The rejection of the cost report which could delay any government receivables
- Financial penalties
- Audit risk for individual claims
Perhaps the most significant change in the draft transmittal is the reporting requirements for bad debt, which is compounded by the recent clarification of Medicare bad debt policy in the 2021 inpatient final rule update. Providers that write off Medicare bad debt on the basis of presumptive eligibility in programs other than Medicaid, such as a state charity care fund or a local welfare program, may not necessarily be sufficiently compliant with the CMS requirement for a valid bad debt collection process. Providers will need to scrutinize the new requirements to see if their state’s current requirements for bad debt will be sufficient for CMS. For example, in New Jersey, the state guidelines for its Charity Care Subsidy would not be fully sufficient for CMS; thus, a collection effort must be made. Additionally, write-off codes must reflect bad debt rather than a contractual adjustment.
As part of the draft requirements, uncompensated care schedules have been expanded. Bad debt logs will also now be required to justify non-Medicare bad debt amounts claimed in addition to the uncompensated care previously prepared. Furthermore, the reporting requirements for Medicaid DSH Day Logs have also been expanded. The effect of these changes is that reimbursement staff will need to work with patient financial services to ensure that these new processes are properly documented and tracked with compliant journal entries in the patient accounting system, and that all new processes, procedures and journal entries are understood by all stakeholders.
Once the new requirements become official, providers will need to take a number of steps to ensure compliance. They will need to build new schedules to submit the cost report properly. Although many of these new schedules involve minor changes, the previous schedules must be adapted to include new data sources or else providers run the risk of falling out of compliance.
CBIZ will keep you updated on these cost report changes. Although many of these new requirements may not necessarily lead to significant overhauls of existing processes, there could potentially be a number of changes that will have to be made to ensure compliance, and no provider wants to face financial penalties or reduced reimbursement that can eat into financial margins. If you have any immediate concerns or needs regarding the new cost report requirements, please our office at 800-957-6900 or email at kaconsults@cbiz.com.