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Reports could lead to payment changes in the future
The Health Care Financing Administration (HCFA) recently released the final version of the hospice cost report. That means hospices whose fiscal year begins in the next few months will have to begin gathering cost data.
According to HCFA officials, it will take 176 hours to fill out the year-end report is. Hospices who begin preparing now and adopt changes in the data collection to mirror the cost report will save time filling out the forms and go a long way toward eliminating costly errors.
Over the next few months, Hospice Management Advisor will provide helpful advice from experts in the field on how to cope with this new requirement.
By Teresa R. Craig, CPA
The Hospice of the Florida Suncoast
Future reimbursement for hospices may be seriously affected by the new hospice cost report, but it will not affect current reimbursement.
However, Tom Hoyer, director of the Office of Chronic Care and Insurance Administration for the Health Care Financing Administration (HCFA), stated that he hopes the new reports can be used in setting pricing for hospice care in the future. On Feb. 18, 1998, Hoyer said he wants the report to "validate and perhaps establish new rates."
HCFA officials have also said the agency is trying to get an idea of how much it costs to provide care to evaluate whether hospice rates are appropriate, questioning whether the nature of care has changed so much that current reimbursement is no longer appropriate reimbursement.
Most of us agree the current rate structure is no longer adequate. We must work to provide the data to support a more equitable reimbursement formula in the future. The Balanced Budget Act of 1997 provided for hospice rates to increase by the hospital market basket less 1% through the year 2002. Because reimbursement after 2002 may be related to current cost reports, hospices must provide accurate data.
The report must be filed for hospices with fiscal years beginning on or after April 1, 1999. Most hospices will be affected later this year when their next fiscal year begins. The report is due five months after the fiscal year ends. The first reports will be due Aug. 31, 2000. Few reports will be due before November 2000 because most hospices will begin fiscal years in July or later. It will be important that hospices complete and file their reports on time. Medicare will withhold payments if the report is incomplete or late.
As with most cost reports, there are three basic elements:
1. Trial balance with adjustments for Medicare allowable expenses.
2. Allocation of overhead costs.
3. Apportionment of costs by payer source and reimbursable vs. non-reimbursable costs.
This breakdown of hospice costs is somewhat different from current hospice practices. Included in patient care costs are nursing, social work, counseling, home health aide, homemaker, spiritual counseling, and other. Education costs will be reported as part of Line 39, "Other hospice service costs, other."
Volunteer service coordination is reported in the general service cost centers. Non-reimbursable services include bereavement programs, volunteer service coordinations, fundraising, and non-hospice programs. We believe the non-reimbursable portion of volunteer service is any payment to volunteers for their services. It will be important that hospices can show their costs clearly in their trial balance and report any adjustments necessary to provide correct reporting.
Hospice programs that are part of an agency that already prepares a cost report, such as a home health agency or skilled nursing facility, will begin preparing schedules related to their hospice program in the home health or skilled nursing facility cost report. For example, if a home health cost report is prepared, detailed hospice schedules will be included in the home health cost report. Regardless of size of the hospice program, the hospice will always become part of other cost reports already being completed. Hospice schedules should mirror those in the hospice cost report.
The report provides these worksheets and attachments:
• WORKSHEET S-1. Hospices will provide data on days of care by reimbursement source, average length of stay, and days by level of care.
• WORKSHEET D. Here, hospices will have these summarized costs:
1. Total cost for all levels of care.
2. Unduplicated days of care provided to all hospice patients.
3. Average cost per day — 1 divided by 2.
4. Unduplicated Medicare days and average Medicare cost.
5. Unduplicated Medicaid days and average Medicaid cost.
6. Unduplicated days of care for Medicare hospice patients residing in an SNF and average SNF cost.
7. Unduplicated days of care for Medicaid hospice, patients residing in a nursing facility and average cost.
8. Other unduplicated days and average cost for those days.
9. Total days of care.
Other forms include the balance sheet, which will be reported on Worksheet G; the statement of changes in fund balances, which will be found on Worksheet G-1; and the adjusted statement of patient revenues and net income, which will be found on Worksheet G-2.
"Medicare" within the cost report refers only to Medicare patients and the days of care provided while those patients had a valid Medicare Hospice Election. Statistics for those patients not under the election who are cared for should be included with statistics for days of care paid for by other payers. "Other" includes patients not making the hospice election under Medicare or Medicaid.
Reporting by metropolitan statistical area (MSA) is not included in the cost report. Because of questions and concerns raised by providers, HCFA eliminated separate cost reporting by MSA. This is probably helpful for hospices providing care in multiple MSAs as the detail needed would have been difficult to accomplish. In Worksheet S-1, where HCFA asks which county service was provided, the county where the administrative offices are located should be used.
• ENROLLMENT DAYS — Schedule S-1, Part II. Programs will have to report days by level of care provided. Although continuous home care is reimbursed by the hour, it will be necessary to report the actual number of days the patient received continuously if at least eight hours of continuous care were provided each day. Unduplicated Medicare days, Medicaid days, and other payer days will be reported by number of days by level of care. In addition, the Medicare and Medicaid hospice benefit days will also be reported separately for patients residing in a skilled nursing facility. Other payer sources are not reported by location of care, only level of care.
• CENSUS DATA — Schedule S-1, Part III.
The total number of patients receiving hospice care in the reporting period will be reported based on payer source.
If a patient’s stay overlapped two reporting periods, the stay should be counted once in each reporting period. The patient who initially elects the hospice benefit, is discharged or revokes the benefit, and elects the benefit again within a reporting period, is considered to be a new admission with a new election and should be counted twice.
This is different than the reporting we do for our cap computation in which each patient is only counted once as electing hospice care. However, average length of stay by patient includes all time periods under which the election was in place for that patient. All days are combined for the patient within each payer source to determine total length of stay for that patient by payer source. See instructions, page 38-8.
• WORKSHEET A — Reclassification of trial balance expenses. Careful review of the definitions and line items for the A worksheets will be important in determining your chart of accounts and changes you may need to make. The instructions on pages 38-9 through 38-16 are details of reporting you will provide. You should review your current chart of accounts and approach to cost allocation with these governmental definitions and requirements in mind. You may wish to share these line item definitions with all accounting staff involved in cost allocation and expense analysis.
• Line 10 — Inpatient — General Care, page 38-11. Costs incurred by a hospice furnishing direct patient care services to patients receiving general inpatient care either directly from the hospice or under contractual arrangement in an inpatient facility is to be included in the visiting service costs section. This means only the direct costs of furnishing routine ancillary services for inpatient general care or the contractual amount paid to another facility will be recorded here. If the hospice maintains its own inpatient beds, these costs include costs of furnishing 24-hour nursing, meals, laundry and linen services, and housekeeping.
The direct patient care costs for programs contracting with an inpatient facility will be included in the hospices visiting services section.
Some concerns about the cost report include:
1. Hospices have learned to raise enough money to survive on the reimbursement, even though it is inadequate for the full services provided.
2. Some programs do not offer all options to their patients. For example, chemotherapy, blood transfusions, and some medications are used to provide pain control and symptom management in many programs. Others have elected not to admit patients using those therapies because their policy states these are not palliative care. This may lead to reporting a wide variety of costs and create confusion when HCFA begins reviewing the reports.
3. Hospices use inconsistent definitions and cost allocations. It will be important that consistent reporting occurs throughout the country.
4. The cost report does not break down costs by level of care. The separation of cost per patient day is only for location of care — whether in the patient’s own home or in a nursing home. This appears to support the idea that reimbursement should vary based on patient location.
5. It is unclear how to count patients who move from their own home to a nursing facility or vice versa.
6. The cost per day on Worksheet D will blend costs for all patients. This will result in an inaccurate per diem for Medicare or Medicaid Hospice patients because many insurers do not have hospices provide all of the care related to the terminal illness.
Maybe next time
Hospices should begin making changes to their payroll, income, and expense tracking systems immediately to provide the needed reporting. Tracking will include staff time and other expenses separated by patient residence. Staff will need to report time by patient and program if non-hospice programs are provided. Bereavement and other non-reimbursed services will be separated. Time sheets will need to be detailed for staff that provide both direct patient care and other non-reimbursed services so costs can be allocated appropriately.
Although the hospice community was hopeful the cost report would provide detailed reporting to support the high level of cost incurred by programs, it appears this will be incomplete.
On the bright side, the cost report follows typical cost report formats and will provide an average aggregate cost per day for most program costs. This will give a starting point for more thorough cost analysis in the future.