2. Medicare Cost Reporting HomeTown Health University Module Three Cost Report Worksheets Presented by: Draffin & Tucker, LLP

3. B Series Worksheets

4. Worksheets B and B-1 oPurpose o To allocate cost for general service cost centers to the revenue producing cost centers

5. Worksheet A

6. Worksheet B information flows from Worksheet A column 7 net expenses. Agrees to Worksheet A, column 7

7. Since hospitals do not directly bill a patient for overhead items, such as laundry, meals, etc., the overhead cost must be included in the charge for the procedure or service performed. The B series of worksheets are used to assign overhead costs to the revenue producing areas of the hospital.

8. The B worksheets use various statistics to allocate overhead costs to the revenue areas. For example, the operating room will pick up a portion of the hospitals housekeeping cost based upon the ORs portion of square footage as compared to the hospital total square footage.

9. 1897/ 28,939=.06555.06555 * 159,774 = 10,473 Worksheet B-1 Worksheet B The OR has 1,897 square feet. Total square footage is 28,939. Therefore the OR has 6.555% of total hospital square footage. Since the OR has 6.555% of total hospital square footage, it will be assigned 6.555% of the housekeeping costs.

10. Allocations are performed in the order of the Worksheet A cost centers. 1.Depreciation 2.Employee Benefits 3.Administration 4.Laundry 5.Maintenance 6.Utilities 7.Laundry 8.Housekeeping 9.Dietary 10.Cafeteria 11.Nursing Admin 12.Central Supply 13.Pharmacy 14.Medical Records 15.Social Service

12. Worksheet A net expenses were $7,526,169. The indirect overhead expenses, such as A&G, laundry, housekeeping etc. have now been allocated to the revenue producing areas and added to the direct costs for these cost centers. The total of the direct and indirect expenses will now be transferred to Worksheet C. Gift shop expenses will not go to Worksheet C, since this is not a patient care area. Worksheet B after allocations

13. C Series Worksheets

14. Worksheet C

16. Costs / Charges = RCC Example: OR 276,648 / 464,851 =.595133 Worksheet C

17. D Series Worksheets

18. Worksheet C indicates how much it costs to generate $1 of revenue in a cost center. In our example we learned that it costs approximately $.60 to generate $1.00 of OR revenue. Based on the amount of OR charges to Medicare for the year, we can now estimate the related Medicare cost for OR. The Medicare charges are reported on the D Worksheets. From these charges, we can determine the Medicare costs.

19. This is an example of the D Worksheet that indicates the Medicare inpatient ancillary costs. Lets look at our OR example: Medicare charges are $50,429. Since it costs $.60 to generate $1 of OR charges, we can estimate that the cost of caring for Medicare patients in the OR was $30,012. $50,429 *.595133 = $30,012 Total Medicare ancillary inpatient costs are $829,740. * * Routine costs are determined based on a cost per day basis. Routine costs / Total Days = Cost per day Medicare Days * Cost per day = Medicare Costs (See next slide) Worksheet D-4

20. $582.96 * 1609 days = $937,983 $1348.13 * 172 days = $231,928 From worksheet D-4 Total Medicare inpatient costs Worksheet D-1 summarizes the Medicare inpatient costs. It includes the computation for the inpatient room and board, and adds this to the inpatient ancillary costs shown on the previous slide. Medicare days are transferred from Worksheet S Series.

21. This is an example of the D Worksheet that indicates the Medicare outpatient ancillary costs. Lets look at our OR example: Medicare outpatient charges are $225,223. Since it costs $.59 to generate $1 of OR charges, we can estimate that the cost of caring for Medicare outpatients in the OR was $134,038. $225,223 *.595133 = $134,038 Worksheet D Part V

22. E Series - Settlements

23. Total Medicare inpatient costs from Worksheet D-1 is transferred to Worksheet E Since this is a CAH, the provider will be paid based on 101% of costs. $1,999,601 * 101% = $2,019,597 Worksheet E-3

24. Allowable costs $2,019,597 l.19 Less: Deductibles 340,576 l. 20 Coinsurance 684 l. 23 Add: Bad Debts 75,882 l. 25 Total Reimbursable $1,754,219 l. 30 Interim Payments 1,748,173 l. 32 Underpayment $ 6,046 l. 33 Worksheet EA

26. Total Medicare Outpatient costs calculated on Worksheet D Part V + Part VI is transferred to Worksheet E Part B. This is the outpatient settlement worksheet. Worksheet D Part V

27. Allowable costs $1,471,787 l.17 Less: Deductibles 31,959 l. 18 Coinsurance 552,236 l. 1801 Primary Payer 1,050 l. 24 Add: Bad Debts 94,083 l. 27 Total Reimbursable $ 980,625 l. 32 Interim Payments 1,359,604 l. 34 Overpayment $ 378.979 l. 35 $1,457,215 * 101% = $1,471,787

29. G Series Worksheets

30. Worksheet G Balance Sheet

31. Worksheet G-1 Worksheet G-2 Worksheet G-3

32. Medicare Cost Reporting Module Three: Cost Report Worksheets If you have any questions regarding this course, please contact: Jeff Askey, CPA Draffin & Tucker, LLP P.O. Box 6 Albany, Georgia 31702 (229) 883-7878 JAskey@draffin-tucker.com