IDAHO MEDICAID COST REPORTS Presented by: Luke Zarecor, CPA, Owner Dingus, Zarecor & Associates PLLC East Main Street, Suite A Spokane Valley, Washington Website:

OVERVIEW Review of Medicaid payment methodology for hospitals  Special treatment for non exempt and critical access hospitals A walk through of how to calculate a Medicaid cost report settlement estimate

INPATIENT SETTLEMENT Inpatient reimbursement:  Paid on cost Routine services are paid on the cost per day (per diem) Inpatient ancillary services are paid based on each department’s ratio of cost to charge (RCC) Both the RCC and the per diem are taken from the Medicare cost report for the year of settlement Cost reduced by 8.3% due to cumulative Medicaid cuts Several limitations

INPATIENT SETTLEMENT (CONTINUED) Inpatient limitations:  Lesser of cost or charges  Per diem limit (excluding capital) This limitation is still in the regulations, but due to yearly rebasing it does not harm hospitals A reimbursement floor sets the lower limit on what a hospital will be reimbursed for inpatient services. The base floor is 77.4%.

INPATIENT INTERIM RATES Interim rate setting  Based on the most recent finalized Medicaid cost report  Payments are made on a percentage of charges  Interim rate is reduced for the 8.3% reimbursement reduction  An adjustment will be made to your rate if you had a significant settlement on your most recent Medicaid cost report

OUTPATIENT SETTLEMENT Cost is calculated utilizing each ancillary department’s RCC from the finalized Medicare cost report Cost is reduced in all calculations by:  10% reduction in capital costs (excluding sole community hospitals)  5.8% operating cost reduction (excluding sole community hospitals)  8.3% reduction to all costs

OUTPATIENT SETTLEMENT (CONTINUED) Outpatient laboratory - fee schedule (no settlement) Outpatient surgery (including ancillaries):  New! Reimbursed the lesser of Cost Charges

OUTPATIENT SETTLEMENT (CONTINUED) Outpatient radiology – lesser of:  58% fee schedule and 42% cost blend  Cost  Charges Ambulance – paid on a fee schedule (no settlement) Physician Services – paid on a fee schedule (no settlement)

OUTPATIENT SETTLEMENT (CONTINUED) Rural Health Clinics – paid a prospectively determined per visit rate (no settlement after base rate is set) Other outpatient services – settled on cost

OUTPATIENT INTERIM PAYMENTS Most services are paid on a percentage of charges prior to settlement Outpatient laboratory:  Paid on a fee schedule Outpatient radiology:  Paid on a fee schedule Outpatient surgery (revenue code 490):  Now paid as a percentage of charges

OUTPATIENT INTERIM PAYMENTS Ambulance:  Paid on a fee schedule Other outpatient – percentage of charges:  Based on most recent finalized Medicaid cost report  Reduced for cost reductions (CONTINUED)

OUTPATIENT INTERIM RATE SETTING Interim rate setting  Based on the most recent finalized Medicaid cost report  Outpatient laboratory and radiology are not included in the rate setting calculation  Payments are made on a percentage of charges  Interim rate is reduced for the 8.3% reimbursement reduction  An adjustment will be made to your rate if you had a significant settlement on your most recent Medicaid cost report

CRITICAL ACCESS HOSPITALS Inpatient (effective 7/1/10)  8.3% reimbursement reduction is no longer in effect  No limits will apply  Reimbursement will be increased to 101% of reasonable cost  The inpatient floor will be 101% of cost

CRITICAL ACCESS HOSPITALS (CONTINUED) Outpatient (effective 7/1/10)  8.3% reimbursement reduction is no longer in effect  10% capital reduction is no longer in effect  5.8% operating cost reduction no longer applies  Reimbursement will be increased to 101% of reasonable cost

NON EXEMPT HOSPITALS Non Exempt = the hospital pays the new provider assessment tax A hospital pays the new tax if it meets the criteria below:  Located in Idaho  Not a government hospital  Operates an emergency room

NON EXEMPT HOSPITALS (CONTINUED) Inpatient (effective 7/1/10)  The 8.3% reimbursement reduction is no longer in effect  The inpatient floor will be 85%

NON EXEMPT HOSPITALS (CONTINUED) Outpatient (effective 7/1/10)  8.3% reimbursement reduction is no longer in effect  10% capital reduction no longer applies  5.8% operating cost reduction no longer applies

MEDICAID ESTIMATE PROCESS THINGS TO GET BEFORE YOU START Medicare cost report for the year of the estimate Medicaid logs from Molina  Request logs from Molina  Molina will provide summarized inpatient and outpatient log (not perfect but better than most internal logs)

Ask for logs with a service date of your fiscal year and paid dates from the beginning of the fiscal year until six months after year end Evaluate the need to order logs for the claims paid after the first six months of the fiscal year with service dates before the beginning of the year – may not be significant MEDICAID ESTIMATE PROCESS THINGS TO GET BEFORE YOU START (CONTINUED)

Most recent “Recon 490” from Myers & Stauffer  Shows how Myers & Stauffer groups the revenue codes for your hospital  Compare groupings to your Medicare cost report MEDICAID ESTIMATE PROCESS THINGS TO GET BEFORE YOU START (CONTINUED)

Medicaid settlement template from your most recently finalized Medicaid cost report  Myers & Stauffer is willing to provide to you the most recent template used for your facility MEDICAID ESTIMATE PROCESS THINGS TO GET BEFORE YOU START (CONTINUED)

Update the template for:  Inpatient per diem cost  Ancillary RCC  Inpatient capital per diem cost  Ancillary capital RCC MEDICAID ESTIMATE PROCESS (CONTINUED)

Medicaid logs  Group and summarize revenue by Medicare cost report department Summarize covered charges for inpatient services Summarize billed and covered charges for outpatient services MEDICAID ESTIMATE PROCESS (CONTINUED)

Outpatient radiology  Assume billed amount equals ancillary charges  Assume covered charges equals fee schedule payments MEDICAID ESTIMATE PROCESS (CONTINUED)

Summarize payments Group inpatient days by Medicare cost report department MEDICAID ESTIMATE PROCESS (CONTINUED)

Enter Medicaid data into the template  Separate outpatient radiology schedule Carefully review the outpatient services and payment data Evaluate the settlement for reasonableness based on your operations and interim payments MEDICAID ESTIMATE PROCESS (CONTINUED)

Luke Zarecor, CPA, Owner Dingus, Zarecor & Associates PLLC East Main Street, Suite A Spokane Valley, Washington Phone: CONTACT INFORMATION