Medical Assistance Cost Reporting

1
Medical Assistance Cost Reporting

• Presented to the Pennsylvania Forum for Primary
  Healthcare
• February 17, 2005

2
Introduction

• Medical Assistance (MA) cost reporting
  methodology differs from Medicare cost reporting.
• Medicare provides coverage to people age 65 and
  older. Some coverage is provided to people under
  the age of 65 who have a disability, and people
  with end stage renal disease.
• Medicaid is the largest source of funding for
  medical and health related services for people
  with limited incomes. The population served can
  vary from neonatal to geriatric.

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The Cost Report

• Components of the cost report are The cost
  report itself, a trial balance cross- referenced
  to the line items on the cost report, the
  provider identification and certification page,
  the provider questionnaire and any other
  applicable information such as licenses for all
  providers rendering services in the clinic. The
  cost report must be submitted on the standard
  approved forms. Cost reports will be returned to
  the provider if components are missing, or if the
  reports are not submitted on the approved cost
  reporting forms.
• Cost reports are to be submitted annually to the
  Department of Public Welfare (DPW) no later than
  90 days after a clinics own fiscal year. This
  requirement applies to all Federally Qualified
  Health Centers (FQHC), including look alike
  clinics. Managed care quarterly settlement
  reports are due no later than 25 days following
  the end of the quarter.

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Why File Annual Cost Reports?

• Annual submission of cost reports enables the
  Office of Medical Assistance Programs (OMAP) to
  properly adjust payment rates if changes in scope
  of practice occur.
• When the Centers for Medicare and Medicaid (CMS)
  and the General Accounting Office (GAO) re-base
  the Prospective Payment System (PPS) rates OMAP
  will have an up to date database of clinic costs.
• DPW Comptrollers Office requires annual
  submission to verify costs.

5
Worksheet 1

• Record the trial balance of expenses from your
  records. This worksheet also is used to reflect
  adjustments and reclassifications to the
  accounts.
• Reimbursable costs are costs related to patient
  care, direct health care costs, and overhead
  costs. Cost centers not allowed are
  miscellaneous, general, other, and marketing.
  These may not be attached to any other cost
  center such as general supplies, miscellaneous
  financial or promotional advertising. Other
  must always be accompanied by a rider explaining
  what the item is, and it should be cross
  referenced to the trial balance with supporting
  financial information.
• Reclassifications and adjustments must be
  reported on worksheet 1A or 1B.
• Non-FQHC costs are to be reported on lines 40-47.
  Reclassification of these costs to reimbursable
  cost centers is prohibited. If applicable,
  worksheet 1C must be completed.

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Worksheet 1ASchedule of cost reclassifications
(column 6 only)

• This worksheet moves certain amounts from one
  cost center to another cost center in cases where
  the expenses in any given cost center on
  Worksheet 1 may belong to another cost center.
• If a physician performs administrative duties,
  the appropriate portion of compensation and
  fringe benefits should be reclassified from
  health care staff to overhead cost.
• This worksheet should not be used to reclassify
  non-FQHC items from the non-FQHC portion of the
  cost report to the FQHC portion of the cost
  report.

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WORKSHEET 1BSchedule of Adjustments to Expenses
(column 8 only)

• Examples of items to be entered on Worksheet 1B
  are those needed to adjust expenses incurred,
  items that constitute recovery of expenses
  through receipt of refunds and rebates, sale of
  property or other items. Supporting
  documentation is needed for each adjustment made,
  and where an adjustment to an expense affects
  more than one cost center, the facility must
  record the adjustment to each cost center on a
  separate line on this worksheet.
• This worksheet provides adjustments to be listed
  on Worksheet 1 Column 8 only. Information from
  Worksheet 1C Related Organizations may feed
  certain items on Worksheet 1B.

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Worksheet 1CRelated Organizations

• This worksheet provides the computation of any
  needed adjustments to costs applicable to
  services, facilities, and supplies furnished to
  the clinic by organizations that are related to
  the clinic.
• Costs for services, facilities and supplies
  furnished to the clinic by organizations related
  to the clinic by common ownership are allowed as
  long as those costs are reported at cost to the
  related organization.
• All organizations furnishing services,
  facilities, and supplies, and percent of
  ownership must be recorded on this worksheet.

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Worksheet 2

• This worksheet reflects paid, billable visits, or
  encounters furnished by various health care
  staff. All providers rendering medical services
  must possess the appropriate education and or
  state license. Providers must adhere to all of
  the applicable state licensure requirements for a
  given provider type. State licensure describes
  educational requirements, supervision
  requirements, and scope of practice.
• Full Time Equivalency (FTE) is the total number
  of hours per year for which one employee must be
  compensated to meet the clinic definition of an
  FTE. The clinics definition of an FTE is equal
  to the number of full time operating hours per
  week multiplied by 52 weeks, less the amount of
  time spent in non-productive activities, i.e.
  times when patients arent being treated but for
  which the clinic provides compensation. FTEs
  usually end up being some fraction of 1.00. Full
  time operation of a clinic must be at least 32
  hours per week. Clinic staff are prohibited from
  having FTEs of less than 50 percent of clinic
  operating hours.

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FTE Calculation

• To calculate the FTE for each provider, multiply
  weekly patient care hours worked by 52 weeks per
  year. Divide this figure by the total hours of
  clinic operation for the year. Hypothetical
  example is for a Medical Director
• Total weekly paid hours 37.50
• Total weekly administration hours 11.38
• Total weekly/ holiday leave 4.61
• Total weekly Continuing Medical Education hours
  .72
• Total weekly patient care hours 20.79
• Number of months worked 12
• 20.79 x 52 weeks 1081.08
• 1081.08/1950 (37.5 hours per week x 52 weeks)
  .5544 FTE

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Worksheets 3 and 4

• Worksheet 3 is used to calculate provider
  encounters and overhead costs applicable to FQHC
  services
• Worksheet 4 is used to calculate rates for
  medical and dental encounters. Overhead costs
  are distributed between medical and dental
  categories based on costs.

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Worksheet 5MCO Settlement Report

• This worksheet is used to report encounter and
  payment activity.
• Do not report encounters associated with rejected
  MCO claims, or claims for ineligible recipients.
  If the clinic does not have a contract with an
  MCO, or the clinic is not the primary care
  provider for the patient do not record the
  encounter.
• Clinics may report encounters in the month in
  which they occur and receipts in the month in
  which they are paid.

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Worksheet 5Schedule A, Pages 1 2

• Lines 1-7 list the number of encounters for each
  provider type. On line 5 list only clinical
  social service encounters.
• Lines 9-12 are for other ambulatory services. On
  line 10 do not include encounters for the
  hygienist if that hygienist assisted the dentist
  on the same day that treatment occurred.
• Report payments for services rendered on Page 2.
  Do not include bonus payments.

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How to add a Service

• Submit costs related directly to the new service
  such as salary, fringe benefits, and equipment
  costs. DPW may request additional information,
  depending on what type of service is being added.
• Submit an estimate of the total number of annual
  patient visits, including non-MA patients for the
  fiscal period affected by the addition of the new
  service.
• The amount of rate increase is determined by
  dividing the total cost of the new service by the
  total number of all visits.

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Where to Get More Information

• CMS offers a wealth of information for FQHCs and
  RHCs. Their website is www.cms.hhs.gov
• DPWs website is www.dpw.state.pa.us/omap/
• Open the link for provider information and
  bookmark it. There are several links that
  provide specific information on a wide variety of
  topics, such as billing, managed care, and
  Promise. Cost reports and instructions for
  completion of the reports can be downloaded by
  opening the Promise handbook and billing guide,
  open the link for the 837 professional/CMS 1500
  claim form, scroll to the bottom of this page and
  open appendix E.
• License verification can be checked at
  www.licensepa.state.pa.us
• The Pennsylvania Forum for Primary Healthcare
  provides support and assistance for providers who
  render services in underserved areas. Contact
  the Association at www.paforum.com