Healthcare leaders know the importance of careful, accurate cost report preparation. This crucial administrative task has an outsized impact on a facility’s financial health and sustainability as well as keeping organizations in compliance with regulatory requirements. With Georgia’s updated state plan recently approved by the Centers for Medicare & Medicaid Services (CMS), high-quality cost report preparation becomes yet more critical.
Annual Medicare and Medicaid cost reports for hospital-based and freestanding skilled nursing facilities in Georgia have been tied to reimbursement rates only loosely for quite some time. Each fiscal year’s reimbursement rate has been calculated by applying the appropriate growth allowance (3% or 5%) to the previous year’s rate, which was based on a cost report that could be several years old. That is about to change.
The new CMS-approved state plan specifies that the year of the Medicaid Cost Report used to determine a nursing facility’s reimbursement rate be updated “at least every two years.” This means that either the June 2021 or June 2022 cost report will be used if CMS approves the request to use June 30, 2020, effective July 1, 2022. Going forward, Georgia healthcare facilities should be using a cost report that is at a maximum of only two years old.
Best practices boost reimbursements
Accurate cost reports can impact the reimbursement rate a facility receives and with reimbursement rates now being driven by more recent cost reports, facilities must ensure that their cost reporting is scrupulously accurate and fully complete.
It is critical that all relevant accruals are recorded for the report period to optimize reimbursements. Other imperatives for cost reporting include having accurate cost centers and scrutinizing all coding of expenses for accuracy.
Establishing and maintaining effective internal controls over these functions can facilitate a smooth cost report preparation process and increase efficiency as well as accuracy. That sounds great in theory, but many healthcare organizations are struggling with staffing shortages, absenteeism and burnout among the staff they do have.
While this is the unfortunate reality for businesses across the spectrum of industries in 2022, the problem is especially acute in the health professions. As a result, maintaining appropriate internal controls and ensuring accuracy in coding, billing, sorting, recording and reporting costs often fall by the wayside.
However, the importance of these functions cannot be overstated; healthcare leaders need to devote the necessary attention and resources to overcome these challenges and ensure timely, accurate and complete cost reporting for their facility.
The unprecedented challenges healthcare facilities are navigating in the years since Covid-19 struck are no secret. A host of pandemic-era waivers and flexibilities are in place along with special supports, guidance and resources to help providers manage operations.
These special supports in no way minimize the need for healthcare facilities to fully comply with the regulatory requirements that still apply, including the latest updates. CMS has recently released several proposed and final rules for fiscal year 2023, including:
- Calendar Year (CY) 2023 Medicare Physician Fee Schedule Proposed Rule
- FY 2023 Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (LTCH PPS) Final Rule — CMS-1771-F
- Fiscal Year (FY) 2023 Skilled Nursing Facility Prospective Payment System Final Rule (CMS 1765-F)
- Fiscal Year 2023 Inpatient Rehabilitation Facility Prospective Payment System Final Rule (CMS-1767-F)
- Fiscal Year 2023 Medicare Inpatient Psychiatric Facility Prospective Payment System Final Rule (CMS-1769-F)
CMS provider cost report audits are ongoing, and compliance officers should recognize cost reports as the high-risk area they truly represent. The demands on hospitals and other healthcare facilities are extreme, and a disciplined approach to managing risk of all kinds is critical for these beleaguered organizations.
Right now, the best guidance anyone can offer is to stay calm, do the best you can and focus on first priorities—which definitely include solid cost reporting. If you have questions or need help implementing an optimally efficient cost reporting process, contact the healthcare advisors at Mauldin & Jenkins.