The Case for Cost Reports
Part Four | Three Examples that Support the Case for Cost Reports
Our previous posts in this series, Part One | Are Medicaid Cost Reports Still Necessary?, Part Two | Why Cost Reports Still Make Sense… Especially Now, and Part Three | Can Medicare Cost Reports be Used Instead?, we provided our insight into why cost reports make sense, looked at factors that argue FOR the cost report, and considered the federal perspective. Here, we bring it all together in three case studies – each is one of our own engagements – that demonstrate the relevance and importance of cost reports to the client.
Providers regularly point to increasing costs, which seem to spiral higher and higher. This was the case with the COVID pandemic, when every provider claimed skyrocketing costs, but no one actually knew costs for certain. The more we can provide real-time data to our clients, the better off they will be in making stronger decisions – and this requires costs reports. Below, we have provided examples of why it makes sense.
Case Study 1: Ground Emergency Medical Transportation
Challenges Our Clients Faced. Medicaid ground emergency medical transportation (GEMT) program supplemental financing has grown drastically in recent years. The increase in emergency medical transportation supplemental payment programs is often driven by industry efforts as Medicaid reimbursement for emergency transportation services is frequently less than the cost to perform those services.
The supplemental payment is calculated on a cost report approved by the Centers for Medicare & Medicaid Services (CMS) in which the provider is to attest the reported costs conform to state and federal regulations. To avoid recoupments and to maximize current payments, it is important for states to make sure these programs comply with CMS requirements.
Existing GEMT supplemental payment programs have been scrutinized by CMS or have been under review by the Office of Inspector General (OIG), which has led to continual change in treatment of costs at the federal level. The flexibility of the GEMT cost report allows states to quickly incorporate the ever-changing federal guidance to limit the potential liability of overpayments due to complex rules.
Solutions We Proposed. Using our expertise in GEMT program supplemental financing, we have helped states in the development phase of their GEMT programs by writing state plans and administrative rules, as well as developing cost reports to ensure they meet the states’ goals and interests for the program. For states with existing programs, performed audits of the annual GEMT cost reports as required by CMS and provided consulting to ensure program compliance with federal regulations and guidance.
On August 17, 2022, CMS issued a Center for Medicaid and Children’s Health Insurance Program Services Informational Bulletin (CIB) about federal cost principles for GEMT programs and reported on provisions of existing GEMT programs. Myers and Stauffer worked closely with states to mitigate the effects of the CIB on their programs, thus helping reduce the risk of future recoupments.
Benefit We Provided to Our Client. Many of these programs were created and implemented by industry consultants. It is valuable for states to have their own independent consultant to help with program development and design, Medicaid financing strategies, compliance, and safeguarding of the state’s interests. Myers and Stauffer is an independent consultant that protects state interests, including ensuring adequate financing, allowing for state administrative costs and limiting potential liability for overpayments.
Case Study 2: Waivers
Challenges Our Client Faced. In addition to disproportionate share hospitals using the cost report to calculate uncompensated cost, waivers can also rely on data elements available within the cost report. For waivers requiring a reconciliation of payments to cost, the costing methodologies from the cost report can be extremely helpful. In the case of waivers related to uninsured charity care, cost report elements were extracted and used for both payment calculations and cost reconciliations for each unique provider group. Without the cost report data, a large administrative burden would have been placed on the provider groups to determine the cost associated with services.
Solutions We Proposed. The Medicare cost report offers clients a standardized data collection without individual provider outreach. Myers and Stauffer worked with the client to update the payment calculation methodology to utilize the Medicare cost report data for multiple provider groups. This process included combining cost report data elements from historical cost reports to forecast current state fiscal year payments based on cost. In addition, Myers and Stauffer provided technical support for cost report regulation changes that would impact future payment setting.
Benefit We Provided to Our Client. Using cost report data, the client can direct payments based on a standardized approach. While the cost report cannot eliminate the risk of overpayments if the payments are set based on historical data, it can help lessen the potential burden. The payment setting process was streamlined due to uniform data only available through the Medicare cost report, which also reduced the administrative burden on the provider groups.
Case Study 3: Cost Reports for State Home and Community-based Services (HCBS) and Intermediate-Care Facility
Challenges Our Client Faced. A state client had an unexpected need, driven by legislative action, to collect minimum wage and pass-through bonus information for all HCBS and intermediate-care facility providers in the state. Because this information had not been included in any prior requests, the data was not readily available.
Solutions We Proposed. As the current Medicaid cost report contractor for this state, we maintain, provide, and collect Medicaid cost reports for both provider types. When the legislative request occurred near the standard cost report filing window, we were able to make immediate modifications to the current cost reporting templates to collect relevant wage information. We were also able to leverage our provider contact database to submit pass-through bonus information requests directly to providers, for use in legislative mandated attestation procedures.
Benefit We Provided to Our Client. We helped our client meet their legislative compliance goals within a reasonable timeframe and with minimal impact to providers and ongoing state operations. Additionally, we were able to leverage our existing relationships with providers to expedite the retrieval of pass-through bonus information for review within legislative timelines.
Look for our final installment soon, in which we address how we can help you, offer our relevant full suite of services, and make our case for Why Myers and Stauffer.
Why Myers and Stauffer
Purpose driven. Exclusive focus. Government Programs.
Established in 1977, Myers and Stauffer is a nationally based consulting and certified public accounting (CPA) firm. For more than 48 years, we have worked exclusively with local, state, and federal government health and human-services agencies to help them accomplish their most critical goals for the nation’s most fragile people.
We are here to answer any questions and help with any health and human-services needs your agency may be encountering. Contact a member of our team today.
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Explore the full scope of our Case For Cost Reports comprehensive series:
Authors
| Bob Hicks, CPA
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Tami Bensky, CPA
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Tammy Martin, CPA
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