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Medicare bad debt: Review sample procedures for Skilled Nursing Facilities

11.29.21

Read this if you are a Skilled Nursing Facility (SNF) providing services to Medicare beneficiaries.

Skilled Nursing Facility (SNF) bad debt expenses resulting from uncollectible Medicare Part A and Part B deductible and coinsurance amounts for covered services are reimbursable under the Medicare Program on a full-utilization Medicare cost report. SNF providers can report allowable Medicare bad debt expense on Worksheet E, form CMS-2540-10. Currently Medicare reimburses 65% of the allowable amount, less sequestration, if applicable.  

BerryDunn maintains a database of SNF as filed Medicare cost reports nation-wide. We analyze data annually, looking for trends and opportunities to help providers optimize available reimbursement. Cost reports data shows that in 2018–2020, on average, 75% of facilities nation-wide reported allowable bad debts, and claimed, on average, close to $63,000 of reimbursable bad debts for Medicare Part A. 

To compare facilities of different sizes and Medicare utilization rate, we also show bad debts on per Medicare patient day basis (figure 2). In FY 2020, all US regions experienced an increase in reimbursable Medicare Part A debt, averaging $19.43 per Medicare patient day.  

Understanding the requirements for bad debts and utilizing this reimbursing opportunity could help your facility’s bottom line. 

Medicare bad debt checklist now available

To support SNFs with reimbursement for these costs, BerryDunn’s healthcare consulting team has developed a checklist that provides insight into the Medicare cost report opportunities. 

Download the checklist, and please contact us if you have any questions about your specific situation or would like to learn more.

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Read this if you are a provider who works with MaineCare and files an annual cost report.

Each year the Department of Health and Human Services (DHHS) Division of Audit releases updated MaineCare cost report templates in Excel format. In the most recent revision of the templates, DHHS has made some significant changes that providers should be aware of when preparing to file their cost reports. We’ve highlighted them here. 

  • Supplemental Payments (Schedule GG)—DHHS has updated the format of Schedule GG to a new simplified form where providers no longer need to report expenses in each individual cost center, but rather will only need to identify the total expense in each component (i.e., direct, fixed, routine, and PCS for Residential Care Facilities (RCF) Appendix C). DHHS has designated specific cost centers for each offset in each component. In addition, there are now multiple Schedule GGs, including a separate schedule for each level of service within each template. Each level of service must complete one schedule for the payments received in the first round (September and October 2021) and a second to reflect the payments received in the second round (August 2022). Each Schedule GG includes a line to report supplemental payments earned in a prior period and a reconciliation of any amounts unearned.
    • For providers who have already filed their 2022 cost reports and wish to adjust their Schedule GG, they can refile just Schedule GG on the simplified form. An entire updated cost report is not necessary or suggested as the Division of Audit will incorporate the updated Schedule GG at the time of audit. This also applies to any providers wishing to amend and refile their 2021 Schedule GG. 
  • RCF High MaineCare Utilization (HMU)—Effective 7/1/2022, HMU is a new component of the RCF rate pursuant to 2022 P.L. Ch. 635. The new HMU payment required DHHS to update the cost report forms to include a settlement of these payments. As such, DHHS has added a new schedule, Schedule HH, to all RCF Appendix C, including multi-level cost reports that report HMU earned. In addition, a table was added to the bottom of Schedule L-R&B to calculate the payments received. The payments received flows to Schedule HH, where a settlement is calculated that flows to the RCF room and board settlement page. 
  • Minimum Occupancy Penalty—Per the Office of MaineCare Services News Release from November 15, 2022, the Office of MaineCare Services is temporarily waiving the minimum occupancy penalty for nursing facilities (NF), found in Chapter III, Section 67, principle 18.9, through the end of the federal Public Health Emergency (PHE). Additionally, DHHS is temporarily waiving the minimum occupancy penalty for RCF, Private Non-Medical Institution (PNMI) Appendix C facilities, found in DHHS Rule Chapter 115, principle 34.3, through the end of the federal PHE. In order to accommodate this within the cost report, the penalty calculation has been removed from Schedule G (NF), Schedule X (multi-level), and Schedule A (RCF free-standing). 
  • Revenue—DHHS also added a new schedule, Schedule D (B-1 on the ICF template), which is a summary of revenue by payor.

There were also some minor changes made last summer including:

  • Schedule F & R (NF), Schedule E (RCF/PNMI), and Schedule B (Intermediate Care Facilities (ICF))—Added a new cost center to the fixed costs section for “COVID Staff Universal & Surveillance Testing.” 
  • Schedule B (NF)—Added a Direct Care add-on column for the AAAA add-on (125% of minimum wage) based on updated rate letters. 
  • Schedule E (NF)—Removed the median question due to LD 684. There is now no need to be under the medians to qualify for ultra-high MaineCare utilization (over 80% utilization). 
  • Schedule J (NF and ICF), Schedule L-PNMI (RCF/PNMI), and Schedule B (Appendix F)—Updated wording from TRI (temporary rate increase) to ECA (extraordinary circumstances allowance) funding.

Cost reports must be submitted in Excel format and DHHS is no longer accepting locked or protected cost report files or files that have hidden tabs. Cost reports and supporting documentation should be filed using MOVEit. If you have not established an account with DHHS yet for MOVEit, please reach out to Lucas Allen, Manager of Data Analytics

Please note the following specifications for online submission to MOVEit:

  • Each filename will need to contain: facility/agency name, four-digit year, what the document relates to, and what the document is (i.e., cost report).
  • Files cannot be a zipped file.
  • Files cannot be password protected or restricted in any way.
  • No folders are to be uploaded.
  • It is recommended that supporting documentation be combined into one PDF document with appropriate bookmarks for each supporting document, but this is not a requirement. If the supporting documentation is not in one PDF file, label all files with the facility/agency name, four-digit year, and what the document is.
  • Files need to be in one of the following formats: Microsoft product or Adobe PDF to ensure it is machine readable.

As a reminder, when submitting your cost report and supporting documentation:

  • Complete all schedules in the cost report. If a specific schedule does not apply to your facility, mark “N/A” on the schedule.  
  • Do not alter the schedules in the cost report.  
  • Submit a completed cost report checklist, and place a checkmark for each section that applies to your facility or “N/A” for any section that does not apply.  
  • Submit all supporting documentation identified on the checklist in an acceptable format (Microsoft product or Adobe PDF).

If you have any questions on these changes or would like to talk about your specific needs, please contact our senior living team. We are here to help.

Article
MaineCare cost report templates: What providers should know about the current year changes

Read this if you are in the senior living industry.

The COVID-19 pandemic wreaked havoc on the country and created challenges across the labor force, and senior living facilities weren’t spared. For senior living, the pandemic contributed to the widening of the care cost shortfall- by decreasing the available workforce pool through voluntary resignations and a demand for higher wages. That situation has remained, and senior living facilities are faced with many challenges, including rising labor costs. Of note: 

  • Across the nation, contract nursing labor utilization continues to increase, with an average 35% increase in contract agency hours used per patient day from 2020 to 2021.1 
  • Occupancy has been declining nationwide, driven by both diminishing referrals (infection control concerns, reduction of elective procedures such as joint replacements, and hospital capacity limitations) and the ability of facilities to accept patients (suspension of admissions due to inadequate staffing).
  • Rising costs and diminishing occupancy have resulted in an average SNF $178.65 per patient day cost of care increase from 2020 to 2021.
  • Nationally, the US Bureau of Labor Statistics2 (BLS) reports nursing and residential care facility employment declined 5% from 2019 to 2020, and further 5.7% from 2020 to 2021. Competition for workers resulted in noticeable wage increases, 10.4% in 2020, and 5.6% in 2021 (Table 1). 

Table 1: Employment and wages, 2019 – 2021

The first quarter of 2022 reveals a continuing reduction of employment coupled with continuing wage increases in the industry. The first quarter of 2022 showed an 11.4% increase in average weekly wage for nursing and residential care facilities over that same period in 2021, and continuing decline in employment (Table 2). 

Table 2: Employment and wages, Q1 2022

COVID-19-related staff burnout, lack of childcare or school schedule disruptions, infection control requirements- such as mandatory masking or vaccinations- and other factors resulted in a rapid and significant reduction of clinical staff available for work. 

Additional factors, such as migration of clinical staff from facility-based employment to a temporary contract agency, may have also contributed to the reduction of workforce in clinical occupations. CMS SNF Provider Information3 data comparison between August 2021 and August 2022 shows that all US regions reported a decline in average case-mix adjusted direct care hours per patient day (Figure 3) within a year. On average, 7.89% reduction in total hours reported, or 0.32 hours of services less per patient day. It is important to note that utilization of unlicensed staff (nursing assistants) has not changed significantly (57.2% in 2021 and 57.7% in 2022), indicating that nationwide availability of both licensed (RN, LPN) and unlicensed staff has decreased. 

Table 3: Average case-mix adjusted direct care hours per patient day – August 2021 and August 2022 comparison

Our interviews with long-term care facilities across the US have revealed that a number of facilities had to suspend admissions for a period of time, or close a portion of the facility, due to limited or inadequate staffing levels. Due to the nature of services, it mostly affects short stay rehabilitation unit admissions. For the majority of facilities, short stay revenue sources (such as Medicare) are more favorable and normally more profitable than long-term stays. The decrease in census (Table 4) drives the per diem costs up, and the loss of short-stay revenue continues to negatively impact the bottom line. Additionally, with a significant reduction of short stay rehabilitation volume, some highly trained employees of the facilities (such as therapists, clinical directors, dieticians, and others) may be less utilized, and potentially harder to retain. 

Table 4: Average Medicare-certified facility occupancy, 2019 – 2021

The increased cost of labor is one of the major per diem cost increase drivers for senior living facilities. The tight labor market has led to higher labor costs, increased utilization of contract labor, as well as reductions or suspensions in admissions due to lack of staffing. 

Table 5: Average Medicare-certified facility direct care labor cost per patient day (wages, benefits, contract labor), 2019 – 2021

Table 6: Average Medicare-certified facility direct care contract wages, 2019 – 2021

Many states facilitate labor-related programs aimed at increasing labor pool and staff retention through innovative programs, as well as considering waivers related to staff certification and delegation of duties requirements. Due to timing, the job outlook could not be forecasted with the effects of the new initiatives, as there is no data yet available on effectiveness of these programs.

If you would like more information, or have questions about your specific situation, please contact our senior living and long-term care team. We’re here to help.

HCRIS as filed SNF Medicare (full utilization) cost reports, 2019 – 2021
Bureau of Labor Statistics, 2022
The Centers for Medicare & Medicaid Services, 2022

Article
Current senior living industry trends and challenges—spotlight on labor costs

Read this if you are subject to Medicaid DSH audits.

The Medicaid DSH program, created in 1981, provides funding to hospitals in the form of DSH payments. Federal law requires that state Medicaid programs make DSH payments to hospitals that serve a disproportionately high number of Medicaid beneficiaries and uninsured low-income patients, to help offset uncompensated care costs (UCC). With healthcare costs steadily outpacing income growth and inflation, these DSH payments serve as an important and sometimes necessary reimbursement mechanism. 

In most states, hospitals that receive Medicaid DSH payments are subject to an annual DSH audit, to determine the DSH UCC limit and to compare it against DSH payments received from the Medicaid state agencies. The DSH UCC limit uses information from the Medicare cost report, as well as Medicaid and uninsured patient detail, to calculate the UCC. 

Upon completion of the DSH audit, the Medicaid state agency or its contractor will compare the UCC to the DSH payments issued during the state fiscal year to determine if a hospital is in a shortfall, where DSH payments were less than the UCC, or a "longfall", where DSH payments were greater than the UCC. If it is determined that a hospital is in a longfall, the state’s Medicaid plan may require hospitals to pay some or all of the DSH funds back. With potentially significant financial implications, it is in the hospital’s best interest to understand the requirements and to complete the audit in a timely and accurate fashion. 

Completion of the DSH audit can be a daunting task. For some, the mere mention of the words “DSH audit” is enough to send chills down one’s spine. It is best assigned to those with solid reimbursement, revenue cycle, hospital operations, and information management system (IT) knowledge. 

It is not uncommon for hospitals to have a consulting firm, such as BerryDunn, complete the DSH audit on their behalf. While the DSH audit may seem like a heavy lift, we hope the following tips will assist you in tackling the audit and getting through the process smoothly and efficiently. 

  1. Allow enough time for completion of the DSH audit. A considerable amount of time and effort is needed to collect, reconcile and summarize the internal claims data and to enter information into the required schedules. The time needed to complete the audit will depend on your organization’s available resources and complexity of the IT and financial systems. Typically, this process takes one to two weeks to complete, sometimes longer. Creating the patient data support files themselves is arguably the most time-consuming aspect of the process. 
  2. Review the minimum federal requirements for DSH payment eligibility and document your organization’s qualifications. To receive DSH payments, hospitals must have a low-income inpatient utilization rate (LIUR) greater than 25 percent, or the hospital must have a Medicaid utilization rate (MIUR) that is at least one standard deviation above the mean rate of all hospitals in the state that receive Medicaid payments. States may distribute DSH payments to other hospitals provided they have a MIUR of at least one percent, and if they offer obstetric services that they have at least two OB/GYN on staff.
  3. Take time to understand how DSH payments are calculated in your state and if any recent state Medicaid plan changes may affect your organization’s eligibility and amount of qualifying payments. 
  4. Carefully review any audit instructions provided, paying particular attention to types of claims, service dates, and required supporting information. 
  5. Gather all the data files needed for completion of the DSH audit before diving in, including the cost report(s) for the period under audit, patient data support files that support the Medicaid and uninsured populations, and audited hospital financial statements (if applicable). Remember: bad data in, bad data out!
  6. Reconcile the state claims data. If the state claims data is used by the state Medicaid agency or its contractor to complete a portion of the audit, we strongly recommend a reconciliation of the state claims data to internal records, to help ensure all eligible claims, inpatient days, and charges are included.
  7. Identify and capture all Medicaid and uninsured patients. When completing schedules, hospitals should ensure they are identifying and capturing all Medicaid and uninsured patients, and accurately report the charges and payments for these patients for the DSH audit. Certain data elements are required, including patient demographic data and hospital charge and payment information. 
  8. Review insured patients' claims with no insurance payment. For uninsured patient charge capture, hospitals may benefit from reviewing insured patients’ claims with no insurance payment. Some claims, meeting state Medicaid plan coverage requirements, could be included as “uninsured” if they meet one of the three exclusion requirements: (1) service was not covered by insurance, but is covered by a Medicaid state plan; (2) patient’s benefits were exhausted prior to the admission/service date, and (3) patient reached the lifetime insurance limit. Some accounts that appear to be insured on the surface may in fact be eligible for inclusion in the calculation of the UCC. Remember, claims denied by insurance, such as untimely filing, lack of pre-authorization, or medically unnecessary services, should not be reported. In many cases, the only way to know for sure if an account can be included is through research of patient notes and financial information. Leave no stone unturned! It could be the difference between a longfall and a shortfall in your UCC.
  9. Review your work prior to submission. Many states will provide a checklist with the audit package, to ensure all data elements have been included with the submission. Even if the hospital has resources to complete the audit, consider arranging for a third-party review of the DSH audit and other submission items to help ensure the accuracy and completeness of the data. 
  10. Schedule time to review audit adjustments. The Medicaid state agency or its contractor will likely provide an adjustment report for your review. Plan your time for review of the audit adjustments, as the window for response or amendments may be very narrow. Take note of the adjustments, especially the high dollar ones, and either confirm that they are accurate or make revisions as necessary. This is another opportunity to bring in an advisor for a second review. 

Should you have any questions about or during the DSH reporting process, please do not hesitate to reach out to Andrew Berube and Olga Gross-Balzano at BerryDunn. We’d be pleased to serve as a second set of eyes to your process or alleviate the time requirements on your finance team. 

Andrew Berube
aberube@berrydunn.com
207-239-9893

Olga Gross-Balzano
OGross-Balzano@berrydunn.com
207-842-8025

Article
Medicaid Disproportionate Share Hospital (DSH) audits: 10 tips for a successful audit

The Centers for Medicare & Medicaid Services (CMS) has issued the final rule for FY 2023 SNF PPS which was published in the Federal Register on August 3, 2022. The rule:

  • Updates the PPS rates for SNFs for FY 2023 using the market basket update and budget neutrality factors effective October 1, 2022;
  • Recalibrates the Patient Driven Payment Model (PDPM) parity adjustment;
  • Establishes a permanent 5% cap on annual wage index decreases;
  • Finalizes proposed changes in PDPM International Classification of Diseases, Version 10 (ICD-10) code mappings;
  • Updates the SNF Quality Reporting Program (SNF QRP); and
  • Updates the SNF Value-Based Purchasing (SNF VBP) Program.

2023 PPS rate calculations

The final rule provides a net market basket increase for SNFs of 5.1 percent beginning October 1, 2022 which reflects:

  • An unadjusted market basket increase of 3.9 percent adjusted upward by 1.5 percent associated with a forecast error adjustment;
  • A reduction of 0.3 percentage points in accordance with the multifactor productivity adjustment required by Section 3401(b) of the Affordable Care Act (ACA).

In addition, as discussed in the Recalibration of the PDPM parity adjustment section below, the net market basket increase of 5.1 percent is further reduced by 2.3 percent related to accounting for year one of a two-year PDPM parity adjustment phase-in.

CMS projects an overall increase in Medicare Part A SNF payments of approximately 2.7 percent or $904 million in FY 2023 related to the payment rate updates. The final rule also estimates an increase in costs to SNFs of $31 million related to the FY 2023 SNF QRP changes and an estimated reduction of $186 million in aggregate payments to SNFs during FY 2023 as a result of the changes to the SNF VBP program.

The projected overall impact to providers in urban and rural areas is an average increase of 2.7% and 2.5%, respectively, with a low of 1.4% for urban outlying providers and a high of 3.6% for urban Pacific providers―actual impact will vary. 

The applicable wage index continues to be based on the hospital wage data, unadjusted for occupational mix, rural floor, or outmigration adjustment (from FY 2019) in the absence of SNF specific data.

Recalibration of the PDPM parity adjustment

When CMS finalized PDPM in October 2019 it also finalized that this new case-mix classification model would be implemented in a budget neutral manner. However, since PDPM implementation, CMS has closely monitored SNF utilization data which has indicated an unintended increase in payments to providers. In order to achieve budget neutrality under PDPM, CMS is finalizing their proposal to recalibrate the PDPM parity adjustment using a factor of 4.6 percent (an impact of $1.5 billion) using the combined methodology of a subset population that excludes patients whose stay utilized a coronavirus (COVID-19) public health emergency (PHE)-related waiver or who were diagnosed with COVID-19 and control period data using months with low COVID-19. CMS is finalizing the implementation of the parity adjustment with a two-year phase-in period (2.3 percent applied in FY 2023, and 2.3 percent in FY 2024), which means that, for each of the PDPM case-mix adjusted components, CMS will lower the PDPM parity adjustment factor from 46 percent to 42 percent in FY 2023 and would further lower the PDPM parity adjustment factor from 42 percent to 38 percent in FY 2024. CMS applied the parity adjustment equally across all components.

Permanent cap on wage index decreases

To mitigate instability in SNF PPS payments due to significant wage index decreases that may affect providers in any given year, CMS is finalizing a permanent 5% cap on annual wage index decreases to smooth year-to-year changes in providers’ wage index payments.

Changes in PDPM ICD-10 code mappings

Beginning with the updates for FY 2020 nonsubstantive changes to the ICD-10 codes included on the PDPM code mappings and lists are applied through a subregulatory process consisting of posting updated code mappings and lists on the PDPM website. Substantive changes will be proposed through notice and comment rulemaking. The final rule finalized several proposed changes to the PDPM ICD-10 mappings.

SNF QRP update

CMS is finalizing the adoption of a new process measure, the Centers for Disease Control and Prevention (CDC)-developed Influenza Vaccination Coverage Among Healthcare Personnel (HCP) (NQF#0431) measure, beginning with the FY 2024 SNF QRP. The measure is intended to increase influenza vaccination coverage in SNFs, promote patient safety, and increase the transparency of quality of care in the SNF setting. Residents of long-term care facilities have greater susceptibility for acquiring influenza. Therefore, monitoring and reporting influenza vaccination rates among HCP is important as HCP are at risk for acquiring influenza from residents and exposing residents to influenza. The measure reports the percentage of HCP who receive an influenza vaccine. SNFs will submit the measure data through the CDC National Healthcare Safety Network.

CMS is also revising the compliance date for certain SNF QRP reporting requirements, including the Transfer of Health Information measures and certain standardized patient assessment data elements to October 1, 2023. This will align the collection of data with the Inpatient Rehabilitation Facilities and Long-Term Care Hospitals and Home Health Agencies.

SNF VBP program

The rule finalizes a proposal to suppress the SNF 30-Day All-Cause Readmission Measure (SNFRM) as part of the performance scoring for the FY 2023 SNF VBP program year due to the combination of fewer admissions to SNFs, regional differences in the prevalence of COVID-19 throughout the PHE and changes in hospitalization patterns in FY 2021 which has impacted the ability to use the SNFRM to calculate payments for the FY 2023 program year. For FY 2023, CMS will assign a performance score of zero to all participating SNFs and will reduce the otherwise applicable adjusted Federal per diem rate for each SNF by 2% and award SNFs 60% of that withhold, resulting in a 1.2% payback. Any SNFs that do not report a minimum of 25 stays for the SNFRM will be excluded from the VBP program for FY 2023.

In addition, Section 111(a)(2) of the Consolidated Appropriations Act, 2021 allows the secretary to add up to an additional nine new measures with respect to payments beginning in FY 2023 to the VBP program, which may include measures of functional status, patient safety, care coordination, or patient experience. CMS is using this authority to finalize the adoption of three new measures into the VBP program—two measures in FY 2026 and one measure in FY 2027.

CMS is also finalizing a number of updates to its scoring methodology:

  • Updating the policy for scoring SNFs that do not have sufficient baseline period data beginning with the FY 2026 VBP Program year.
  • Adoption of a measure minimum policy beginning with the FY 2026 SNF VBP program year which will require a two-measure minimum for a SNF to receive a SNF performance score for FY 2026 and a three-measure minimum for FY 2027.
  • Adoption of a case minimum policy for the SNFRM that replaces the Low-Volume Adjustment policy beginning with the FY 2023 program year. 
  • Adoption of a case minimum policy for the SNF HAI, Total Nurse Staffing, and DTS PAC SNF Measures beginning between FY 2026 and FY 2027.

Our experts at BerryDunn have created an interactive rate calculator to assist you with the calculation of your PPS rates for FY 2023. You can access the PPS rate calculator now:

Click to download SNF PPS Rate Calculator

If you have any specific questions about the final rule or how it might impact your facility, please contact Ashley Tkowski or Melissa Baez.

Article
Fiscal Year (FY) 2023 Skilled Nursing Facility (SNF) Prospective Payment System (PPS) final rule

Editor's note: read this if you are a CFO, controller, accountant, or business manager.

We auditors can be annoying, especially when we send multiple follow-up emails after being in the field for consecutive days. Over the years, we have worked with our clients to create best practices you can use to prepare for our arrival on site for year-end work. Time and time again these have proven to reduce follow-up requests and can help you and your organization get back to your day-to-day operations quickly. 

  1. Reconcile early and often to save time.
    Performing reconciliations to the general ledger for an entire year's worth of activity is a very time consuming process. Reconciling accounts on a monthly or quarterly basis will help identify potential variances or issues that need to be investigated; these potential variances and issues could be an underlying problem within the general ledger or control system that, if not addressed early, will require more time and resources at year-end. Accounts with significant activity (cash, accounts receivable, investments, fixed assets, accounts payable and accrued expenses and debt), should be reconciled on a monthly basis. Accounts with less activity (prepaids, other assets, accrued expenses, other liabilities and equity) can be reconciled on a different schedule.
  2. Scan the trial balance to avoid surprises.
    As auditors, one of the first procedures we perform is to scan the trial balance for year-over-year anomalies. This allows us to identify any significant irregularities that require immediate follow up. Does the year-over-year change make sense? Should this account be a debit balance or a credit balance? Are there any accounts with exactly the same balance as the prior year and should they have the same balance? By performing this task and answering these questions prior to year-end fieldwork, you will be able to reduce our follow up by providing explanations ahead of time or by making correcting entries in advance, if necessary. 
  3. Provide support to be proactive.
    On an annual basis, your organization may go through changes that will require you to provide us documented contractual support.  Such events may include new or a refinancing of debt, large fixed asset additions, new construction, renovations, or changes in ownership structure.  Gathering and providing the documentation for these events prior to fieldwork will help reduce auditor inquiries and will allow us to gain an understanding of the details of the transaction in advance of performing substantive audit procedures. 
  4. Utilize the schedule request to stay organized.
    Each member of your team should have a clear understanding of their role in preparing for year-end. Creating columns on the schedule request for responsibility, completion date and reviewer assigned will help maintain organization and help ensure all items are addressed and available prior to arrival of the audit team. 
  5. Be available to maximize efficiency. 
    It is important for key members of the team to be available during the scheduled time of the engagement.  Minimizing commitments outside of the audit engagement during on site fieldwork and having all year-end schedules prepared prior to our arrival will allow us to work more efficiently and effectively and help reduce follow up after fieldwork has been completed. 

Careful consideration and performance of these tasks will help your organization better prepare for the year-end audit engagement, reduce lingering auditor inquiries, and ultimately reduce the time your internal resources spend on the annual audit process. See you soon. 

Article
Save time and effort—our list of tips to prepare for year-end reporting

Read this if you are a Skilled Nursing Facility (SNF) providing services to Medicare beneficiaries.

There are a few Skilled Nursing Facilities (SNF) reimbursement opportunities on the Medicare cost report. Two of them could reimburse providers for sizable expenses that the majority of SNFs experience every year: the Utilization Review (UR) and Medicare bad debts. 

Utilization Review: Medicare cost report opportunities

UR meetings historically focused on managing lengths of patient stay and reducing costs. The implementation of the SNF value-based purchasing program and the related incentive payment adjustment, which resulted in a reimbursement rate increase or reduction by up to 2%, led some facilities to increased physician or medical director involvement in the UR management in order to improve clinical outcomes. 

With the increase in physicians’ UR time, there frequently is a cost increase for SNFs. CMS Provider Reimbursement Manual – Part 1, Chapter 21, Section 2126.2, outlines the requirements for 100% reasonable Medicare program UR cost reimbursement.  The only mechanism for SNFs to get reimbursement for these costs is through the Medicare cost report. 

Why is this important? BerryDunn maintains a database of SNF Medicare cost report filings and analyzes the data annually, looking for trends and opportunities to help providers optimize available reimbursement. The cost report data shows that from 2016 to 2019 only 1.95% of rural SNFs and 2.82% of urban facilities claimed reimbursable Medicare UR costs. Of the facilities claiming UR costs, the median requested reimbursement was $9,000 or $2.07 per Medicare patient day. 


Figure 1 Source: HCRIS as filed full utilization SNF cost reports, 2017 - 2019

Optimize your reimbursement: Utilization Review checklist available

To support SNFs with reimbursement for these costs, BerryDunn’s healthcare consulting team has developed a checklist that provides insight on the Medicare cost report opportunities. Download the Utilization Review checklist.

Article
Leaving money on the table? Reimbursement opportunities for Skilled Nursing Facilities

Read this if you work in senior living. 

We are all pressed for time these days, especially in senior living and long-term care facilities, where the pandemic has taken a toll on the health of our residents, the well-being of our employees, and the state of our finances. Across the nation, losses from patient care have increased significantly from 2016-2020. In the Northeast, losses from patient care increased 17% from 2016-2019, and in the western United States, they increased by 52% from 2016-2019.

With so many time and financial pressures, why is the development of a labor management program an important investment of your time? Because labor management is important to the financial success of your facility.

Labor management factors to consider:

  • Labor is the largest expense in a facility—between 2016 and 2019 labor-related costs, including contract labor and employee benefits, represented between 48%-53% of the expenses reported on the Medicare cost report 
  • With a growing trend of hiring outsourced therapy, housekeeping, laundry, dietary, and other functions, actual labor related costs could be significantly higher
  • Increased COVID-19 expense may not be fully covered by reimbursement rates
  • Facilities are experiencing increased agency use to fill nursing vacancies, resulting in higher direct labor cost per patient day

The senior living industry is already facing severe nursing shortages and, according to the Bureau of Labor Statistics, at least 2.5 million more workers will be needed by 2030 to care for the so-called “silver tsunami”. Argentum has projected that 1.2 million new workers—mostly Certified Nursing Assistants, aides and Registered Nurses—will be needed in senior living through 2025.

Workforce shortages are not only occurring in nursing departments, but throughout all of our departments, as senior living competes with the retail and hospitality industry to fill ancillary positions.

The benefits of creating a labor management program

The development of a well-executed labor management program may result in:

Clarity on optimal staffing and competency levels in all departments
Labor budgets and schedules adjusted for both census and patient needs can help facilities have the right people in the right place at the right time. Time invested in this initiative improves patient outcomes, staff morale, and your organization’s bottom line. 

Stronger community integration and leadership
Most senior living facility positions are filled by recruiting locally. Understanding local demographic trends and developing a forward-looking strategy for staff acquisition, retention, and development (both personal and professional) may help a facility become an employer of choice and minimize vacancies. 

Achieving community recognition
A labor management program may help your facility better understand your CMS star rating as it relates to staffing, and tailor a response to publicly available ratings. 

Improved regulatory compliance and response to changes in tax and other policy
Many recent laws have varying provisions for organizations based on size, which is measured by number of employees or full-time employee equivalents. Well-structured labor reports may help your organization respond to regulatory changes promptly.

Opportunities for reimbursement optimization
By understanding your labor structure and compensation arrangements, you may be able to increase reimbursement though more accurate cost reporting (such as utilization review reimbursement on the Medicare cost report). Medicaid reimbursement methodologies vary by state. In many cases, correct classification of labor into reimbursable and non-reimbursable departments, as well as allocations between units, may be key. 

Improved bottom line
Understanding and managing labor statistics may help facilities improve their bottom line, both short and long term, by aligning costs and revenue trends.

Labor management is a key tool to drive efficiency and increase quality across all departments in your facility. Building a high-performing workforce culture and implementing labor management tools will help you gain efficiencies, reduce costs, and produce quality outcomes. The stakes are high right now—facilities that can build a strong culture and workforce will be the facilities that are successful in the future.

If you need assistance or have questions about your specific situation, please contact our senior living consulting team. We’re here to help. 

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Six steps for a successful labor management program