Over 20 years ago, the partners of PMF determined the firm needed software to prepare Medicare cost reports. In 1978, the firm acquired the necessary software from a firm in Atlanta, Georgia. Within a couple of years, PMF created their own software to prepare Medicare cost reports and had it approved by the Health Care Financing Administration (now CMS). As a result of completing this process, we have an understanding of the inner workings of cost reimbursement from the CMS point of view. This understanding has allowed us to develop a wide-range of services that concentrate on providing clients with the appropriate reimbursement from Medicare, Medicaid, private pay or any other third party source and other revenue enhancement to increase overall profitability.
Pricing Strategies
Magic Wand Analysis
Revenue Enhancements
Review Prior Year Cost Reports
Mini Cost Reports
Geographic Reclassification
Representation in Phases of Cost Report Audit
Volume Adjustments
Medicare Repayment Plan
Cost Reporting Reopening/Adjustment
Disproportionate Share Qualification
Wage Index Review
Professional Practice Time Accounting and Management System
Pricing Strategies (Charge Master)
What is it?
Rate Maximization refers to structuring changes to the hospital’s charge master in a fashion designed to result in strengthening third party reimbursement.
What do we do?
We obtain a computer readable disk of your procedures by payor and develop a program that considers every procedure in your charge master. We produce a report for you showing the procedure code, description, old charge and suggested new charge. We also quantify the expected difference between an across the board rate increase and the results using our method
Magic Wand Analysis
(Where the financial problems are in the Hospital)
What is it?
Magic Wand refers to the comparison of similar sized profitable hospitals in various areas such as inpatient or outpatient revenue and expenses such as salaries, professional fees or other direct expenses. The comparison is on a departmental basis and is used to identify and evaluate different hospital weaknesses or areas requiring improvement. The basis of comparison uses the number of hospital beds and total inpatient days as a major factor.
What do we do?
Based on the hospital’s bed size, we take at least three profitable hospitals with the same approximate bed size and compare the revenue and certain expenses department by department. The comparison is evaluated based on a per patient day basis. Total revenue or expenses are divided by total patient days. Any major variances from the average rates are reviewed.
Revenue Enhancements
What is it?
A revenue enhancement can be referenced to a variety of projects, however, the intent of any revenue enhancement is to either strengthen the current operations of the hospital or to start a new operation within the hospital to increase profitability. A magic wand analysis is an example of a revenue enhancement to evaluate and identify areas to focus on to increase profitability on current operations. The study of the revenue implications of developing new and alternative services such as a rural health clinic, skilled nursing facility, rehabilitation unit or home health unit is another example of a revenue enhancement.
What do we do?
Based on an evaluation of the current operations of the hospital from a magic wand analysis, we are able to identify areas to concentrate on to strengthen profitability either on current operations or for any possible new operations.
Review Prior Year Cost Reports
What is it?
During a review of a prior year cost report, certain issues may be found and addressed that can allow additional reimbursement. Parrish, Moody & Fikes has the experience and knowledge to question certain procedures or issues that allow additional bottom line benefit to the hospital. Issues are resolved with the intermediary by either amending the cost report or preparing a reopening request if the cost report has been finalized in order to propose the adjustments.
What do we do?
We input prior year cost reports on our cost report system in order to study and review for any misstated or overlooked issues in order to receive proper reimbursement. Once we have the cost reports on our system, we are able to recalculate any settlement changes from the correction of reporting from the originally filed cost report.
Feasibility Studies
What is it?
A feasibility study quantifies the effects of a change in the existing hospital’s structure and is an example of a revenue enhancement. Consideration can be made whether to add a home health or a rural health clinic or the impact of expanding the current operations in certain areas. The effects of any operating change can be planned out to determined if profitability, timing and feasibility for the hospital are present.
What do we do?
We develop a computer based model that with certain characteristics of the hospital’s current financial operations we are able to estimate the income, costs and cash flow requirements for a possible additional service to be added to the existing hospital operations in order to either break even or become profitable. Any changes to the original model can be addressed to determine feasibility both financially and operationally.
Once feasibility is determined, we can assist and monitor the application process with the appropriate state and federal agencies to receive certification.
Mini Cost Reports
What is it?
By preparing and filing a mini cost report, several items can be accomplished. The mini cost report provides an accurate feedback regarding the financial position of the hospital in respect to reimbursement during different time frames throughout the fiscal year. The interim cost report can also be used and filed with Medicare to determine if the correct interim rate is being used for reimbursement. By correcting the interim rate, a more stable cash flow management system occurs.
What do we do?
We prepare a cost report using the current year to date trial balance and log information. We post adjustments as needed assuming the same methodologies as the prior year. Statistical information is updated to represent the current year status.
Geographic Reclassification
What is it?
A hospital may be reclassified from one geographical area to another geographical area for purposes of using the other area’s standardized amount, wage index value or both in order to properly state reimbursement through the payment of the DRG. The Medicare Geographic Classification Review Board requires annual applications for consideration and approval of the request of reclassification. The geographical areas are divided into urban and rural. The urban area is further divided into large urban and other urban.
What do we do?
Parrish, Moody & Fikes analyzes the hospital’s current status for both the standardized amount and the wage index and projects the possible status change and the eligibility requirements needed to change the status of the hospital. Evaluations are done to determine whether the geographic reclassification would be advantageous and the affects of their current special status. We review to determine if the wage index is at least 108% of the average hourly wage of hospitals in the provider’s area and the hospital’s average hourly wage is greater than 85% of the average hourly wage in the adjacent area. Mileage, adjacency and proximity rules are studied for each hospital along with occupational mix and wage index comparisons.
Representation During All Phases of the Cost Report Audit
What is it?
Each cost report is subject to a series of reviews and audits from the appropriate fiscal intermediary. The final settlement of the cost report typically occurs within three years after the filing of the original cost report. During the three year period, there are numerous settlements and reviews along with the audit of the cost report which cause representation of the provider to address any questions or issues that need to be handled or addressed.
What do we do?
Analysis of each Medicare audit adjustment is made to the originally filed cost report to determine the reimbursement effect of each audit adjustment. Any inquiries, correspondence, negotiations and appeals are made on the provider’s behalf with the required research of support from the regulations for each issue in question.
Volume Adjustment
What is it?
Under PPS, volume adjustments are available to sole community hospitals (SCHs) and those that are SCH-eligible. Under this program, eligible hospitals may apply for volume adjustment if the number of total inpatient admissions falls by more than five percent in a year, they can demonstrate that the variation was uncontrollable, and the hospital is losing money on Medicare. Once approved, hospitals may receive an adjustment in reimbursement that brings total PPS reimbursements up to the level of PPS inpatient operating costs.
What do we do?
We determine if a hospital is eligible to file for a volume adjustment based on total discharges decreasing by 5% from the prior year. If the hospital qualifies, we study FTE’s and based on routine nursing staffing requirements and related costs, we calculate the amount of additional reimbursement in the form of a volume adjustment. This procedure is not required to be filed with the filing of the original cost report.
Medicare Repayment Plan
What is it?
A Medicare repayment plan allows a provider to repay a payable settlement from the cost report over an extended period of time as approved by Medicare. Monthly installments or withholding are scheduled until the total payable is satisfied and paid in full in order to avoid 100% immediate withholding and cash flow difficulties to the provider.
What do we do?
Certain documentation is required for the request for an extended repayment plan when filing with the intermediary. Parrish, Moody & Fikes assists the provider in the analysis of the cash flow potentials for a monthly installment in order to avoid any shortfalls in other financial needs of the hospital. Negotiations with Medicare to compromise on the repayment plan terms are made to the provider’s benefit.
Cost Report Appeals/Reopening/Amendment
What is it?
An intermediary’s determination (Notice of Amount of Program Reimbursement) becomes final and binding upon the expiration of 180 calendar days after the date of issuance of the NPR, unless before that time the provider (entity) requests an appeal hearing, or a late-filed request is accepted for good cause. An intermediary’s NPR which is otherwise final, may be reopened by the provider or the intermediary within three years of the date of such notice only for specifically noted items. The provider has the right to file an amended cost report before the NPR is issued.
What do we do?
In order to receive appropriate reimbursement after an initial cost report has been settled (NPR’d), an appeal or reopening request has to be filed. The amended cost report corrects or adjusts any misstatements or errors made in the initial cost report prior to the NPR being issued.
Disproportionate Share Qualification
What is it?
The Medicaid disproportionate share program distributes additional revenues to hospitals who provide a disproportionate share of health care to indigent patients. The State Department of Health determines which hospitals qualify as Medicaid disproportionate share hospitals based on a qualification method with formulas and filing requirements deadlines.
What do we do?
Hospitals receiving state and local tax revenues must fill out reporting forms in the qualification process that indicate how the funds were used within the hospital for services. Parrish, Moody & Fikes analyzes the uses of the funds to each department based on methods that maximize the qualification process formulas. Conditions of participation for each participating hospital are monitored throughout the year to ensure the eligibility into the program.
Wage Index Review
What is it?
A provider’s wage index is obtained from the Medicare cost report Worksheet S-3 Part II. CMS publishes the hospital’s wage index in final form. Any changes or adjustments to the wage index must be made before a certain date. Once the wage index numbers are published, they can not be changed. The wage index is used for various purposes such as in the geographical reclassification procedure tests. A hospital may request a geographic redesignation to an adjacent area for the purpose of using the wage index if the hospital demonstrates, among other requirements, that its average hourly wage (AHW) is at least 108% of the AHW of hospitals in its area and the hospital’s average hourly wage was greater than 85% of the average hospital hourly wage in the adjacent area.
What do we do?
We verify the wage index information and focus on the components that make up the adjusted average hourly wage. We compare the provider’s wage index to the provider’s area for accuracy and reliability.
Professional Practice Management System
The Professional Practice Management system is a comprehensive time/expense accumulation and billing application. Time is entered by the staff into the PPM database via the Time Entry application. Billing can be performed by partner or by staff in the billing department on-screen. Statements can be reviewed for accuracy, corrected and printed for distribution. A full set of management reports can be generated on demand for in-depth analysis of employee productivity and client service.
PPM was designed around a multi-user relational database providing flexibility for all users. Tables contained in the PPM database include:
Client – Contains all clients and demographics about customer base
Professional – Contains data about all of a firm’s employees
Work Description – Contains classifications for work performed (billable & non-billable)
Billing – Contains all billing and collections data (current & historical)
Timesheet Detail – Contains all timesheet detail for work in process and billed activity
10 Major Advantages
Simplicity of use, yet all information is stored in a ODBC compatible database where individual detail is capable of being retrieved at any point.
All reports can be previewed, saved to a file, or printed.
Flexible Windows features are available including Microhelp, Toolbar, and Dynamic Sorting.
Most reports are in month and year to date format.
As can be seen from the basic screens, there are icons for many of the shortcut keys.
The time entry screen available for each accountant is simple and easy to use, including a stop watch feature.
Online help and detailed billing history are available.
Flexible and interim billing are simple and can be done on demand.
Budgeting by professional.
Object level (Window/Controls) throughout system.
System Requirements
Clients – 386 PC or better with 4 meg of RAM running windows 3.1x , Win95 or NT 3.51 Server – Novell 3.1x, Novell 4.x or Windows NT Advanced Server 3.51
