Your Top 5 FAQs on the Hospice Cost Report Answered
In general, a business takes three approaches to earn higher profits. It can either focus on increasing its revenues, controlling its costs, or doing a combination of both. Before it chooses which approach to take however, it must first obtain information on its current financial condition. The same principle is applied to hospices in the form of the Hospice Cost Report. Although the Hospice Cost Report is first and foremost a compliance tool required by the Centers for Medicare and Medicaid Services (CMS), it also serves as a means for which hospices can gain a better understanding of their finances. As another round of submissions is due within 2021, we have answered your frequently asked questions on the Hospice Cost Report to guide you through the process.
- Who is required to file the Hospice Cost Report?
All hospices who are Medicare — certified should file an annual Hospice Cost Report covering your previous fiscal year. Even if you are a newly certified hospice within 2020, you are still required to file one unless your certification date falls within a month prior to the fiscal year end. For example, if your fiscal year covers January 1, 2020 — December 31, 2020 and you have only secured Medicare certification within December, then you can file a 13-month cost report by 2022 covering the period from December 2020 until December 2021. Otherwise, you would need to file a report from your certification date until the end of your previous fiscal year.
2. Why do we have to file a cost report?
Aside from providing you with a better understanding of your finances to aid in your agency’s decision — making, the Hospice Cost Report is required by CMS for future payment or rate settings. As a matter of fact, for FY 2020, CMS significantly increased payment levels for General Inpatient (GIP), General Inpatient Respite Care (IRC), and Continuous Home Care (CHC) and slightly increased the rates for Routine Home Care (RHC) based on previous cost reports submitted. As such, even if there is no immediate impact to your finances, it is crucial that reports are complete and accurate for a more effective future payment setting process.
3. What data are included in the report?
The report is a collection of worksheets which reflect your agency’s basic information, statistical data (i.e., no. of unduplicated days), and financial data (e.g., assets, liabilities, revenues, expenses). Your agency’s expenses which take up the largest portion of the report, must be grouped to match the specific line items and cost centers in the worksheets. They must also be broken down or allocated based on the four (4) levels of hospice care: Routine Home Care, Continuous Home Care, Inpatient Respite Care, and General Inpatient Care, using the statistical data approved by CMS.
For example, the salaries of your clinical staff who provide services across the different levels of care, must be distributed per each hospice care level. These expenses will then be used to calculate the per diem cost per level of care which is ultimately what CMS uses to set future rates. It is worth noting that the Hospice Cost Report will be certified by your agency officer or administrator who will then be liable to the law should there be data misrepresentation or falsification. Thus, it is important that the report is prepared by subject matter experts as well as reviewed by the agency’s management before sign off.
4. How and when is the cost report submitted?
The Hospice Cost Report is submitted either through mail or electronically via the MCREF with the latter being more favored as it is more efficient and convenient. Deadline for submission of the report is five months after the end of your fiscal year. Late filings are strongly discouraged as they can result in payment suspensions of around 30–60 days especially during the busy season.
5. What are other items we need to take note of when preparing the cost report?
It is important to note that your agency’s financial data, especially the revenues, must be reported on an accrual rather than a cash basis. To put simply, you need to recognize and report revenues within the period the service has been performed — not when you received payment for it. For example, for hospice claims relating to FY 2020 services but are to be billed this 2021, they are to be included in your 2020 financial data. This is especially relevant in calculating your net reimbursement amount as reflected in your PS&R Hospice Net Reimbursement Report. If the net reimbursement amount goes beyond $200,000, you will need to prepare a full cost report. If it is less than that, a low utilization cost report will be submitted. If it is equal to zero, no utilization cost report will be required at all. Given this, an efficient EMR system will be helpful as it can provide you with a good picture of your reimbursement amounts way before the preparation period.
CMS has also advised that for your FY 2020 Hospice Cost Report, you should categorize your financial data as you normally would, not considering the effects of the pandemic. For example, any revenues earned as a result of COVID-19 shall be recognized as Other Revenues. It is also worth noting that upon submission, your cost report along with other Medicare-certified hospices’ reports will be treated as public information. As a result, you will not only get a better understanding of your finances but also those of your fellow providers.
These information were discussed and shared during Data Soft Logic’s Hospice Cost Report Webinar in partnership with Walters & Associates CPAs, conducted last January 7, 2021. To join and get updated on future webinars, like and follow our Facebook and LinkedIn pages.
Data Soft Logic, as your Intelligent Care Partner, aims to empower your passion for compassion with Hospice Centre, its intelligent software solution designed specifically for hospice care. To know more about how we can help you with your hospice needs, schedule a demo with us now.