Cost Reporting Presented by Bill Lubaway Paul Evers Lubaway, Masten & Co. Doug Horner St. Mary’s of Michigan 2012 Annual Insurance & Reimbursement Update Eastern Michigan Chapter HFMA March 22, 2012

Agenda I.Overview II.Who Cares? III.Worksheets IV.Real Job Description V.Audit Issues VI.Wrap Up

Who Cares? 1.CMS uses the information submitted by hospitals in the aggregate to set future payment rates & as a basis for market basket updates. 2.Hospital specific information impacts certain payment factors (wage index, outlier RCC). 3.Each year could potentially be used as a base year for a future change in payment regulations. 4.Medicaid & BCBSM use for rate setting.

Who Cares? Blues Care 1.The Blue Cross Full Cost Model -Currently rebasing 2013 based on Piggybacks on the Medicare cost report 3.Uses Full Cost Method reimbursement principles as defined by Blue Cross 4.To calculate inpatient and outpatient rates

Cost Finding Objectives 1.Determine reimbursable cost 2.Establish full cost for rate setting 3.Provide management information such as profitability of services

Cost Finding Process 1.Gather revenue and expenses by department from general ledger and departmental statistical reports. 2.Make reclassifications to match expense to revenue. 3.Adjust to regulations vs. accounting differences, offset other revenue and eliminate non-allowable costs. 4.Allocate overhead cost centers to revenue producing departments. 5.Allocate cost to program.

Worksheet S-10

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Real Job Description includes 1.Bad debts 2.Wage Index-pension & contract labor issues 3.Medical Education 4.Disproportionate Share 5.Case Mix Index 6.Value Based Purchasing 7.Readmissions 8.Transfers 9.HIT

Provider Number Name CMI 2007 CMI 2010 Actual - Assumed 6.1% BON SECOURS HOSPITAL % BOTSFORD GENERAL HOSPITAL % BRIGHTON HOSPITAL % CHELSEA COMMUNITY HOSPITAL % COTTAGE HOSPITAL % CRITTENTON HOSPITAL MEDICAL CENTER % DETROIT REC HOSP & UNIV HLTH CENTER % EDWARD W SPARROW HOSPITAL ASSOCIATION % GARDEN CITY HOSPITAL % GENESYS REGIONAL MEDICAL CENTER % HARPER UNIVERSITY HOSPITAL % HEALTHSOURCE SAGINAW % HENRY FORD BI-COUNTY HOSPITAL % HENRY FORD HOSPITAL % HENRY FORD WYANDOTTE HOSPITAL % HURLEY MEDICAL CENTER % HURON VALLEY-SINAI HOSPITAL % KARMANOS CANCER CENTER % LAPEER REGIONAL MEDICAL CENTER % MCLAREN REGIONAL MEDICAL CENTER % MERCY HOSPITAL - PORT HURON % MERCY MEMORIAL HOSPITAL % MOUNT CLEMENS GENERAL HOSPITAL % NORTH OAKLAND MEDICAL CENTERS % OAKWOOD ANNAPOLIS HOSPITAL % OAKWOOD HERITAGE HOSPITAL % OAKWOOD HOSPITAL AND MEDICAL CENTER -DEARBORN % OAKWOOD SOUTHSHORE MEDICAL CENTER % Case Mix Index

Provider Number Name CMI 2007 CMI 2010 Actual - Assumed 6.1% POH MEDICAL CENTER % PORT HURON HOSPITAL % PROVIDENCE HOSPITAL % SAINT JOSEPH MERCY LIVINGSTON HOSPITAL % SAINT JOSEPH MERCY SALINE HOSPITAL % SAINT MARY'S HEALTH CARE % SINAI-GRACE HOSPITAL % SOUTHEAST MICHIGAN SURGICAL HOSPITAL % ST JOHN HOSPITAL & MEDICAL CENTER % ST JOHN MACOMB HOSPITAL % ST JOHN NORTH SHORES HOSPITAL % ST JOHN RIVER DISTRICT HOSPITAL % ST JOSEPH MERCY HOSPITAL % ST JOSEPH MERCY OAKLAND % ST JOSEPH'S MEDICAL CENTER % ST MARY MERCY HOSPITAL % ST MARY'S OF MICHIGAN MEDICAL CENTER % STRAITH HOSPITAL FOR SPECIAL SURGERY % UNIVERSITY OF MICHIGAN HEALTH SYSTEM % WA FOOTE MEMORIAL HOSPITAL % WILLIAM BEAUMONT HOSPITAL % WILLIAM BEAUMONT HOSPITAL-TROY % Average %

Audit Issue – Medicare sampling 1.Medicare uses one of the most punitive and harsh sampling methodologies. 2.There are 3 levels of errors that may be applied against a sample: a)Most Likely Error b)Upper Error Limit c)Upper Error Limit plus the basic precision 3.The method used is based on auditor discretion. 4.It is important to receive the sampling error worksheets so you can determine how the adjustment was reached.

Stratified Sample

Random Listing

Calculation of Error

Karmanos Komen Race for the Cure May 26, 2012