New HHA Cost Report May Give Rise To Rebasing

New hourly wage calculation will prove crucial to future rate reductions, expert predicts.

A new cost report form and instructions don’t just bring extra work for home health agencies — they also may usher in lower payment rates.

In the April 16 Federal Register, the Centers for Medicare & Medicaid Services published a Paperwork Reduction Act notice for cost report revisions. “The Form CMS–1728–19 cost report is needed to determine a provider’s reasonable cost incurred in furnishing medical services to Medicare beneficiaries and reimbursement due to or from a provider,” CMS says in the notice. The “cost report is also used for annual rate setting and payment refinement activities, including developing a home health market basket.”

Plus: The Medicare Payment Advisory Commission “uses the home health cost report data to calculate Medicare margins, to formulate recommendations to Congress … and to conduct additional analysis of the HHA PPS.”

The update is far from routine, says cost report expert Dave Macke with VonLehman & Co. in Ft. Wright, Kentucky. “This is going to catch a lot of people off guard,” Macke predicts.

In the new report, Worksheet S-3 Part V collects new data, Macke explains. “This worksheet is an attempt to get specific wage and benefit data for each of the direct care cost centers. Wages and benefits will be separately reported for RNs, LPNs, Nursing Assistants/Aides. In addition, Physical Therapists, Physical Therapy Assistants, Physical Therapy Aides, Occupational Therapists, Occupa­tional Therapy Assistants, Occupational Therapy Aides, Speech-Language Pathologists, and Other Medical Staff,” he says.

“The same categories apply to any contract labor costs,” Macke adds. “It is very important to separate out direct cost for W-2 wages from contract labor on your financial statements.”

Thanks to these changes, “the agency will need to accumulate additional statistics consistent with the reported costs, i.e. LPN visits and patients served, physical therapy assistant visits and patients served, and certified occupational therapy assistant visits and patients served,” advises The Health Group in Morgantown, West Virginia.

Along “with the detailed reporting of wages and contract labor, CMS is also requesting total paid hours for each of these categories,” Macke says. “The purpose of this Worksheet is to compute an average hourly wage for each occupational category.”

Reporting total paid hours is going to be tricky for some agencies that haven’t been tracking the data carefully up until now, Macke tells Eli. And it may prove a significant problem to agencies that pay per visit.

Why it matters: Once CMS starts gathering the data to calculate hourly wages, you can expect the agency to start comparing HHA costs versus Medicare payment rates, Macke predicts. “And then CMS will start recalculating rates,” Macke believes.

If you think that’s a remote threat, just look at what CMS is doing in the hospice arena, Macke points out. In its newly proposed rule, CMS is rebalancing payment levels based on hospice cost report data (see story, p. 115).

Other changes included in the revision are separate reporting of Medicaid versus other patients and separate reporting for aides on Worksheet S-3, Part I, the National Association for Home Care & Hospice says in its member newsletter.

And “telehealth has been added as a reimbursable cost center and remote patient monitoring has been added as a general service cost center on Worksheet A,” points out The Health Group in its electronic newsletter.

One problem: CMS indicates the cost report changes are supposed to take effect in 2019, “but we are already four months into the year,” Macke notes. CMS will need to change the date to 2020, Macke says.

If CMS doesn’t, HHAs must “segregate the additional financial information and statistics retroactive to January 1, 2019,” The Health Group counsels.

HHAs have until June 17 to comment on the changes, CMS says in the Federal Register notice.

Note: The notice is at

Source- SuperCoder

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