Home Health & Hospice Week

If you get behind on your Medicare cost reporting duties, you can expect a cash flow emergency that could shut your doors for good.

Home health agencies and other providers that are late with their cost reports will see a 100 percent suspension of Medicare payments, the Centers for Medicare & Medicaid Services says in May 23 program memorandum A-03-042.

CMS earlier said it would actually lighten up on withholding for late cost reports, to only 20 percent, due to the prospective payment system, notes accountant Pat Laff with Hilton Head, SC-based Laff Associates. But the agency has made an abrupt about-face with its latest directive.

Under PPS, "some agencies see [cost reports] as a secondary tier of responsibility," says accountant Vern Peterschmidt. Because the reports no longer have a direct reimbursement settlement tied to them, some HHAs are becoming lax about submitting them on time, worries Peterschmidt, with Albuquerque-based Peterschmidt & Associates.

"There are a lot more late cost reports under PPS," agrees cost report preparer Richard Dix-on with Dixon-Kanary & Co.

"It's like pulling teeth to get cost report data" from some agencies, Peterschmidt notes. "They are so tied into the clinical activities and day-to-day operations," they lose sight of the importance of cost reports.

Because these agencies have been lax about turning in their reports, the entire home care community has to suffer as CMS tightens up the rules, Laff contends. "Some people take advantage and it bodes ill for everyone."

But the vast majority of HHAs are filing their cost reports by the deadline, believes accountant Jeffrey Blumengold with M.R. Weiser & Co. in Edison, NJ. "The move to PPS did not have an impact on the compliance aspect of filing a timely cost report," Blumengold says. "Agencies typically know that they can cause a demand overpayment situation by not filing timely."

Only about 3 percent of Peterschmidt's clients have failed to file their reports on time, he says. Dixon estimates about 10 percent of his clients filed late this year. "They just didn't send in their financial data soon enough," he says.

If providers know ahead of time they won't make the deadline, they can appeal to the intermediary. If the CMS regional office approves, the intermediary can put the providers on only a 50 percent suspension for the first 60 days after the deadline.

This likely will be a little-used option, Pet-erschmidt predicts. Providers not organized enough to submit their data on time generally won't request a lowered suspension amount either, he theorizes. Perhaps when there's an abrupt change of chief financial officer or business office staff, agencies would use the clause.

One of Laff's clients had three other fiscal years under audit and an ill CFO and still submitted its cost report only five days late, he notes.

One item that may cause a legitimate delay is when an agency's internal records conflict with the cost report data furnished by the provider statistical and reimbursement (PS&R) report, Laff allows. The time it takes to obtain a detailed PS&R from the intermediary and reconcile it with internal reports "can be enormous" and can delay filings, he says.

Late Cost Reports Signal Other Problems

Peterschmidt praises CMS' crack-down on late-filing providers. If the agency is "that delinquent with its cost report, it could be an indication of other problems," he maintains.

"Most agencies should be able to comply with the deadlines," Laff agrees.

And as soon as providers start seeing 100 percent withholds, they will jump to submit their reports, Dixon expects. "Then they'll get very important," he forecasts.

Widespread understanding that a 100 percent withhold looms if the report isn't in by the deadline will motivate providers to avoid late submissions in future years, Dixon also predicts.

What this memo fails to address is the accuracy of cost report data, Peterschmidt adds. HHAs that submit inaccurate data are falsely signing their attestation statements and setting themselves up for lowered reimbursement rates down the road, Dixon warns.

But without a direct reimbursement impact, that's exactly what a number of agencies are doing, Peterschmidt fears. No longer receiving a payment from the cost report is the only processing change under PPS, "but it's a big one," he notes.

Editor's Note: The memo is at www.cms.gov/manuals/pm_trans/A03042.pdf.