The Complete Guide to Home Health Medicare Cost Reporting

According to the law, home health agencies participating in the Medicare program need to maintain compliance with cost reporting requirements. Unfortunately, for many providers, Medicare cost reporting is as complicated as a jigsaw puzzle filled with endless forms, intricate calculations, and minute details.

Medicare cost reporting experts at NMP Professional Services specialize in offering strategies that help many home health agencies pass through this complexity. This guide is aimed at helping you learn all the important things about Medicare cost reporting.

What Is Medicare Cost Reporting?

Medicare cost reporting is the submission of financial and statistical data to the Centers for Medicare & Medicaid Services (CMS) within a given time frame. For home health agencies (HHAs), this report contains operational costs, patient census, Medicare utilization, and overhead. CMS uses all this data to assess reimbursement, monitor compliance, and adjust future payment rates.

Why It Matters?

Home healthcare agencies may wonder why this level of reporting is necessary. Here are the reasons why documenting everything matters:

• Compliance: Medicare home health cost reports are a legal requirement. If an agency fails to file the necessary reports on time, the result may be penalties or payment suspension.
• Reimbursement: The primary concern for the CMS is how caregivers are compensated for their services. It directly affects how payment rates are calculated and adjusted.
• Audit Defense: Maintaining Proper cost reporting will serve as an important defense in case an agency has issues with being audited by CMS or Medicare Administrative Contractors.
• Strategic Planning: How well an agency understands its cost structure determines its chances of successfully identifying areas for cost savings, revenue optimization, and enhanced resource allocation.

Who Needs to File?

Any Medicare-certified home health agency that gets reimbursement under the Medicare program is required to submit an annual cost report, even if the agency had no Medicare patients for the fiscal year. Not filing can result in payment withholding or Medicare certification being terminated.

When Is the Cost Report Due?

Medicare home health cost reports are submitted no later than five months after the end of the agency’s fiscal year. For instance, if the agency’s fiscal year ends on December 31, then the cost report will need to be submitted by May 31 of the following year. You can also request extensions, but the timeframe is very strict. Moreover, you should submit the request well before the official due date.

Key Components of the Home Health Medicare Cost Report

Let’s examine key sections of the cost report and their respective contents:

1. Statistical Information

• Total visits by discipline (skilled nursing, physical therapy, etc.)
• Number of patients served (Medicare and non-Medicare)
• FTEs (Full-Time Equivalents) by staff category
• Utilization stats, including mileage and average cost per visit

2. Financial Data

• Revenue and expenses for each of the services offered
• Cost allocation across administrative, clinical, and overhead categories
• Depreciation schedules and lease agreements for major equipment or facilities

3. Medicare Cost Apportionment

• Determining the total costs that can be apportioned to Medicare services
• Needs monitoring of reimbursable vs. non-reimbursable costs with precise accounting

4. Reconciliation

• Final comparison of Medicare payments received versus allowable costs
• Overpayments may require a refund; underpayments may prompt adjustments

Common Pitfalls to Avoid

While the concept of cost reporting looks straightforward, many costly mistakes can mess up your compliance:

• Misclassifying Costs: Costs should be accurately assigned to the right cost centers. Misclassification can cause rejected reports or incorrect reimbursement.
• Failing to Track Non-Reimbursable Costs: Costs of marketing, some administrative activities, and non-Medicare patients should be excluded from Medicare cost pools.
• Missing the Deadline: CMS does not have any grace periods when it comes to submitting reports late. Submitting after the deadline can hold up payments or, in some situations, may result in even more severe repercussions.
• Inadequate Documentation: All calculations must be documented in detail – everything from mileage to payroll summaries must be submitted.

Tips for Accurate Cost Reporting

Here are some tips on how to achieve efficiency while reporting costs to ensure compliance:

• Use a Dedicated Accounting System: Purchase accounting software tailored for healthcare facilities. It’ll allow you to track costs by discipline, department, and types of reimbursement.
• Implement Time Studies: Time studies allow for accurate payroll cost allocation for employees working in multiple roles, such as clinical care and administration.
• Maintain Real-Time Records: Do not wait until year-end to amass data. Keeping up monthly entries reduces the effort required to prepare reports during the report preparation period.
• Work With an Experienced CPA: Working with CPA firms like NMP Professional Services, which focuses on home health agency Medicare cost reporting, ensures compliance, accuracy, and peace of mind.

The Role of NMP Professional Services

NMP Professional Services understands that the Medicare cost reporting process can be tedious for home health agencies as they focus on patient care. That’s why we offer comprehensive services that include:

• Initial setup and guidance
• Data review and audit preparation
• Cost allocation strategies
• Report preparation and electronic submission
• Ongoing compliance consulting

We’ve supported HHAs (home health agencies) across the country for years, and our team knows how to manage the heavy administrative burdens so that you and your staff can focus on providing quality health care to your patients.

What Happens After Submitting the Cost Report?

After submission of the report, the Medicare Administrative Contractor (MAC) reviews it. The need for additional information or clarification can’t be avoided. If all is in order, the data will then be used by CMS to update the payment profile and cost benchmarks associated with them.

It’s important to keep a copy of your full submission, including all work papers and supporting documents, for at least five years in case of any future audits.

The Future of Cost Reporting

CMS continues to evolve the cost reporting process to improve transparency and value. With increasing focus on value-based purchasing, patient outcomes, and cost efficiency, accurate reporting is more important than ever.

Forward-looking home health agencies are already using cost report data to optimize performance, not just stay compliant.

Let Experts Handle Medicare Cost Reporting!

Medicare cost reporting is not just a compliance exercise; it is an opportunity to understand the true cost of your services, streamline operations, and align your agency with Medicare’s long-term goals.

However, it is a team effort because of the intricate rules and strict deadlines.
NMP Professional Services is available for new providers as well as seasoned agencies that are looking to upgrade their reporting standards. Our specialized CPA team is here to ensure your home health Medicare cost report is accurate, compliant, and submitted on time – every time.