Hospice Cost Report Update
CMS Addresses Use of Square Feet for Capital-related Movable Equipment Costs; NAHC Submits Comments on HHA-based Hospice Cost Report Changes
November 5, 2015 10:03 AM
The Centers for Medicare & Medicaid Services (CMS) is in the process of expanding hospice cost reporting requirements to gather greater detail on costs by level of care. The National Association for Home Care & Hospice (NAHC) has been monitoring activity in this area and submitting recommendations to CMS through the review and comment process. The revised hospice cost report for freestanding hospice providers became effective for cost reporting years beginning on/after October 1, 2014, while the SNF-based hospice cost report changes are effective for cost reporting years beginning on/after October 1, 2015. It is anticipated that the hospital and home health-based hospice cost report changes will likely become effective for cost reporting years starting on/after October 1, 2015 but neither has been finalized as yet.
An ongoing concern of hospice providers related to the hospice cost report revisions is that CMS now requires use of dollar value for purposes of allocating capital-related movable equipment costs while historically hospices have used square feet for this calculation. Many commenters on the hospice cost report changes (including NAHC) urged continued allowance of use of square feet, but CMS responded that use of dollar value is more accurate. In recent months members of NAHC’s Home Care & Hospice Financial Managers Association (HHFMA) have reported submission of requests to the Medicare Administrative Contractors (MACs) for permission to use square feet as an alternative statistic for allocating capital-related movable equipment costs. Two of the MACs have been approving the alternative statistic, while Palmetto GBA has denied the requests.
Ted Cuppett of The Health Group has been issuing educational notices to hospice providers related to hospice cost reporting issues and, as part of one of those notices, outlined his and other firm’s experiences with the MACs related to requests for use of alternative statistics related to allocation of capital-related movable equipment costs. One of those notices caught the attention of a CMS official, who has clarified that IF A HOSPICE PREVIOUSLY USED square feet for this statistic that the hospice is permitted to continue to use that statistic and that a special request for use of alternative statistics IS NOT NECESSARY.
NAHC received the following confirmation from CMS on this issue:
If a hospice was previously using square feet for allocating capital related movable equipment, a new approval is not necessary or required. We modified the forms but the statistical basis approvals, whether they were through a formal approval, or obtained through no response by the MAC, do not require a new approval process. There was no question posed in the comment period that described an existing basis and the requirement to obtain approval to continue using the existing basis. I understand that many hospice providers used square feet. If they were using square feet prior to October 1, 2014, they may continue to use square feet.
In related news, NAHC and its affiliated HHFMA and Hospice Association of America (HAA) recently submitted comments on proposed changes to cost reporting requirements that affect home health-based hospice organizations. NAHC’s comments included many comments that were previously submitted related to the freestanding and hospital-based hospice cost report changes. A copy of the comments is available here. As part of the comments, NAHC requested that CMS provide more explicit clarification on use of square feet vs. dollar value for allocation of capital-related movable equipment costs. Following are some of NAHC’s comments on this issue:
Capital Related Costs/ Movable Equipment: For hospice Capital Related Costs/Movable Equipment, the home health cost report changes provide inconsistent guidance on the appropriate statistic that should be used. On Worksheet B-1, Capital Related Costs/Movable Equipment is allocated based on EITHER square footage or dollar value (column 2). The costs allocated to Worksheet B/line 25/column 2, will flow to Worksheet O-5/ line 2/ column 2. This cost will then flow to Worksheet O-6 and follow the Medicare step-down methodology. The statistic on Worksheet O-6/ Part II/column 2 is dollar value. The inconsistency between the specified allowable statistics will make it impossible for Worksheet O-6 to be properly prepared. It should be noted that the home health section of the cost report uses square feet as the reporting statistic for allocation of Capital Related Costs/Movable Equipment. Given these circumstances, use of square feet is most appropriate for this statistic.
We would also point out that, based on a recent clarification from CMS staff, it is our understanding that any hospice that previously used square feet as the statistic for allocation of capital-related movable equipment costs is permitted to continue to use square feet without the need to request use of an alternative statistic from the Medicare Administrative Contractor (MAC). While we recognize that dollar value may be a more accurate statistic, we support this clarification of policy because most hospices have historically used square feet for this statistic and because it allows for consistent reporting of Capital Related Costs/Movable Equipment between a provider-based hospice and its parent company since hospitals, home health agencies, and skilled nursing facilities continue to use square feet for this statistic.
We recommend that:
CMS formalize the clarification so that there is more universal understanding that continued use of square feet is permitted for all types of hospices without the need to request permission to use an alternative statistic from the MAC if that is the statistic that has been used previously;
CMS clarify whether new hospice providers would be expected to use dollar value for this statistic; and
CMS permit new provider-based hospices to use square feet for this statistic without the need to request use of an alternative statistic if the parent uses square feet for this statistic. This will ensure consistency with the statistic used by the parent provider throughout the cost report.