Understanding HCFA-2552-92 cost reporting forms - United States.Health Care Financing Administation

Healthcare Financial Management, Oct, 1992 by W. Coleman Powell, Derek A. Pierce

MEDICARE

The new cost reporting requirements necessitated by the new Medicare capital regulations may require up to 160 hours of additional data collection. Authors Powell and Pierce detail the anticipated changes to the Medicare cost reporting worksheets used to collect the data.

Healthcare financial managers have been anticipating the new Medicare capital regulations for some time. In fact, most hospitals probably have been audited for the 1990 capital base year and are being paid under the new rules or have received correspondence from their intermediary concerning the new payment requirements. Now the changes are at hand.

But even with careful planning, many hospital financial managers and reimbursement directors are not prepared for the new cost reporting worksheets. According to the California Hospital Association, an additional 160 hours may be needed to compile the data needed to complete these worksheets. With such a large amount of data to collect, hospital personnel must begin to familiarize themselves with the worksheets immediately, because hospitals filing cost reports for years ending on or after September 30, 1992 will be required to use them.

While drafts of the new worksheets were released in mid-May, the Health Care Financing Administration's (HCFA's) Division of Payment and Reporting Policy is expected to make final revisions and distribute the worksheets sometime in November. Since hospitals only have 90 days to file, providers with fiscal years ending September 30 may encounter a logistical nightmare. At the time of printing, the government was considering granting a 30-day filing deadline extension to any hospital using the new worksheets, but time may still be short.

This review of the latest versions of the new worksheets will provide practical tips for capturing needed data. But the changes are numerous, and while this article will highlight major differences between the old and new worksheets, the new instructions that will accompany the forms still should be read carefully.

Capital PPS

HCFA has developed two methods of payment under the capital PPS--the fully prospective method and the hold harmless method. Providers with hospital-specific rates below their adjusted Federal rate will be paid under the fully prospective method. HCFA estimates 71 percent of hospitals will be paid under this method.

Regardless of the provider's capital payment method, hospitals must maintain old and new capital records for the 1992 and subsequent years' cost reports. These records may be used to establish update factors, support redetermination requests, and effect applicable cost settlements during the transition period.

Old capital is defined as any capital costs incurred or put into service before the 1990 calendar year-end, including leases, rentals, depreciation, interest, property taxes, insurance and other capital related costs. Old capital also includes obligated capital--previously committed capital--which must be tracked separately. Generally, new capital is defined as capital costs incurred or put into service after the 1990 calendar year. Exceptions do exist, of course, such as for a lengthy certificate of need process.

The methods for tracking new, old, and obligated capital are many. The data can be coded by a hospital's mainframe computer system. It can be tracked using spreadsheet software (which can sort entries by date) on personal computers. Records can even be kept manually, if necessary. Each hospital will have to decide the most efficient way to handle the new information requirements, based on its current recordkeeping procedures.

Changes in cost reporting forms

Conceptually, the purpose of the new worksheets is to separate old capital from new capital for payment purposes. Most of the new forms are actually additions to the old worksheets (with the exception of Series L). A list of the revised cost reporting worksheets as they appear in the Medicare cost report follows, with a brief description of each.

Worksheet S-2 identifies a hospital's payment method for capital costs--fully prospective or hold harmless. If a hospital is a hold harmless provider, it should indicate whether it is filing on the basis of 100 percent of the Federal rate, even though this may result in a lower payment.

Worksheet A accumulates total hospital costs. Four new lines have been added to accommodate for old and new capital. These lines are:

* Old Capital Related Costs--Building and Fixtures

* Old Capital Related Costs--Movable Equipment

* New Capital Related Costs--Building and Fixtures

* New Capital Related Costs--Movable Equipment

These lines replace the old lines 1 and 2, previously used to report capital. Every capital reclassification and adjustment made on worksheets A-6 and A-8 should be specified as old and/or new capital. For example, for the 1992 cost report, a reclassification of property tax to capital from administrative and general would be reclassified to "New Capital Related Costs--Building and Fixtures." However, a reclassification of interest for an old bond issue may be 100 percent old capital or allocated between old and new capital.