3 Tricks for Finding Hidden Cash in Medicare Cost Reports

Karen Minich-Pourshadi, October 4, 2010

If you’re looking to come out ahead with your hospital’s bottom line, then it’s important to realize that while at first blush it doesn’t seem possible that there is money in Medicare, there actually is—and it may be hiding in your cost report.

It’s not news to hospital CFOs that Medicare-certified institutional providers are required to submit an annual cost report to a fiscal intermediary. The cost report contains provider information such as facility characteristics, utilization data, costs and charges by cost center (in total and for Medicare), Medicare settlement data, and financial statement data. Nevertheless, as with all things Medicare, there are so many exceptions to the process that even the cost report, which should be straightforward, is an area where hospital-owed funds seem to magically disappear.

This Houdini act is costly for most facilities, however. So to find out how you can change this I checked in with Paul Soper, CPA and partner responsible for Medicare reimbursement services at the Philadelphia-based IMA Consulting. He says that aside from bringing in an experienced reimbursement director or qualified consultant, there are three areas where hospitals can wave their magic wands to make what’s owed reappear.

Trick #1: Coinsurance. Medicare anticipates that many of the patients who walk through your doors may not be able to pay the coinsurance or the deductible for which they are responsible. Hospitals that track to see which patients don’t pay and can demonstrate to Medicare that they’ve done everything possible to collect the amount—but couldn’t—will find that Medicare will reimburse them up to 70%. Generally, hospitals are already doing this type of tracking and reaping the benefits of it. Nevertheless, you’re likely missing more money than you realize in your Medicare bad debt.

Soper recommends reviewing your Medicare records as far back as five years looking at all of the Medicare deductible and coinsurance payment the hospital incurred and then matching it against your patient accounting information to see which claims were paid. If the claim wasn’t paid, did the hospital claim it as Medicare bad debt? If it didn’t claim it as bad debt, why didn’t they, and under Medicare regulations, are they allowed to claim it?

Karen Minich-Pourshadi Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media. Twitter
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