Blog, Reimbursement, The Hospital Finance Podcast®

Recap from the 2019 HFS user meeting [PODCAST]

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The Hospital Finance Podcast

In this episode, we are joined by Jeff Wolf, Director of Reimbursement Services at BESLER, to discuss highlights from the recent HFS Provider User meeting.  

Learn how to listen to The Hospital Finance Podcast® on your mobile device. 

Highlights of this episode include:

  • Background on the HFS Provider User meeting which took place in Boston, MA from August 22-23, 2019.
  • Why the issue of S-10 and bad debts was such a hot topic at the meeting.
  • What providers can do to meet Medicare requirements when filing bad debts.
  • A review of the changes and edits made to CMS’ Medicare cost report forms.
  • And more…

Download our SPECIAL REPORT: The Common Elements of Uncompensated Care to learn about the interdependence of S-10, bad debts, and DSH as they relate to uncompensated care.

Mike Passanante: Hi this is Mike Passanante and welcome back to the award-winning Hospital Finance Podcast. Today I’m joined by our director of reimbursement Jeff Wolf who attended the HFS user meeting for 2019 in Boston I believe, right Jeff?

Jeff Wolf: Correct.

Mike: Yes. And Jeff, you had a couple of key takeaways. You sat through several sessions but there were a couple of key things that really stuck out to you at the meeting and you wanted to share that with our audience today. Could you walk us through what was interesting to you this year?

Jeff: Sure. Well first off, I do have to say the HFS user meeting is actually a really good session for some educational material. There were quite a few seminars on some pretty hot topics that I think people would be interested– depending on what type of providers you are. But one of the main issues that came about– and we found this in discussions with people at the lunch tables as well as in two different sessions this particular issue came up– and the issue is revolving around Medicare recognizing the S-10 debts and they’re pulling out a regulation that is a significant number of years old and applying it. And what the regulation is it basically says that these bad debt transactions have to be booked to an expense sub-account. Well there’s a difference there between Medicare saying it has to be booked to an expense sub-account and the way that both GAAP and AICPA require our financial auditors to book these transactions. The financial auditors are all going to be required to book these transactions as contractual adjustments or contra revenue accounts.

So there’s a distinct difference there and Medicare is basically saying if this bad debt is not booked to an expense account on the general ledger, they’re not going to allow it. And this is kind of a new thing that they started with the last set of audits and they’re starting to move forward with and they’ve kind of reinforced it in the rules. So one of the things that we’ve been talking about is how do we deal with this issue? And a suggestion came up through these seminars that might be a good way to deal with this and that is to change the transaction codes for your bad debt write-off to actually book bad debts to an expense sub-account but then also have a journal entry that moves that expense from– or that bad debt from the expense sub-account to the contractual. That way you can meet both requirements. The initial transaction is booked to an expense sub-account so you meet your Medicare requirement, you can show them, you can show them all the expenses hitting there, and then you can use journal entries to move the bad debt up to the contractual thereby you’ll meet the financial auditor requirements.

At the end of the day, your bad debt expense will net to zero but if Medicare wants to audit it all you have to do is remove the journal entries and you’ll be able to see all the expense that was booked to that expense account for bad debts. Again, we’re still a little bit on a learning curve as far as how Medicare’s going to handle this because of the disparity between financial auditors and Medicare but that was one of the big topic issues that we did see quite a bit of.

The other item that came up was actually a result of CMS changing some of the forms and edits that they put in to the actual cost report forms. So this more affects skilled nursing, home health, hospice, and rural health clinics. And with those particular providers Medicare is tightening down what they called 1000 level edits– the edits that will cause your cost report to reject. And one of the things is for these non-acute care providers, their systems are not as sophisticated, so they tend to know the total cost of salaries, they tend to know the total cost of supplies, they don’t necessarily know all of these expenditures by the type of care or the level of care. So like if you think about home health, they have skilled versus non-skilled, things like that. If you’re talking about skilled nursing hospitals, you actually have SNF versus NF. So, all of these providers have a little levels of care and we usually have really good statistics of the number of encounters whether it’s visits or days by these levels of care and we put those in the cost report. Well the edits are now saying if you have X level of care, you must have expenses and revenues associated with that level of care where most of the clients had data in the main service level and then either allocated or moved expenses down.

Medicare is now requiring those to be lined up so you may have to do some work before you get to your cost report using statistics to allocate the expenses down to the correct level of care before you actually get the numbers on the cost report. And that’s going to be significant change for those providers because again they’re less sophisticated, they usually don’t have the big decision support systems that help them the way acute care hospitals do in moving all the expenses around in their general ledgers.

Mike: Thanks for stopping by the podcast once again Jeff.

Jeff: Great. Thank you very much.

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