Blog, Reimbursement, The Hospital Finance Podcast®

The value of reviewing NPRs [PODCAST]

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The Hospital Finance Podcast

In this episode, we are joined by Jimmy Mendez, senior manager on BESLER’s Reimbursement Services team, to discuss the value of reviewing Notice of Program Reimbursement (NPRs).

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

Highlights of this episode include:

  • Reasons why hospitals would want to review an NPR’d cost report.
  • What areas of high reimbursement on cost reports should hospitals track data and trending information.
  • How medical education programs benefit from a review of settled or NPR’d cost reports.
  • Why tracking trending data for items such as the disproportionate share percentage and organ acquisition cost data is important
  • And more…

An accurate and complete Medicare cost report should be a top priority for hospital CFOs and CCOs. Download our white paper to find out more about common errors and potential opportunities to increase revenue. Download

Mike Passanante: Hi, this is Mike Passanante. And welcome back to the Hospital Finance Podcast.

Today, I’m joined by Jimmy Mendez who’s a senior manager on our Reimbursement team here at BESLER.

And Jimmy is going to talk with us about the value of reviewing NPR’s. Jimmy, welcome to the show.

Jimmy Mendez: Thank you Mike. Glad to be here.

Mike: So, Jimmy, for those in our audience who may not be familiar with what an NPR is, can you just tell us about that?

Jimmy:  Well, Mike, NPR stands for a Notice of Program Reimbursement and refers to a cost report that has been settled by the CMS contractor in which the Medicare provider is officially informed of the cost report’s settlement amounts.

We typically refer to that cost report as an NPR cost report or simply the NPR.

Mike: Got it! So, this is a cost report issue. And we’re here today to talk about why a hospital would want to review an NPR’d cost report. Why would they want to do that?

Jimmy:  Well, there are several high reimbursement areas of a cost report that can be monitored by tracking figures on hospital cost reports where an NPR has been issued. Erroneous calculations, keying errors, and failures to update parts of a cost report impacted by updates on other parts of the cost report are the types of corrections that could be identified.

Many of these can be entirely identified and calculated by just reviewing the NPR cost reports without the need to review any additional hospital documentation. Others would serve as alerts to the hospital that further research is warranted. And these would be identified by tracking trends of the data.

Mike: Can you give us some examples of what that might be?

Jimmy:  Well, some examples are the nursing & allied health managed care payment, direct graduate medical education, indirect medical education, and then other high reimbursement impact areas in which anomalies can be identified through tracking the trending of the data.

Mike: Okay. So why don’t we dive into some of what you just said there. Can you elaborate on the managed care payment for nursing and allied health?

Jimmy:  Sure, Mike. Hospitals that train individuals in accredited medical education programs such as nursing programs and pharmacy programs are eligible for a payment related to managed care Medicare. The calculation of this payment is derived from the cost report information from two years prior as well as standard figures that are provided by the government and typically remain constant.

The calculation employs a variety of data obtained from various cost report lines in three different cost report worksheets that includes patient days information and pass through cost information.

By reviewing the NPR’d cost report and pulling all the necessary criteria, one can calculate the payment to ensure it was done correctly or to update the calculation for changes that may have occurred in any of the criteria from the calculations.

Cost reports can be reopened for a variety of reasons. And many times, the data that drives the calculation can be changed. For example, the managed care Medicare days may have increased since the initial calculation due to the use of more current Medicare laws at the time of audit. Updating for this change would increase reimbursement.

Mike: Jimmy, you also mentioned some medical education programs that can benefit from a review of settled or NPR’d cost report. What are these?

Jimmy:  Well, the government reimburses hospitals for training interns and residents for both direct graduate medical education, also known as GME, and indirect medical education, also known as IME.

First, let’s discuss GME.

One of the components of the calculation is the rolling average full-time equivalent or FTE count known as the three-year rolling average FTE. It is derived from the average of the current year FTE count and the two preceding years. By tracking all the pertinent NPR’s, one can ensure the rolling average is calculated correctly.

A common hospital error is to simply pull the current year FTE figure from the prior year cost report and consider that the prior year FTE for the current year cost report. This does not always provide you with the correct FTE figure if your prior year cost report was subjected to the FTE cap.

The same error may have occurred in your penultimate year cost report, so the error is compounded. An annual review of the NPR’s can guard against these errors.

Also, a previous year cost report may have had their FTE’s adjusted. Thus, updating the current NPR cost report for the prior year and penultimate year FTE’s may be necessary.

Other areas that may benefit from tracking trends and identifying anomalies that are components of GME reimbursement are the per resident amount and all cost report lines that impact the FTE caps since the rolling average FTE is subjected to this cap. This may include adjustments to the cap provided by the Affordable Care Act and the Medicare Modernization Act.

Mike: What about indirect medical education?

Jimmy:  Well, that would be the IME component. Reimbursement for IME similarly relies in part on the rolling average FTE and FTE caps. So those would be monitored.

In addition, a major component of IME reimbursement is a resident-to-bed ratio. This ratio is calculated for all cost reports. However, the current year’s calculation is capped at the level of the prior year resident-to-bed ratio. This prior year resident-to-bed ratio is calculated from the previous year’s cost report.

Monitoring the NPR’s can facilitate finding errors in the calculation of this very important ratio. IME reimbursement is typically larger than GME reimbursement. And a small change in the resident-to-bed ratio component of the calculation or in the FTE count can have a substantial impact on reimbursement.

Other areas that may benefit from tracking trends and identifying anomalies that are components of IME reimbursement are the bed days available and the various cost report lines that impact the FTE caps. These two may include the adjustments to the cap provided by the Affordable Care Act and the Medicare Modernization Act similar to GME reimbursement.

Mike: Jimmy, are there any other areas that a hospital would want to track?

Jimmy:  Well, Mike, other areas could benefit from monitoring of NPR information in that they may reveal deviations from the norm. In these instances, one may not be able to fully calculate the correction solely by the NPR, but instead would alert the hospital that some additional research is warranted.

Keeping track of trending information for items such as the disproportionate share percentage, the allowable bad debt expense, organ acquisition cost data, cost-to-charge ratios and some less common payments such as payments for low volume adjustment and high ESRD among others.

A review could also uncover that the utilization of available beds is low and they present an opportunity to reduce available beds and thus improving your resident-to-bed ratio which helps your IME reimbursement.

Mike: And certainly, cost reports are complex items. And cost report reviews are something that we expertly do here at BESLER.

If you’d like to learn a little bit more about what we do or take a look at some additional resources, you can head over to Just click on the Resources tab, and you’ll see some papers and other articles there that will help you understand more about the value of cost report reviews.

Jimmy, thanks so much for coming to the podcast today and talking to us about the value of looking at NPR cost reports.

Jimmy:  Thank you Mike. It was my pleasure.



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