Why Accurate Cost Reporting Could Be Key To Higher Rates In Home Health Care

Home Health Care News | By Patrick Filbin
 
Regardless of what the U.S. Centers for Medicare & Medicaid Services (CMS) decides to do with its home health final payment rule, industry experts believe providers need to drastically improve their cost reporting data.
 
“CMS seems to think there are too many of us and we’re making too much money,” Robert Markette, an attorney with the law firm Hall, Render, Killian, Heath & Lyman, said during an Axxess panel. “If you look at the data they’re relying upon, we’ve somewhat done that to ourselves with cost reporting. The reason they think we have a 45% profit margin, which is essentially what they’re saying, is because our cost report data is off.”
 
Prior to the implementation of PPS at the turn of the century, home health providers were accustomed to spending months on cost reports. At the time, providers would have to submit accurate data and were paid based on those cost reports.
 
Because of that, home health agencies got accustomed to spending a lot of money on those cost reports to make sure they were accurate and thorough.
 
“What happened with PPS is that CMS came out and said, ‘Well, you still have to submit cost reports, but we’re really not going to look at the data,’” Arlene Maxim, SVP of clinical services with Axxess said on the panel. “Well, they have done something. MedPAC now takes that data from the cost reports and gives that to Congress. Therein lies the problem.”
 
Over the years, Maxim said she has seen providers cutting corners firsthand when hiring accountants to put together cost reports. As the industry has evolved and demand has risen, those cost reports have taken a back seat to other operational priorities.
 
Now is the time to change that, she said.
 
“I believe that’s where our industry has gotten ourselves into a major problem,” Maxim said. “I think we’ve looked at the cost of preparing cost reports and have not looked ahead to what might possibly happen as a result of that. CMS is seeing a huge range of profit margins. I work with a lot of agencies and I know no one who is working at a 45% margin, let alone 5%. That would be generous.”
 
To make sure CMS is getting as clear of a profit picture from agencies, Maxim said hiring CPAs and other legal and financial experts with experience in the home health space is critical moving forward.
 
At the same time, Markette believes CMS is too far removed from the actual day-to-day realities of home health and hospice care.
 
“CMS still views hospice like it’s 1979,” he said. “With a lot of this stuff, they don’t understand that our cost structure today is not the same as it was in 1985. And yet, when we cry poor, they don’t believe us.”
 
Some of that onus is still on the providers, however.
 
“We have failed to give them good data,” Markette continued. “They rely on the cost report. When they look at our cost reports, they see an industry whose data shows our costs aren’t real.”
 
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