Welcome to this new entry into my Reimbursement Blog!
As I go about my work of helping small and mid-size hospitals obtain all the Medicare reimbursement that they deserve for the services that they have delivered, I have found that there are some misconceptions out there about where we fit in to their hospital’s reimbursement strategy, who we are, what we do and what we don’t do much of. I hope to clear up one of those misconceptions in this blog post today!
When I am trying to get approval to help a hospital (i.e. doing sales), the first and most common response is “we are using XYZ Firm to prepare our cost report.” At that point, I have to let them know that we are fine with that and really want them to continue using XYZ Firm if they are happy with the service they are getting. It surprises some hospital administrators that there is a reimbursement consulting firm that is not after their cost report preparation business (for full disclosure, we choose to prepare a handful of cost reports each year only upon a specific request of our clients).
At this point, I have to explain to them that our main consulting service starts about the time XYZ Firm and the hospital have completed all the work they are going to do with a cost report, so they are both over and done with it! Based upon our experience, the hospital has probably received about 95% to 98% of the total reimbursement due under the law for the services delivered at this point.
My next question is, “Does the hospital want to take a chance of leaving 2% – 5% on the table or do they want to allow us to make sure they get as close to 100% as they can?” If a relatively small hospital that receives $5,000,000 per year from Medicare left 2% on the table, that equals $100,000 per year. Over a four year period, that is $400,000 and beginning to add up to real money!
On this front, the Congress has been kind to hospitals. They knew there would be both disagreements and mistakes made, so the Medicare regulations provide hospitals a great appeal process to a non-partisan board and ultimately to Federal courts with a 180 day window for appeal. They also provide a full 3 years for reopening a report. These avenues are there for all and meant to be used when needed. The large urban hospitals use these regulations! They protect their rights, appeal every cost report and use the reopening process. Unfortunately, the small and mid-size hospitals dramatically under-utilize the avenues the Medicare program provides to improve their reimbursement.
On occasion (maybe 10% of the time), we review a hospital’s cost reports and find that we think they received very near 100% or 100% of the amounts due from Medicare. Due to this real risk, a contingent type fee arrangement works well for this service (we will also do this work on an hourly basis). Through this type arrangement, we accept all the risk of us not finding any issues, so the hospital only pays us a fee if we are successful. Under this arrangement, the hospital retains the final call on what issues we pursue and don’t pursue. In addition, we will do virtually all the work to get the reimbursement.
So the bottom line is….the hospital gets our assistance in pursuing the final 2% – 5% in reimbursement that may be due or, for a small group, a free confirmation that there is nothing we can do, it retains all rights, it only pays if we are successful and it also gets to continue its current relationship with XYZ Firm. It makes so much sense!
I guess that is why these type arrangements and consulting services have been commonplace in large urban hospital for 25 – 30 years. The misconception that the cost report preparation is all there is to getting proper reimbursement is the result of us being the first firm or one of them to bring this level of reimbursement sophistication to the small and mid-size hospital market.
I hope this post helps the reader understand where our services fit into his or her business and are related to the services of XYZ Firm! Please don’t hesitate to contact me with any questions or if I can be of service in any way!
Kendall Quisenberry, President