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Medicare Cost Reports

Medicare Cost Reports Gustavo Viera Miami CPA has been providing Medicare Cost Reports and accounting and tax services to Home Healthcare


Medicare Cost Report Preparation Strategies

Medicare Cost Report Preparation Strategies

Our Medicare Cost Report Preparation, Reimbursement & Cost Report Services Strategies for enhanced reimbursement. With the increasing pressure on hospital margins, it is imperative that providers obtain accurate reimbursement from Medicare and Medicaid as well as other third-party payors in order to file an accurate Medicare Cost Report.

You can benefit from our experience with Medicare Cost Report Preparation since the inception of Medicare for hospitals and health systems of all sizes and types, including critical access hospitals (CAHs). We have a team dedicated to Medicare Cost Report Preparation and defending them through reviews and appeals. Our Medicare Cost Report Preparation team keeps up with changes in Medicare Cost Reports and requirements to better serve you and includes members who have hands-on experience with reimbursement issues on both sides – Medicare and hospitals.

We have helped numerous clients increase their reimbursement by assisting them with conversion to special Medicare status such as sole community provider, regional referral center, and critical access hospital.

We’ve also assisted them with various Medicare prospective payment systems (PPS) reimbursement issues such as:

  • Wage index analysis
  • Disproportionate Share Hospital (DSH)
  • Medicare bad debt optimization

For academic medical centers, we’ve assisted in proper reporting for post acute transfer issues, graduate medical education (GME), independent medical examiners (IME), and organ transplant costs. On behalf of hospitals and health systems, VieraCPA also has negotiated with various third-party payors including state Medicaid programs.

As part of our Medicare Cost Reports preparation service, we provide a summary of observations and recommendations about the data provided for the cost report as well as opportunities to enhance reimbursement in the future. We’ll help you interpret the results of your Medicare Cost Reports so you know if you make or lose money on individual service lines.

State Statutes require applicants to show anticipated provider revenue and expenditures, the basis for financing anticipated cash-flow requirements of the provider, and an applicant’s access to contingency financing. All schedules must be prepared in accordance with generally accepted accounting principles (GAAP). CPA Firms must compile, examine, or apply agreed-upon procedures to prospective financial statements, including summaries of significant assumptions and accounting policies. An applicant will have demonstrated Proof of Financial Ability to Operate by completing schedules 1-7 in conformity with the below instructions and GAAP, all relevant rules and statutes, and projections that show assets, credit, and projected revenues meet or exceed projected liabilities and expenses and Independent evidence of sufficient funds for starting a Home Health Care Agency, working capital & contingencies.


Proof of Financial Ability to Operate

Healthcare Accounting Specialist Explains Proof of Financial Ability to Operate

As you may know, part of the process to complete the Health Care Licensing Application, the Florida Agency for Health Care Administration (AHCA) and the Florida Statutes requires that each applicant to establish AHCA Proof of Financial Ability to Operate and to show per Healthcare accounting requirements the anticipated provider revenue and expenditures, the basis for financing anticipated cash-flow requirements of the provider, and an applicant’s access to contingency financing. To establish AHCA proof of financial ability to operate, information is provided in detailed forms and schedules which include the monthly projected summary of revenue and expenses, the monthly projected cash flow statements for 24 months and the two annual balance sheets and detailed footnotes that include summaries of significant assumptions, accounting policies and other informative disclosures as required by Generally Accepted Accounting Principles (GAAP). Typical Excel based spreadsheets may be cumbersome to design for this purpose.  Because of the special requirements to produce monthly income statements and cash flows for 24 months, customized projection software is needed to meet the reporting requirements. Subsequent to approval, certain Medicare providers will have to file an annual Medicare Cost Reports.

To show AHCA proof of financial ability to operate per Healthcare accounting requirements the forms and schedules must accompany any initial or change of ownership (CHOW) application for the following types of health care providers.

•  Adult Day Care Centers

•  Assisted Living Facilities

•  Health Care Clinics

•  Home Health Agencies

•  Home Medical Equipment

•  Hospice

•  Intermediate Care Facilities for the Developmentally Disabled

•  Prescribed Pediatric Extended Care Center

•  Skilled Nursing Facilities

All schedules must be prepared in accordance with generally accepted accounting principles (GAAP). A Certified Public Accountant (CPA) must compile, examine, or apply agreed-upon procedures to prospective financial statements, including summaries of significant assumptions and Healthcare accounting policies. Such a requirement is usually not required for the annual Medicare Cost Reports

To establish AHCA proof of financial ability to operate each applicant can select the type of financial statement to be given to the Provider.  As mentioned above, the three choices are :

1.  Compiled

2.  Agreed-upon procedures

3.  Examined

To establish AHCA proof of financial ability to operate and to learn more about your financial statement options and Healthcare accounting requirements:

Before you select the level of service from the CPA , the following will serve as a brief analysis of each option.

1.  Compile – A compilation engagement is the lowest level of service that an accountant can perform on prospective financial presentations that is intended for third parties. Despite it being the lowest level of service, it is a very common deliverable provided by a CPA and often a cost effective solution for many companies, when required or accepted by third parties and acceptable healthcare accounting practices utilized. Compilation procedures includes assembling, to the extent necessary, the prospective financial information based on the responsible party’s assumptions. Performing the required compilation procedures, including reading the prospective financial statements with their summaries of significant assumptions and healthcare accounting policies, and considering whether the prospective financial statements appear to be (1) presented in conformity with American Institute of Certified Public Accountants(AICPA) guidelines and (2) not obviously inappropriate. The compilation procedures are not performed for the purpose of providing any assurance on the presentation or on the underlying assumptions. The accountant may prepare the financial statements or then reads them when they are prepared by the Company’s management  to make sure that they appear appropriate in form and content. Because the accountant does not perform any other procedures, the accountant does not obtain any assurance that the financial statements are free of material misstatement. A compilation report is issued by the CPA.

2.  Agreed-upon procedures – With an agreed-upon procedures engagement the accountant is engaged by a client to perform specific procedures and report findings. The accountant does not perform an examination or provide an opinion. Rather, the accountant reports only procedures and findings. In this type of an engagement, the accountant performs whatever procedures the users of the prospective statements specify. It is a flexible form of engagement; the procedures may be as extensive or cursory as the specified parties want, but should include more than a mere reading of the prospective financial statements. The service may be lower than a compilation, between a compilation and an examination, or as high as an examination.

3.  Examined – An examination engagement is a professional service that involves extensive corroborative procedures, resulting in the CPA’s expression of positive assurance about the presentation and the underlying assumptions. It is similar to an audit of historical financial statements and is the highest level of service that CPA’s can provide on prospective financial statements. The examination involves (a) evaluating the preparation of the prospective financial statements,(b) evaluating the support underlying the assumptions,(c) evaluating the presentation of the prospective financial statements for conformity with AICPA presentation guidelines, and (d) issuing an examination report.

Some additional insight factors to consider when choosing the levels of service

In an examination engagement an opinion is given by the CPA and it states that (i) the prospective financial statements are presented in conformity with AICPA guidelines and (ii) the assumptions provide a reasonable basis for the responsible party’s projection, the assumptions provide a reasonable basis for the responsible party’s projection given the hypothetical assumptions. Because an examination is an extensive service, it is more expensive to provide than the other two alternatives. Examinations are typically performed when the prospective presentation is associated with a decision involving a large amount of money or when a regulatory agency (such as a securities commission or health care authority) requires it.

Notwithstanding the statutory requirement for either a compilation, or agreed-upon procedures or examination to establish the AHCA proof of financial ability to operate, you may want to consult with your counsel and the healthcare accounting authority before hiring the accountant to prepare the Florida AHCA Proof of Financial Ability application.

We can help you with …..

•Due diligence on acquisitions of Home Health Agencies  that are  primarily Medicare based.

•To provide the AHCA proof of financial ability to operate, we can assist  you with the Florida AHCA Proof of Financial Ability application including assistance with compiled prospective(projected) financial statements that are required to be completed by a Certified Public Accountant for Home Health Agencies that are primarily Medicare based. We have developed specialized projection software that was customized to meet the AHCA requirement(s) for a Medicare based Home Health Agency that shows the monthly projected summary of revenue and expenses and the monthly projected cash flow statements for 24 months and the two annual balance sheets.

•Setting up accounting systems with QuickBooks and related training after obtaining your license from the State of Florida.

We have prepared dozens of projections  over the years in various industries and recently successfully assisted a Medicare based Home Health Agency and HME   in completing and filing a AHCA proof of financial ability to operate (CHOW) and to attain a license from The Florida Agency for Healthcare Administration (AHCA) by completion of the  Proof of Financial Ability To Operate application, which included preparation of the projections, forms and schedules referred to above and communication with the AHCA reviewer.


What is included in your Medicare Cost Report?

What is included in your Medicare Cost Report?

Gustavo A Viera a Medicare Cost Report Preparation firm with nearly 30 years of experience preparing Medicare Cost Reports. This Report is used by the government to track the Cost of Medicare and Medicaid programs. In addition, Medicare CPA uses the data from the Cost Reports to set reimbursement. Due to reductions in the Reimbursement System, choosing the right Medicare Accountant to prepare your Cost Report has never been more important.

Every year, Gustavo A Viera Medicare Cost Report Preparation firm prepares over a hundred Cost Report. Our highly trained and experienced Medicare Accountant review and ensure that your Medicare Cost Report is prepared in compliance with all CMS’s regulations.

We provide expert Medicare Cost Report Preparation services including:

  • Analysis of Accounting Records to ensure Compliance with Cost Reporting Regulations
  • Year End Adjusting Journal Entries, Adjusted Trial Balance
  • Cost Report Package for submission to corresponding Medicare Intermediary, including:
  • Electronic Cost Report
  • Work Papers related to Cost Report reclassification and adjustments
  • CMS Form-339 Questionnaire
  • Trial Balance
  • Grouping Schedule
  • Compiled Financial Statements
  • Electronic AHCA Cost Report File and copy of submitted AHCA Cost Report

Medicare Cost Report Preparation

Preparation of CMS annual Medicare Cost Report and supplementary schedules in one nice package, with suggestions for reimbursement opportunities when applicable. We also prepare the Medicaid Cost Report, in a similar fashion.

Medicare Cost Report Review Services

Review of the CMS annual Medicare Cost Report is prepared for you, to highlight any potential improvements, issues or omissions, and to offer suggestions to streamline the AHCA Cost Report preparation of future years.

Hospital Medicare Cost Report Preparation

Medicare Training & Consulting prepares several Critical Access Hospital Cost Reports. Our staff is well trained at the different reimbursement schedule for Critical Access Hospitals.




Medicare CPA Approximates Providers Received $6.6 Billion despite Tax Debts

Medicare CPA Approximates Providers Received $6.6 Billion despite Tax Debts

Medicare CPA VieraCPA approximates 7,000 Medicaid Cost Report providers in three selected states—Florida, New York, and Texas—had an estimated $791 million in unpaid federal taxes from 2009 or earlier, but nonetheless received about $6.6 billion in Medicare Cost Report and Medicare Cost Report reimbursements that year, according to a new study by the Government Accountability Office and Medicare Cost Report Preparation firms.

This represents about 5.6 percent of the Medicare Cost Reporting reimbursed by the selected states during 2009. The report noted that the amount of unpaid federal taxes that the GAO identified is probably understated because taxpayer data from the Internal Revenue Service reflects only the amount of unpaid taxes either reported on a tax return or assessed by the IRS through enforcement. It does not include entities that did not file tax returns or underreported their income.

The GAO report also profiled 40 Medicare Cost Reports providers, including dentist, home care providers, doctors, hospitals, medical suppliers and others. These individuals and businesses received a total of $235 million in Medicare Cost Reporting reimbursements, while having unpaid taxes of about $26 million. The amount of unpaid federal taxes ranged from approximately $100,000 to over $6 million.

Medicare CPA VieraCPA approximates these 40 cases, according to the report, show “the sizable amounts of unpaid federal taxes owed by some Medicaid providers, are among the most egregious examples of Medicare Cost Report Preparation providers with unpaid federal taxes we identified.”

Records reviewed by the Medicare CPA indicate that two of the providers reviewed by GAO investigators are currently, or were previously, under criminal investigation. One example of criminal behavior was a provider caught in a Medicare Cost Report Preparation billing fraud scam. Another company was found guilty of “improperly prescribing controlled substances.”

Other providers profiled in the report took actions that were not illegal, but raised the suspicions of state regulatory agencies and others. For example, providers reviewed by the GAO have had their professional licenses revoked and have been fined by state oversight agencies for regulatory violations. One provider was disciplined by the state Board of Medicine for “quality of care and record-keeping violations.”

Wining and Dining

One dentist profiled by the GAO owed over $100,000 in federal taxes, but nonetheless continued to spend money on “fine dining, trips, spas, shopping and wine.” Another couple bought a new home while their Medicare Cost Report business accumulated a $3 million tax debt.

More than 77 percent of the taxes owed by the 7,000 Medicaid providers came from payroll and individual and corporate tax. In addition, 72 percent of the taxes owed have been owed for more than five years, since 2007. The longer the IRS takes to collect taxes owed to the federal government, the odds grow that the tax revenue with never be collected.

The report showed that the IRS attempted to collect taxes from all 40 of the Medicaid health care providers who were examined in detail, but the IRS was often stymied due to hidden assets, broken commitments, or legal or corporate maneuvers taken by the providers to avoid paying their tax debts.

GAO investigators attempted to include the state of California in the report by obtaining Medicaid data from California, but determined that the data was unreliable for the purpose of the report and removed them from the analysis.

The report found that current federal law does not prohibit Medicaid providers who owe federal taxes from participating in Medicaid or receiving Medicaid payments. In addition, the report found that the IRS is limited to issuing a one-time tax levy to collect the unpaid taxes owed to the federal government. If the payment does not cover the tax debt owed, then the IRS has to issue another levy. Medicaid payments have never been continuously levied because they are not considered or do not qualify as “federal payments” under federal law.

If the IRS had a continuous levy authority for Medicaid, it could have collected between $22 million and $330 million from tax cheats from the three states studied, according to the report.

The report recommends that the IRS “explore further opportunities to enhance collections of unpaid federal taxes from Medicare Cost Report providers.” While citing operational challenges, the IRS agreed to further explore “opportunities to enhance collection of unpaid federal taxes.”