Graduate Medical Education (GME) is calculated on Worksheet E-4 on the Medicare cost report. The equation is based on the ratio of total Medicare and Medicare Health Maintenance Organization (HMO) days compared to total days from Worksheet S-3 multiplied by the allowable residency costs. As a result, whenever Medicare Part C days (Medicare HMO) are omitted from Worksheet S-3 of the Medicare cost report, GME reimbursement is negatively affected, which can be several hundred dollars per day excluded for a hospital.  

Hospitals are required to submit Medicare HMO claims through the claims processing system the same way as for other Medicare Part A claims. This duplicate billing is known as “shadow billing” or submitting “no-pay claims” that are then subsequently included on the provider statistical and reimbursement system (PS&R) report. Because shadow-billed claims don’t always result in additional cash payments, many times these claims aren’t focused on within a hospital’s revenue cycle billing and collection process. Below are a few issues and errors hospitals commonly make when capturing the Medicare HMO claims on the Medicare cost report S-3 Worksheet or PS&R report:

  1. HMO plans are incorrectly included as a commercial plan on the patient insurance grouping within the hospital’s billing system and therefore never are submitted for shadow billing.
  2. No-pay claims for the subproviders such as inpatient psychiatric or inpatient rehabilitation units aren’t included on the PS&R report.
  3. No reconciliation or comparison is being completed between internal management statistics to the PS&R report for total HMO days for acute-care and subprovider units.

In addition, exclusion of Medicare HMO no-pay days on the Medicare cost report can negatively affect reimbursement for disproportionate share hospital (DSH), low-income patient (LIP), nursing allied health (NAHE), and indirect medical education (IME). Also, not properly billing Medicare HMO claims as shadow bills is considered a billing compliance issue under current CMS regulations. If you would like additional information on this topic or assistance in helping capture any eligible no-pay days on the PS&R report, please reach out to your BKD Trusted Advisor™ or submit the Contact Us form below.

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