Strategic planning requires more than immediate profit and loss calculations. There could be Medicare and/or Medicaid reimbursement implications to any operational change. When making decisions about new services, building projects, mergers, or the structure of existing services, it is important for hospital systems to consider these implications with a regulatory reimbursement professional. Here are some common examples of these considerations:
- If you manage a multihospital system, it is likely required that the system set up a home office cost report to allocate shared overhead costs between hospitals. The structure of the home office cost report should be considered strategically to help ensure costs get allocated both accurately and with positive reimbursement impacts, depending on hospital type, e.g., critical access hospital (CAH) versus prospective payment system (PPS), as well as the hospitals’ needs.
- When new buildings are considered for a hospital system, much attention is paid to the needs of the community, availability of resources, and profit to be generated. There could be additional reimbursement implications of adding beds to the hospital, additional services, or a potential change in payor mix that could result from the building project. There also could be reimbursement implications related to financing costs. Some states allow for a Medicaid rate rebase related to building projects so that inpatient rates can be increased on an interim basis to accommodate the additional cost of the new area.
- Medicare rates could be beneficial if a unit is certified as a psychiatric or rehabilitation subprovider, but if your hospital is a disproportionate share hospital (DSH), there may be unintended impacts from establishing a distinct unit on both your Medicare DSH and 340B Drug Pricing Program status, if applicable.
- For some hospitals with low utilization, it may be beneficial to consider a new organizational structure. For example, the reimbursement might be better to certify as a CAH, sole community hospital, or other special Medicare designation. Alternatively, the hospital might consider converting to an outpatient facility with transfer ability to an acute-care setting. The needs of the community are important, but so are the reimbursement implications.
- In a hospital system, there are several clinic organization opportunities available. It might be beneficial to reorganize Rural Health Clinics (RHCs) to be provider-based so they can qualify for increased reimbursement. Reimbursement also can be more beneficial for provider-based clinics when compared to a freestanding physician private office.
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