Primary Payer Information

Of the 58 sections in the Hospital Annual Report, the sections preparers rated as the most difficult were Primary Payer Charges and Adjustments, sections 13 and 20. Personal experiences of MHA staff who deal with billing data from hospitals also relate these same frustrations and problems. Attempting to analyze billing data based on payer type can be convoluted at best, and at times seemingly impossible. There are some resources available to help preparers arrive at reasonably accurate numbers and make this process less challenging.

Payer Charges and Adjustments require more thought and work than other areas

Primary Payer Charges and Adjustments

Volume 1, Issue 5

April 25, 2006

Communicating with the Business Department

One of the reasons why this section of the HAR may be difficult is that the HAR may be asking for details in a different way than the payer type information is recorded in your system. Communicating with the business department to divide the charges into the payer categories needed may be further complicated by the fact that they may not understand (or know) what payer names in the system should be associated with which group. Further, the software being used at the hospital may also complicate or limit the ability to output payer detail.

If attempts at getting payer class detail from the billing department have been unsuccessful, the staff at MHA may be able to help. Through collaboration with hospitals on other projects, MHA has dealt with billing information at most hospitals and may be able to provide the preparer with ideas on how to obtain the data. It is better to deal with problem before submission than to lengthen and complicate the audit process.

One strategy to help alleviate some of the issues with payer specific charges is to start from the most general accounts and work down to the specific ones. Account 850, “Total Patient Charges” is an auto-fill from the Institution Section on page three (account 201). This number can almost always be found the hospital’s audited financial statement (AFS), and is the easiest number to find. Also usually identifiable in the audited financial statement are the Medicare and Medicaid charges. These numbers, or their relation to total charges, can be found in the notes of the AFS. This can be useful for either filling in these accounts or verifying the accuracy of the data provided by the business office.

Total patient charges and adjustments are broken into three major categories: non-managed care payers, managed care payers, and self pay/charity care (adjustments). It is at this point that some preparers start encountering difficulties reporting the correct breakout. When recording the amounts in these lines, analyze the ratio to total charges to see if they are consistent. If the ratio has changed by a significant amount, it would be strongly advisable to review the numbers again for errors. For example, if non-managed care charges made up 56% of total charges last year but this year it is only 34%, it is likely there are charges missing.

The next level of payer detail is the breakout of Medicare, MA/GAMC/MinnesotaCare, and Commercial. As mentioned previously, the Medicare and Medicaid numbers may be obtained from the AFS. Also, the Medicare Cost Report may be useful in identifying Medicare numbers, and the MN Department of Human Services may be able to assist in arriving at MA/GAMC/Minnesota Care numbers. The last level of payer detail, accounts 7136-7147, separate the MA, GAMC, and MinnesotaCare charges and adjustments. These are the most difficult accounts to fill in, and if the preparer can not reasonably calculate these accounts then they should be left blank.

Work from General to Specific Accounts

Ratio of Specific Payer Accounts to Total Charges

Charges

· Non-Managed Care: 56.17%

· Managed Care: 37.58%

· Self-Pay: 2.75%

· Other: 3.51%

Adjustments

· Non-Managed Care: 58.41%

· Managed Care: 36.42%

· Charity Care: 1.35%

· Other: 3.82%