In this episode, Emily Cook, Partner at McDermott Will & Emery, shares her thoughts balancing cost reporting compliance and 340B Program considerations.
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Learn how to listen to The Hospital Finance Podcast® on your mobile device.Highlights of this episode include:
- The role of the Medicare Cost Report in the 340B Program
- Consequences of filing an improper Cost Report
- What hospitals participating in the 340B Program should be doing to ensure they are not letting the 340B Program considerations supersede Medicare cost reporting rules
Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome Emily Cook. Emily provides counsel to healthcare providers on complex regulatory and reimbursement matters. Her regulatory experience includes fee-for-service Medicare and Medicaid reimbursement, billing and coding, licensure, survey certification, and accreditation, and compliance with Medicare and state fraud and abuse requirements. She also has significant experience counseling healthcare providers and other stakeholder entities on issues related to 340B Drug Pricing Program implementation, compliance, and advocacy. Emily previously spent more than five years with the U.S. Department of Health & Human Services, Health Resources and Services Administration, and the Federal Office of Rural Health Policy, where she counseled hospitals and other facilities on Medicare reimbursement and regulatory issues. Emily also served as a Senior Policy Advisor to the National Advisory Committee on Rural Health and Human Services, advising the committee on key issues related to healthcare policy.
In this episode, we’re discussing balancing cost reporting compliance and 340B Program considerations. Welcome, and thank you for joining us, Emily.
Emily Cook: Thank you so much for having me. I’m so excited to talk about this topic today. And I know it is very timely for many hospitals that participate in the 340B Program and are looking at various decisions impacting their cost reporting as it relates to their 340B eligibility.
Kelly: Yes, it is going to be a great discussion today. So, let’s go ahead and jump in. So, what is the role of the Medicare Cost Report in the 340B Program?
Emily: Yes, it’s a great question because when we think about Medicare and the Medicare Cost Report, we largely think about them as a tool used by the Centers for Medicare and Medicaid Services, CMS, which is a sister agency to the Health Resources and Services Administration that oversees the 340B Program, but is a different agency. And the Medicare Cost Report is largely used to determine payments to hospitals. But the 340B Program has, in some ways, adopted the Medicare Cost Report as really what they view as I’ll call the source of truth as to what is the actual hospital entity that is eligible to participate in the 340B Program. And while I certainly have some thoughts that are not always in alignment with HRSA’s thoughts on whether the Medicare Cost Report is, in fact, the right tool for that purpose or if they are using it in the most appropriate way, nevertheless, it is what the Health Resources and Services Administration currently uses to both determine initially whether a hospital is eligible to participate in the 340B Program, their ongoing continued eligibility to participate, and specifically which locations and services of that hospital are eligible to access 340B drugs.
And often, there is a shorthand that is used. So, you will often hear folks talk about whether a particular cost center, location, or service is on the cost report. And really, that means not just on the cost report because there can be many services and locations that are reflected on the paper forms or electronic forms of the cost report, but are not eligible because they are not on a reimbursable line of the Medicare Cost Report. And generally there, we’re talking about above line 190. And primarily when it comes to 340B, we’re talking about locations that are going to be on line 90 or a subscripted line 90. So there can be a lot of focus when we are working with hospital clients who participate in the 340B Program about where a specific cost center will ultimately be located on the cost report, whether it might be adjusted off or moved to ensure that it is staying on a reimbursable line of the cost report, because that is what HRSA will use to determine whether or not that particular service or location can actually access the discounted 340B drugs.
Kelly: Wow. That’s a lot of really great, very helpful information, Emily. Does the use of the Medicare Cost Report for 340B Program eligibility change any of the Medicare cost reporting rules?
Emily: It’s a really great question and one that I think it is important for folks who are working with hospitals participating in the 340B Program, both on the 340B side and importantly on the cost report preparation side, to be mindful of. There is nothing about participation in the 340B Program that in any way changes any of the otherwise applicable cost reporting rules. And that is very important because often there can be very significant financial consequences tied to where a particular cost center or service or location ultimately ends up on the cost report. Or in the case of eligibility based on the DISH percentage, the calculation and the various metrics that go into determining the DISH percentage. And there are often discussions about ways in which to ensure that the way in which the metrics are being calculated or where things are on the cost report are being done in a way that is going to be most beneficial for 340B purposes. And there is certainly nothing wrong with an eye towards ensuring maximization of 340B benefit. That is the intent of the program. Congress intended hospitals that participate in the 340B Program to be able to use it to the maximum extent to use those 340B discounts to support services to their communities and their patients.
But it is always important to be mindful of not crossing over the line from 340B maximization into potentially improper cost reporting. So I do think that it is always very important to ensure that there is collaboration, coordination, and open discussions between operations, finance, 340B teams, and cost report preparers to make sure that everyone’s interests are being taken into account, but that the potential 340B considerations are not superseding or otherwise resulting in, again, potentially improper cost report treatment of various metrics on the cost report.
Kelly: There’s just so much to keep in mind here. [laughter] So you talked about improper cost reporting. So, what are the consequences of filing an improper cost report?
Emily: And that is where I think, really, the rubber hits the road on some of these issues because the consequences for filing an improper cost report, and particularly for knowingly filing an improper cost report, are severe. There can even be criminal penalties for knowingly filing an improper cost report, and certainly there can be civil penalties and repayments under the Federal False Claims Act. So it is really of paramount importance to understand what the actual cost report rules are and ensure that in trying to achieve the best possible outcome for 340B purposes, that hospitals are still making sure that they are adhering to those cost reporting rules and not resulting in scenarios where they may have pushed the line a bit too far or even inadvertently tripped over the cost reporting rules in an effort to ensure that the 340B Program is continuing its operations. So, the 340B Program certainly has its own consequences for noncompliance, but those consequences for filing improper cost reports can often be, again, significantly greater than the benefit that might be obtained for 340B purposes by pushing some of those boundaries.
Kelly: Yeah, those consequences seem very significant. So, what should hospitals participating in the 340B Program be doing to ensure that they are not letting the 340B Program considerations supersede Medicare cost reporting rules?
Emily: Very important that hospitals participating in the 340B Program ensure that they are working with skilled, experienced cost report preparers, like the folks at BESLER. Many of the cost reporting rules can be very complex, and I know folks who work in the cost reporting space say quite often that cost reporting is sometimes an art more than a science. But there are still rules, and with the 340B Program, there can be a lot of complexities, potentially a lot of different pathways and options that can be pursued. And sometimes it is important to understand what the cost reporting options might be, really at the beginning of a new cost reporting period, so you are prepared for what the cost report might look like at the end of the cost reporting period and when it is filed. So having those discussions frequently and early are often very important, but also, as you’re getting towards the end of filing the cost report and the end of a particular cost reporting year, making sure, again, that somebody with an eye towards the cost reporting compliance, and, ideally, just the cost reporting compliance, is reviewing the cost report and the way in which various 340B-specific elements are being reflected to ensure that the cost report is compliant, that it is accurate, that it is complete, and that when the 340B hospital submits that cost report, it can be confident that the individual attesting to the accuracy and completeness is able to do that confidently and know that they have appropriately balanced both the 340B considerations and the Medicare cost reporting rules.
Kelly: Yeah, I know preparing the Medicare Cost Report, I think it’s an art and a science. I’m not sure, but that would be another discussion, I think. Well, thank you so much for joining us today, Emily, and for sharing all these really wonderful insights on balancing cost reporting compliance and 340B Program considerations. Thank you so much.
Emily: Well, thank you so much for having me. I really appreciate the opportunity to talk about this today. And it is a topic that I feel very passionate about.
Kelly: Yes. Definitely. Well, if a listener wants to learn more or contact you to discuss this topic further, how best can they do that?
Emily: Sure. The best way is generally email. And my email address, fortunately, is very, very straightforward. So, it is ecook, for Emily Cook, so ecook at mwe, that is the initials of the law firm, McDermott Will & Emory, dot com. So ecook@mwe.com.
Kelly: Wonderful. Thank you for providing us with that. And thank you all for joining us for this episode of The Hospital Finance Podcast. Until next time…
[music] This concludes today’s episode of The Hospital Finance Podcast. For show notes and additional resources to help you protect and enhance revenue at your hospital, visit besler.com/podcasts. The Hospital Finance Podcast is a production of BESLER | SMART ABOUT REVENUE, TENACIOUS ABOUT RESULTS.
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