Adult Day Health Care Frequently Asked Questions (FAQ’s)
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Q. What is Senate Bill 1755 and how does it affect reimbursement for Adult Day Health
Care (ADHC) Centers?
A. Senate Bill 1755 (SB 1755) is a law that was passed in 2006 and directly relates to the
reimbursement methodology for ADHC providers. Effective August 1, 2010, reimbursement
rates will be calculated on a prospective basis and will be based on ADHC providers’
audited cost.
SB 1755 implements two major changes in regards to the reimbursement methodology.
Reimbursement rates will be based on the average cost per unit of service for a peer group
and the rates will be unbundled into Core Services and six separately billable services
(Occupational Therapy, Physical Therapy, Mental Health, Speech and Language
Pathology, Registered Dietitian Services, and Transportation Services).
Q. Where can I read about SB1755?
A. SB 1755 was chaptered and filed with the Secretary of State on September 29, 2006.
Please see link below for the Senate Bill language:
http://www.leginfo.ca.gov/pub/05-06/bill/sen/sb_1751-1800/sb_1755_bill_20060929_chaptered.html
Q. Where can I find Department of Health Care Services (DHCS) new Annual Cost
Report?
A. The DHCS Annual Cost Report format can be found on the following website:
http://www.dhcs.ca.gov/provgovpart/Pages/FinancialAuditsBranch.aspx
Q. Where can I find general information regarding ADHC cost reporting requirements
and training materials?
A. DHCS Audits and Investigations (A&I) is in the process of building a website that contains
training materials, FAQ’s, and internet references to laws, regulations, and reimbursement
guidelines. The website is current active but not fully complete. Please visit us at:
http://www.dhcs.ca.gov/individuals/Pages/AdultDayHealthCare.aspx
- Update 01/02/2008: the training presentations posted on this website were prepared and
- presented in mid-2008. Since that time, updates to the cost report format and instructions
- have been made. Please be sure to read the updates at the ADHC New Room.
Q. How do I get in contact with DHCS – A&I regarding cost reporting and instructions?
A. Contact DHCS – A&I has a designated e-mail box set up for questions and comments. This
e-mail inbox is checked daily and we make every attempt to respond to your e-mail within
24 hours. On occasion, a response may be delayed due to the time it takes to research a
question. The e-mail address is: adhc@dhcs.ca.gov
Q. Do I have to file an annual cost report in the new DHCS format?
A. The DHCS format is required for fiscal periods ending December 31, 2007 and beyond. If
your fiscal period ends on or before December 30, 2007, you are required to complete the
California Department of Aging (CDA) cost report format.
Q. When is the annual cost report due for filing?
A. For those fiscal periods ending between December 31, 2007 and May 5, 2008, cost reports
are due on or before October 2, 2008. For those fiscal periods ending after May 5, 2008,
you will have 150 calendar days to submit your cost report.
Q. When will the new reimbursement methodology take affect?
A. SB1755 calls for the new reimbursement rate methodology to take affect on August 1, 2010.
Q. Why are all the cost report changes happening now if the new reimbursement rate
methodology does not take affect until August 2010?
A. Reimbursement rates will take affect in August 2010; however the cost information must be
gathered well in advance of the change. A&I will be compiling the information based on
audited data obtained from the filed cost reports. The data will be submitted to DHCS’s
Rate Development Branch (RDB) for developing the reimbursement rates.
Q. How will reimbursement rates be determined in August 2008?
A. Currently, A&I is not aware of any rate development procedures in place. Development of
rates is separate from the A&I function. No comment is available at this time, other than
what has been chaptered into law via SB1755. Section 14571 of the Welfare and
Institutions (W&I) Code outlines the reimbursement methodology prescribed by SB1755.
FAQ’s from the ADHC Cost Report Training Sessions held in Sacramento, Los Angeles, and San Diego
Please note that there were many questions at the trainings that have not been posted due to various reasons. If you feel that the question you asked at the training or placed on a card has not been sufficiently answered, simply send an e-mail to the ADHC e-mail inbox and A&I staff will send a response. Many of the questions were either specific to a situation and/or could not be answered without further information. Also, many of the questions pertain to policy or rate issues, which A&I cannot comment on at this time. As noted, feel free to send an e-mail with your question and A&I will respond within 48 hours. Thank you for understanding.
Q. Are the audits performed by A&I announced visits or do we get warning to have staff present?
A. A&I performs a variety of audits/reviews at all types of healthcare providers, including
ADHCs. The financial audits of the annual cost reports will always be announced visits from
the Financial Audits Branch (FAB). However, on occasion, the Medical Review Branch
(MRB) and Investigations Branch (IB) of A&I may perform unannounced visits.
Q. Who should submit claims for reimbursement to DHCS for Separately Billable
Services – the ADHC Center or the provider of service (i.e. OT, PT, etc)?
A. Separately Billable Services are provided on behalf of the ADHC Center in conjunction with
the participant’s Individual Plan of Care. Therefore, the Separately Billable services
provided should be billed by the ADHC Center.
Q. If a participant is NOT at the program for 4 hours, do we include them in the
statistics for that day?
A. No. California Code of Regulations (CCR), Title 22, Section 54113 requires that a
participant be at the ADHC Center receiving covered services for a minimum of four (4)
hours in order to be considered a day of attendance.
Q. Should Visitor/Non-paid days be included in the participant census?
A. A visitor who is at the ADHC Center for more than four hours constitutes a participant day,
regardless if payment is received. Census records should include Visitor/Non-paid days
and reported as such.
Q. Where do we allocate the time that PT, OT, Psychologist and other professionals
spend to do the required paperwork (documentation) i.e. plan of care, progress
notes, quarterlies, etc?
A. The Medi-Cal Benefits, Waivers, and Rates Division (MBWRD), formerly known as the
Policy Division, of DHCS is currently working with the California Association for Adult Day
Services (CAADS) on the definition of Separately Billable Services. The document
(projected release in mid-August 2008) will address the issue of required paperwork that is
required by the healthcare specialists and transportation drivers to document progress of
participants.
-
Update 01/02/2008: Please visit the CAADS website for further information
-
on Separately Billable Services. On approximately 08/25/208, information
-
Q. Is there a time limit for disbursement of accrued cost per cost report?
A. In general, a liability must be liquidated within one year of the ending of the cost report
period for the expense to be considered valid. However, there are exceptions and
variations, depending on the type of the expense. Please see CMS Pub 15-1, Section 2305
for further details.
Q. Will the auditors disallow cost on the basis of industry standards?
A. A&I will make adjustments in accordance with DHCS’s interpretation of reimbursement
principles and correlating laws and regulations. Depending on the circumstances
surrounding the incurred expense, an exception may or may not be taken during the audit.
If an adjustment is made, FAB Auditors are required to cite the appropriate basis for the
adjustment and explain the rationale behind the adjustment.
Q. What is considered sufficient documentation for allocating Separately Billable
services for FYE 06/30/08?
A. A&I cannot require specific documentation for Separately Billable Services. As noted during
the ADHC Cost Report Training sessions, A&I is aware that information relating to
Separately Billable Services was, in all likelihood, not documented prior to the release of
the new cost report format. Therefore, for the first two or three years of annual cost reports,
A&I will accept time studies or service logs that include time and units of service provided in
lieu of actual information. It is highly recommended that ADHC Centers begin to maintain
accurate records for Separately Billable information immediately.
Q. Where should Malpractice Insurance expense be reported?
A. Several options exist in the case of any Administration & General/Overhead expenses,
such as Malpractice Insurance. If an ADHC Center’s chart of accounts does not match
specifically to the DHCS Cost Report, the ADHC Center should prepare a bridging
document (aka Grouping Schedule) that will identify the expenses that have been reported
in a particular cost center. Another option is for the ADHC Center to utilize the blank lines in
Section H of the Cost Report to include costs that do not specifically fit into a category
offered in Section H.
Q. Should Agency Overhead (indirect cost) be reported in "Administrative Expenses"
line 26 or "Home Office" cost line 27?
A. Much like the previous question, expenses such as Agency Overhead or Home Office costs
can be reported in a variety of ways. However, as long as the costs being allocated from an
Agency or Home Office is not specific to Core Services or any of the Separately Billable
Services, reporting the costs in an Administration line is appropriate. Additionally, if the
Agency Overhead/Home Office costs are routinely booked in the ADHC Center’s general
ledger on an ongoing basis, then these costs should be included in Columns 1 thru 6 of
Section H. If, however, the Agency Overhead/Home Office costs are included as a yearend
adjustment or journal entry, then the costs should come into Section H as a cost report
adjustment in Section J-2.
Q. What if PT and OT Supplies are directly identified in the General Ledger? How could
you capture the direct costs of these supplies?
A. If the cost of PT or OT Supplies are directly identified on an ongoing basis in the general
ledger and the supplies are maintained in a separate area and used only for PT or OT, then
the cost can be reported under PT or OT on Section H of the cost report using one of the
blank lines.
Word of caution...if the supplies are shared by PT and OT, then the allocation must go
through Administrative and General as there is no mechanism in the cost report to allocate
to select cost centers.
Q. What is considered a fringe benefit?
A. Fringe benefits are amounts paid to, or on behalf of, an employee, in addition to direct
salary or wages. For a complete definition, please see CMS Pub 15-1, Section 2144.
Q. Are we already going to use this new cost report form if our fiscal year end is
12/31/07?
A. Yes. The new cost report format is for ADHC Centers with fiscal periods ending 12/31/2007
and after.
Q. If two ADHC opened under the same name, will each have to fill a separate or
combined cost report?
A. Each licensed ADHC will be required to fill out a cost report. For those entities that operate
multiple ADHC Centers under multiple provider numbers or NPI, each ADHC Center will be
required to complete a cost report.
Q. What constitutes in-kind services?
A. In-kind services generally relate to services that have been donated. Such as a nursing
student that donates his/her time to the ADHC Center for school credits or a transportation
company that transports participants at no cost.
Q. Will the grouping schedule/bridge spread sheet be available?
A. Yes, the grouping schedule has been posted to our website at:
http://www.dhcs.ca.gov/individuals/Pages/AdultDayHealthCare.aspx
Q. What about SCAN. They pay a lot less? How will this payment affect the
Discriminatory Billing issue described in CCR, Title 22, Section 51480?
A. As the case is with virtually all third-party payer sources (i.e. health insurance, Medi-Cal,
Veteran’s, Managed Care, etc), SCAN has most likely entered into a contract
reimbursement rate.
The key with the Discriminatory Billing issue is the usual and customary charge (UCC),
which must be equal to or greater than the amount charged to the Medi-Cal program. Any
contractual allowance or cut-back or deduction should be noted in Section G, Column 2 of
the cost report.
Q. When an ADHC chart of accounts is part of a larger chart of accounts, may the ADHC
trial balance be separated and presented?
A. Yes. The cost report is representative of the ADHC cost only. Please keep in mind that any
cost coming from the parent corporation or home office, or a “larger chart of accounts” is
also subject to audit.
Q. Our parent organization is located at a service center and we run a Title III nutrition
program at the ADHC site. Is a home office report required?
A. Without knowing the specifics in this situation, it is difficult to offer a simple yes or no
response. DHCS, however, offers the definition of a chain organization published in
CMS Pub 15-1, Section 2150. If a particular ADHC Center is part of a chain organization and an
allocation of cost from the home office is included in the ADHC Center’s cost report, then a
Home Office cost report must be filed in order for the allocated costs to be considered
allowable.
Q. When will be a good time to start logging units of services for the new cost report?
A. The best time to begin logging the units of service and time spent on Separately Billable
Services is as soon as possible...the sooner the better. The definitions for Separately
Billable Services are pending, however, using the given the information during the ADHC
Cost Report training sessions is a start in the right direction.
* Update 01/02/2009: Definitions for Separately Billable Services are posted on the CAADS website. Please visit www.CAADS.org.
Q. What time to what time is counted? When you log for transpiration, do you consider
the time that your van leaves the center?
A. Separately Billable units for Transported are counted by trips rather than hours. Therefore,
no time log, per se, is required for cost reporting purposes.
Q. Is there a cost center designated for the cost of fuel for transportation vehicles?
A. There is no specific cost center designated for the cost of fuel for transportation vehicles.
These costs can be grouped into a cost center that is appropriate within the Transportation
section.
Q. Do auto repairs and maintenance costs go together for transportation or only
maintenance?
A. If the costs pertain to the repair and/or maintenance of transportation vehicles, using
Line 78 of Section H will suffice.
Q. An ADHC Center (Center) has two vans that transport participants to and from the
Center. The Center utilizes other transportation services, such as Access,
Paratransit, etc. Would the unit of cost would be different for each category?
A. The reimbursement rates for transportation will be one uniform rate for each peer group. At
this time, there will not be a need to separate out the costs of the various forms of
transportation.
Q&A’s from the CAADS 2009 Winter Conference
Below are the hand-written questions that DHCS received during the conference.
Q. When will we know the rate of our Core services for our ADHC? Can we dispute the rate we are given?
A. Rates for all services (Core and Separately Billable) are handled by the Rate Development Branch (RDB) of DHCS. Rates are usually publicized on or about August 1st of each new rate year.
Although there is no avenue to dispute the actual rates, the ADHC provider will have the opportunity to dispute or appeal any audit adjustments that are made by A&I during the review of the filed cost report. If an audit adjustment is overturned through the appeal process, the cost data is recalculated and sent to RDB for inclusion in the peer group rate setting process.
Q. Is there any data to show what percentage of ADHCs is physically located in low income/low rent areas? Our Center is located in a middle to upper-middle class socio economic area; consequently our cost for facility rental is substantially higher than the majority of other Centers in San Diego County. How will the data be “scrubbed” to account for these variances in “cost” to deliver services? Additionally, there are programs that have had buildings donated to them to operate their ADHC out of. Consequently, programs like this have a much lower operating cost.
A. At this point, DHCS has not made any determination as to peer grouping or rate methodology and A&I is unable to comment or speculate on any of these areas. Once the peer groups have been approved and identified by DHCS Executive Management, questions and comments such as these will be forwarded to RDB. Any responses that we receive from them will be posted on our website’s FAQs.
Q. When the rates for ADHC Core Service & Separately Billable Services are determined, will they be at different rates per County or service area? Or are they going to be at a universal rate?
A. As previously noted, the peer groups and rate methodology have not been determined or approved by DHCS Executive Management at this time. A&I cannot comment or speculate on how the rates will be set for each peer group.
Q. Is there a prescriptive period on audits? How many months after submission of the cost report do we expect financial audits?
A. A financial audit conducted by FAB of A&I will pertain to a particular cost report period(s). Depending on resources available at the time, a financial audit of the submitted cost report could be anywhere from three to nine months after submission.