CMS-287-21_Responses_to_60day_comments

Responses to Comments Received for Proposed Form CMS-287-21
Published September 12, 2019 (84 FR 48147)
Comment
1 Commenter noted the increased costs and workload burden
required to report home office costs on the proposed form CMS-287
and commented that the estimated costs and preparation hours are
understated.

Response
CMS appreciates the commenter's concern that the proposed form CMS-287 may cause
increased cost and workload burden and that the commenter believes the burden estimate
is understated. The burden estimates are an average of the time and resources that is
expected for most home offices to complete their cost statement. We recognize the burden
hours may vary depending on the HO/CO size and complexity. We invite public comment
on the burden hours as well as the staffing requirements utilized to compile and complete
the Medicare cost report.

2 Commenter requested the ability to continue using alternative cost
report forms for the proposed form CMS-287 as was done with the
form CMS 287-05.

CMS acknowledges the commenters' request to continue using an alternative cost report
form in lieu of the approved home office cost statement. The proposed cost statement
forms are designed to accomodate all scenarios, facilitate electronic preparation and
submission, and permit electronic signature.

3 Commenter expressed concern about reporting innacurate
allocation calculations if required to allocate by individual types of
expenses since they currently group expenses by department to
allow costs to be allocated to the chain providers who benefit from
services furnished by the applicable department. Converting to the
proposed form CMS-287 will result in innacurate allocations due to
the limited allocation calculations. Additionally, the use of the new
forms will result in the inability to compare home office activity from
the historical forms used.

CMS appreciates the commenters' concerns. We have expanded the Schedule A
instructions to allow subscripting of all the cost centers (lines 1 through 98) to
accommodate expenses detailed by locations and departments.

4 Commenter expressed concern regarding the requirement that a
provider must submit adequate cost data that can be verified by a
qualified auditor. Requiring the home office cost statement to be
reviewed by multiple auditors not only adds burden, but increases
the risk of inconsistent review of information.

CMS appreciates the commenter's concern. The regulation at 42 CFR 413.20(d)(2) states
that the provider must permit the contractor to examine records and documents as
necessary to ascertain information pertinent to the determination of the proper amount of
program payments due the provider(s) in the home office/chain organization. The
examination is intended to assure that the home office/chain organization has an adequate
ongoing system for furnishing the records needed to provide accurate cost data and other
information capable of verification by qualified auditors and adequate for cost reporting
purposes under §1815 of the Social Security Act.

5 Commenter suggested that a designated point of contact be
assigned for each contractor so a chain can have a single contact
for furnishing a copy of the home office cost statement. Additionally,
contractor responsibility for notification and distribution of the home
office cost statement should be specified.

CMS acknowledges the commenter's suggestions; however, the comments are beyond the
scope of the proposed revisions to the home office cost statement forms and instructions.

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Responses to Comments Received for Proposed Form CMS-287-21
Published September 12, 2019 (84 FR 48147)
Comment
6 Commenter suggested that the proposed form CMS-287 be
submitted to the MACs in an approved electronic format. This would
help reduce the administrative burden and allow CMS to introduce
level 1 edits to improve the accuracy and completeness of the home
office cost statement data.

Response
CMS notes the commenter's suggestion to require the proposed form CMS-287 be in an
electronic format, and we agree. Section 4805.2 in the proposed form CMS-287-19
(4800.20 in the revised proposed form CMS-287-21) instructions states a home office is
required to prepare and submit the form CMS-287-21 using CMS-approved software.
Section 4801.12 in the revised proposed form CMS-287-21 states that a home office may
elect to electronically submit the certification statement.

7 Commenter requests that CMS reconsider how salaries are reported
on the home office cost statement and allow for home offices to
report salaries in a separate column on Schedule B. This will allow
the home office to better utilize functional statistics to allocate
department costs.

CMS appreciates the commenter's concerns and we have updated the Schedule A
instructions to allow for subscripting of all the cost centers (lines 1 through 98), including
salaries on lines 8 and 9, to allow for salary costs to be detailed by locations and
departments. We believe this will help the home office better utilize functional statistics to
allocate its department and chain facility location costs.

8 Commenter requests that the proposed form CMS-287 be updated
to track salary amounts throughout the cost statement and totaled
on a new schedule. This would make it easier for providers to
determine the home office salary amounts applicable to each IPPS
hospital when completing Worksheet S-3, Part II, and make it easier
for the MACs to verify the home office salary amounts for wage
index review.

CMS appreciates the commenters' request and proposed Schedule F and F-1 that
summarize all the capital and non capital allocations for direct, functional and pooled
allocations of salaries to better track salary and wage related costs and aid the MACs in
verifying the home office salary amounts for wage index review.

9 Commenter requested further clarification to specify how an entity
must be structured to be considered a home office. CMS states that
a home office of a chain is not in itself certified by Medicare,
however, commenter has seen IPPS hospitals that have taken
specific departments of the hospital and classified them as home
office departments and have been issued a home office number.

CMS appreciates the commenters' request for further clarification as to how an entity must
be structured to be considered a home office. A formal home office provider number is
needed when there is a chain organization. A chain organization consists of a group of two
or more health care facilities which are owned, leased, or through any other device,
controlled by “one organization.” Chain organizations may take a variety of structures and
may have a variety of types of components; however, all chains have two basic elements:
healthcare facilities and a central organizing body. Chain organizations include, but are not
limited to, chains operated by proprietary organizations and chains operated by various
religious, charitable, and governmental organizations. Most chain home offices are
separate and distinct headquarters. The home office is usually physically and
organizationally separate and easily identifiable from the facilities it serves. Most home
offices provide healthcare related functions to or on behalf of the chain providers. These
functions may include central management and policy direction; financial arrangements
and overall financial control; centralized services such as accounting, billing, purchasing,
laundry, payroll, cost report preparation, etc. Please see section 4800 of the proposed form
CMS-287 instructions.

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Responses to Comments Received for Proposed Form CMS-287-21
Published September 12, 2019 (84 FR 48147)
Comment
10 Commenter requested that CMS consider issuing recommended
statistical bases for various functional allocations in order to help
facilitate allocating costs functionally instead of pooling costs.

Response
CMS acknowledges the commenter's request that CMS consider issuing recommended
statistical bases for various functional allocations. Costs should be allocated on a statistical
basis which most accurately reflects the proportionate benefits received by each chain
component for each service. Examples include: centralized payroll on number of checks
issued, purchasing on numbers of purchases made or requisitions handled, and data
processing on machine time. It is important that chain home offices remain consistent from
one accounting period to another in the selection of functional allocation bases. See CMS
Pub. 15-1, chapter 21, §2156.2, for additional recommended allocation bases. If a home
office cannot use the recommended bases, it may use alternative bases after obtaining the
approval of the MAC in accordance with CMS Pub. 15-1, chapter 21, §2150.3(c).

11 Commenter requested that CMS survey the home office community
to determine which departments and services are more common
and add them as standard cost centers on Schedule B.

CMS appreciates the commenter's suggestion to add standard cost centers on Schedule B
(Schedule A in revised proposed CMS-287-21). The 60-day notice and comment period
followed by the 30-day comment period allows for the home office community to propose
what standard cost centers to add in the proposed form CMS-287-21. Schedule A also
accomodates subscripting up to 99 times for each additional cost center through line 98.
For example, line 5 may be subscripted from line 5.01 through line 5.99.

12 Commenter requested that with the issuance of electronic
specifications for proposed form CMS-287-19, CMS will allow for the
subscripting of key officers on Schedule S-1, adjustments on
Schedule C, and related organization costs on Schedule D.

CMS acknowledges the commenter's request. Please note that the revised proposed form
CMS-287-21 accomodates for the subscripting of key officers on Schedule S-1, Part II,
from lines 6 through 20, adjustments on Schedule A-8 from lines 18 through 99, and related
organizations on Schedule A-8-1 from lines 1 through 99.

13 Commenter requested additional clarification regarding the use of
inpatient days as a pooled allocation statistic on Schedule G.
Instructions indicate that inpatient days may only be used when all of
the components of a chain are the same type. Some home offices
have argued that an IPPS hospital and a CAH are the same and the
sub units which are part of these providers can substantially change
the costs of the organization and would not be taken into account
with an inpatient days statistic. Commenter requests more
clarification for when inpatient days could be utilized as a statistic.

CMS acknowledges the commenter's request for additional clarification regarding the use
of inpatient days as a pooled allocation statistic on Schedule G (Schedules E and E-1 in the
revised proposed CMS-287-21). We clarified the instructions and added language that
states that pooled home office costs must be allocated on the basis of inpatient days
provided the entire chain consists solely of comparable inpatient health care facilities.
IPPS hospitals and short term inpatient hospitals and CAHs are considered comparable
inpatient healthcare facilities and would be allocated on the basis of inpatient days. For
chain components that are composed of unlike health care facilities, for example, long term
care hospitals, hospital complex facilities, and home health agencies, pooled home office
costs must be allocated to chain components on the basis of total costs and not allocated
based on inpatient days. See CMS Pub. 15-1, chapter 21, §2150.3(d)(2) for additional
detail.

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