Healthcare Accounting

For more than 50 years, Draffin & Tucker has concentrated its practice in the healthcare industry and currently serves over 150 healthcare clients, generating approximately 70 percent of the firm’s business. Because of this concentration, our knowledge with the regulatory, reimbursement, and tax issues that affect a healthcare organization in today’s changing environment is unparalleled.

To strengthen our expertise, our staff receives ongoing specialized training in the areas of healthcare accounting, reimbursement and tax-related matters. Additionally, we are heavily involved in various healthcare professional associations, allowing us to stay current with changes in the healthcare industry. Each customized service team will be led by a firm leader who will utilize the team’s skills to deliver the best possible work product. This team approach also means that each person assigned to your organization becomes highly knowledgeable about its strategies and operations.

Healthcare industry concentrations include:

  • Hospitals
  • Physician Practices
  • Community Health Centers
  • Skilled Nursing Facilities

Budgeting

Whether you are preparing budgets for the upcoming fiscal year operations, anticipated capital outlays, or specific areas of operation like department expansions, changes in healthcare reform will impact your decisions.

The professionals at Draffin & Tucker are constantly monitoring regulations affecting reimbursement in an effort to assist clients in making informed budgeting decisions. In addition, staff members are well informed about various budgeting techniques to help plan future actions and monitor the results of those actions.

Employee Benefit Plan Audits

Employee benefit plans with 100 or more eligible participants are subject to the financial reporting requirements of the Employee Retirement Income Security Act of 1974 (ERISA). ERISA contains a requirement for annual audits of plan financial statements by an independent qualified public accountant. With plan sponsors facing greater challenges in meeting the expectations of participants and regulators, selecting an experienced auditor is a must.

Draffin & Tucker has extensive employee benefit plan experience and offers the plan a product that reaches beyond regulatory compliance and includes recommendations to improve plan administration. The following is a list of benefit plan services available:

  • Full-scope and limited-scope financial statement audits of plans, including, but not limited to:
    • Health and welfare
    • Defined benefit
    • Defined contribution
  • Communication of our recommendations through a management letter and attendance at trustee or audit committee meetings
  • Department of Labor and Internal Revenue Service audits or correction programs
  • Reviews to monitor compliance with legislative and regulatory requirements
  • Preparation of Form 5500 and Summary Annual Report
  • Delinquent Form 5500 filings under DOL Delinquent Filer Voluntary Compliance Program (DFVCP)
  • Evaluation of internal control processes and procedures
  • Agreed-upon procedures, including analysis and verification of various plan attributes

Financial Statement Audits

An audit is generally performed in order to provide assurance to third-party decision makers, such as stockholders, creditors and banks, grantors, and regulators. The primary objective of our audit is the expression of an opinion about whether your financial statements are fairly presented, in all material respects, in conformity with U. S. generally accepted accounting principles (GAAP) or other applicable financial reporting framework.

With Draffin & Tucker’s extensive concentration in the healthcare industry, our audit teams are staffed with personnel whose entire career is dedicated to providing services to healthcare providers. Through participation in healthcare professional associations, more than 40 years of continuing service to healthcare providers, and a current healthcare client base with an excess of 150 clients, Draffin & Tucker has gained significant insight into the issues facing hospitals and other healthcare providers. Our audit teams offer a healthcare facility a product enhanced beyond the regulatory requirements of a fiscal year-end audit.

Internal Control Development and Documentation

Risk of error or misappropriation of assets can be related to regulations, personnel and even technology changes. Not only must organizations have in place well-documented internal controls and processes, but they must also be able to continuously adapt these controls and processes as they evolve.

Draffin and Tucker, LLP’s internal audit team of professionals has extensive experience in assisting organizations with review of their current controls and processes, as well as establishing proper internal controls to mitigate risk of errors or misappropriation of assets.

Revenue Cycle Improvement

A well-functioning revenue cycle is a key component of a healthcare organization’s financial success. From patient scheduling and registration to claim collections and denials management, Draffin & Tucker has been helping our clients meet the challenges of today’s evolving healthcare environment. Our professionals are ready to provide hands-on assistance in assessing your current operations, developing recommendations and implementing changes to your organization’s processes.

At Draffin & Tucker, we recognize an effective and efficient revenue cycle is better positioned to handle today’s declines in reimbursement, strains on resources, and cost-containment pressures. With a thorough understanding of the healthcare industry, we are uniquely qualified to provide assistance to your organization.

Single Audit

A single audit is an entity-wide audit consisting of two components: an audit of the financial statements and a compliance audit of the entity’s major federal award programs. Not all state and local governments and nonprofit organizations that receive federal awards are subject to the single audit requirements. Organizations that expend $750,000 or more in federal awards during a year are subject to the single audit requirement for that year. Since Federal programs have increased in breadth leading to much greater scrutiny from regulators, selecting an experienced auditor is a must.

Draffin & Tucker has extensive single audit experience and offers a product that reaches beyond regulatory compliance and includes recommendations to improve governmental contract compliance.

Compliance Services

Healthcare organizations can reduce their risk and liability of governmental investigations by establishing an effective compliance program. Our experienced professionals offer a wide range of compliance services from the initial design of the program through compliance effectiveness reviews. Services provided include policies and procedures development, employee training, auditing and monitoring, claims data analysis, compliance program effectiveness evaluations, independent review organization services, outsourced compliance officer roles and risk assessment and management.

340B

Compliance Auditing and Monitoring

According to the Office Inspector General Program Guidance, an ongoing evaluation process is critical to a successful compliance program. The United States Sentencing Guidelines also consider auditing and monitoring of compliance functions as an effective tool to promote and ensure compliance within the facility.

Draffin & Tucker can assist facilities in performing auditing and monitoring tasks. We can provide guidance to your internal audit function, or perform specific auditing tasks for you. By using our services, facilities can obtain an objective and independent assessment of regulatory compliance.

Compliance Education and Training

Draffin & Tucker LLP develops Compliance Seminars that translate complex healthcare regulations into terms your employees can understand. By using “real-life” experiences, our knowledgeable presenters will provide employees with a basis for relating these laws to their daily job duties. Through the use of simple, easy-to-understand teaching methods and a “touch of humor” employees will be better able to retain the information presented.

Compliance Effectiveness Review

The United States Sentencing Guidelines requires the periodic evaluation of the effectiveness of facilities’ Compliance and Ethics Programs. Many facilities choose to have an external, independent party perform an objective review of the Program Effectiveness.

With our wide range of healthcare experience including coding, audit and reimbursement, we are uniquely qualified to perform such objective reviews.

Independent Review Organization Services

Healthcare organizations may be required to ensure compliance through the use of an Independent Review Organization (IRO). We are experienced in serving as the IRO for healthcare entities and in satisfying the related reporting requirements to the Department of Justice and U.S. Attorney’s Office. Reviews are conducted in accordance with the OIG’s approved RAT-STATS methodology and generally accepted statistical practices and include claims reviews, unallowable cost reviews and transaction reviews.

OIG Initiatives and Investigations

Regulators have learned that healthcare is a popular and rich source of publicity and additional funding through recoupment. Unfortunately, many providers have experienced this phenomenon and struggle to respond.

Draffin & Tucker staff will work closely with facility staff, legal counsel and OIG representatives in responding to OIG investigations. Using procedures agreed-upon by the facility and Justice Department representatives, we review statistically valid samples. Findings are then used to develop any settlements.

Annual Hospital Financial Surveys

Surveys provide essential information to federal, state, and other regulatory agencies that relate to the healthcare industry. Facilities can lose or fail to receive appropriate funding due to inaccurate surveys.

Draffin & Tucker assists in completing, reviewing and/or providing consultation related to hospital surveys. We will help ensure accuracy and completeness that is vital for your hospital to receive appropriate funding. Such surveys are used by state and federal agencies to determine eligibility and funding for many programs.

Certificate-of-Need Applications

A Certificate-of-Need application is required in many instances when providers expand or offer new services; other times, only a letter of non-reviewability is needed. Preparation of the application with developing and organizing supporting information requires significant time and staff resources that may be unavailable at the facility.

Assistance is provided by Draffin & Tucker in completing applications for health facility certificate of need for new services and/or facilities. Draffin & Tucker’s assistance includes reimbursement consulting, and completion and organization of the C-O-N application.

Charity Care Documentation

There are a number of charity programs with specific documentation and reporting requirements. These programs include federal Hill-Burton programs, Federal Upper Payment Limit Medicaid programs, Medicare and Medicaid Disproportionate Share programs and the Indigent Care Trust Fund program.

Draffin & Tucker can provide assistance in program development, reporting to appropriate agencies, development of documentation procedures, and will serve as the liaison between the health facility and agency.

Community Health Needs Assessments

To help ensure compliance with IRS regulations, our professionals can assist the hospital in the performance of a community health needs assessment (CHNA). Our assessment is offered in phases, which allows the hospital to custom design an engagement that meets its specific needs. We can provide initial assessment and planning assistance, research and analyses of community health data and preparation of a community health profile, facilitation of community focus groups and key stakeholder interviews, preparation of the CHNA report, and preparation of the implementation strategy. Our tax professionals can also assist with the preparation of the hospital’s IRS form 990 for reporting of community benefits.

Grant Applications

Grant funds can be a significant source of funding for many healthcare facilities. Preparing the grant, including obtaining and organizing supporting information can be a significant undertaking for many facilities.

Draffin & Tucker works with your hospital staff in the completion of grant applications. This allows your hospital staff to better utilize its valuable time and resources rather than performing research or developing and organizing information supporting the grant application. Such grant applications may include Rural Health Transition Grants, Rural Outreach Grants and others.
Medicaid DSH Surveys

As a part of the Federal Medicaid Disproportionate Share Hospital (DSH) program, the Centers for Medicare and Medicaid Services (CMS) requires each state to calculate a Hospital Specific DSH Limit amount for each eligible hospital in their state. The Federal Medicaid program defines the data elements used to calculate the DSH Limit and allows each state to gather the necessary information.

Most states use a Medicaid DSH Survey to allow providers to complete the required data elements. The DSH Limit uses Medicare Cost Reporting Principles but also requires much patient service level detail to calculate cost and payments of individual services provided in each state fiscal year. Therefore, to correctly calculate your hospital’s DSH Limit that will be used to limit the amount of ultimate payments to each hospital, understanding the Federal and State requirements related to this program is a must.

Mergers and Acquisitions

For many healthcare providers, the ever changing payment environment has caused organizations to evaluate their position in the marketplace. With lower payments per unit of service and more value added requirements, many healthcare providers are considering either merging upwards with larger providers, or acquiring smaller providers to retain economies of scale with their market place.
These organizational changes result in major regulatory, compliance, accounting, and reimbursement challenges and opportunities. These challenges and opportunities must be planned and supported with the full knowledge of experienced personnel and consultants.

Reimbursement and Cost Report Services

Cost reports continue to have an effect on facility reimbursement, especially wage-related information. Regulators utilize cost reports for monitoring a number of reimbursement programs. Therefore, inaccurate cost reports may lead to lower reimbursement and regulatory scrutiny.

Draffin & Tucker has extensive third-party reimbursement experience. Since 1967, the first year of the Medicare program, we have filed cost reports for healthcare entities including hospitals, free-standing and hospital-based nursing homes, home health agencies, and rehabilitation clinics. We currently prepare more Medicare cost reports for submission, with fewer resulting intermediary audits, than any other firm in this service area. We are familiar with many alternatives to be considered in maximizing reimbursement under the Medicare and Medicaid programs and are knowledgeable of the related documentation required by intermediaries.

With a thorough understanding of the relationship and impact of the Medicare and Medicaid programs, we are uniquely qualified to provide assistance to your facility. We maintain excellent working relationships with the Medicare Intermediary and State Medicaid departments.

Critical Access Hospital Designation

Many small rural hospitals benefit from gaining Medicare Critical Access Hospital cost based reimbursement. The improved reimbursement has given new life to many of these hospitals.
We assist your hospital in pursuing Critical Assess Hospital designation. This is accomplished by performing the financial analysis of CAH designation, providing reimbursement and billing, consultation and cost report preparation.

Disproportionate Share Hospital (DSH) Analyses

The Medicare and Medicaid Disproportionate Share Hospital designations provide many hospitals with additional reimbursement for indigent care and other programs. Improperly reported information may lead to loss of funding from these programs.

Assistance is provided by Draffin & Tucker to hospitals related to Disproportionate Share Funding. We work closely with state regulators to remain current with rules and filing procedures. We assist hospitals in identifying eligible Medicaid days to maximize their ability to participate in such programs, as well as the filing of surveys and plans that are required by regulatory agencies.

End Stage Renal Dialysis

Hospital providers are eligible for add-on payments to their DRG payment for treating a high percentage of end stage renal dialysis patients. The data required for this adjustment is very detailed and can be labor intensive to compile. We routinely assist providers through data mining techniques in compiling the necessary information for submission to the Medicare intermediary.

Medicare and Medicaid Reimbursement

Medicare and Medicaid reimbursement can be among the most complex and critical issues healthcare providers face.

For more than 45 years, the professionals at Draffin & Tucker have provided for the unique reimbursement needs of Home Health Agencies, hospitals, skilled nursing facilities and other healthcare providers in the area of Medicare and Medicaid reimbursement. Since 1967, the first year of the Medicare program, we have filed cost reports for healthcare entities, and currently prepare more Medicare cost reports for submission, with fewer resulting intermediary audits, than any other firm in this service area. We are familiar with many alternatives to be considered in maximizing reimbursement under the Medicare and Medicaid programs and are knowledgeable of the related documentation required by intermediaries.

With a thorough understanding of the relationship and impact of the Medicare and Medicaid programs, we are uniquely qualified to provide assistance to your facility.

Medicare Bad Debts

Compilation of the Medicare bad debt lists is a labor intensive process. Many providers have difficulty capturing all of their Medicare bad debts as well as insuring non-allowable portions of Medicare bad debts are not included in their bad debt lists. Through data mining techniques using detail paid claims data, we routinely assist providers in the preparation of their Medicare bad debt list. While the assistance routinely identifies additional bad debts to claim on the cost report, a well-organized Medicare bad debt listing also aids in future Medicare audits.

Medicare Change of Ownership

A Change of Ownership (“CHOW”) for health facilities must be reported to a number of agencies. Failure to properly report this information to the agencies could result in delays or loss of cash flow.

We provide assistance in completion of state and federal applications required by licensing, certification and fiscal intermediaries. Such applications include provider enrollment applications of the main entity as well as those of employed physicians and/or other related entities.

Medicare Cost Report Filing

Since 1967, the first year of the Medicare program, we have filed cost reports for health care entities across the country including, but not limited to, hospitals, free-standing and hospital-based nursing homes, home health agencies, rural health clinics and rehabilitation clinics.

We are familiar with many alternatives to be considered in optimizing reimbursement under the Medicare and Medicaid programs and are knowledgeable of the related documentation required by Medicare Administrative Contractors (MAC) and State Medicaid Agencies.

With a thorough understanding of the relationship and impact of the Medicare and Medicaid programs to the success or failure of a health care entity, we are uniquely qualified to provide assistance to your facility in planning, preparing and filing the required cost reports.

Medicare Cost Report Reviews

As changing regulations and the fiscal pressures on healthcare facilities continue to increase, providers are continuously evaluating opportunities for enhanced reimbursement. With the complexity of issues impacting Medicare and Medicaid reimbursements, the often referred to “reduced importance of cost reports” is exaggerated. Movement to prospective payment systems over the last several years has certainly diminished the factors impacting cost report settlements; however, the current Medicare cost report still has a number of areas with significant reimbursement implications that should be considered.

Data elements reported in the cost report now impact Medicare bad debt reimbursement, Medicare DSH reimbursement, EHR reimbursement and many programs specific to state Medicaid plans, just to name a few factors. Due to time constraints under which cost reports are often prepared, and the impact those constraints can have on complete and accurate as-filed cost reports, we often provide post-filing review to allow for a focused approach to ensure data elements impacting various reimbursement components are appropriately considered.

Medicare Geographic Reclassifications

Reclassification may allow your hospital to obtain increased Medicare funding due to use of higher wage index and/or standardized amounts used in funding determination for inpatient and outpatient payments.

Draffin & Tucker provides consultation and assistance to providers related to reclassifying to another area for Medicare wage index and/or standardized amounts.

Medicare Provider-Based Requests

Provider-based facilities often receive greater reimbursement than freestanding facilities. Regulators require proper organization and operation to approve provider-based status. Effective development and organization of provider-based requests is important for quick approval and avoidance of cash flow delays.

Consultation and assistance is provided by Draffin & Tucker to providers in substantiating Medicare provider-based status of related entities. Such assistance includes completion of provider-based requests, development and organization of supporting documentation and liaison with state, federal and fiscal intermediaries.

Medicare Wage Index Reporting and Reviews

Reporting inaccurate wage index data can be a costly mistake. Errors can have a substantial impact on reimbursement and may even be viewed as compliance deficiencies. Wage data reported on the hospital’s Medicare cost report is used to calculate a significant portion of the payment for inpatient, outpatient, inpatient psychiatric, inpatient rehabilitation, skilled nursing facility, hospice, and home health services.

We can help you with every step of the wage index process: from compiling all the relevant data for inclusion on the cost report and occupational mix survey, to detail analysis of the supporting documentation to ensure data is complete and accurate, to reviewing and requesting corrections to the public use files before the data is used to calculate your payments.

Occupational Mix Surveys

Medicare requires the collection of the occupational mix of employees for each acute care hospital every three years. The information is then developed to construct an occupational mix adjustment to the wage index. This process of data collection and analysis can become burdensome with tight deadlines, aligning live payroll data that often times bridges multiple Medicare Cost Reporting periods and applying a blend of Bureau of Labor Statistics and Medicare Wage Index logic to the data.

Draffin & Tucker can help you with every step of the wage index process. This includes compiling all of the relevant data for inclusion on the cost report and occupational mix survey, a detailed analysis of the supporting documentation to ensure data is complete and accurate, and reviewing and requesting corrections to the public use files before the data is used to calculate your payments.

Draffin & Tucker provides consultation, reporting and application assistance related to obtaining and maintaining the facility’s tax-exempt status. We work with a number of tax-exempt organizations, healthcare and other nonprofits, regarding many issues related to exempt status, including bond issuances and reporting of unrelated business income. We also provide assistance with completion/review of annual income tax reporting.

Rural Referral Center Applications

Medicare Rural Referral Status can result in increased inpatient Medicare reimbursement for qualifying hospitals. Hospitals may also benefit from favorable treatment in Medicare Geographic Reclassification determination.

Draffin & Tucker provides assistance in preparing the Rural Referral Center request with development and organization of supporting documentation. We also serve as a liaison with the fiscal intermediary regarding the request.

Sole Community Hospital Applications

Medicare Sole Community Hospital status benefits many hospitals by receiving improved reimbursement. Hospitals must be at least 25 miles from similar facilities.
We can help your hospital prepare the Sole Community Hospital request by developing and organizing supporting documentation. We also act as the liaison with the FI regarding the request.

TRICARE Reports

Hospitals subject to the TRICARE/CHAMPUS DRG-based payment system are eligible for additional reimbursement for allowed capital and direct medical education costs.

The professionals at Draffin & Tucker can assist you in submitting the required request for reimbursement necessary to obtain the additional funds.

Managing risks in today’s ever changing regulatory and business climate requires experienced internal audit professionals. With more than 150 healthcare clients across the nation, we understand the unique audit risks encountered by hospitals. Our audit staff and healthcare consultants are experienced in Medicare billing and coding regulations, as well as the complex financial reporting requirements of the industry. With the impending implementation of healthcare reform, the assessment of associated audit risks will become even more challenging. Our professionals are ready to assist your organization in identifying these risks and designing an optimal solution for your internal audit needs.

We can provide a range of internal audit services, including:

  • Specific project assistance
  • Risk assessment and audit planning
  • Internal control effectiveness
  • Regulatory compliance
  • Complete outsourcing of department

Draffin & Tucker provides a full range of tax compliance and tax advisory services specifically tailored for both non-profit and proprietary organizations serving the healthcare industry. Our tax specialists can assist you in choosing the proper business structure for an activity; planning and structuring executive and deferred compensation arrangements; reporting community benefits; conducting community health needs assessments and designing implementation strategies; planning joint ventures; merger and acquisition/reorganization planning; tax return compliance and reporting, and IRS representation, if needed.

Our healthcare tax professionals have broad experience within the healthcare industry. Our clients include large integrated multi-entity healthcare systems, physician groups, nursing homes, governmental and dual status hospitals, ambulatory surgery centers, diagnostic centers, and variety of ancillary service providers to the healthcare industry.

Annual Tax Returns

Tax rules related to healthcare facilities continue to experience frequent change. It is important for facilities to understand the tax implications of other operational and financial decisions.
Draffin & Tucker provides assistance with annual tax returns of both for-profit and not-for-profit entities. Through our extensive experience we provide tax-planning advice to minimize regulatory implications for your facility.

Executive and Deferred Compensation Arrangements

Draffin & Tucker provides tax consulting and advisory services in many areas, including structuring executive and deferred compensation arrangements for both taxable and tax-exempt entities. Tax provisions related to executive and deferred compensation are complex, and mistakes in applying these rules can be very costly to both the organization and the executive. For tax-exempt organizations, the rules are especially complex since two separate tax regimes apply to deferred compensation arrangements. Draffin & Tucker can work with an employer to ensure compliance with the various tax provisions and provide the proper communication for an executive to understand the structure of these compensation arrangements.

Hospital Restructurings

Restructuring governmental hospitals into private non-profit charitable organizations may be necessary or desired for a variety of reasons, from healthcare reform to simply needing to operate in new jurisdictions. Draffin & Tucker can work with your legal counsel to choose the proper organizational structure and make any tax filings required at both the federal and state levels.

Hospital/Physician Joint Ventures

When planning hospital/physician joint ventures, tax-exempt organizations must avoid private inurement and private benefit, and all parties to hospital/physician joint ventures must avoid the excess benefit provisions of the Internal Revenue Code. Draffin & Tucker can identify potential tax issues and deliver alternatives designed to mitigate any IRS problems with these partnerships.

Tax Exemptions

Many healthcare facilities have to deal with special tax rules related to tax-exempt status. These special rules include dealing with private benefit and inurement issues as well as issues related to tax-exempt financing.

Draffin & Tucker provides consultation, reporting and application assistance related to obtaining and maintaining the facility’s tax-exempt status. We work with a number of tax-exempt organizations, healthcare and other nonprofits, regarding many issues related to exempt status, including bond issuances and reporting of unrelated business income. We also provide assistance with completion/review of annual income tax reporting.

Our goal is to provide services that exceed our clients’ expectations, and the basis of this goal begins by keeping clients well informed of issues affecting the healthcare industry through Client Alerts.

CONTACT OUR HEALTHCARE ACCOUNTING SPECIALISTS.

For information on how our healthcare accounting specialists can assist you, please click here to contact us. We have 35 years of experience serving healthcare organizations and look forward to learning more about your specific needs.