Previously, Medicare Advantage swing bed days may have been included with the total swing bed nursing facility (NF) days.

“Depending on the number of Medicare Advantage swing bed days at your Critical Access Hospital, this cost reporting change could result in a significant reduction in current payments and payback to Medicare for previous un-audited cost reporting periods,” says Steve Rader, health care reimbursement principal with LarsonAllen.

Routine costs for swing bed SNF days versus NF days
The possible payment reduction due to this change in reporting results from the calculation differences between costs related to swing bed SNF and swing bed NF days. The routine costs for swing bed SNF days are carved out of acute care routine costs at full cost by including the swing bed SNF days with the acute care days when calculating the cost per day.

Alternatively, the routine costs for swing Bed NF days are carved out of the acute care routine costs based on the state’s Medicaid rate, which is approximately $150 per day.

Reporting the Medicare Advantage swing bed days as SNF days versus NF days could negatively impact Critical Access Hospitals (CAHs) considering their average cost per day can be significantly higher than the state’s Medicaid rates.

Examples of reporting change
The following examples demonstrate the impact of the change in reporting. In the first case below, the Medicare Advantage days are carved out at the NF state Medicaid rate of $145. The carve out of these expenses is $7,250.

Medicare Cost Report Description	Total
Adults and pediatrics Medicare days	2,000
Swing bed Medicare days	1,000
Total days (including observation bed days and excluding swing bed NF days)	4,050
Total routine costs	3,000,000
Swing bed NF:	Days	Rate
Carve out	50	145.00	(7,250)
Adjusted routine cost	2,992,750
Adjusted general inpatient routine cost per diem	738.95
	Swing bed	Hospital inpatient
Total allowable routine costs	738,951	1,447,901	2,216,852
Medicare allowable costs (101% of cost)	746,340	1,492,680	2,239,020

The second example below will carve out the Medicare Advantage days at the adjusted general inpatient routine cost per diem of $731.71. The carve out difference will be $21,947, a detriment to the hospital.

Medicare Cost Report Description	Total
Adults and pediatrics Medicare days	2,000
Swing bed Medicare days	1,000
Total days (including observation bed days and excluding swing bed NF days)	4,100
Total routine costs	3,000,000
Swing bed NF:	Days	Rate
Carve out	-	145.00	-
Adjusted routine cost	3,000,000
Adjusted general inpatient routine cost per diem	731.71
	Swing bed	Hospital inpatient
Total allowable routine costs	731,707	1,463,415	2,195,122
Medicare allowable costs (101% of cost)	739,024	1,478,049	2,217,073

The Medicare Advantage programs typically pay the cost as shown in the most recent filed cost report, or interim cost report submitted by a CAH, without a settle up of actual costs incurred compared to payments received by hospitals.

By including the Medicare Advantage swing bed days in the swing bed SNF days, the costs are carved out at a rate more in line with what the Medicare Advantage programs are paying.

Although the cost report handling has changed, the methodology for the Medicare Advantage rate setting remains consistent.

Negotiating payment rates
The Medicare Advantage programs typically use the Medicare cost report as a basis for negotiating the payment rates to CAHs. This change in reporting of swing beds will reduce the average cost per day and could ultimately reduce the Medicare Advantage rates as well.

When negotiating payment rates with Medicare Advantage programs, CAHs should include an add-on to the rates for bad debts because Medicare Advantage bad debts can not be included in reimbursable bad debts in the Medicare cost report.