CMS issued a new edit recently, edit 1050A, which has generated a lot of questions.

Edit 1050A requires that certain cost centers (Worksheet A lines) have costs.  The edit was engineered by the hospice advisory committee to try to make sure that the cost report gets filled out correctly.  Per the hospice advisory committee, all hospices should have the costs in question, so they must be identified on the cost report.

Below are the mandatory cost centers, with some explanation as to the costs that should be reported on each one:

• Line 1 – Capital Related Building Costs – these are the costs related to rent or lease of a building or office, or, if owned, property taxes and depreciation.  Also, any leasehold or building improvements would be included in this line.  There has been an issue where some hospices have donated space, so there are neither rent nor property tax/ depreciation costs.  CMS is currently dealing with this issue.  Otherwise, there should be costs on this line.
• Line 2 – Capital Related Movable Equipment Costs – these are costs related to equipment rental, depreciation, or purchase (as when assets are expensed).  Examples would be copier leases, computers, water coolers, and office furniture.  DME (durable medical equipment) costs would be reported on line 38.
• Line 3 – Employee Benefits – since a hospice must have salaried employees, it follows that there must be employee benefits related to those salaries.  This would include health, life, vision, and dental insurance, employee incentives, and employer-paid payroll taxes.  Also, any human resource salaries should go on this line.
• Line 4 – Admin & General – this cost center includes all office and business-related expenses that do not belong in any of the other cost centers.
• Line 13 – Volunteer Service Coordination – since all hospices must have a volunteer program, there must be associated costs in coordinating the program.  This includes salaries paid to a volunteer service coordinator (but not to actual volunteers) and any volunteer training costs.
• Line 14 – Pharmacy – there must be drug costs.  One may either enter them on line 14 [and allocate via B-1 to the different Levels of Care] or on line 42.50 Drugs Charged to Patients [on the various Level of Care worksheets].  Therefore, there must either be cost on line 14 or on line 42.50.
• Line 28 – Registered Nurses -there must be RN costs.  Alternatively, one may enter all RN costs on line 9 Nursing Administration and allocate to the different Levels of Care via Worksheet B-1.  Therefore, there must either be costs on line 9 or on line 28.
• Line 33 – Medical Social Services 
• Line 37 – Hospice Aide and Homemaker Services
• Line 38 – Durable Medical Equipment/ Oxygen

There is another edit, edit 1000A, which mandates that columns 1 and 2 of Worksheet A must be greater than zero.  This means that there must be costs entered into both columns.  Column 1 is for all salaries, and column 2 is all non-salary expenses.  It is worthwhile to note that this is in keeping with one of the Conditions of Participation, mentioned above, which mandates that hospices have actual employees and cannot just contract out key positions to rotating contract staff.

In addition to the Level I edit issues, many of the above costs are associated with CMS’s Conditions of Participation, so make sure that your hospice has these costs to remain compliant.

Disclaimer:  This blog does not contain legal advice. What it does contain are our best
explanations, advice, and suggestions to help facilities and cost report preparers to understand the cost report forms and reporting process and offer suggestions for their preparation. Progressive Provider Services assumes no legal responsibility for the content of this blog, nor for cost reports or other reports prepared based on the content herein.