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The CMS Proposes New Medicare Cost Report Form for Home Health Agencies – 1728-19 (Version 2)

03/02/2020 Dave Macke

The Centers for Medicare Services (“CMS”) originally issued a proposed rule on April 16, 2019, to change the Medicare cost report form set for home health agencies.  This notice provided for an original 60 day comment period.  On February 24, 2020, the CMS issued a revised notice of proposed home health cost report forms and provides for a second 30 day comment period.  Comments must be received by the CMS no later than March 25, 2020.  The CMS made some significant changes to the original notice. 

The new forms will be known as the CMS Form 1728-19.  The proposed changes were originally intended to be effective for cost reporting periods beginning on or after January 1, 2019 and ending on or after December 31, 2019.  The revised effective date was changed to be effective for cost reporting periods beginning on or after July 1, 2019 and ending on or after June 30, 2020.  Therefore some agencies are eight months into the affected cost reporting period and the new forms are still not yet final.  We recommend that agencies implement these latest changes immediately as we do not anticipate many, if any changes during this second round of comments.

The following is a summary of the most significant proposed changes. 

Worksheet S-3, Part I – Census Statistics

This worksheet has been modified to separately report the number of visits and patients for Medicaid services.  Previously Medicaid was included with “Other” patients.  Therefore, the counts will be Medicare, Medicaid and Other – visits and patients.  It should be noted that Medicare visits here are reported based on date of service in the cost report period, not episode end date.  Utilization data for completed episodes continues to be reported on Worksheet S-3, Part IV in the cost report period ended and generally comes from the PS&R report.  CMS has clarified the instructions to state that Medicare Managed Care and Medicaid Managed Care visits and patients are to be reported as “Other” in columns 5 and 6.

In addition, the number of visits and patients are now segregated for the following disciplines.  Skilled Nursing Care statistics will be separately reported for RN’s and LPN’s, Physical Therapy and Physical Therapy Assistants, and Occupational Therapy and Certified Occupational Therapy Assistants.  Non like-kind services are still to be reported as “All Other” services on line 10.

Worksheet S-3, Part II – Full time Equivalents (FTE’s)

FTE’s are defined as total paid hours for the entire year divided by 2,080 (52 weeks times 40 hours per week).  This worksheet reports FTE’s by Occupational Category and separate for Staff (W-2 employees) versus contract labor.  Additional categories have been added for Nursing Supervisors, RNs, LPNs, Certified Nursing Assistants, and Therapists and Therapy Assistants for PT and OT.  Many agencies have not properly reported FTE’s in the past and there is also a new Occupational Wage Data Worksheet (S-3, Part V).  See below.  

Worksheet S-3, Part IV – PPS Activity Data

There was concern in the industry about the comingling of PPS payment data from the conversion from the 60 day episode model to the 30 day PDGM model.  PPS episode claims data is reported in the cost report period when the payment period ends.  In the year of conversion that overlaps January 1, 2020, there will be 60 day episode data and 30 day payment period data that will be comingled.  The CMS stated that they are not concerned with this comingling and they will not separate this data on the cost report, instead using claims data for their analyses.  This is a one-time issue for the 2020 cost report.       

Worksheet S-3, Part V – Occupational Wage Data

This worksheet is an attempt by the CMS to get specific wage and benefit data for each of the direct care cost centers.  Wages and benefits will be separately reported for Nursing Supervisors, RN’s, LPN’s, and Certified Nursing Assistants.  In addition, Physical Therapy Supervisors, Physical Therapists, Physical Therapy Assistants, Occupational Therapy Supervisors, Occupational Therapists, Occupational Therapy Assistants, Speech-Language Pathology Supervisor, Speech-Language Pathologists and Other Medical Staff.  The same categories apply to any applicable contract labor costs.   It is very important to separate direct salary cost for W-2 wage employees from outside contract labor on your financial statements by these individual categories

With the detailed reporting of wages and contract labor, the CMS is also requesting total paid hours for each of these categories.  The purpose of this Worksheet is to compute an average hourly wage for each occupational category.  A significant problem here is that time records may not be readily available.   Some patient visits are paid on a “per visit” basis and may not have actual paid hours to report.  The CMS believes that all agencies have accurate records for total paid hours.        

Agencies should review their financial statement account detail, payroll reporting systems and accounts payable from outside contractors to ensure they will have the required level of detail.   

Worksheet A – Trial Balance of Expenses 

This is the worksheet where total expenses from the agency are reported from the Trial Balance of the
Financial Statements of the Agency.  There are numerous new cost centers created, mainly to match up to the new level of detail for visit reporting.  The CMS believes that agencies are already separately reporting these direct care costs on their financial statements, which may not be accurate.  

Line 5 – Remote Patient Monitoring – Enter allowable administrative costs related to remote patient monitoring  as described in 42 CFR 409.46 (e).  This overhead cost is allocated on Worksheet B stepdown based on time spent by cost center.  This does not include Telehealth (line 47).

Line 7 – Nursing Administration – Enter the cost of overall management and direction of the nursing services.  This overhead cost is allocated based on direct nursing hours for staffed supervised.  Do not enter the cost of direct nursing services. 

Line 8 – Medical Records – Enter the direct cost of medical records including the medical record library.  This does not include the costs of the general library and / or medical library which are reported in the administrative and general cost center. This cost is allocated based on time spent which may be difficult to identify for patients receiving services from multiple disciplines.

Lines 16 and 17 – Skilled Nursing Care – Separate cost for RN and LPN.

Lines 18 and 19 – Physical Therapy – Separate cost for Therapists and Assistants.

Lines 20 and 21 – Occupational Therapy – Separate cost for Therapists and Assistants.

Line 27 – Cost of Administering Vaccines – Includes costs for administering pneumococcal, influenza, hepatitis B and osteoporosis drugs vaccines.  The cost of the actual vaccines is reported on line 26 – Drugs.

Line 29 – Disposable Devices – Cost of disposable devices i.e., negative pressure wound therapy (NPWT) devices.

Line 47 – Telehealth – Direct costs associated with telehealth.  Remote Patient Monitoring is not a telehealth service.

Line 48 – Advertising – Costs associated with non-allowable community education, business development, marketing and advertising.  In the CMS response to comments, it was stated that if the costs associated with nonallowable advertising are insignificant to warrant establishing a non-reimbursable cost center, then the direct costs may be removed from the cost report on Worksheet A-8, line 11. 

Line 49 – Fundraising – Costs associated with non-allowable fundraising.

Worksheet A-8-1 – Related Party / Home Office Costs

In the responses from the CMS to comments, the CMS provided clarification as to when a formal home office provider number is necessary versus a related party transaction.  Generally speaking, a home office is needed when there is a chain organization consisting of two or more facilities which are owned, leased or controlled by one organization.  A home office is usually physically and organizationally separate, easily identifiable from the facilities it serves, and provides centralized services to the chain components. 

Worksheet F-1 – Statement of Revenue and Expenses

Gross patient revenues and contractual allowances and discounts are now required to be separately identified as Medicare, Medicaid and Other, consistent with the reporting of patient visits on Worksheet S-3.  Managed Care must be reported as “Other”.  Bad Debts should be included with Contractual Allowances and Discounts and not as an expense item. 

Worksheet A-7 and Worksheet F-2 have been deleted.  Worksheet A-7 was the capital asset summary and Worksheet F-2 was the Fund Balance / Equity balance rollover from the prior year.

Worksheet O Series – HHA Based Hospice costs

There are some differences in the reporting of expenses on Worksheet A and Worksheet O for the reporting of Hospice overhead costs for a HHA Based Hospice.  For the most part, the Worksheet O series follows the freestanding Hospice Cost Report form set, CMS Form 1984-14 and by level of care.  The CMS has added line 43 for Drugs Charged to Patients as a direct expense to be consistent with a change made previously to the freestanding hospice cost report form. 

The Federal Register Notice was published on Monday, February 24, 2020.  There is a 30 day comment period to provide feedback to the CMS on these changes. Comments are due by March 25, 2020.

The following is a link to the Federal Register notice.   


In addition, the CMS has provided a link to the actual draft forms, instructions and a crosswalk comparing the Form 1728-94 to the Form 1728-19. 


The CMS provided a summary of their responses to the initial comments from 2019 at the following link.


We encourage everyone to review these changes and provide comments to the CMS. 

Please let us know if you have any questions.  We will be monitoring this new form set and provide updates as they are published.

Dave Macke, CHFP, FHFMA
Shareholder, Director of Reimbursement Services

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