New hospitals face numerous challenges, from staffing to patient care to financial stability. Amidst these hurdles, an often-overlooked opportunity could significantly boost your bottom line: Medicare Advantage (MA) capital cost recovery.
At Titan Health, we've made it our mission to uncover these hidden revenue streams for healthcare facilities nationwide. This overlooked reimbursement strategy could significantly boost your hospital's budget by millions of dollars. Let's dive into the world of MA new hospital capital cost recovery and discover how your facility can capitalize on this financial opportunity.
Unveiling Medicare Advantage Capital Cost Recovery
Imagine unlocking a hidden treasure within your hospital’s finances! Medicare regulations require payers who reimburse like Medicare, including MA plans, to follow the same rules as traditional Medicare. This includes the retroactive adjustment for capital costs that new hospitals receive. While many hospitals are aware of this reconciliation with Medicare, they often miss out on similar reimbursements from MA plans.
The complexity lies in that hospitals and MA plans are often unaware of this requirement. Federal regulation CFR 42 412 304 states that new hospitals are eligible for capital cost reimbursement, but claiming these funds from MA plans requires specialized knowledge and persistence.
The Reimbursement Process Explained
When a new hospital opens, its initial Medicare reimbursements are based on standard rates. These rates are determined by Diagnostic Related Groups (DRGs), which are calculated based on patient demographics, diagnoses, procedures, and other factors. DRG payments include a base rate plus various "pass-through" reimbursements, including capital costs.
However, the initial DRG payments don't fully account for a new hospital's capital costs. A new hospital, as defined under § 412.300(b), is paid 85 percent of its allowable Medicare inpatient hospital capital-related costs through its cost report ending at least 2 years after the hospital accepts its first patient, this payment is made on a lump sum basis and is calculated after the Medicare cost reports has been completed.
After year three, CMS moves the facility to a national capital rate and increases the Medicare base rate for each DRG by an amount that is applicable to the capital add on. Prior to the move to the national capital rate, this expected reimbursement is NOT included in the base DRG rate in the CMS Prospective Payment System (PPS) Pricer.
While Medicare automatically reconciles and reimburses these retroactive payments, MA plans often don't. This is where the opportunity for recovery lies — and where Titan Health's expertise comes into play.
Eligibility Criteria for Capital Cost Recovery
To qualify for MA capital cost recovery, hospitals must meet three critical criteria:
Be a new, freestanding building (not just a new wing or remodel)
Have a unique CMS number
The recovery applies only to inpatient claims
The Financial Impact of Capital Cost Recovery
The potential for revenue recovery is substantial. Recent Titan Health projects have yielded impressive results:
A 64-bed hospital recovered $2,148,000
A 36-bed hospital recovered $1,317,000
A system with two new hospitals (194 beds combined) recovered $1,094,000
Why Hospitals Miss This Opportunity
Many hospitals and MA plans are unaware of this reimbursement opportunity. The process requires specialized knowledge of Medicare regulations and persistent follow-up with MA plans. Additionally, the complexity of hospital cost reports and the delay in reimbursement adjustments often lead to this opportunity being overlooked. Unlike the automatic reconciliation process with traditional Medicare, pursuing this reimbursement from MA plans requires proactive effort.
The Titan Health Approach
Our Capital Cost Recovery Service is designed to be minimally intrusive and no risk, high reward for hospitals. We work on a contingency basis, meaning there are no upfront costs. Our team handles the entire process, from auditing and calculating amounts to coordinating with payers for efficient recovery.
Unlike other revenue recovery projects requiring extensive hospital data access, our process primarily needs access to cost reports and limited claims verification. This makes it a relatively quick and straightforward project for hospitals to undertake.
Ready to transform your hospital's financial future? Contact Titan Health today and start the journey towards a more prosperous tomorrow.
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