Worksheet A

Worksheet A on the Medicare Cost Report is used to report expenses from a hospital’s Trial Balance. It also allows for adjustments and reclassifications of expenses through several worksheets in a “A” series. We will discuss the “A” series worksheets in a minute. Expenses are reported by cost center. These cost centers are mostly standardized by CMS, but each hospital may have additional cost centers that they need to separate out for a variety of reasons. The bulk of cost centers used though will the standard ones. This is important as this helps with calculating the hospital’s cost to charge ratio as well as other payment rates for the hospital and the industry as a whole.

Worksheet A breaks down the trial balance into general service, inpatient routine service, ancillary service, outpatient service, other reimbursable, special purpose, and nonreimbursable cost centers. These same cost centers are used on subsequent worksheets of the cost report.

Worksheet A-6 Reclassifications

This worksheet allows the hospital to reclass costs from one cost center to another as needed. An example of a reclass that may need is as follows: Patient is in the ICU and receives medication. If the hospital posts this expense on their trial balance to the ICU department, the drug expense would need to reclassed from cost center 31 (ICU) to cost center 73 (Drugs Charged to Patients) through Worksheet A-6.

Worksheet A-7 Capital

This worksheet is for the reconciliation of the capital cost centers: lines 1 & 2.

Let’s take a quick look at the capital asset breakdown for each hospital.

	AU Medical	University Hosp	Doctors Hosp	Burke Medical	Univ-McDuffie
FYE:	06/30/21	12/31/21	03/31/22	05/31/21	12/31/21
Land	$15,040,169	$18,593,142	$14,065,324	$349,155	$1,314,519
Land Improvements	$717,982	$4,984,214	$2,446,708		$368,679
Bldgs & Fixtures	$43,203,902	$211,637,582	$93,593,980	$12,143,242	$25,001,486
Bldg Improvements	$218,281,280	$150,553,992	$253,393		$656,476
Fixed Equipment	$159,663,449	$17,057,043	$65,949,170	$2,334,266	$25,545
Movable Equipment	$169,026,027	$349,113,119	$124,518,500	$7,429,758	$11,316,024
HIT-desginated assets	$0	$54,145,541	$0		$0
Reconciling Items	-$12,400,996	$9,371,108	$0	-$279,171	$755,353
Total	$593,531,813	$815,455,741	$300,827,075	$21,977,250	$39,438,082

I am really surprised that University has a higher asset value than AU Medical. May be due to University having a huge newer Heart & Vascular building. Very interesting.

Worksheet A-8 Adjustments

These are the types of adjustments that are included on this worksheet:

Those needed to adjust expenses to reflect actual expenses incurred
Those items which constitute recovery of expenses through sales, charges, fees, etc.
Those items needed to adjust expenses in accordance with the Medicare principles of reimbursement
Those items which are provided for separately in the cost apportionment process

In essence, there may be expenses on the hospital’s trial balance that are not allowable on the cost report or maybe there was an accrual of a home office expense that needs to be corrected. There are tons of examples, but A-8 is where you correct expenses that are the hospital’s trial balance.

There are some additional A-8 series worksheets that feed back into A-8.

Worksheet A-8-1: Related organization and/or Home Office transactions
Worksheet A-8-2: Provider-based physician adjustments
Worksheet A-8-3: Critical Access Hospitals (only) adjustment for reasonable cost by outside suppliers of therapy services

Expense Comparison

Now that we have walked through all of the related A series worksheets, lets see how the hospitals compare overall. Below you can see the expenses for a handful of cost centers plus the total allowable amount of expenses.

		AU Medical	University Hosp	Doctors Hosp	Burke Medical	Univ-McDuffie
Cost Ctr	FYE:	06/30/21	12/31/21	03/31/22	05/31/21	12/31/21
15	Pharmacy	$47,171,621	$8,754,635	$4,190,543	$361,341	$0
21	Interns & Residents Salary	$27,459,206	$218,224	$0	$0	$0
22	Interns & Residents Other	$13,482,065	$798,797	$0	$0	$0
30	Adults & Peds	$72,318,926	$40,142,981	$23,901,442	$995,617	$1,750,178
33	Burn Unit	$0	$0	$25,283,897	$0	$0
50	Operating Room	$72,715,931	$24,852,264	$14,099,371	$51,320	$1,577,409
52	Labor & Delivery	$3,744,296	$4,670,876	$4,658,560	$0	$0
91	Emergency Room	$24,473,000	$20,904,231	$10,111,671	$1,253,272	$2,074,966
105	Kidney Acquisition	$5,016,936	$0	$0	$0	$0
200	Total Allowable Expenses	$859,428,164	$483,917,980	$330,518,626	$12,096,554	$21,159,867

AU Medical has almost double the amount of expenses as compared to University Hospital. Maybe that does not surprise me. :) But I am surprised that University McDuffie has twice the expenses Burke Medical Center has.

Musing Revelation

Worksheet A series takes the expenses from the hospital’s trial balance, moves the expenses between cost centers on A-6, details out the capital expenses on A-7, and adjusts expenses on A-8 (including A-8-1, A-8-2, & A-8-3). After all of these calculations are made, we can see what the total allowable expense amounts are for each hospital. This would allowable amounts for Medicare reimbursement purposes.

I was surprised to see that AU Medical does kidney transplants. Guess I could have figured that out reading S-2, but alas, I did not dig through that worksheet. They are also Medicare certified pancreas transplant center. I have never worked with a hospital that does transplants, so this will be exciting to dig through new worksheets and learn new things.

Overall, as you can see from Worksheet A, it is really expensive to run a hospital. The bigger a hospital is, the more adjustments and reclasses to expenses hospitals have to make in order to get expenses in the proper cost center. For these hospitals, the Medicare cost reports are much more complex. And just to be clear, the figures reported have not been audited yet, so they can and most likely will change in the future. For now, though, we can start to get a feel for the operations of these hospital. And I feel there is so much left to learn. The future is bright.

AU Medical Worksheet A Series

University Hospital Worksheet A Series

Doctors Hospital Worksheet A Series

Burke Medical Center Worksheet A Series

University Hospital McDuffie Worksheet A Series