Pennsylvania ICFs/ID receive two cost settlements for each fiscal year: Tentative cost settlements and Final Cost Settlements. Tentative c ost settlements are currently about 2 years behind. Final cost settlements are many years behind--ODP is currently working on FY 2013-14 . It is important to track cost settlements and verify the DHS calculations.
Tentative cost settlements can be pre-calculated, based on your ID46 cost report. Final cost settlements can be pre-calculated, based on the "final recommended settlement" (previously BFO final audit). This is important, so that you can book a payable or receivable as appropriate.
If DHS owes the provider money in a tentative cost settlement, 80% of the amount is paid to the provider, and 20% is withheld until final cost settlement. If the provider owes DHS, the provider must pay 100% of the amount due. Final cost settlements--which occur after the final recommended settlement--should account for any amounts paid or collected in the tentative cost settlement.
TENTATIVE COST SETTLEMENTS
Tentative cost settlements are based on a comparison of what a provider has been paid (via PROMISe), including patient income, to the lesser of the ID46 reported costs or the approved funding level. Sometimes other adjustments are applicable.
FINAL COST SETTLEMENTS
Final cost settlements are based on a comparison of what a provider has been paid (via PROMISe), including patient income and tentative cost settlements, to the lesser of the MA eligible payments (determined in the final recommended settlement) or the approved funding level.
Following is an example of the chronology for one fiscal year, which can span several years.
June 30, 2012: last day of FY 2011-2012
September 30, 2012: ID46 cost report is filed. As of this date, the provider is able to pre-calculate an estimated tentative cost settlement.
Unknown date: DHS issues tentative cost settlement based upon PROMISe records available on this date.
Unknown date: DHS conducts review of reported costs and issues draft recommended settlement.
10-15 days after draft recommended settlement, DHS issues final recommended settlement.
Anytime after final recommended settlement, DHS issues final cost settlement, sometimes on the same day. The final cost settlement will take into account the tentative cost settlement, if applicable. We have noticed significant delays in some final cost settlements, even after the final recommended settlement has been issued. It is important to monitor these transactions.