Pennsylvania ICFs/MR receive two cost settlements for each fiscal year: Tentative cost settlements and Final Cost Settlements. Tentative cost settlements are currently about 3 years behind. Final cost settlements are many years behind--some providers are waiting for resolution as far back as FY 2008-09 and 2009-2010. It is important to track cost settlements and verify the DPW calculations.
Tentative cost settlements can be pre-calculated, based on your MR46 cost report. Final cost settlements can be pre-calculated, based on the BFO final "audit", now known as "final recommended settlement." This is important, so that you can put excess funds in reserve and to book a payable or receivable.
If DPW 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 DPW, the provider must pay 100% of the amount due. Final cost settlements--which occur after BFO's final audit, or final recommended settlement--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, which is offset from the invoices, to the lesser of the MR46 reported costs or the approved funding level.
FINAL COST SETTLEMENTS
Final cost settlements are based on a comparison of what a provider has been paid (via PROMISe), including patient income, which is offset from the invoices, and including payments/recoupments of tentative cost settlements to the lesser of the MA eligible payments (determined by BFO audit and aka audited costs) or the approved funding level.
Following is an example of the chronology for one fiscal year. This one chronology can span several years.
June 30, 2009: last day of FY 2008-09
September 30, 2009: MR46 cost report is filed. As of this date, the provider is able to pre-calculate an estimated tentative cost settlement.
Unknown date: DPW issues tentative cost settlement based upon PROMISe records available on this date.
Unknown date: DPW conducts audit of reported costs (BFO audit) and issues draft recommended settlement.
10-15 days after draft recommended settlement (draft audit), DPW issues final recommended settlement (aka final audit).
30 days or more after final recommended settlement, DPW issues final cost settlement. The final cost settlement will take into account the tentative cost settlement, if applicable. We have noticed significant delays in final cost settlements, even after the final recommended settlement has been issued.