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Medicare Cost Reporting. HomeTown Health University Module Four Cost Reporting Issues. Presented by: Draffin & Tucker, LLP. Cost Report Filing. Cost report filing deadline Due within 5 months (150 days) of the end of the cost reporting period

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Medicare cost reporting

Medicare Cost Reporting

HomeTown Health University

Module Four

Cost Reporting Issues

Presented by:

Draffin & Tucker, LLP

Cost report filing
Cost Report Filing

  • Cost report filing deadline

    • Due within 5 months (150 days) of the end of the cost reporting period

    • No extensions allowed other than for acts of God (flood, hurricane, etc…)

    • Late filing results in 100% withhold of interim payments

    • Partial relief of withhold may be grantedfor 60 days at the discretion of Intermediary and CMS

Cost reporting issues

The cost report is a necessary evil.

Except for CAHs, it really has no significant reimbursement impact.

Preparation is often rushed without appropriate analysis of the data reported.

Cost reports provide providers with valuable information for decision making.

Understanding the cost report can prevent unexpected year end settlements.

The OIG continues to mandate correct reporting.

Cost Reporting Issues

Cost reporting issues1
Cost Reporting Issues

  • The cost report can provide valuable information for decision making:

    • Hospital statistics

    • Direct costs and allocated costs for departments

    • Salary v. non-salary expenses

    • Fully allocated per unit cost

    • Direct cost per unit


Cost reports benchmarking
Cost Reports - Benchmarking

  • Since all hospitals are not the same, neither are all cost reports.

  • Comparisons of cost report information between hospitals should consider the following:

    • What type entities does the cost report include?

      • Hospital

      • Nursing Home(s)

      • Psychiatric Unit

      • Rehabilitation Unit

      • Swing Beds

      • Rural Health Clinics

      • Physician Practices

Cost reports benchmarking1
Cost Reports - Benchmarking

  • Where are the comparison hospitals located?

  • What allocation statistics are used?

    • Hospitals are not required to use the same statistics for allocations of cost to Medicare and Medicaid.

  • What is the payer mix in each hospital?

  • What add-on payments are received in each hospital?

    • Disproportionate Share Payments

    • ESRD payments

    • Medical education

    • Transitional Corridor Payments

Cost reports benchmarking2
Cost Reports - Benchmarking

  • Although cost reports can provide basic information about a hospital’s performance, one must be careful not to place too much confidence in variations between hospitals.

  • Some examples of benchmark information that are available:

    • Cost per discharge (Medicare, Medicaid, Other)

    • Cost per department

    • Cost per day

    • Hours worked per adjusted day/discharge

    • Average salary per department/cost center

    • Cost per unit

Accurate cost reports
Accurate Cost Reports

  • Review statistics used to allocate costs for accuracy:

    • Square footage

      • Have there been any renovations or additions during the year?

      • Have any departments moved to a new space during the year?

      • When was the last time square footage was actually measured?

Accurate cost reports1
Accurate Cost Reports

  • Identify any non-reimbursable cost centers and report separately on Worksheet A:

    • Gift shop

    • Medical office building

    • Outlying physician offices

    • Rental property

Accurate cost reports2
Accurate Cost Reports

  • Review trial balance of expenses and identify non-allowable costs:

    • Political lobbying expense

    • Physician compensation & recruiting

    • Advertising

    • Rebates of expenses

    • Patient convenience items

    • Alcoholic beverages

Accurate cost reports3
Accurate Cost Reports

  • Claim all allowable costs:

    • Medicare Bad Debts

      • 70% reimbursed in acute care PPS hospital

      • 100% reimbursed in Critical Access Hospital

Common cost report errors
Common Cost Report Errors

  • Inadequate support for amounts reported

  • Failure to report ER availability

  • Failure to report Bad Debts accurately

  • Inaccurate or erroneous statistics

  • Improper reporting of related party costs

  • Failure to report observation days/cost accurately

  • Inaccurate DSH and ESRD calculations

Cah cost report issues
CAH – Cost Report Issues

  • Review comparative financial statements to identify significant variations

    • Analyze cost report impact of pricing changes or major expense changes

    • Compare patient day and payer mix statistics to prior year

  • Consider preparing interim cost reports


  • Understanding the cost report will benefit decision making and can mitigate year end surprises.

  • In a CAH, the cost report will directly impact Medicare and Medicaid reimbursement.

  • Costs reports are often used for benchmarking, but caution should be taken in using this data.

Medicare cost reporting1

Medicare Cost Reporting

Module Four:

Cost Reporting Issues

If you have any questions regarding this course, please contact:

Jeff Askey, CPA

Draffin & Tucker, LLP

P.O. Box 6

Albany, Georgia 31702

(229) 883-7878

[email protected]