Nearly every U.S. hospital – and many other healthcare providers – accepts Medicare and is therefore required to provide annual, detailed reports to the Centers for Medicare and Medicaid Service (CMS) called Medicare cost reports (MCRs). Medicare-certified Part A institutional providers are required to submit an annual cost report to a Medicare Administrative Contractor (MAC).
Such institutions include:
- Skilled Nursing Facilities
- Home Health Agencies
- Rural Health Clinics
- Federally Qualified Health Centers (FQHCs)
- Community Mental Health Centers
- Home Offices
Why is the MCR so important to a healthcare institution? The cost report is utilized to set prospective payment rates such as Disproportionate Share Hospital (DSH) adjustment, wage index, indirect medical education (IME) and graduate medical education (GME) among other characteristics, financial information, and outliers.
The MCR is comprised of worksheets and schedules that describe each institution’s providers’ characteristics, financial information, costs, and charges. MCRs, maintained by the CMS in the Healthcare Provider Cost Reporting Information Center (HCRIS), contains provider information, such as facility characteristics, DSH payments, wage data, costs and charges, utilization data, Medicare cost settlement data and financial statement data. The HCRIS contains annual reports submitted by institutional providers to Medicare to help determine the annual settlement summary between CMS and the provider.
Accessing the Data
Healthcare institutions must complete two sets of reports and dozens of forms within each set to cover wide-ranging topics.
The sheer volume of data can make the analysis of MCRs challenging, to say the least. You can put the Excel aside—the numeric set of data contains roughly 350-400 megabytes of data per year, which requires special software that can open the files. MCR software is strictly monitored to be CMS-compliant to ensure reports are accurate and meet all requirements. All of the cost report files are available for download.
Once you have retrieved the data you’re after, then what? Each hospital must match its permanent code number to the hospital’s filing code number for each year. Once you locate the hospital you need, you can sort through columns to see costs relating to billing charges, operating costs, hospital revenue, total patient revenue and even costs for the building and fixtures.
MCR Due Dates
Cost reports are due five months after the fiscal year end for your facility. So, if your books run on the calendar year, your cost report filing date is May 31 each year. If the due date is a holiday or weekend, your cost report would be due the first work day after. Unlike tax filing, there are no filing extensions except for extreme circumstances. Keep in mind there is a penalty for overdue cost reports; the respective MAC will suspend payments and/or assessed interest and penalties.
Accurate Reporting is Critical
The MCR has great bearing on the financial future of an institutional provider, so it is essential to understand the specifics of what you need to report. The CMS estimates that an average of 10 percent of all cost reports are misfiled each year, and it can get costly.
Work with a financial professional who has a comprehensive understanding of the Medicare cost reporting to facilitate the compilation and filing of Medicare cost reports, and to maintain compliance standards.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.