In the past, Medicare cost reports directly determined reimbursement.  Now that most facilities are on a prospective payment system (PPS), facilities know that their reimbursement is based on a specified rate schedule not on the cost report expenses.

However, those PPS rates are actually ultimately determined by the Medicare cost reports submitted.   The cost report data is analyzed to determine what costs were per visit, per day, or per whatever stat the cost report measures.  Once the numbers are calculated, they are factored into determining what future payments should be.  As such, it is wise to make sure to report costs accurately.   One should not offset expenses unnecessarily just to save time.

The main way to make sure that costs are being calculated correctly is that the preparer should make sure that the expenses are allocated to the correct cost centers.  This way, the per-visit costs will reflect the actual costs by discipline.  PT contract costs should be accurately reported to the PT cost center, nursing salary costs should be accurately reported to the skilled nursing cost center, etc.  The preparer can check the per-visit costs by discipline.  On Med-Calc software, this can be done by looking at the “Direct Cost” tab, which calculates the direct cost per visit before overhead for each discipline.   If any costs look off, for example, HHAs are being paid $257/ visit, the facility should be consulted for further information.

For Medicaid-reimbursed facilities which need to file Medicaid cost reports, in many states the Medicare cost report is used as a tool in auditing the Medicaid cost report.  For this reason, it is also important to make sure that data is consistent on both reports.

Disclaimer:  This blog does not contain legal advice. What it does contain are our best
explanations, advice, and suggestions to help facilities and cost report preparers to understand the cost report forms and reporting process and offer suggestions for their preparation. Progressive Provider Services assumes no legal responsibility for the content of this blog, nor for cost reports or other reports prepared based on the content herein.