What’s the Purpose of the Medicare Cost Report?

What is The Purpose of My Cost Report

The Medicare cost report is used to determine several different types of reimbursement and monies directed toward your facility.

For some (fewer and fewer) facilities, the cost report is used to determine how much the facility gets reimbursed by Medicare for that year. Examples of these facilities, called “cost-reimbursed”, would be RHCs (up until their cap) and cost-reimbursed hospitals.

Additionally, the Medicare cost report determines reimbursement for vaccine costs for many facilities. Depending on the information entered into the cost report, the facility will get paid for the vaccines administered to Medicare patients (or owe money to the MAC).

The cost report also calculates bad debt reimbursement, for those facilities who can claim Medicare bad debt and follow the requirements for doing so. An explanation of bad debt is beyond the scope of this blog, but, in short, it is reimbursement for a percentage of unpaid Medicare co-pays. It would only apply to facilities that collect co-pays from their Medicare patients.

For prospective payment system (PPS) reimbursed facilities, such as home health agencies, FQHCs, skilled nursing facilities, and hospices, the main use of the cost report is less direct. The cost report data is collected and analyzed. Further rate-setting is based on the average costs calculated by the cost report data on file – per visit, per day, per treatment, or whatever the PPS system is for that facility. This means that a filed cost report will indirectly influence how much the facility gets paid down the road as the PPS system is analyzed.

Recently, during the COVID-19 PHE, the cost report reported revenues were also used to determine how much each facility received of the emergency relief package.

What all this means to you is that it is in your best interest to make sure that your cost report is completed correctly – to maximize direct reimbursement, future PPS reimbursement, and any other government aid directed to your facility.

Need help with your cost report or need cost report software? Contact PPS or visit our website. Thirty-plus years of cost reporting experience – we only do cost 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.

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