Effective July 1, 2025, FQHCs and RHCs bill Medicare directly, at time of service, for pneumococcal, influenza, hepatitis B, and COVID-19 vaccines and their administration — rather than waiting to be paid through the annual cost report settlement process. This applies to Original Medicare beneficiaries; Medicare Advantage vaccine billing is unaffected.

What this means for cash flow: Facilities now receive payment for these vaccines as claims are processed, instead of waiting until cost report settlement — often many months after the vaccines were administered. This is a meaningful cash flow improvement.

What this means for the cost report: Worksheet B-1 isn’t going away, but it is simplifying. For cost reporting periods beginning on or after July 1, 2025, the separate columns for pneumococcal, influenza, COVID-19, and hepatitis B (columns 1, 2, 2.01, 2.02, and 2.03) are no longer used. Instead, all vaccine types are combined into a single column 3. The worksheet still computes the facility’s cost per injection/infusion and the Medicare-allowable cost, which flows to Worksheet E for the annual settlement calculation.

What this means for cost report reimbursement settlement: Since vaccines are reimbursed after billing, the settlements will be smaller – they will only reflect the difference between total cost and what has already been paid, instead of showing total cost. This also may mean, if it is determined that a provider was overpaid, meaning that cost was lower than the rate CMS paid for the vaccines, that the providers may owe money back via the cost report settlement.

What this means for low utilization providers: In practice, low utilization cost reports have not included a vaccine reimbursement settlement — that reconciliation has required a full cost report. Now that CMS has already paid facilities for vaccines at time of service, CMS will need a way to determine whether those payments matched actual cost. Facilities that previously filed low utilization reports may need to move to full cost reports going forward, since a low utilization filing won’t capture the vaccine cost data needed to determine whether Medicare over- or underpaid.

Practically speaking: Don’t expect vaccine reimbursement to disappear from cost report settlements — it’s still there, affecting the ultimate settlement. What’s changed is that the interim payment now happens at time of service via claims (verified through the PS&R), with the cost report still performing an annual true-up between what was paid and the facility’s actual reasonable cost. Facilities should keep tracking vaccine drug and supply costs (lines 48, 49, 49.10–49.12 on Worksheet A) just as before — that data still feeds Worksheet B-1’s column 3 calculation.

Medicare bad debt for unpaid coinsurance continues to be claimed via the cost report as before; that process is unaffected by this billing change.

For more information, see CMS MLN Matters article MM13923: Payment for Medicare Part B Preventive Vaccines & Their Administration for Rural Health Clinics

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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.