Start Now to Comply with New Medicare Cost Report Rules
- Julia R. Jesuit
Given the narrow margins on which most hospitals operate, even a single cost reporting mistake can have dire consequences. That’s why staying on top of ever-evolving Medicare cost reporting rules is so critical.
The Centers for Medicare & Medicaid Services (CMS) updated cost reporting forms and instructions, effective for cost reporting periods that begin on or after October 1, 2022. These sweeping changes touch on nearly every component of the supplemental payment streams that serve as a lifeline for our nation’s safety-net hospitals.
For example, here are some of the most significant changes to Worksheet S-10 – Hospital Uncompensated and Indigent Care Data:
In addition to these changes to the Medicare uncompensated care calculation, the new rules also change how CMS calculates Medicare Disproportionate Share Hospital (DSH) payments, graduate medical education payments, and it requires additional bad debt data in the new Exhibit 2A. Given today’s challenging financial climate, hospital reimbursement teams will be wise to sit down with their IT departments as soon as possible to plan for compliance with the new cost reporting instructions.
Cost reporting errors have dramatic and far-reaching impacts. In addition to their impact on Medicare reimbursements, Medicare cost reports also affect several other types of reimbursements. For example, hospitals with sites participating in the 340B Drug Pricing Program could forfeit significant savings if they fail to file an accurate report. Delayed or inaccurate reports can impact Medicaid payments, as well, in states that pull data from the most recently filed Medicare cost report. Payments may be dramatically understated if a provider experienced a significant change in Medicaid numbers from the prior year — such as in states that expanded eligibility.
Beyond reimbursement, cost-reporting errors can dramatically impact an organization’s public perception. Researchers, news outlets, public advocacy groups, and watchdog groups all use cost reports to gain insights into healthcare institutions’ financial health, especially their uncompensated care levels.
Long story short: Getting cost reporting data right on the front end is crucial to the short-term and long-term health of hospitals and other providers that rely on Medicare payments.
Here are some suggestions to make sure your hospital is prepared to comply with the most current Medicare cost report rules:
Start early. Medicare cost reports are due five months after the end of a facility’s fiscal year (May 31 for calendar-year entities), and there is no “late filing” option. In addition to incurring financial penalties and interest, late reports can jeopardize past and future reimbursements. If your hospital’s cost report is late, take steps as quickly as possible to get into compliance.
Build templates now. If you haven’t already, sit down with your IT department to map out the data points required for your upcoming cost report and create templates to enable efficient and timely compliance.
Sample audit. Given the importance of Medicare cost reports, it pays to test the data before you hit submit — both to check that the templates function properly and to verify that you have the appropriate documentation to support the data. If you don’t have the bandwidth internally, then ask your cost report preparers to perform a sample audit of the data.
Tune in to regulatory updates. Make sure you understand how recent rule changes could impact your facility’s future Medicare payments. In its FY 2024 final rule for acute and long-term care hospital prospective payments, CMS moved forward with its recommendation to base Medicare DSH payments on three years’ worth of data. That one change means that today’s calculations will ripple across multiple years of payments, making accuracy even more critical to your hospital’s long-term financial health.
Does your hospital need some help getting up to speed on the latest Medicare regulations? We can help. Reach out to your CRI healthcare advisor to help your hospital achieve compliance today and maximize reimbursement for the future.
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