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Understanding Hospital Cost Reporting Procedures

Learn about cost reports as necessary documents for Medicare and Medicaid reimbursement in healthcare settings. Understand the detailed information needed, such as patient care costs and charges, observation logs, and report submission requirements. Discover how these reports impact reimbursement and settlement processes.

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Understanding Hospital Cost Reporting Procedures

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  1. bservation Guidelines Module 4 Cost Reporting

  2. What is a cost report? • A cost report is somewhat similar to a “tax return”. • Cost reports are required in order to report to Medicare and Medicaid the cost of providing services to patients. • Cost reports are filed annually and provide extensive detail regarding how much it cost a hospital to provide patient care as compared to how much the hospital was paid for those services.

  3. What is a cost report? • Let’s compare a cost report to a tax return.

  4. Medicare/Medicaid Cost Report • Hospitals must submit a cost report that lists inpatient and outpatient costs and charges separately. • Cost report must be submitted within 5 months after its fiscal year end.

  5. Observation Log • For cost reporting purposes, hospitals must maintain an observation log.

  6. Observation Log • At a minimum observation logs should include: • Account number • Patient name • Admission date and time • Discharge date and time • Calculated hours in observation • Whether patient was admitted or transferred

  7. Cost Report Requirements • Observation bed days are reported on S-3 Line 26 columns 5.01, 5.02, 6.00, 6.01, 6.02 of the cost report.

  8. Medicare Cost Report • Medicare captures outpatient charges used in the settlement calculation from the Provider Statistical and Reimbursement (PS&R) report. • PS&R report shows detailed distribution of charges based on revenue codes billed by the hospital.

  9. Medicaid Cost Report • Medicaid captures outpatient charges used in the settlement calculation on the Hospital Statistical and Reimbursement (HS&R) report. • HS&R report shows detailed distribution of charges based on revenue codes billed by the hospital.

  10. Cost Reports • Reimbursement is made retrospectively based on a cost report. • Only costs incurred for patient care are eligible for reimbursement.

  11. Medicare Cost Report • CAH hospitals are subject to a cash settlement of observation services after calendar year end. • There is NO settlement related to observation services for APC hospitals.

  12. Medicaid Cost Report • Under Medicaid, both APC and CAH hospitals receive interim payments during the year based on a percentage of charges. • Therefore, both APC and CAH hospitals are subject to a cash settlement of Medicaid observation services after calendar year end.

  13. bservation Guidelines Module 4 Cost Reporting If you have any questions or concerns regarding this course, please contact Mary Askew at maskew@draffin-tucker.com.

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