bservation Guidelines

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 5.00, 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.