Insights
May 20, 2024
Proper Medicare reimbursement is crucial for hospitals. It fuels their ability to provide high-quality care, invest in cutting-edge technology, and attract skilled staff. The complexities of Medicare cost reporting, however, can lead to denials and discrepancies, thus threatening financial stability.
Hospitals facing cost report denials often embark on a challenging appeals process. Stringent deadlines, precise discrepancy documentation, and well-supported arguments are all essential for success. However, navigating the legalities, reimbursement calculations, and intricate Medicare regulations can be overwhelming.
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Hospitals rely on Cost Reports to secure fair Medicare reimbursement. These reports outline the costs incurred during healthcare service delivery and are crucial in determining payment for treating Medicare beneficiaries. Medicare intermediaries review the submitted Cost Reports for accuracy and may request additional documentation.
The reviewed Cost Report, along with established payment policies, ultimately determine a hospital's current reimbursement. However, the significance of Cost Reports goes beyond immediate financial impact.
The data they contain, when combined with information from Medicare Parts A & B (MedPar), builds a critical foundation. This combined dataset informs Congress and the Centers for Medicare & Medicaid Services (CMS) when setting future payment rates and making policy decisions regarding Medicare reimbursement.
Hospitals can dispute disallowed costs through "protested amounts." The hospital includes these costs on the Cost Report (usually on Worksheet E) as allowable under Medicare. Hospitals should preserve appeal rights by either claiming the cost as allowable or "self-disallowing" it, providing an explanation and estimated reimbursement amount. This ensures the ability to fight for these costs later, even if initially denied.
Navigating Cost Report adjustments can involve two key options: amendments and reopenings. While both aim to rectify errors, they differ in purpose and timing:
Amendments are ideal for addressing material errors identified before the official Notice of Program Reimbursement (NPR) is issued. These errors must significantly impact the hospital's reimbursement.
Common reasons for amendments include miscalculations or incorrect application of specific cost reporting rules, like Disproportionate Share Hospital (DSH) adjustments. Medicare Administrative Contractors (MACs) may decline amendments unless they significantly affect reimbursement.
The provider, CMS, or the MAC can initiate reopenings. They are allowable within specific timeframes and can be an important tool for correcting errors after the NPR has been issued.