Medicare Program; Date for Filing Medicare Cost Reports

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 413

[BPD-794-P]

RIN 0938-AG55

Medicare Program; Date for Filing Medicare Cost Reports

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule extends the time frame providers have to

file cost reports from no later than 3 months after the close of the

period covered by the report to no later than 5 months after the close

of that period. This change is necessary to ensure that providers have

an adequate amount of time to file complete and accurate cost reports.

We are also proposing to define what HCFA considers to be an

``acceptable'' cost report submission.

DATES: Comments will be considered if we receive them at the

appropriate address, as provided below, no later than 5 p.m. on July

25, 1994.

ADDRESSES: Mail written comments (1 original and 3 copies) to the

following address: Health Care Financing Administration, Department of

Health and Human Services, Attention: BPD-794-P, P.O. Box 7517,

Baltimore, MD 21207-0517.

If you prefer, you may deliver your written comments (1 original

and 3 copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,

Washington, DC 20201, or

Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore,

MD 21207.

Because of staffing and resource limitations, we cannot accept

comments by facsimile (FAX) transmission. In commenting, please refer

to file code BPD-794-P. Comments received timely will be available for

public inspection as they are received, generally beginning

approximately 3 weeks after publication of a document, in room 309-G of

the Department's offices at 200 Independence Avenue SW., Washington,

DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m.

(phone: (202) 690-7890).

FOR FURTHER INFORMATION CONTACT: Linda McKenna Hite, (410) 966-4530

SUPPLEMENTARY INFORMATION:

I. Background

Section 1815(a) of the Social Security Act (the Act) requires that

each provider participating in the Medicare program submit information

(as requested by the Secretary) in order to determine the amount of

payment due to the provider for services furnished under the Medicare

program. Implementing regulations at 42 CFR 413.24(f) require that

participating providers submit cost reports that generally cover a

consecutive 12-month period of the provider's operations. Section 102

of the Provider Reimbursement Manual (PRM), HCFA Publication 15-II,

states that a provider may select any annual period for Medicare cost

reporting purposes regardless of the reporting period it uses for other

purposes. Once a provider has informed HCFA of its selection, HCFA

requires it to report annually thereafter for periods ending on the

same date unless that provider's intermediary approves a change in the

provider's reporting period. The intermediary makes interim payments to

the provider during the provider's cost reporting year. Based on the

annual cost report, a retroactive adjustment is made after the end of

the provider's cost reporting year to bring the interim payments made

during the period into agreement with the reimbursable amount payable

to the provider.

Section 413.24(f)(2)(i) specifies that cost reports are due on or

before the last day of the third month following the close of the

period covered by the report. Section 413.24(f)(2)(ii) states that the

intermediary may grant a 30-day extension of the due date, for good

cause, after first obtaining the approval of HCFA. Section 104.A.2 of

the PRM requires that in order to obtain an extension, the provider

must submit a written request and obtain written approval from its

intermediary before the cost report due date.

A provider that voluntarily or involuntarily terminates its

participation in the Medicare program, or experiences a change of

ownership, must file a cost report no later than 45 days following the

effective date of the termination of the provider agreement or the

change of ownership, as required by Sec. 413.24(f)(2)(iii). HCFA will

not grant an extension of the cost report due date in either of these

situations.

To ensure timely receipt of the cost reports, section 2231.1 of the

Intermediary Manual, Part 2, requires that the intermediary send a

``reminder'' letter to the provider at the end of the second month

following the end of the cost reporting period. The letter advises the

provider of the due date for filing the cost report and informs the

provider that its interim payments will be reduced or suspended if the

cost report is not received on or before the last day of the third

month following the close of the period covered by the report. However,

as allowed by Sec. 413.24(f)(2)(ii), the provider may, for good cause,

request that the intermediary grant a 30-day extension of the due date

of the cost report. If the intermediary does not receive the cost

report by the required due date (including an extension if approved),

the intermediary sends the first of three ``demand'' letters to the

provider requesting the submission of the provider's cost report and

informing the provider of the percentage by which its interim payment

rate will be reduced. The letter also states that further delay in

filing the cost report will result in an additional reduction in the

interim rate and, ultimately, a suspension of interim payments.

HCFA regulations at 42 CFR 405.376 set forth specific rules for the

payment of interest on Medicare overpayments and underpayments.

Interest is assessed unless the intermediary recoups the overpayment or

the intermediary pays the provider an amount equal to the underpayment

within 30 days of a ``final determination.'' When a provider does not

file its cost report timely, all interim payments advanced for the

period are considered overpayments, and a final determination is deemed

to occur on the day after the date the cost report was due. Interest

accrues on the deemed overpayment until the provider files the cost

report, after which the usual audit rules and procedures regarding

overpayment determinations apply.

HCFA has established a Provider Statistical and Reimbursement

System (PS&R) to assist intermediaries in reconciling provider cost

reports. This system provides a number of reports to be used in

developing and auditing provider cost reports. HCFA prepares the

reports for each participating provider. These reports contain Medicare

charge and reimbursement information compiled by the provider's fiscal

year. One of these reports, the Provider Summary Report, is sent to

providers by their intermediaries in order to assist the providers in

preparing their cost reports. The Provider Summary Report contains

information about charges, Medicare patient days, coinsurance days,

etc. HCFA requires the intermediaries to furnish the Provider Summary

Report to each provider within 60 days following the end of the

provider's fiscal year. The provider then has 30 days to submit its

completed cost report to its intermediary (60 days if an extension has

been granted.)

Another system that provides useful cost report data is the

Hospital Cost Report Information System (HCRIS). This system is an

automated data collection, data processing, and report generation

system. HCRIS contains provider cost report data from all Medicare-

participating hospitals, skilled nursing facilities, and end-stage

renal disease facilities. HCRIS functions as the single cost report

collection and dissemination point for Medicare cost report data. We

use HCRIS to produce several standard files for the analysis of

Medicare cost report data.

For purposes of maintaining the HCRIS data base, Medicare

intermediaries currently must submit an extract of provider cost report

data to HCFA within either 180 days of the end of the hospital cost

reporting period or 60 days of receipt of the cost report from the

provider, whichever is later.

II. Provisions of the Proposed Regulations

A. Due Dates for Filing Cost Report

This proposed rule would increase the amount of time a provider has

to file its cost report. Presently, under Sec. 413.24(f)(2)(i), a

provider must file its cost report on or before the last day of the

third month following the close of the period covered by the report.

Under this proposed rule, the provider would be required to file an

acceptable cost report, as defined at new Sec. 413.24(f)(5), on or

before the last day of the fifth month following the close of the

period covered by the report (that is, if a provider's cost reporting

period ends June 30, 1994, the provider would have from July 1, 1994

through November 30, 1994 to file its cost report.) For cost reporting

periods ending on a day other than the last day of a month, cost

reports would be due 150 days after the last day of the cost reporting

period. (In accordance with Sec. 405.376(e)(3), interest would not

begin to accrue until the day following the due date of the report.)

In proposing this change, we are responding to objections from

providers to the current 3-month time frame, which many providers

believe creates an undue burden on their financial departments. For

example, in a recent cost report extension survey report, many

providers cited problems in getting accurate PS&R data as a primary

reason for requesting an extension. Under this proposed rule, the

additional time providers would have to submit their cost reports also

would allow the intermediaries additional time to prepare the necessary

PS&R reports. With the additional time, we believe that the

intermediaries would be able to provide more accurate and complete PS&R

data to the providers, which would, in turn, result in providers

requiring less time to reconcile the PS&R data with their records. The

providers also would have additional time to prepare their books and

records, complete the necessary audits and develop financial statements

and reports that are needed before providers can complete the cost

reporting forms.

We are also proposing to change the regulations at

Sec. 413.24(f)(2)(ii) that allow an intermediary to grant, for good

cause, a 30-day extension of the due date after first obtaining the

approval of HCFA. Since we believe that the time frame we are proposing

for the filing of the cost report (5 months) is sufficient, we propose

that extensions may be granted by the intermediary only when a

provider's operations are significantly adversely affected due to

extraordinary circumstances over which the provider has no control. An

example of such extraordinary circumstances might be a flood or a fire

that forced a provider to cease operations and transfer its patients

temporarily to other providers outside of the impacted area. The

intermediary would still be required to obtain HCFA approval.

We are also proposing to delete Sec. 413.24(f)(2)(iii), which now

states that the cost report from a provider that voluntarily or

involuntarily ceases to participate in the Medicare program or

experiences a change of ownership is due no later than 45 days

following the effective date of the termination of the provider

agreement or change of ownership. We do not believe the current 45-day

period is sufficient time for these providers to file a final cost

report. Instead, as a result of the proposed deletion of

Sec. 413.24(f)(2)(iii), providers in these cirumstances would be

permitted the same amount of time to file a cost report as other

providers.

B. Acceptable Cost Report Submissions

We are also proposing to define at Sec. 413.24(f)(5) what HCFA

considers to be an acceptable cost report submission. Provisions of the

proposed definition are as follows:

All providers: The provider must complete and submit the

required cost reporting forms, including all necessary signatures, and

also must submit all supporting documentation required by the

intermediary (for example, the working trial balance; HCFA Form 339,

Provider Cost Report Reimbursement Questionnaire; and copies of audited

financial statements).

Providers that are required to file electronic cost

reports: In addition to completing and submitting the required cost

reporting forms and supporting documentation, the provider also must

submit its cost reports in an electronic cost report format in

conformance with the requirements contained in section 130 of the

Electronic Cost Report (ECR) Specifications Manual (unless the hospital

has received an exemption from HCFA.) These requirements include the

electronic file passing all of the fatal (level 1) edits contained in

the ECR Specifications Manual. An acceptable cost report submission

also must include all of the appropriate signatures. (Additional

instructions concerning electronic submission of cost reports can be

found at Sec. 413.24(f)(4), as set forth in our final rule with comment

period published elsewhere in this issue of the Federal Register.

In addition, we would specify that the intermediary is to make a

determination of acceptability within 30 days of receipt of the cost

report. If the intermediary considers the cost report unacceptable, the

intermediary returns it to the provider with a letter explaining the

reasons for the rejection (for example, the cost report failed a fatal

edit or included incomplete documentation). When the cost report is

rejected, it is deemed an unacceptable submission and treated as if a

report had never been filed. The intermediary would also inform the

provider of the consequences of filing a late cost report, that is,

interest would be assessed on all overpayments and the provider's

interim payments would be suspended. Given the additional filing time,

we believe providers should have sufficient time to complete and submit

an acceptable cost report. Thus, we are suspending all payments if the

cost report is not filed within the 5-month timeframe. The provider

should make the necessary corrections to the cost report and resubmit

the cost report to the intermediary as quickly as possible.

III. Related Issues

As a result of these proposed regulation changes, the timing of

provider reminder letters, PS&R Summary Reports and the submission of

HCRIS data would also be affected. We plan to revise the Intermediary

Manual and the PRM as necessary to reflect these changes.

A. Reminder Letters

Because we are proposing to lengthen the amount of time a provider

has to file its cost report, we also would change the deadline for the

intermediaries to send reminder letters to providers to notify them

that cost reports are due. The revised deadline would be by the end of

the fourth month after the close of the cost reporting period. The

reminder letter may be sent at the same time an intermediary sends the

PS&R Summary Report to the providers, but an intermediary may not send

the reminder letter before sending the PS&R Summary Report. The

reminder letter will inform the provider that if the cost report is not

received by the end of the fifth month after the close of the cost

reporting period, the provider's interim payments will be suspended in

their entirety the following day, rather than just reduced (as the

Intermediary Manual now provides). Under Sec. 405.371(d), if a provider

does not furnish necessary information that is needed to determine the

amounts due the provider under the Medicare program, interim payments

may be suspended immediately. In addition, under Sec. 405.376(e)

interest will be assessed immediately in the case of a cost report that

is not filed on time. However, given the extended filing deadline, we

believe that providers should have little difficulty in filing timely.

B. PS&R Summary Report

In conjunction with the change in the cost report due dates, we

also intend to revise our Manual instructions to extend the time that

HCFA allows the intermediaries to furnish the PS&R Summary Report to

providers. Intermediaries would be required to furnish the PS&R Summary

Report by the last day of the fourth month following the end of the

provider's cost reporting period, instead of 60 days following the end

of the provider's cost reporting period, as is currently the practice.

For cost reporting periods ending on a day other than the last day of a

month, intermediaries would be required to furnish the PS&R Summary

Report by the 120th day following the end of a provider's cost

reporting period. As noted above, an intermediary must send the PS&R

Summary Report to a provider before or at the same time as it sends the

reminder letter. (The reminder letter cannot be sent before the PS&R

Summary Report.) This change would ensure that a provider still would

have at least 30 days after receipt of the PS&R Summary Report to

complete and submit the cost report to the intermediary. If the

provider receives the PS&R Summary Report later than the last day of

the fourth month (or the 120th day, if applicable) following the end of

its cost reporting period, the provider would have 30 days from receipt

to file its cost report.

C. HCRIS Data

Presently, the intermediary must submit HCRIS data to HCFA within

either 180 days of the end of the hospital cost reporting period or 60

days of receipt of the cost report from the provider, whichever is

later. The current 180-day deadline is based on the following: (1) 90

days for a provider to file its cost report, (2) 30 days for an

extension of time to file (available to providers with good cause), and

(3) an additional 60 days for the intermediary to submit HCRIS data to

HCFA. In conjunction with the proposed extension of the deadline for

filing a cost report, we would revise the Intermediary Manual to

instruct intermediaries to submit HCRIS data to HCFA within 210 days of

the last day of the hospital cost reporting period. The new deadline is

based on the following: (1) 150 days for filing a cost report and (2)

60 days for submission of HCRIS data to HCFA. The 30-day extension of

time to file a cost report would be eliminated. As explained above,

extensions would be granted only under extraordinary circumstances, and

therefore an additional 30 days for a filing extension normally would

not be necessary.

In addition, we plan to revise our Manual instructions to specify

that if the intermediary is late in sending the PS&R Summary Report to

the providers, the amount of time for the intermediary to submit the

HCRIS data would be reduced by the same number of days the PS&R Summary

Report was late. For example, if the intermediary sends the PS&R

Summary Report to the provider 10 days late, the provider would still

have 30 days from receipt of the PS&R Summary Report to file its cost

report. However, the time remaining for the intermediary to submit the

HCRIS data would be reduced by a corresponding 10 days (that is, from

60 to 50 days following receipt of the cost report.) In such cases, the

intermediary still would have a total of 210 days from the end of the

hospital cost reporting period to submit HCRIS data to HCFA.

As explained above, the overall effect of the extension of the time

frame for providers to file cost reports would be that HCFA would not

have access to updated HCRIS data until 210 days after the end of a

given cost reporting period. This change would not delay significantly

the availability of the analytical files (which are updated quarterly)

in HCRIS, and it should improve the accuracy of initial cost report

data. Although it would delay the availability in the analytical files

of cost report data for the most recent cost reporting period, it would

not affect availability of a complete set of cost report data.

Under the current requirements for intermediaries to transmit cost

report data extracts, a complete set of cost report data for any

Federal fiscal year is not available until 180 days after the latest

cost reporting period in the Federal fiscal year. For example, if a

provider's cost reporting period begins on September 1, 1993 and ends

on August 31, 1994, its cost report extract now would be due to HCFA by

February 27, 1995 (180 days after the end of the cost reporting

period). The data would be available for use in the next quarterly

update of the analytical files, which would take place on March 31,

1995. In this case, under the proposed provisions, we would extend the

due date for HCRIS submissions from 180 days after the hospital cost

reporting period ends to within 210 days of the last day of the

hospital's cost reporting period. Thus, in the above example, the cost

report extract of a provider with a cost reporting period ending August

31, 1994, would be due to HCFA by March 29, 1995. The data from this

provider's file still would be available for use in the March 31, 1995

update of the analytical files.

IV. Impact Statement

We generally prepare a regulatory flexibility analysis that is

consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601

through 612) unless the Secretary certifies that a proposed rule would

not have a significant economic impact on a substantial number of small

entities. This proposed rule would extend from 3 months to 5 months the

time frame that providers have to file their cost reports and would

define what HCFA considers to be an ``acceptable'' cost report

submission. Neither of these proposed changes would have a significant

economic impact on providers. Therefore, we have determined, and the

Secretary certifies, that this proposed rule would not have a

significant effect on a substantial number of small entities. Thus, we

are not preparing a regulatory flexibility analysis.

Section 1102(b) of the Act requires the Secretary to prepare a

regulatory impact statement if a proposed rule may have a significant

economic impact on the operations of a substantial number of small

rural hospitals. Such an analysis must conform to the provisions of

section 603 of the RFA. For purposes of section 1102(b) of the Act, we

define a small rural hospital as a hospital that is located outside of

a Metropolitan Statistical Area and has fewer than 50 beds.

We are not preparing a regulatory impact statement since we have

determined, and the Secretary certifies, that this proposed rule would

not have a significant economic impact on the operations of a

substantial number of small rural hospitals.

In accordance with the provisions of Executive Order 12866, this

regulation was not reviewed by the Office of Management and Budget.

V. Other Required Information

A. Public Comment

Because of the large number of pieces of correspondence we normally

receive on a proposed rule, we are not able to acknowledge or respond

to them individually. However, in preparing the final rule, we will

consider all comments that we receive by the date specified in the

Dates section of this preamble, and we will respond to the comments in

the preamble of that rule.

B. Paperwork Reduction Act

This document does not impose information collection and

recordkeeping requirements. Consequently, it need not be reviewed by

the Office of Management and Budget under the authority of the

Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.).

List of Subjects

42 CFR Part 413

Health facilities, Kidney diseases, Medicare, Puerto Rico,

Reporting and recordkeeping requirements.

42 CFR Chapter IV, part 413, is amended as follows:

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR

END-STAGE RENAL DISEASE SERVICES

1. The authority citation for part 413 continues to read as

follows:

Authority: Secs. 1102, 1814(b), 1815, 1833(a), (i), and (n),

1861(v), 1871, 1881, 1883, and 1886 of the Social Security Act as

amended (42 U.S.C. 1302, 1395f(b), 1395g, 13951(a), (i), and (n),

1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); sec. 104(c) of Pub.

L. 100-360 as amended by sec. 608(d)(3) of Pub. L. 100-485 (42

U.S.C. 1395ww (note)); and sec. 101(c) of Pub. L. 101-234 (42 U.S.C.

1395ww (note)).

Subpart B--Accounting Records and Reports

2. In Sec. 413.24, paragraph (f)(2) is revised, and a new paragraph

(f)(5) is added to read as follows:

Sec. 413.24 Adequate cost data and cost finding.

* * * * *

(f) * * *

(2) Due dates for cost reports. (i) Cost reports are due on or

before the last day of the fifth month following the close of the

period covered by the report. For cost reports ending on a day other

than the last day of the month, cost reports are due 150 days after the

last day of the cost reporting period.

(ii) Extensions of the due date for filing a cost report may be

granted by the intermediary only when a provider's operations are

significantly adversely affected due to extraordinary circumstances

over which the provider has no control, such as flood or fire.

* * * * *

(5) An acceptable cost report submission is defined as follows:

(i) All providers.--The provider, in addition to completing and

submitting the required cost reporting forms, including all necessary

signatures, must submit all supporting documentation required by

program instructions.

(ii) For providers that are required to file electronic cost

reports.--In addition to the forms and documentation required in

paragraphs (f)(4) and (f)(5)(i) of this section, the provider must

submit its cost reports in an electronic cost report format in

conformance with the requirements contained in the Electronic Cost

Report (ECR) Specifications Manual (unless the provider has received an

exemption from HCFA).

(iii) The intermediary makes a determination of acceptability

within 30 days of receipt of the provider's cost report. If the cost

report is considered unacceptable, the intermediary returns the cost

report with a letter explaining the reasons for the rejection. When the

cost report is rejected, it is deemed an unacceptable submission and

treated as if a report had never been filed.

(Catalog of Federal Domestic Assistance Program No. 93.773,

Medicare--Hospital Insurance; and Program No. 93.774, Medicare--

Supplementary Medical Insurance Program)

Dated: March 29, 1994.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Dated: May 10, 1994.

Donna E. Shalala,

Secretary.

[FR Doc. 94-12458 Filed 5-24-94; 8:45 am]

BILLING CODE 4120-01-P