Medicare Program; Electronic Cost Reporting for Skilled Nursing Facilities and Home Health Agencies

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 413

[BPD-788-F]

RIN 0938-AH12

Medicare Program; Electronic Cost Reporting for Skilled Nursing

Facilities and Home Health Agencies

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

ACTION: Final rule.

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SUMMARY: This final rule adds the requirement that, for cost reporting

periods ending on or after February 1, 1997, most skilled nursing

facilities and home health agencies must submit cost reports currently

required under the Medicare regulations in a standardized electronic

format. This rule also allows a delay or waiver of this requirement

where implementation would result in financial hardship for a provider.

The provisions of this rule allow for more accurate preparation and

more efficient processing of cost reports.

DATES: This final rule is effective February 1, 1997. This rule is

applicable for cost reporting periods ending on or after February 1,

1997.

FOR FURTHER INFORMATION CONTACT: Tom Talbott, (410) 786-4592.

SUPPLEMENTARY INFORMATION:

I. Background

Generally, under the Medicare program, skilled nursing facilities

(SNFs) and home health agencies (HHAs) are paid for the reasonable

costs of the covered items and services they furnish to Medicare

beneficiaries. Sections 1815(a) and 1833(e) of the Social Security Act

(the Act) provide that no payments will be made to a provider unless it

has furnished the

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information, requested by the Secretary, needed to determine the amount

of payments due the provider. In general, providers submit this

information through cost reports that cover a 12-month period. Rules

governing the submission of cost reports are set forth in Federal

regulations at 42 CFR 413.20 and 42 CFR 413.24.

Under Sec. 413.20(a), all providers participating in the Medicare

program are required to maintain sufficient financial records and

statistical data for proper determination of costs payable under the

program. In addition, providers must use standardized definitions and

follow accounting, statistical, and reporting practices that are widely

accepted in the health care industry and related fields. Under

Secs. 413.20(b) and 413.24(f), providers are required to submit cost

reports annually, with the reporting period based on the provider's

accounting year. Additionally, under Sec. 412.52, all hospitals

participating in the prospective payment system must meet cost

reporting requirements set forth at Secs. 413.20 and 413.24.

Section 1886(f)(1)(B)(i) of the Act required the Secretary to place

into effect a standardized electronic cost reporting system for all

hospitals participating in the Medicare program. This provision was

effective for hospital cost reporting periods beginning on or after

October 1, 1989. On May 25, 1994, we published a final rule with

comment period in the Federal Register implementing the electronic cost

reporting requirement for hospitals (59 FR 26960). On June 27, 1995, we

published a final rule that responded to comments on the May 25, 1994

final rule with comment period (60 FR 33123).

II. Provisions of the Proposed Regulations

On December 5, 1995, we published a proposed rule in the Federal

Register (60 FR 62237) that proposed to require SNFs and HHAs to submit

cost reports in a standardized electronic format for cost reporting

periods beginning on or after October 1, 1995. We also proposed that if

a SNF or HHA believes that implementation of the electronic submission

requirement would cause a financial hardship, it may submit a written

request for a waiver or a delay of these requirements.

We stated that we essentially would apply the current hospital

electronic cost reporting requirements to SNFs and HHAs. Hospitals

participating in Medicare must submit cost reports in a uniform

electronic format for cost reporting periods beginning on or after

October 1, 1989. These hospital cost reports must be electronically

transmitted to the intermediary in American Standard Code for

Information Interchange (ASCII) format. In addition to the electronic

file, hospitals were initially required to submit a hard copy of the

full cost report, which was later changed to a hard copy of a one-page

settlement summary, a statement of certain worksheet totals found in

the electronic file, and a statement signed by the hospital's

administrator or chief financial officer certifying the accuracy of the

electronic file (Sec. 413.24(f)(4)(iii)). Further, to preserve the

integrity of the electronic file, we specified procedures regarding the

processing of the electronic cost report once it is submitted to the

intermediary. In addition, the provider's electronic program must be

able to disclose that changes have been made to the provider's as-filed

cost report. We proposed to apply these same hospital electronic cost

reporting requirements to SNFs and HHAs.

In the proposed rule, we discussed in detail the benefits of

requiring electronic cost reports for SNFs and HHAs. The use of

electronically prepared cost reports will be beneficial for SNFs and

HHAs because the cost reporting software for these reports will

virtually eliminate computational errors and substantially reduce

preparation time. The use of cost reporting software will also save

time when the provider discovers that it needs to change individual

entries in the cost report.

III. Discussion of Public Comments

We received six timely comments in response to the proposed rule.

The majority of the commenters supported our proposal but had some

questions and concerns regarding its implementation. A summary of these

comments and our responses follow:

Waivers and Exclusions

Comment. Several commenters requested clarification of the

requirement for granting a waiver of electronic filing due to financial

hardship. While some commenters suggested that we develop a defined set

of criteria for determining when the requirement for electronic filing

would impose a financial hardship on a provider, others supported our

proposal of a case-by-case review of waiver requests. One commenter

suggested that, in addition to financial hardship, waivers should be

automatically granted for providers with low Medicare utilization.

Commenters supporting case-by-case review advised us to remain

flexible in making determinations of financial hardship until we have

the experience and data to determine whether set criteria are

necessary. Another commenter supporting our proposal noted that most

providers have, or have access to, a computer and recommended that as

part of a waiver request, a provider should be required to include a

statement certifying that it does not own, rent, or have access to a

computer.

Commenters opposing case-by-case review were concerned that, based

on hospitals' experiences with electronic filing, few waivers would be

granted. These commenters asserted that it would be best to establish

specific criteria for the waiver process.

Response. We do not believe that the development of specific

criteria for waiver requests is appropriate. For example, a

characteristic such as a provider's size alone may not necessarily be a

reliable indicator that electronic cost reporting would impose a

financial hardship since even the smallest SNFs and HHAs are quite

likely to already be using computer equipment. Thus, we believe that an

individualized review of each waiver request based on the totality of

the provider's financial situation would be the most effective method

for making determinations. Factors that we may consider in determining

whether to grant a waiver include whether the provider has access to a

computer, the provider's size, level of Medicare utilization, and

financial status.

Regarding the commenters concern that, like hospitals, few waivers

will be granted for SNFs and HHAs, we wish to point out that the small

number of electronic reporting waivers granted to hospitals is

attributed to the small number of hospitals that have requested them.

We have received only 10 waiver electronic reporting requests from

hospitals (of approximately 7,000 hospitals required to file

electronically) since we implemented electronic reporting. All 10

hospitals have been granted waivers. We note that hospitals must

request the waiver every year. We anticipate receiving numerous

requests from SNFs and HHAs. There are large differences in the

financial structure between hospitals and long-term care providers.

Hospitals provide many services that are not provided by SNFs and HHAs.

Additionally, virtually all hospitals have, or have access to, computer

equipment, which may or may not be the case for SNFs and HHAs. As we

did with hospitals, we anticipate granting hardship waivers for

providers with low Medicare utilization and

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providers with reimbursement systems that would be too costly to

program (for example, all inclusive rate providers who are not required

to file electronically). Each waiver request will be handled on a case-

by-case basis and waivers will be granted when a provider has

documented appropriately its financial hardship.

We note that if a provider subject to the requirements and not

granted a hardship exemption does not submit its cost report

electronically, Medicare payments to that provider may be suspended

under the provisions of sections 1815(a) and 1833(e) of the Act. These

sections of the Act provide that no Medicare payments will be made to a

provider unless it has furnished the information, requested by the

Secretary, that is needed to determine the amount of payments due the

provider under the Medicare program. Section 405.371(d) provides for

suspension of Medicare payments to a provider by the intermediary if

the provider fails to submit information requested by the intermediary

that is needed to determine the amount due the provider under the

Medicare program. The general procedures that are followed when

Medicare payment to a provider is suspended for failure to submit

information needed by the intermediary to determine Medicare payment

are located in section 2231 of the Medicare Intermediary Manual (HCFA

Pub. 13). Those procedures include timeframes for ``demand letters'' to

providers. Demand letters remind providers to file timely and complete

cost reports and explain possible adjustments of Medicare payments to a

provider and the right to request a 30-day extension of the due date.

Comment. One commenter suggested that, to avoid unnecessary

administrative costs and delays, the fiscal intermediary instead of

HCFA should have responsibility for granting waiver requests.

Response. We believe that our process for making waiver

determinations is the most efficient and will allow each provider

seeking a waiver to receive an individualized review of its request. As

explained later, we have extended the deadline for filing waiver

requests. The revised process specifies that the waiver request,

including supporting documentation, must be submitted to a provider's

intermediary no later than 30 days after the end of the provider's cost

reporting period. The intermediary will review the request and forward

it, with a recommendation for approval or denial, to the HCFA central

office within 30 days of its receipt of the request. HCFA central

office will either approve or deny the request by response to the

intermediary within 60 days of receipt of the request from the

intermediary.

Comment. Some commenters expressed concern with the proposed

deadline for filing waiver requests of 120 days before the end of the

provider's cost reporting period. One commenter noted that the deadline

should not be set before the end of the reporting period because the

level of Medicare utilization can vary from month to month. Another

commenter suggested that the time limits be modified to be more

accommodating until HCFA has further experience with the impact of

electronic cost reporting on SNFs and HHAs.

Response. We have reconsidered our proposed policy in light of

these comments and the fact that we have decided to extend the due date

for filing electronic cost reports in this final rule (as discussed

under the section on ``Implementation Date''). We agree with the

commenters that it is appropriate to allow providers a longer time

period within which to submit waiver requests. We have revised

Sec. 413.24(f)(4)(v) to provide that a provider may submit a written

request for delay or waiver with necessary supporting documentation to

its intermediary no later than 30 days after the end of its cost

reporting period.

Comment. One commenter suggested that in lieu of a waiver, we

should allow the hardware and software costs as ``below the line'' cost

expenses by modifying the Medicare cost report to allow the provider to

enter the software costs directly into reimbursable costs and to treat

the hardware similarly, as a capital expense.

Response. The use of electronic cost reporting software and the

costs associated with it is similar to a provider hiring an accounting

firm to complete its cost report. We do not make separate payments for

these types of costs; rather we include the costs as administrative and

general costs. Similarly, for those providers that have to purchase

computer equipment, in accordance with existing regulations governing

payment of provider costs, Medicare will pay for the cost of the

equipment as an overhead cost.

Comment. One commenter inquired about the effect of the rule on

hospital-based HHAs. The commenter asked if hospital-based facilities

will be required to submit a separate cost report. Another commenter

requested clarification as to whether providers under the prospective

payment system would be required to file electronically. Specifically,

the commenter asked that we clarify our statement in the proposed rule

that a SNF that furnishes fewer than 1,500 Medicare covered days in a

cost reporting period would not be subject to the electronic cost

reporting requirement (60 FR 62238).

Response. The electronic cost reporting provision will only apply

to those providers that are required to file a full Medicare cost

report. Providers that are required to file less than a full cost

report (that is, low or no Medicare utilization) will not file

electronically but will be required to request a waiver of the

requirement to file electronically. Hospital-based SNFs and HHAs file

electronically through the hospital, would continue to do so, and would

not file separately as a result of this regulation. We did not intend

to exclude SNFs that are paid prospectively and that file their cost

reports on Form 2540S. While Sec. 413.321 defines the Form 2540S as a

simplified cost reporting form, the form does not meet the definition

of a less than full cost report as discussed above. Absent a waiver,

these SNFs will be required to file their cost reports electronically.

Software will be available from HCFA and from commercial vendors that

meet the requirements for electronic filing.

Implementation Date

Comment. Commenters were concerned that the proposed implementation

date for filing electronic cost reports beginning on or after October

1, 1995, was too aggressive and would not allow sufficient time for

providers with short period cost reports to file electronically.

Response. We agree that the proposed implementation date should be

revised. The new effective date will be timed to coincide with the

completion of the installment of and training on the free software and

electronic specifications.__ We anticipate that the software will be

ready for distribution in time for providers to become accustomed to

using it before they submit their cost reports for cost reporting

periods ending on or after February 1, 1997. Thus, we are revising the

implementation date to require SNFs and HHAs to begin filing their cost

reports electronically for cost reporting periods ending on or after

February 1, 1997. We believe that this revised implementation date will

avoid prolonged extensions for short period cost reports. We also

believe that providers with cost reporting periods ending on February

1, 1997 (and who thus must file their cost reports by June 30, 1997),

will have ample time to do what is needed to file an electronic cost

report by June 30, 1997.

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Cost Reporting Software

Comment. One commenter inquired about how providers will be paid

for the cost of the electronic cost reporting software. Other

commenters questioned the adequacy of the software offered by HCFA and

its efficiency in performing electronic filing. These commenters'

concerns were based on the difficulties experienced by hospitals in

using the cost reporting software provided by HCFA. Another commenter

suggested that the software be available at least 6 months before the

implementation date for electronic filing to allow providers time to

install the software and train staff. Additionally, one commenter

advised that free software should be available for SNFs under the

prospective payment system. Finally, commenters suggested that we

develop software for billing and for the Provider Cost Report

Reimbursement Questionnaire (Form 339).

Response. HCFA will provide software, free of charge, to any

provider that requests it. Alternatively, providers may purchase the

software from any HCFA-approved software vendor. To obtain the free

software, providers may contact their intermediaries or send a written

request to the following address: Health Care Financing Administration,

Division of Cost Principles and Reporting, Room C5-02-23, Central

Building, 7500 Security Boulevard, Baltimore, MD 21244-1850. We note

that, as with the cost of computer equipment, Medicare will pay for the

cost of the software as an overhead cost through the cost report based

on Medicare utilization.

Regarding commenters' concerns about the adequacy of the cost

reporting software, we note that while there were some difficulties

with application of the free software for hospitals, the hospital cost

report is extremely complex and requires extensive reporting for a

number of Medicare services that are not provided by SNFs and HHAs.

Thus, we do not anticipate having similar types of problems with cost

reporting software for SNFs and HHAs because these providers generally

file less complicated cost reports. The free software will not be

developed to compete with commercial software packages. Rather, the

software offered by HCFA will enable a provider with access to a

computer to meet the requirements by filing an electronic data set to

the fiscal intermediary in order to generate a cost report. We expect

that the software will be a series of input screens that are designed

to assimilate the cost reporting forms. Once the prescribed data are

entered, these same data can be forwarded to the intermediary to

produce a completed cost report. As stated above, we anticipate that

the software will be ready for distribution in time to allow providers

to install the software and train staff.

While we do not currently require that providers submit bills in an

electronic format, we strongly encourage electronic billing. We note

that fiscal intermediaries can accept electronic bills prepared with

commercially available software that meets Medicare specifications.

Fiscal intermediaries also provide free software for submission of

Medicare billing data. Providers should contact their intermediary's

electronic billing department for information about this software.

Additionally, we are currently in the process of developing a software

package for the Form 339.

Audit Adjustments

Comment. One commenter questioned the provision in proposed

Sec. 413.24(f)(4)(iii), which requires that the fiscal intermediary

must return the as-filed cost report to the provider for correction if

it does not pass all specified edits. The commenter believed that

requiring intermediaries to send rejected cost reports back to the

provider would impose a burden because the provider would have to do a

complete review of the cost report in order to identify and correct the

error. The commenter suggested that we allow the intermediary

discretion in determining whether to send a cost report back to the

provider.

Response. This section provides that the intermediary must reject a

cost report that does not pass all specified edits. This provision is

not intended to prohibit the intermediary from making audit adjustments

to the provider's cost report. Rather, an intermediary must reject a

cost report that fails a ``level one'' edit (for example, when the

settlement amount on the hard copy cost report and the amount contained

in the electronic file are different). Cost reports that fail level one

edits result in incorrect settlement data that cannot be corrected by

the intermediary for legal reasons. The cost report is the submission

of the provider and must maintain its originality throughout the cost

report settlement process.

Comment. One commenter recommended that intermediaries not require

providers to submit more than one hard copy of the cost report in

addition to the electronic file.

Response. During a transition period, we will require providers to

submit a hard copy of the completed full cost report forms in addition

to the electronic file (as we did for hospitals). Requiring a hard copy

will allow the provider and the intermediary to compare data on the

hard copy cost report to data in the electronic file to ensure accuracy

and proper programming. Once providers and intermediaries become

accustomed to the use of the electronic cost reporting software, we

will no longer require that a hard copy of the full cost report be

filed. After the transition period, SNFs and HHAs subject to the

electronic reporting requirement will be required to file a hard copy

of the one-page settlement sheet, a statement of certain worksheet

totals found in the electronic file, and a statement signed by their

administrator or chief financial officer certifying the accuracy of the

electronic file.

IV. Provisions of the Final Rule

In this final rule we are adopting the provisions as proposed with

three revisions. Specifically, in response to a public comment, we are

revising Sec. 413.24(f)(4) (ii) and (iv) to change the implementation

date. These sections now provide that, effective for cost reporting

periods beginning on or after February 1, 1997, SNFs and HHAs must

submit cost reports in a standardized electronic format. Additionally,

we are revising Sec. 413.24(f)(4)(v) to clarify that providers with low

or no Medicare utilization may request a waiver of electronic cost

reporting. We are making another revision to Sec. 413.24(f)(4)(v) to

specify that a provider may submit a written request for a delay or a

waiver with necessary supporting documentation to its intermediary no

later than 30 days after the end of its cost reporting period.

V. 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 we certify that a final rule such as this will not

have a significant economic impact on a substantial number of small

entities. For purposes of the RFA, all providers and small businesses

that distribute cost-report software to providers are considered small

entities. HCFA's intermediaries are not considered small entities for

purposes of the RFA.

In addition, section 1102(b) of the Social Security Act requires us

to prepare a regulatory impact analysis for any final rule that may

have a significant impact on the operation of a substantial number of

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

of section 604

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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 rural impact statement since we have determined, and

certify, that this final rule will not have a significant impact on the

operations of a substantial number of small rural hospitals.

As stated above, under Secs. 413.20(b) and 413.24(f), providers are

required to submit cost reports annually, with reporting periods based

on the provider's accounting year. This final rule will require SNFs

and HHAs, like hospitals, to submit their Medicare cost reports in a

standardized electronic format. We anticipate that this requirement

will take effect for cost reporting periods ending on or after February

1, 1997, meaning that the first electronic cost reports will be due

June 30, 1997.

Currently, approximately 75 percent of all SNFs and HHAs submit a

hard copy of an electronically prepared cost report to the

intermediary. We believe that the provisions of this final rule will

have little or no effect on these providers, except to reduce the time

involved in copying and collating a hard copy of the report for

intermediaries. In addition to the 75 percent of providers that

currently use electronic cost reporting, this rule will not affect

those providers that do not file a full cost report and, as stated

above, will not be required to submit cost reports electronically.

This final rule may have an impact on those providers who do not

prepare electronic cost reports, some of whom may have to purchase

computer equipment, obtain the necessary software, and train staff to

use the software. However, as discussed below, we believe that the

potential impact of this final rule on those providers who do not

prepare electronic cost reports will be insignificant.

First, a small number of providers that do not submit electronic

cost reports may have to purchase computer equipment to comply with the

provisions of this final rule. However, even among the 25 percent of

SNFs and HHAs that do not submit electronically prepared cost reports,

we believe that most providers already have access to computer

equipment, which they are now using for internal record keeping

purposes, as well as for submitting electronically generated bills to

their fiscal intermediaries, for example. Thus, we do not believe that

obtaining computer equipment will be a major obstacle to electronic

cost reporting for most providers. For those providers that will have

to purchase computer equipment, we note that, in accordance with

current regulations governing payment of provider costs, Medicare will

pay for the cost of the equipment as an overhead cost.

We recognize that a potential cost for providers that do not submit

electronic cost reports will be that of training staff to use the

software. Since most SNFs and HHAs currently use computers, we do not

believe that training staff to use the new software will impose a large

burden on providers. An additional cost will be the cost of the

software offered by commercial vendors. However, providers could

eliminate this cost by obtaining the free software from HCFA.

The requirement that hospitals submit cost reports in a

standardized electronic format has been in place since October 1989.

Since that time, the accuracy of cost reports has increased and we have

received very few requests for waivers. Additionally, we have not

received any comments from the hospital industry indicating that the

use of electronic cost reporting is overly burdensome. We believe that

electronic cost reporting will be equally effective for SNFs and HHAs,

with the benefits (such as increased accuracy and decreased preparation

time) outweighing the costs of implementation for most providers.

In conclusion, we have determined that this final rule will not

have a significant effect on SNF and HHA costs because these providers

will not be required to collect any additional data beyond that which

the regulations currently specify; cost reporting software is available

at no cost from HCFA to any provider that requests it; most SNFs and

HHAs have some type of computer equipment through which they currently

prepare electronic cost reports; and a waiver of the electronic cost

reporting requirement will be available to providers for whom the

requirement will impose a financial hardship. We note that, as with the

cost of computer equipment, Medicare will pay for the cost of the

software as an overhead cost through the cost report based on Medicare

utilization. Therefore, SNFs and HHAs will only be affected to the

extent that, absent a waiver, they will be required to submit cost

reports in a standardized electronic format to their intermediary. A

provider that does not comply with the provisions of this rule, as

specified in the preamble, will be subject to sections 1815(a) and

1833(e) of the Act, which provide that no payments will be made to a

provider unless it has furnished the information requested by the

Secretary that is needed to determine the amount of payments due the

provider under Medicare.

In accordance with the provisions of Executive Order 12866, this

regulation was not reviewed by the Office of Management and Budget

(OMB).

VI. Collection of Information Requirements

The overall information collection and recordkeeping requirements

associated with filing HHA costs reports (HCFA Form 1728) have been

approved by OMB through October 1997 (OMB approval number 0938-0022).

Additionally, OMB has approved the overall information collection and

record keeping requirement associated with filing SNF costs reports

(HCFA Form 2540) through May 1999 (OMB approval number 0938-0463).

This final rule does not require SNFs and HHAs to report any

information on the electronic cost report that is not already required

in the Medicare cost reports currently submitted by these providers.

Although this regulation does not impose any new information collection

requirements per se, the new electronic format requires HCFA to

resubmit the information collection requirements to OMB for approval.

We estimate that the number of hours each provider will save by

submitting an electronically prepared cost report instead of manually

preparing and photocopying the cost report will be about 4.5 hours for

each affected HHA and 9 hours for each affected SNF. Assuming that

approximately 25 percent of all SNFs and HHAs will be affected, that

is, roughly 3,000 SNFs and 2,000 HHAs, we estimate that SNFs will save

approximately 27,000 hours per year completing cost reports and HHAs

will save about 9,000 hours per year.

This final rule does not need to be reviewed by OMB under the

Paperwork Reduction Act of 1995.

List of Subjects in 42 CFR Part 413

Health facilities, Kidney diseases, Medicare, Puerto Rico,

Reporting and recordkeeping requirements.

42 CFR part 413 is amended as set forth below:

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

END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED

PAYMENT RATES FOR SKILLED NURSING FACILITIES

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

follows:

[[Page 31]]

Authority: Secs. 1102, 1861(v)(1)(A), and 1871 of the Social

Security Act (42 U.S.C. 1302, 1395x(v)(1)(A), and 1395hh).

2. Section 413.1 is amended by redesignating paragraphs (a)(1)(ii)

(C) through (J) as paragraphs (a)(1)(ii) (D) through (K), respectively,

and adding a new paragraph (a)(1)(ii)(C) to read as follows:

Sec. 413.1 Introduction.

(a) Basis, scope, and applicability.

(1) Statutory basis. * * *

(ii) Additional requirements. * * *

(C) Sections 1815(a) and 1833(e) of the Act provide the Secretary

with authority to request information from providers to determine the

amount of Medicare payment due providers.

* * * * *

3. Section 413.24 is amended by redesignating existing paragraphs

(f)(4)(i) through (f)(4)(iv) as paragraphs (f)(4)(ii) through

(f)(4)(v); adding a new paragraph (f)(4)(i); and revising redesignated

paragraphs (f)(4)(ii) through (f)(4)(v) to read as follows:

Sec. 413.24 Adequate cost data and cost finding.

* * * * *

(f) Cost reports. * * *

(4) Electronic submission of cost reports. (i) As used in this

paragraph, ``provider'' means a hospital, skilled nursing facility, or

home health agency.

(ii) Effective for cost reporting periods beginning on or after

October 1, 1989, for hospitals, and cost reporting periods ending on or

after February 1, 1997, for skilled nursing facilities and home health

agencies, a provider is required to submit cost reports in a

standardized electronic format. The provider's electronic program must

be capable of producing the HCFA standardized output file in a form

that can be read by the fiscal intermediary's automated system. This

electronic file, which must contain the input data required to complete

the cost report and the data required to pass specified edits, is

forwarded to the fiscal intermediary for processing through its system.

(iii) The fiscal intermediary stores the provider's as-filed

electronic cost report and may not alter that file for any reason. The

fiscal intermediary makes a ``working copy'' of the as-filed electronic

cost report to be used, as necessary, throughout the settlement process

(that is, desk review, processing audit adjustments, final settlement,

etc). The provider's electronic program must be able to disclose if any

changes have been made to the as-filed electronic cost report after

acceptance by the intermediary. If the as-filed electronic cost report

does not pass all specified edits, the fiscal intermediary rejects the

cost report and returns it to the provider for correction. For purposes

of the requirements in paragraph (f)(2) of this section concerning due

dates, an electronic cost report is not considered to be filed until it

is accepted by the intermediary.

(iv) Effective for cost reporting periods ending on or after

September 30, 1994, for hospitals, and cost reporting periods ending on

or after, February 1, 1997, for skilled nursing facilities and home

health agencies, a provider must submit a hard copy of a settlement

summary, a statement of certain worksheet totals found within the

electronic file, and a statement signed by its administrator or chief

financial officer certifying the accuracy of the electronic file or the

manually prepared cost report. During a transition period, skilled

nursing facilities and home health agencies must submit a hard copy of

the completed cost report forms in addition to the electronic file. The

following statement must immediately precede the dated signature of the

provider's administrator or chief financial officer:

I hereby certify that I have read the above certification

statement and that I have examined the accompanying electronically

filed or manually submitted cost report and the Balance Sheet

Statement of Revenue and Expenses prepared by ________ (Provider

Name(s) and Number(s)) for the cost reporting period beginning

________ and ending ________ and that to the best of my knowledge

and belief, this report and statement are true, correct, complete

and prepared from the books and records of the provider in

accordance with applicable instructions, except as noted. I further

certify that I am familiar with the laws and regulations regarding

the provision of health care services, and that the services

identified in this cost report were provided in compliance with such

laws and regulations.

(v) A provider may request a delay or waiver of the electronic

submission requirement in paragraph (f)(4)(ii) of this section if this

requirement would cause a financial hardship or if the provider

qualifies as a low or no Medicare utilization provider. The provider

must submit a written request for delay or waiver with necessary

supporting documentation to its intermediary no later than 30 days

after the end of its cost reporting period. The intermediary reviews

the request and forwards it, with a recommendation for approval or

denial, to HCFA central office within 30 days of receipt of the

request. HCFA central office either approves or denies the request and

notifies the intermediary within 60 days of receipt of the request.

* * * * *

(Catalog of Federal Domestic Assistance Program No. 93.773,

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

Supplementary Medical Insurance Program)

Dated: September 27, 1996.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

[FR Doc. 96-33093 Filed 12-31-96; 8:45 am]

BILLING CODE 4120-01-P