[Federal Register Volume 60, Number 233 (Tuesday, December 5, 1995)]
[Proposed Rules]
[Pages 62237-62241]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29542]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 413
[BPD-788-P]
RIN 0938-AH12
Medicare Program; Uniform Electronic Cost Reporting for Skilled
Nursing Facilities and Home Health Agencies
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would add the requirement that, for cost
reporting periods beginning on or after October 1, 1995, all skilled
nursing facilities and home health agencies must submit cost reports
currently required under the Medicare regulations in a standardized
electronic format. This proposed rule would also allow a delay or
waiver of this requirement where implementation would result in
financial hardship for a provider. The proposed provisions would allow
for more accurate preparation and more efficient processing of cost
reports.
DATES: Comments will be considered if we receive them at the
appropriate address, as provided below, no later than 5 p.m. on
February 5, 1996.
ADDRESSES: Mail written comments (one original and three copies) to the
following address: Health Care Financing Administration, Department of
Health and Human Services, Attention: BPD-788-P, P.O. Box 7517,
Baltimore, MD 21207-0517.
If you prefer, you may deliver your written comments (one original
and three copies) to one of the following addresses:
Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW,
Washington, DC 20201, or
Room C5-11-17, 7500 Security Boulevard, Baltimore, MD 21244-1850.
Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code BPD-788-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 comments that relate to information collection requirements,
mail a copy of comments to: Office of Information and Regulatory
Affairs, Office of Management and Budget, Room 10235, New Executive
Office Building, Washington, DC 20503, Attn: Allison Herron Eydt, HCFA
Desk Officer.
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 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 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 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
Currently, Sec. 413.24(f)(4) provides that for cost reporting
periods beginning on or after October 1, 1989, all hospitals must
submit cost reports in a standardized electronic format. While the
existing regulations do not require any other provider types to file
their cost reports electronically, more than 75 percent of SNFs and
HHAs currently submit a hard copy of an electronically prepared cost
report rather than a manually prepared cost report. HCFA's fiscal
intermediaries then review the information from these cost reports for
completeness and manually enter the data into their automated data
reporting systems. This process takes substantially longer than
processing cost reports submitted in a standardized electronic format
that allows data to be automatically entered into the intermediary's
system.
This proposed rule would revise existing Sec. 413.24(f)(4) 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 note that the electronic cost reports would not be
due until 5 months after the end of the provider's cost reporting
period. Thus, for a provider with a 12-month cost reporting period
beginning October 1,
[[Page 62238]]
1995, the first electronic cost report would be due February 28, 1997.
The use of electronically prepared cost reports would be beneficial
for SNFs and HHAs because the cost reporting software for these reports
would virtually eliminate computational errors and substantially reduce
preparation time. Preparation time would be decreased because providers
would no longer have to perform mathematical computations to complete
the cost report. Instead, the provider would only need to enter the
correct costs and statistics, and the software would determine the
appropriate amount of Medicare payment due the provider based on these
figures. We note that the costs and statistics that would be entered
into the electronic software are the same as those that are currently
required for Medicare cost reports. This proposed rule would not
require the reporting of any additional information.
The use of cost reporting software would also save time when the
provider discovers that it needs to change individual entries in the
cost report. Rather than recalculating the entire cost report, the
provider would merely enter the new figures, and the software would
generate a new cost report that would reflect all necessary
recalculations. The use of cost reporting software would also eliminate
the need for several administrative tasks associated with filing a cost
report. Specifically, the provider would no longer be required to
photocopy, collate, and mail a hard copy of the cost report, which is a
relatively large, cumbersome document. Instead, the completed cost
report would be electronically filed with the fiscal intermediary. That
is, the provider would submit a disk containing the required cost
report data to the fiscal intermediary.
In all, we estimate that the use of electronically prepared cost
reports would result in an average of 4 to 5 hours less preparation
time for an HHA and 8 to 10 hours less time for an SNF. We recognize
that, initially, the preparation time saved may not be as great as we
have estimated for providers that need time to become familiar with the
cost reporting software. However, we believe that once providers
overcome this small ``learning curve,'' the accuracy of cost reports
would increase and the preparation time would decrease in line with
this estimate. We welcome comments on our estimate of time savings as
well as on other advantages or disadvantages of electronic cost
reporting.
We propose that the provider's software must be able to produce a
standardized output file in American Standard Code for Information
Interchange (ASCII) format. All intermediaries have the ability to read
this standardized file and produce an accurate cost report. SNFs and
HHAs would be required to use HCFA-approved software to submit cost
reports to the intermediary. HCFA's approval process requires each
vendor to submit for review a hard copy cost report produced from their
software. The purpose of this review process is to establish that the
commercial vendor's software can produce a completed cost report in
accordance with the Medicare rules and instructions.
There are approximately 17 commercial software vendors servicing
HHAs and SNFs that have developed HCFA-approved software programs
capable of producing an electronic cost report. In addition, HCFA has
developed a software package that will enable SNFs and HHAs to file an
electronic data set to the fiscal intermediary in order to generate an
electronic cost report. Providers would be able to use either these
existing commercial software packages or HCFA's free software to comply
with the requirements in this proposed rule. To receive 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 Blvd., Baltimore, Maryland 21244-1850.
We also propose 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. This request, including supporting documentation,
would have to be submitted to a provider's intermediary at least 120
days before the end of the provider's cost reporting period. The
intermediary would review the request and forward it, with a
recommendation for approval or denial, to the HCFA central office
within 30 days of such request. HCFA central office would either
approve or deny the request by response to the intermediary within 60
days of receipt of the request. Each delay or waiver would be
considered on a case-by-case basis.
We considered proposing set criteria (possibly based on a
provider's bed size or capacity, for example) under which a SNF or HHA
could be exempted automatically from the electronic cost reporting
requirement. However, we have not done so because we do not believe
that a characteristic such as a provider's size is necessarily 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. We welcome comments on
the process for obtaining a waiver, whether set criteria for obtaining
a waiver would be beneficial, as well as on the number of providers
that may request a waiver.
We note that the electronic cost reporting provision would only
apply to those providers that are required to file a full Medicare cost
report. Those providers that are not required to file a full cost
report (for example, a SNF that furnishes fewer than 1500 Medicare
covered days in a cost reporting period) would not be subject to the
electronic cost reporting requirement, and therefore would not have to
request a waiver.
If a SNF or HHA (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.
Under this proposed rule, we essentially would apply the current
hospital reporting requirements to SNFs and HHAs. In our final rule
with comment period published May 25, 1994, we required that, in
accordance with section 1886(f)(1)(B)(I) of the Act, all hospitals must
submit cost reports in a uniform electronic format for cost reporting
periods beginning on or after October 1, 1989 (59 FR 26960). All
[[Page 62239]]
hospital cost reports must be electronically transmitted to the
intermediary in ASCII format. In addition to the electronic file,
existing Sec. 413.24(f)(4)(iii) requires hospitals to submit a hard
copy of a 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.
Further, to preserve the integrity of the electronic file, we
implemented provisions regarding the processing of the electronic cost
report once submitted to the intermediary. Specifically, existing
Sec. 413.24(f)(4)(ii) provides that the intermediary may not alter the
cost report once it has been filed by the provider. That is, the
intermediary must maintain an unaltered copy of the provider's
electronic cost report. This provision is not intended to prohibit the
intermediary from making audit adjustments to the provider's cost
report. Additionally, this section provides that the intermediary must
reject a cost report that does not pass all specified edits. Finally,
the provider's electronic program must be able to disclose that changes
have been made to the provider's filed cost report. Again, we would
apply these same provisions to SNFs and HHAs.
As stated above, the electronic cost reporting requirement for
hospitals has been a statutory requirement for over 5 years. Our
experience with the process of hospitals submitting cost reports to the
intermediary in ASCII format has been uniformly positive. These cost
reports are processed more expeditiously and efficiently than manually
prepared cost reports or hard copies of electronically prepared cost
reports. In fact, based on comments from hospitals, we amended
Sec. 413.24(f)(4) in our June 27, 1995 final rule to eliminate the
requirement that hospitals submit a hard copy of the cost report in
addition to the electronic file (60 FR 33123). In conclusion, based on
our experience with the submission of electronic cost reports by
hospitals, we believe that electronic filing would reduce the
administrative burden on most SNFs and HHAs, with a waiver available in
financial hardship cases. Therefore, we propose to amend Sec. 413.24
accordingly:
Add a new paragraph (f)(4)(i) to define the word
``provider'' as a hospital, SNF, or HHA;
Redesignate existing paragraphs (f)(4)(i) through
(f)(4)(iv) as (f)(4)(ii) through (f)(4)(v);
Revise redesignated paragraph (f)(4)(ii) to state that
SNFs and HHAs must submit cost reports in a standardized electronic
format for cost reporting periods beginning on or after October 1,
1995; and
In redesignated paragraphs (f)(4)(iii) through (f)(4)(v),
replace the word ``hospital'' wherever it appears with the word
``provider.''
III. 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 proposed rule such as this would
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 proposed 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 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 proposed rule would 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 proposed rule would require
SNFs and HHAs, like hospitals, to submit their Medicare cost reports in
a standardized electronic format. We anticipate that this requirement
would take effect for cost reporting periods beginning on or after
October 1, 1995, meaning that the first electronic cost reports would
be due February 28, 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 proposed rule
would 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 would not affect
those providers that do not file a full cost report and, as stated
above, would not be required to submit cost reports electronically.
This proposed 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 proposed rule on those providers who do not
prepare electronic cost reports would 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 proposed 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 recordkeeping
purposes, as well as for submitting electronically generated bills to
their fiscal intermediaries, for example. Thus, we do not believe that
obtaining computer equipment would be a major obstacle to electronic
cost reporting for most providers. For those providers that would have
to purchase computer equipment, we note that, in accordance with
current regulations governing payment of provider costs, Medicare would
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 would 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 would impose a
large burden on providers. An additional cost would 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 would be equally effective for SNFs and HHAs,
with the benefits (such as increased accuracy and decreased
[[Page 62240]]
preparation time) outweighing the costs of implementation for most
providers.
In conclusion, we have determined that this proposed rule would not
have a significant effect on SNF and HHA costs because these providers
would 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 would be available to providers for whom the
requirement would impose a financial hardship. SNFs and HHAs would only
be affected to the extent that, absent a waiver, all would 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, would 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.
We welcome comments on the effect of the electronic cost reporting
requirement, its benefits or disadvantages, the proposed implementation
date, and issues related to the waiver process.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget (OMB).
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, agencies are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
Whether the information collection is necessary and useful
to carry out the proper functions of the agency;
The accuracy of the agency's estimate of the information
collection burden;
The quality, utility, and clarity of the information to be
collected; and
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
Therefore, we are soliciting public comment on each of these issues
for the information collection requirements discussed below.
As discussed in detail above, this proposed rule would require that
SNFs and HHAs submit cost reports in a standardized electronic format
for cost reporting periods beginning on or after October 1, 1995. That
is, providers would be required to file a diskette containing the
required cost report data in a standardized electronic format. We
believe that this requirement would reduce the paperwork and
information collection burden for those SNFs and HHAs that currently do
not submit electronically prepared cost reports. Specifically, we
estimate that the number of hours each provider would save by
submitting an electronically prepared cost report instead of manually
preparing, and photocopying, the cost report would be an average of 9
hours for each affected SNF and 4.5 hours for each affected HHA.
Assuming that approximately 25 percent of all SNFs and HHAs would be
affected, that is roughly 3,000 SNFs and 2,000 HHAs, we estimate that
SNFs would save approximately 27,000 hours per year completing cost
reports, and HHAs would save about 9,000 hours per year.
We note that the overall information collection and recordkeeping
burden associated with filing SNF costs reports has been approved by
OMB through January 1998 (OMB approval number 0938-0463). Additionally,
OMB has approved the information collection burden for HHA cost reports
through October 1997 (approval number 0938-0022). We would 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.
The information collection and recordkeeping requirements contained
in Sec. 413.24 are not effective until they have been approved by OMB.
A notice will be published in the Federal Register when approval is
obtained. Organizations and individuals that wish to submit comments on
the information and recordkeeping requirements set forth in Sec. 413.24
should direct them to the OMB official whose name appears in the
ADDRESSES section of this preamble.
V. Response to Comments
Because of the large number of items of correspondence we normally
receive on Federal Register documents published for comment, we are not
able to acknowledge or respond to them individually. We will consider
all comments we receive by the date and time specified in the ``DATES''
section of this preamble, and, if we proceed with a subsequent
document, we will respond to the comments in the preamble to that
document.
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
1. The authority citation for part 413 continues to read as
follows:
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 413.24 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 beginning on
or after October 1, 1995, 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
[[Page 62241]]
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 beginning
on or after October 1, 1995, 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. 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. The provider must submit
a written request for delay or waiver with necessary supporting
documentation to its intermediary at least 120 days prior to 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: June 21, 1995.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 95-29542 Filed 12-4-95; 8:45 am]
BILLING CODE 4120-01-P
