[Federal Register Volume 59, Number 100 (Wednesday, May 25, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-12458]
[[Page Unknown]]
[Federal Register: May 25, 1994]
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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
