[Federal Register Volume 60, Number 123 (Tuesday, June 27, 1995)]
[Rules and Regulations]
[Pages 33123-33126]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14782]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 413
[BPD-689-F]
RIN 0938-AE80
Medicare Program; Uniform Electronic Cost Reporting System for
Hospitals
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule.
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SUMMARY: This final rule responds to comments on the May 25, 1994,
final rule with comment period that implemented a standardized
electronic cost reporting system for all hospitals under the Medicare
program. In that rule, we solicited comments on the requirement that
cost reporting software be able to detect changes made to the
electronic file after the provider has submitted it to the fiscal
intermediary. This final rule responds to comments on that requirement
and clarifies that although changes to the ``as-filed'' electronic cost
report are prohibited, an intermediary makes a working copy of the as-
filed electronic cost report for use in the settlement process.
EFFECTIVE DATE: These regulations are effective on July 27, 1995.
FOR FURTHER INFORMATION CONTACT: Thomas Talbott (410) 966-4592.
SUPPLEMENTARY INFORMATION:
I. Background
A. General
Under Medicare, hospitals are paid for inpatient hospital services
that they furnish to beneficiaries under Part A (Hospital Insurance).
Currently, most hospitals are paid for their inpatient hospital
services under the prospective payment systems for operating and
capital costs in accordance with sections 1886(d) and (g) of the Social
Security Act (the Act) and 42 CFR Part 412. Under these systems,
Medicare payment is made at a predetermined, specific rate for each
hospital discharge based on the information contained on actual bills
submitted.
Section 1886(f)(1)(A) of the Act provides that the Secretary will
maintain a system for reporting costs of hospitals paid under the
prospective payment systems. Section 412.52 requires all hospitals
participating in the prospective payment systems to meet the
recordkeeping and cost reporting requirements of Secs. 413.20 and
413.24, which include submitting a cost report for each 12-month
period.
The hospitals and hospital units that are excluded from the
prospective payment systems are generally paid an amount based on the
reasonable cost of services furnished to beneficiaries. The inpatient
operating costs of these hospitals and hospital units are subject to
the ceiling on the rate of hospital cost increases in accordance with
section 1886(b) of the Act and Sec. 413.40.
Sections 1815(a) and 1833(e) of the Act provide that no payments
will be made to a hospital unless it has furnished the information,
requested by the Secretary, needed to determine the amount of payments
due the hospital under the Medicare program. In general, hospitals
submit this information through cost reports that cover a 12-month
period.
All hospitals participating in the Medicare program, whether they
are paid on a reasonable cost basis or under the prospective payment
systems, are required under Sec. 413.20(a) to ``maintain sufficient
financial records and statistical data for proper determination of
costs payable under the program.'' In addition, hospitals must use
standardized definitions and follow accepted accounting, statistical,
and reporting practices. Under the provisions of Secs. 413.20(b) and
413.24(f), hospitals are required to submit cost reports annually, with
the reporting period based on the hospital's accounting year.
Section 1886(f)(1)(B)(i) of the Act provides that the Secretary
will place into effect a standardized electronic cost reporting format
for hospitals under Medicare. This standardized electronic cost
reporting format does not require any additional data from hospitals.
Section 1886(f)(1)(B)(ii) of the Act provides that the Secretary may
delay or waive the implementation of the electronic format in instances
where such implementation would result in financial hardship for a
hospital (for example, a hospital with a small percentage of inpatients
entitled to Medicare benefits). These provisions apply to hospital cost
reporting periods beginning on or after October 1, 1989.
B. Provisions of the August 19, 1991 Proposed Rule
On August 19, 1991, we published a proposed rule (56 FR 41110) to
implement sections 1886(f)(1)(B)(i) and (ii) of the Act. We proposed
that cost reports be submitted in a standardized electronic format. We
proposed that the hospital's cost report software must be able to
produce a standardized output file in American Standard Code for
Information Interchange (ASCII) format. We proposed that all
intermediaries have the ability to read this standardized file and
produce an accurate cost report. We proposed rules for suspension of
Medicare payment if a hospital refuses to submit the cost report
electronically. We also specified that if a hospital believes that
implementation of the electronic submission requirement would cause a
financial hardship, the hospital should submit a written request for a
waiver or a delay of these requirements, with supporting documentation,
to the hospital's intermediary. See section III of the proposed rule
(56 FR 41111 through 41112).
C. Provisions of the May 25, 1994 Final Rule With Comment Period
On May 25, 1994, we published a final rule with comment period to
confirm the proposed regulations and respond to public comments on the
proposed rule (59 FR 26960). As a result of public comments on the
proposed rule, we eliminated the requirement that providers file a hard
copy cost report in addition to the electronic file. Instead, we
required that, in addition to the electronic file, a hospital must
submit hard copies of a settlement summary, a statement of certain
worksheet totals found in the electronic file, and a signed statement
certifying the accuracy of the [[Page 33124]] electronic file or the
manually prepared cost report.
The purpose of these changes was to reduce the burden on providers
and ensure the accuracy of the data contained in the electronic file.
However, we also needed to ensure the electronic cost report is not
altered once it leaves the provider. Thus, in conjunction with the
changes made based on public comments, we implemented several changes
designed to preserve the integrity of the electronic cost report once
the provider files it with the intermediary. We required in
Sec. 413.24(f)(4)(ii) that the provider's software must be capable of
disclosing that changes have been made to the cost report file after
the provider has submitted it to the intermediary. We stated that
electronic cost reporting software will be modified so that the cost
report will calculate a ``hash total,'' that is, a number representing
the sum of the worksheet totals contained in the provider's as-filed
cost report. If any data in the electronic file are changed after the
hash total is calculated, the electronic file will disclose that a
change has been made. We also required that an intermediary may not
alter a cost report once it has been filed by a hospital and must
reject any cost report that does not pass all specified edits and
return it to the provider for correction.
Because providers may not have anticipated the changes needed to
preserve the integrity of the cost report, we solicited comments on the
requirement in Sec. 413.24(f)(4)(ii) that all cost reporting software
must be able to disclose changes made to the electronic file after the
provider has submitted its cost report to the intermediary.
II. Discussion of Public Comments
In response to the May 25, 1994 final rule with comment period, we
received three timely items of correspondence related to the
requirement that cost reporting software be able to detect changes to
the electronic cost report after the provider has submitted it to the
intermediary.
Comment: One commenter pointed out that a strict interpretation of
the requirement in Sec. 413.24(f)(4)(ii) that the ``intermediary may
not alter the cost report once it has been filed by the hospital''
would mean that the intermediary could not make audit adjustments to
the provider's as-filed electronic cost report. Another commenter asked
whether the intermediary can adjust the cost report for additional
information not required for acceptability but needed in such cases as
Hospital Cost Report Information System (HCRIS) preparation.
Response: We did not intend to imply that the intermediary may not
make audit adjustments to a provider's cost report. To clarify this
point, we are revising Sec. 413.24(f)(4)(ii) to state that the as-filed
cost report may not be altered, but the intermediary must make a
working copy of the as-filed cost report to be used for the settlement
process.
Specifically, we are revising Sec. 413.24(f)(4)(ii) to require
that--
The fiscal intermediary store the hospital's as-filed
electronic cost report and not alter that file for any reason.
The fiscal intermediary make 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 fiscal intermediary may also employ a working copy of the as-
filed electronic cost report for making any adjustments needed for
HCRIS purposes.
Comment: Two commenters suggested that, to maintain the integrity
of the provider's electronic file, HCFA should require the
establishment of a print file submitted on diskette as a substitute for
the hard copy cost report. Another commenter supported the use of
``hash totals'' in the electronic cost report (ECR) if the vendors are
able to create ECR files that cannot be edited without detection. The
commenter suggested that the ``hash totals'' in the ECR be printed in
cost report text and on the hard copy certification page. The commenter
also indicated that time and date stamps on the ECR file and printed
cost report are not useful.
Response: As stated in the final rule with comment period,
hospitals are no longer required to submit hard copies of the cost
report in addition to the electronic file. We agree with the
commenters' suggestion that an electronic file containing the complete
printed text of the provider's cost report should be submitted in place
of the hard copy. Since the ASCII file contains input data only, the
print file will be helpful in settling discrepancies between the fiscal
intermediary's settlement amounts and the provider's settlement
amounts. Therefore, we intend to publish in the Provider Reimbursement
Manual (HCFA Pub. 15-II) the requirement that providers submit an
electronic file containing the entire printed text and an encryption
file (hash totals) of the provider's cost report in addition to the
ASCII file used for electronic cost reporting.
We disagree that the time and date stamps on the electronic cost
report are not useful. The time and date stamps on the electronic cost
report file must agree with the certification page that accompanies the
electronic cost report file. This requirement assures us that the cost
report has been reviewed and accepted and has not been altered after
certification by the signing officer. This requirement coupled with the
encryption file will ensure that the integrity of the file has been
maintained.
Comment: One commenter suggested that the regulation mention what
the responsibility of each of the 11 vendors will be to maintain
consistency between software programs, particularly in the
implementation of edits. The commenter indicated that if the ADR vendor
establishes additional edits not specified by HCFA, the electronic cost
report file created by the provider's software vendor system may result
in rejection by the intermediary. This possibility places an undue
burden on the provider who filed under the assumption that all errors
were detected and corrected before submission.
Response: All vendors will be responsible for providing their
clients with the software to create a print file, an encryption file,
and the electronic cost report file. In addition, the three Automated
Desk Review (ADR) vendors are responsible for developing a software
program that will accept the filing of all three files, as mentioned
above, with the intermediary. All of the software programs will
maintain consistent edits that, when specified edits are failed, will
result in the intermediary rejecting the cost report. These edits are
established by HCFA and published in section 130 of the Provider
Reimbursement Manual (HCFA Pub. 15-II). An ADR vendor may establish
additional edits, but failure to meet such edits may not result in
rejection of the cost report by the intermediary.
III. Technical Changes
We received several inquiries implying that it is unclear in the
regulations when an electronic cost report is considered timely filed.
Therefore, in Sec. 413.24(f)(4)(ii), we are clarifying that, for
purposes of the due date requirements specified in Sec. 413.24(f)(2),
an electronic cost report is not considered to be filed until it is
accepted by the intermediary.
In the May 25, 1994 final rule with comment period, we eliminated
the requirement that providers file a hard copy of the cost report. We
stated that effective for cost reporting periods ending on or after
October 1, 1994, this requirement is replaced with the submittal of a
hard copy of a settlement [[Page 33125]] summary, a statement of
certain worksheet totals found within the electronic file, and a
certification statement. After publication, we realized that making
this requirement effective for cost reporting periods ending on or
after October 1, 1994, did not make sense since cost reporting periods
generally end on the last day of a month. To eliminate any confusion
associated with this requirement, we are making a technical correction
to Sec. 413.24(f)(4)(iii) to specify that the replacement of the
submission of a hard copy of the cost report with the revised
documentation is effective for cost reporting periods ending on or
after September 30, 1994, rather than for periods ending on or after
October 1, 1994.
IV. Collection of Information Requirements
As discussed in our May 25, 1994 final rule with comment period (59
FR 26963), Sec. 413.24 contains information collection and
recordkeeping requirements related to cost reporting that are subject
to review by the Office of Management and Budget (OMB) under the
Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.). The overall
recordkeeping and information collection burden associated with filing
the hospital cost report has been approved by OMB through August 31,
1996 under OMB No. 0938-0050.
In the May 25, 1994 final rule with comment period, we revised
Sec. 413.24 to implement the statutory requirement that hospitals
submit their cost reports in a uniform electronic format. As we stated
in the May 25, 1994 document, approximately 90 percent of hospitals
participating in Medicare already file their cost reports
electronically and thus are essentially unaffected by the requirement
that hospitals submit cost reports in an electronic format. For the
remaining hospitals, we stated that it was possible they would
initially experience a small additional reporting burden. However, once
these hospitals become familiar with electronic reporting, there will
no longer be an additional burden and there may be a decrease in burden
since the time needed to compute the cost report will no longer be
required.
This final rule responds to comments on the May 25, 1994 document
and makes only minor technical changes to Sec. 413.24. We received no
comments relating to the discussion in the May 25, 1994 document of the
information collection and recordkeeping burden. The technical changes
contained in this final rule have no effect for information collection
and recordkeeping purposes. However, as stated in the May 25, 1994
final rule with comment period, 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 desiring to submit comments on the information collection
and recordkeeping requirements set forth in Sec. 413.24 should direct
them to the Office of Information and Regulatory Affairs, Office of
Management and Budget, Human Resources and Housing Branch, Room 10235,
New Executive Office Building, Washington, D.C. 20503, Attention:
Allison Herron Eydt, HCFA Desk Officer.
V. Impact Statement
Unless we certify that a final rule will not have a significant
economic impact on a substantial number of small entities, we generally
prepare a regulatory flexibility analysis that is consistent with the
Regulatory Flexibility Act (RFA) (5 U.S.C. 601 through 612). For
purposes of the RFA, all hospitals and small businesses that distribute
cost-report software to hospitals are considered to be small entities.
Intermediaries are not included in the definition of a small entity.
Section 1102(b) of the Act requires us to prepare a regulatory
impact analysis if a final rule may have a significant impact on the
operations 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 has fewer than 50 beds and is located
outside of a Metropolitan Statistical Area.
This final rule is merely making clarifying and technical changes
to the regulations and will not have a significant effect on Medicare-
participating hospitals or software suppliers. Therefore, a regulatory
flexibility analysis is not required. We are not preparing a rural
impact statement since we certify that this final rule will not have a
significant economic impact on the operation 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.
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 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, 1122, 1814(b), 1815, 1833(a), (i), and
(n), 1861(v), 1871, 1881, 1883, and 1886 of the Social Security Act
(42 U.S.C. 1302, 1302a-1, 1395f(b), 1395g, 13951(a), (i), and (n),
1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww).
Subpart B--Accounting Records and Reports
2. In Sec. 413.24, the headings for paragraphs (f) and (f)(4) are
republished, paragraph (f)(4)(ii) and the first sentence of paragraph
(f)(4)(iii) are revised to read as follows:
Sec. 413.24 Adequate cost data and cost finding.
* * * * *
(f) Cost reports. * * *
(4) Electronic submission of cost reports. * * *
(ii) The fiscal intermediary stores the hospital'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 hospital'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 hospital 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.
(iii) Effective for cost reporting periods ending on or after
September 30, 1994, a hospital 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. * * *
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance)
[[Page 33126]] Dated: May 22, 1995.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 95-14782 Filed 6-26-95; 8:45 am]
BILLING CODE 4120-01-P
