[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