Financial Compliance and Ethical Decision Making
Critical Access Hospital: https://www.cms.gov/outreach-and-education/medicare-learning-
network-mln/mlnproducts/downloads/critaccesshospfctsht.pdf
Cost reports are typically prepared using commercially available software and filed electronically.
Determine the allowable costs for all departments (patient care and non-revenue producing overhead departments). Non-allowable costs (such as gift shop, cafeteria, research, physician private offices, and volunteers) are taken out.
Allocate the allowable costs of overhead departments in a step-down fashion to patient care departments and non-allowable departments. One of the outputs of this process is the ratio of cost to charges, a rough proxy for a cost accounting system.
Determine Medicare’s share of fully allowable costs based on payer mix (Medicare share of patient days).
Determine net settlement to/from Medicare by subtracting reimbursable costs from the interim payments.
