The Importance of Critical Access Hospital Interim Medicare Cost Reports

As a cost-based reimbursed provider type, Critical Access Hospitals (CAHs) rely on their Medicare cost report to ensure appropriate reimbursement for a large portion of their business. Reimbursement surprises after fiscal year-end, when the cost report is being prepared for submission to your Medicare Administrative Contractor (MAC), is troublesome to your income statement as well as your cash flow.

Interim Medicare cost reports should be prepared throughout the year to ensure you have a good estimate of your Medicare reimbursement to avoid unexpected results. As the COVID Public Health Emergency (PHE) ended, new norms are arising which could change your Medicare reimbursement.

As you are reviewing your changing operations – volumes, payor mix, service lines, expenses, medical staff contracts, length of stays, statistical allocations, etc. – don’t forget that each of those changes will result in a different outcome on your Medicare cost report. Your Medicare cost report results should also then be communicated to and used by your Medicare HMO companies for reimbursement.

Since the Medicare HMO payor mix has grown, your reimbursement methodology has also changed. Know which companies you are contracted with and what the contract terms are. Also, be aware of what patient services require pre-authorization. A Medicare cost report receivable at year-end usually means you lost Medicare HMO reimbursement since most companies reimburse based on your Medicare interim rate letters.

Keeping track of your Medicare Bad Debts throughout the year will also ensure you are not over or underestimating that value. Changes in collection activity, revenue, and payors can impact the allowable Medicare Bad Debts.

Thank you to all the CAHs for your challenging role of providing essential and accessible healthcare services to rural Americans.

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Caren Puvalowski, CHFP is the Rural Healthcare Reimbursement Manager for The Rybar Group. She offers expertise in the area of Rural Hospital financial, accounting, revenue cycle and reimbursement experience. Her hands-on experience working in a variety of roles in the finance departments of CAHs, including multiple years as a Chief Financial Officer, allows her to identify both present and future reimbursement and payment opportunities.

Reach out to Caren for more information regarding cost report and other reimbursement opportunities for CAH. She can be reached at 810-853-6185 or via email at cpuvalowski@therybargroup.com. 

Focusing exclusively in the healthcare arena, The Rybar Group brings in-depth industry knowledge to help clients create solutions designed to identify opportunities for revenue generation, isolate root causes for underperformance, accelerate cash in the door and support long-term margin improvement. The Rybar Group does not dabble in reimbursement and revenue cycle solutions; we specialize in it.