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Medicare Cost Reports – home health cost report and hospice cost reports

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Cost Report Preparation Services


Medicare requires that providers of certain services are required to prepare on an annual basis a cost report which shows the total expenses to provide services and the Medicare allowable expenses used by CMS to review and adjust rates. The information is also used by MedPac, Medicare Payment Advisory Services Commission, to advise the US Congress on the financing and delivery of care.

Parts of the Medicare Cost Reports are used to determine wage adjustments for the labor components for services in certain geographic areas of the United States. Also, for some PPS providers the Bad Debts are calculated and reimbursed according to CMS policy.

The accuracy of the wage index information along with the Bad Debt Accuracy in producing the cost reports are of extreme importance. If they are calculated incorrectly, the provider is under reimbursed for allowable services provided.

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A valid way to analyze this information is to breakdown the Medicare Cost Report into key components and compare to industry averages to see how your facility compares to the broader market.

Key Metrics in Cost Report data (Important Data)

Unlocking the WEALTH of Information in your Cost Report

In all types of Medicare Cost Reports there are key Matrices that show the management how well the provider is delivering the care to the community. Some examples are:

  • Skilled Nursing Facility (SNF) – General Inpatient Cost per Diem, Average Length of Stay and PPS amounts compared to Cost.

  • Home Health Agency (HHA) – Revenue per Episode, Cost per Episode, and Utilization per Episode.

  • Hospice Agency – Average Cost Per Diem, Average Revenue per Diem and Capitation Calculation on an interim basis.

  • Rural Health Clinics – PPS rate compared to per Diem Costs, Bad Debt calculations.

  • Federally Qualified Health Clinics (FQHC) – PPS Rate compared to Per Diem Costs, Bad Debt Calculations.

  • PPS Hospital – Wage Index information, Bad Debt calculations.

  • Critical Access Hospitals – Cost to Charge Ratio, Case Payer Mix, Bad Debt calculations.


Joseph Kenny, CPA, CMA
Paisley & Elm, LLC
1724 W. Berwyn Ave #1
Chicago, Illinois 60640
Cellular 312-203-1771
Fax 312-275-7967

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To get more information on Cost Report filing
Joseph Kenny, CPA, CMA