A Medicare cost report is submitted by each Medicare participating hospital based on the hospital's own fiscal year.1 The Centers for Medicare and Medicaid Services (CMS) makes selected data from the Hospital Cost Report Information System (HCRIS) available as a public use file. This file contains data on utilization (Medicare, Medicaid, and total), Medicare costs and payments, total costs and charges for routine, ancillary and outpatient services, and data from the hospital's financial statement. These data have been used to describe the relationship of Medicare payments and costs for categories of hospital services covered by different payment systems, hospital cost patterns and trends, and overall hospital financial status.
The data from the financial statements are generally less reliable than data elements used for payment purposes. The instructions indicate that the worksheets should be prepared from the hospital's accounting books and records and do not provide specific line item definitions. The fields are normally not audited; however, adoption of a later filing date for certified cost reports may have improved the quality of the financial data in recent years. The cost report data are updated quarterly by CMS.
The cost report has inpatient utilization statistics for Medicare and Medicaid patients (discharges, days) but not for self-pay or charity care patients. Utilization statistics are not collected for outpatient visits. There is no information on revenues by payer class (other than Medicare charges). The only cost information is for Medicare patients and all patients. No information is collected on charity care.2
The financial data cannot be used in its current form to determine uncompensated care costs but can be used to establish overall measures of financial viability.3
In addition, the cost report data can be used to develop cost-to-charge ratios for inpatient services that can be applied to hospital charges to estimate the cost of providing services.
1. Medicare allows low-Medicare utilization hospitals such as children's hospitals to file low-volume reports that do not contain all the cost information required for the full cost report.
2. Under Medicare rules, bad debts, charity, and courtesy allowances are deductions from revenue and are not an allowable costs; however, bad debts attributable to the deductibles and coinsurance amounts for Medicare beneficiaries are reimbursable at 70% (effective in 2001 as a result of the BIPA restoration of BBA reductions).
3. In the future, data on uncompensated care costs should be available through the Medicare cost report. The BBRA requires the Secretary to collect through the cost report data on costs incurred by acute care hospitals in providing inpatient and outpatient hospital services for which the hospital is not compensated, including non-Medicare bad debt, charity care, and charges for Medicaid and indigent care. The provision is effective for cost reporting periods beginning on or after October 1, 2001. HCFA has not issued final instructions implementing this provision.