Question

Describe the key elements of the Medicare cost report. Why is this report so important for hospital net revenues?

Your response must be at least 200 words in length.

Answer 1

Medicare cost report (MCR) is a requirement for those facilities that participate in the Medicare program. The facilities that participate in the Medicare program are hospitals, mental health facilities, skilled nursing facilities, rural health clinics, out-patient therapy facilities etc. MCR reports expenses for the above mentioned entities and it contains a series of forms that collects data that are financial in nature, descriptive in nature and statistical in nature. The types of information that is included in MCR are facility characteristics (like type of the facility, its ownership status, etc.), cost information, financial information, charge information and wage index information.

Medicare cost report (MCR) is important for net revenues of hospitals. MCR is used to determine if Medicare overpaid or underpaid the provider. It also helps in collecting information that will be used for the purpose of setting prospective payment rates. Facilities like hospitals receive Medicare payment on the basis of their Medicare cost reports. Net revenues of hospitals are affected if Medicare overpays or underpays them and this is determined by their MCR. For instance for acute care hospitals receives payment on the basis of prospectively set rates. The set rates determines the net revenues of these acute care hospitals and are determined using MCR. The system is known as IPPS (in patient prospective payment system) and in this system each case is classified as a type of diagnosis-related group (DRG). Different DRGs have different payment weights assigned to them and this is based on average resources used by the hospital to treat the Medicare patients. All these information is retrieved from MCR.

(264 words)