Review effect on cost reports: Impact smaller than anticipated

Hospitals seeking Medicare payment are required to submit Medicare Cost Reports to their respective fiscal intermediaries, who in turn are required to desk review and sometimes audit the reports. The reviewed or audited report is considered more reliable than the originally submitted report and provides the basis for final Medicare payment. This study quantifies the impact of the review process, finding that, for the most part, the effect is quite small, usually less than 1 percent. Passthrough costs, however, were the exception to this rule. Capital and education passthrough costs, on a per discharge basis, were reduced about 6 percent.