Hospital Cost Audits

Under §§1815(a) and 1833(e) of the Social Security Act, CMS may review any documentation it deems necessary to determine whether payment for reasonable cost to a particular provider is appropriate. The implementing regulations at 42 CFR 413.20 and 413.24 explain this further.

Medicare institutional providers are required to maintain sufficient financial records and statistical data for proper determination of costs payable under the Medicare program. Cost reports are required from providers on an annual basis with reporting periods based on the provider's accounting year.

In keeping with these requirements, CMS contracts with Medicare Administrative Contractors (MACs) and specialized private firms to oversee, audit, and settle annual Medicare cost reports. In addition to MAC audit activities, CMS contracts with Myers & Stauffer to conduct reviews supporting special initiatives.

Myers & Stauffer will review specific cost report data related to selected cost issues. Impacted hospitals will receive an information request letter from the contractor informing them that the cost report is under review to confirm that the data reported on the Medicare cost report is accurate. Hospitals will be required to respond within the timeframe specified in the letter to support their claimed cost report data.

These reviews are in addition to any cost report audit activities completed by the MACs. Myers & Stauffer will work closely with the servicing MACs to obtain cost reports and other necessary information. Any adjustments resulting from the reviews performed by Myers & Stauffer will be incorporated in cost report settlements completed by the MACs.

Hospitals with questions about a specific audit or document requests should contact the Myers & Stauffer representative named in the correspondence. Questions about cost report filing or settlement should be directed to the servicing MAC.