Cost Report Review, Audit, Reimbursement Impact, and Compliance
Review, audit, and compliance exposure
The cost report is a certified claim, and the MAC reviews it through desk review and, where risk warrants, audit. Desk review compares the report to prior years, to S-2 and S-10 detail, and to cost-to-charge ratio outliers; audit may sample claims and trace them to the report. The product of review is a Notice of Program Reimbursement, which is the final determination for the period.
Appeal mechanics matter. A provider dissatisfied with the NPR may request a PRRB hearing within 180 days. The amount in controversy threshold must be met, and group appeals carry a higher threshold than individual appeals. Reopenings and revised reports have their own timing, and a settled report can still be adjusted for fraud or similar fault.
Compliance exposure arises from unsupported reclassifications, inflated S-10 charity care, misstated CCRs affecting outlier and pass-through payments, and related-party or home-office costs without documentation. Because cost report data drive future rates and DSH and uncompensated care shares, an error can have multi-year effect. The 60-day overpayment rule and the False Claims Act apply to cost report certifications.
Traps: missing the 180-day appeal window; assuming a desk review is not an audit; failing to keep workpapers supporting allocations; and treating S-10 as a marketing document rather than a certified data set. Rule of thumb: every number on the report should be traceable to a workpaper, a statistic, or a source document. If the trail cannot be produced, an adjustment is likely to be sustained.