Reimbursement & Cost Reporting Solutions


Now that Medicare has fully implemented prospective payment systems for the majority of provider types – including acute care, psychiatric and rehabilitation care, skilled nursing and home health services – nearly all payments to hospitals are based on predetermined rates. This makes retroactive settlements unnecessary, so reliance on the cost report as a settlement tool has diminished. In fact, most providers have the idea that it has little importance. This can be an expensive mistake, because it still plays a role in the final settlement.

The Centers for Medicare and Medicaid Services (“CMS”) continues using the cost report to:

  • Determine final settlements for:
    • Electronic Health Record Initiatives
    • Graduate Medical Education (direct and indirect)
    • Nursing and Allied Health Education
    • Disproportionate Share
    • Medicare Bad Debts
    • Organ acquisition
    • RHC/FQHC Services
  • Report salaries and wages to compute wage indices

With the transition to MS-DRGs, the cost report serves as the basis for computing the relative weights of the MS-DRGs. Because the cost report measures the relationship of costs to charges and the resulting ratios are used as a basis to compute these relative weights, it is a key element of the payment system.

Additionally, CMS monitors the effectiveness of payment systems by:

  • Determining adequacy of payments to hospitals by monitoring cost fluctuations
  • Monitoring trends in changing healthcare delivery and related costs
  • Collecting data for the potential development of new reimbursement systems

Each of these items factor into payments that are made to hospitals. If providers are not aware of the quickly changing regulatory environment, they will be underpaid all too often. So an accurately prepared cost report, that meets all regulatory requirements, backed by experienced reimbursement support, is still critical to overall financial success.

The cost-effective way to approach cost reporting

Let our highly experienced professionals assist with every reimbursement function. We can:

  • Prepare cost reports
  • Estimate contractual allowances
  • Perform regulatory research analysis
  • Assist with MAC/fiscal intermediary audits
  • Prepare and manage appeals
  • Provide support through the appeal process

With our unmatched level of expertise and support, making SunStone a key part of your reimbursement team just makes good financial sense.


Brian J. Barbera
James J. O’Connell
Frank Tokic, CPA