It’s time to start planning and gathering data for June 30 year-end Medicare interim rate and pass-through reviews. The Medicare Administrative Contractors (MACs) will soon send notices (usually via email) regarding second interim rate reviews (IRR) and pass-through reviews, requesting preparation of an interim rate questionnaire, interim cost report, or a cost report model. The notice will likely grant you two weeks from the date of the letter to submit the chosen IRR. Extensions are typically allowed but will not be approved past the current fiscal yearend.
The key factors to consider when choosing the period of the IRR and requesting extensions are expense, revenue, and payor mix trends for the year. If expenses have increased and revenues are stagnant or down, you are likely expecting a receivable. In this instance, we recommend preparing an IRR sooner than later to increase the Medicare interim rates and receive a lump sum to help make you whole for the underpayment. If expenses are down and revenue is up, maybe consider dawdling a bit (within the MACs approved extensions, of course).
The outcome of your IRR rates will also be shared with the Managed Care payors, so they should be considered as well. When your Managed Care rates are too low the hospital will be underpaid and there will be no lump sum or settlement to make you whole.
Whether completing the questionnaire, submitting an interim cost report or a cost report model, similar items are needed—but they will vary by entity type and services rendered. The difference is that an interim cost report will take longer to prepare. However, the outcome of an interim cost report will also give you a more accurate depiction of the current year expected rates and settlement.
Fair warning: if no data is submitted, depending on the hospital’s MAC, there could be temporary penalties, such as reductions to interim rates, lump sums due to Medicare, or pass-through payment withholdings. Other MACs may have no penalties and will let you use prior year cost data. The outcome of your IRR and decision of what to submit should be discussed with your cost report preparer to strategize the best way to maximize reimbursement.
Whether determining what IRR option to prepare, the period to use or if extensions should be used, we recommend reaching out to your favorite cost report preparer to make a plan sooner rather than later.
Happy cost reporting!
Shayna DesJardin, CPA
