If you own a home health or in-home hospice agency, you know compliance with Medicare regulations is critical to your financial health and ability to serve patients. But what happens if you miss a cost report deadline? Could it put your agency at risk of losing Medicare payments?
At the Home Health Consultant, we help agencies like yours navigate Medicare’s complex regulations. We’ve submitted hundreds of low and no-utilization cost reports over the years. Although we don't offer this service anymore, we wanted to share important information regarding cost reports so you can keep your agency prepared.
In this article, we’ll break down:
- what cost reports are
- who needs to file cost reports
- the different types of cost reports
- why timely cost report filing is essential for your agency’s compliance and financial stability
What Is a Medicare Cost Report and Why is it Required?
A Medicare cost report is a detailed financial document that home health and hospice agencies must report. This document is submitted to your Medicare Administrative Contractor (MAC).
If you're curious about MACs and the roles they play in the home health and hospice industry structure, you can learn more by clicking below.
A Medicare Cost Report outlines all costs, expenses, and revenue associated with patient care. Medicare uses this data to calculate fair reimbursement rates for agencies nationwide. In other words, filing a cost report directly impacts how much Medicare pays agencies like yours.
In this article we’ll be reviewing information pertaining to:
- Home Health Agency Cost Reports
- Hospice Cost Reports
The information in this article is accurate as of the time of publication. However, always be sure to check CMS and your MAC for the most up-to-date information about cost reports.
Who Needs to File a Medicare Cost Report?
If your agency has a Medicare provider number, you must submit a cost report annually. This is true even if you haven’t billed Medicare a single cent. If you have a provider number, filing a cost report is non-negotiable.
By filing your cost report, you remain compliant with federal regulations and keep your agency in good standing with Medicare.
When Are Cost Reports Due?
Because filing your cost report is so important to staying compliant, you must be aware of submission timelines. Submitting your cost report late, or even too close to the deadline, can result in issues with your agency’s billing if an issue is found.
Home health and in-home hospice cost reports are due five months after the end of the agency’s fiscal year.
For most agencies operating on a calendar year (January 1 – December 31), the Medicare cost report is due by May 31 of the following year. If your agency has a different fiscal year, your cost report is due at the end of the fifth month following the close of that fiscal year.
What Are the Different Types of Medicare Cost Reports?
Not all agencies file the same type of cost report. The type of cost report you need to file depends on the amount of total reimbursements you’ve received from Medicare.
1. Full-Utilization Cost Report
A Full-Utilization Cost Report is required for agencies that received more than $200,000 in Medicare reimbursement in the last fiscal year. This is the most detailed and comprehensive report.
2. Low-Utilization Cost Report
If your agency received Medicare payments totaling less than $200,000, you are required to file a Low-Utilization Cost Report. A low utilization cost report includes less detail and is less involved than a full cost report.
3. No-Utilization Cost Report
If your agency did not bill or receive any Medicare payments, you must still file a cost report. If this is the case for your agency, you are required to file a No-Utilization Cost Report. This is the simplest report and can often be completed in about an hour.
Why Are Cost Reports Critical for Your Home Health or Hospice Agency?
Filing an accurate and timely cost report is not just a regulatory requirement. Like many other components of maintaining compliance, filing your cost report directly affects your agency’s financial health. Here’s why:
1. Medicare Payments Depend on It
Missing the deadline = Medicare suspends all payments. If a cost report is not submitted and accepted on time, your agency will be placed on Medicare’s non-payment list. While you won’t lose your provider number, Medicare will pause all reimbursements until your cost report is submitted and accepted.
2. Avoid Costly Errors & Delays
Inaccurate reports can be rejected, forcing you to resubmit and wait for reimbursement to be reinstated. Errors can cause delays in payments, affecting your operations. This is why it’s incredibly important to file your cost report early-typically by the end of April.
3. Protect Future Reimbursement Rates
Medicare uses cost report data to adjust future reimbursement rates. Underreporting expenses could result in lower payments for services in the future.
How to Be Prepared for Filing Your Agency’s Medicare Cost Report
Because cost reports are so essential to maintaining your agency, it's important to be prepared. To streamline the filing process, take these proactive steps:
- Complete corporate taxes early—many financial details overlap.
- Gather key documents, including trial balances, general ledgers, 1099s, payroll records, and expense reports.
- Use home health or hospice software to track patient visits, service hours, and utilization reports.
- Work with an experienced cost report preparer for full or low utilization reports to avoid costly mistakes.
Should You File a Cost Report Yourself or Hire a Specialist?
You may be wondering if a Medicare Cost Report is something you can do yourself, or something you should hire out. For agencies filing a no-utilization report, handling it in-house is a reasonable option. To learn how to file a no-utilization cost report, check out our article below.
However, for low or full cost reports, we highly recommend working with a specialist. These professionals:
- Ensure accuracy and compliance
- Help avoid submission errors
- Prevent payment disruptions
Pro Tip: Instead of working with a typical accountant or CPA, it’s best to seek out a professional who specializes in cost reports. By working with a seasoned professional familiar with the process, you minimize the risks there is an issue with your cost report. You also often pay less for the preparation of the report
Why Filing Home Health & Hospice Medicare Cost Reports the Right Way Matters
Filing a Medicare cost report is not optional. It’s essential for maintaining compliance and securing future payments. Missing a deadline or submitting incorrect data can lead to:
- payment delays
- financial losses
- regulatory penalties
The best way to avoid costly mistakes is to prepare early and work with experts. If you need help, don’t wait until it’s too late.
At The Home Health Consultant, we’ve helped hundreds of agencies file low-utilization cost reports. Although this is a service we no longer offer, we wanted to provide a guide to help agencies with the process. You can learn how to file your low utilization cost report by clicking below.
*This article was written in consultation with Mariam Treystman.
*Disclaimer: The content provided in this article is not intended to be, nor should it be construed as, legal, financial, or professional advice. No consultant-client relationship is established by engaging with this content. You should seek the advice of a qualified attorney, financial advisor, or other professional regarding any legal or business matters. The consultant assumes no liability for any actions taken based on the information provided.
