Medicare Cost Report Audit & Preparation — DC, Maryland & Virginia Healthcare Providers
Quick Answer: What is a Medicare cost report audit and who must file?
Medicare-participating hospitals, skilled nursing facilities (SNFs), FQHCs, and home health agencies must file an annual Medicare Cost Report with their Medicare Administrative Contractor (MAC). The cost report reconciles actual costs against Medicare reimbursement to determine the final settlement. CPA auditors verify the report complies with CMS cost reporting principles and identify additional reimbursable costs that providers often miss.
Key Medicare Cost Report Terms
Medicare Administrative Contractor (MAC)
Regional contractors that process Medicare claims, conduct audits, and manage Medicare cost report settlements on behalf of CMS. DC, Maryland, and Virginia providers are served by Novitas Solutions and CGS Administrators.
Cost Report Settlement
The final reconciliation between interim payments received during the year and the provider's actual allowable costs. A positive settlement means Medicare owes the provider additional money; a negative settlement means the provider must repay an overpayment.
FQHC Cost Report (Form CMS-224-14)
The annual cost report required of Federally Qualified Health Centers that reconciles the FQHC Prospective Payment System (PPS) rate against actual encounter costs to determine any settlement due.
Common Medicare Cost Report Problems We Solve
Cost report filed without a CPA review — missed $40,000 in reimbursable costs that auditors didn't flag until it was too late to amend
MAC contractor initiated a cost report audit and your internal team doesn't have the expertise to respond
FQHC cost report settlement keeps resulting in overpayments because visit coding doesn't match cost allocation
New provider status granted mid-year — first cost report due and no one on staff has ever prepared one
Prior year cost report settlement was reopened by MAC — facing repayment demand you weren't expecting
Medicare Cost Report Services
From first-year cost report preparation to MAC audit defense, we handle every aspect of your Medicare cost reporting compliance.
Medicare Cost Report Preparation
Annual preparation of all required CMS cost report forms for hospitals, FQHCs, SNFs, and HHAs. We compile required worksheets, allocate costs to proper cost centers, and submit via the CMS STAR system.
Interim Rate Analysis
Review of interim payment rates to identify opportunities for rate adjustments during the year. Early adjustments prevent large final settlements and improve cash flow.
Cost Allocation Review
Analysis of cost center allocations to maximize allowable reimbursement within CMS guidelines. Proper allocation methodology directly impacts your final settlement amount.
MAC Audit Defense
Representation during MAC cost report audits; response to information requests and settlement negotiations. We know the Provider Reimbursement Manual and defend your cost report effectively.
Cost Report Amendment
Preparation and filing of amended cost reports to correct errors or claim missed reimbursement. Amendments can be filed within 3 years of the Notice of Program Reimbursement (NPR).
New Provider Cost Report
First-year cost report preparation for newly Medicare-certified providers. Proper setup of your initial FQHC PPS rate or SNF cost report base has long-term reimbursement implications.
Medicare Cost Report Requirements by Provider Type
| Provider Type | Form Number | Filing Deadline | MAC Region |
|---|---|---|---|
| Hospital | CMS-2552-10 | 5 months after FYE | Novitas (DC, MD, VA) |
| FQHC | CMS-224-14 | 5 months after FYE | Novitas / CGS |
| Skilled Nursing Facility | CMS-2540-10 | 5 months after FYE | Novitas / CGS |
| Home Health Agency | CMS-1728-94 | 5 months after FYE | Novitas / CGS |
| Rural Health Clinic | CMS-222-92 | 5 months after FYE | Novitas |
| Hospice | CMS-1984-14 | 5 months after FYE | Novitas / CGS |
Our Medicare Cost Report Process
A structured 5-step process from data gathering to MAC submission.
Provider Data Gathering
Collect trial balance, general ledger, staffing statistics, and visit/discharge data needed for cost report completion.
Cost Center Mapping
Map expenses to CMS-required cost centers; identify the cost allocation methodology that maximizes allowable reimbursement.
Statistical Data Compilation
Compile required statistics (patient days, visit counts, FTE data) for allocation bases used throughout the cost report worksheets.
Report Preparation
Complete all applicable worksheets and schedules in the CMS cost report format; reconcile to audited financial statements.
MAC Submission and Follow-Up
Submit via the CMS STAR system; monitor for MAC acceptance and settlement calculation; respond to any MAC inquiries.
Serving DC, Maryland & Virginia Healthcare Providers
Washington DC
Children's National, Georgetown University Hospital, Howard University Hospital, GW Hospital, MedStar Washington. DC also has one of the highest FQHC densities in the US — Unity Health Care, Mary's Center, WholeFamily Health.
Maryland
Johns Hopkins Hospital System, University of Maryland Medical System, MedStar Montgomery. Maryland has significant SNF and home health agency populations across Prince George's and Montgomery Counties.
Virginia
Inova Health System, Sentara Healthcare, VCU Health. Northern Virginia's growing population has driven expansion of SNF and FQHC capacity in Fairfax and Arlington Counties.
Novitas Solutions handles MAC jurisdiction for DC, Maryland, and Virginia — all three jurisdictions in a single MAC region. Your Virtual CPA coordinates directly with Novitas on cost report submissions and audit responses.
Related Services
FQHC & Ryan White Audit
Single Audits and program-specific audits for FQHCs receiving federal grants.
Nonprofit Single Audit (2 CFR 200)
Federal grant compliance audits for nonprofits and healthcare organizations.
Government Contractor Audit
DCAA compliance and incurred cost submissions for federal contractors.
Grant Compliance Audit
Compliance audits for federal and state healthcare grants.
Attestation Services
AUPs, reviews, and compilations for healthcare organizations.
Book a Consultation
Talk to a Medicare cost report specialist about your situation.
Medicare Cost Report FAQs
Common questions from hospital finance teams, FQHC administrators, and SNF operators about Medicare cost report compliance.
Medicare Cost Report Due? Let's Get It Right.
Whether you're preparing your first cost report, facing a MAC audit, or need to amend a prior year filing, our CPA team has the healthcare reimbursement expertise you need.
Serving hospitals, FQHCs, SNFs, and home health agencies in Washington DC, Maryland, and Virginia.