[Code of Federal Regulations]
[Title 42, Volume 2]
[Revised as of October 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR413.20]

[Page 539-540]
 
                         TITLE 42--PUBLIC HEALTH
 
                    CHAPTER IV--CENTERS FOR MEDICARE
                          & MEDICAID SERVICES,
                        DEPARTMENT OF HEALTH AND
                             HUMAN SERVICES
 
 PART 413_PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR 
 
                Subpart B_Accounting Records and Reports
 
Sec. 413.20  Financial data and reports.


    (a) General. The principles of cost reimbursement require that 
providers maintain sufficient financial records and statistical data for 
proper determination of costs payable under the program. Standardized 
definitions, accounting, statistics, and reporting practices that are 
widely accepted in the hospital and related fields are followed. Changes 
in these practices and systems will not be required in order to 
determine costs payable under the principles of reimbursement. 
Essentially the methods of determining costs payable under Medicare 
involve making use of data available from the institution's basis 
accounts, as usually maintained, to arrive at equitable and proper 
payment for services to beneficiaries.
    (b) Frequency of cost reports. Cost reports are required from 
providers on an annual basis with reporting periods based on the 
provider's accounting year. In the interpretation and application of the 
principles of reimbursement, the fiscal intermediaries will be an 
important source of consultative assistance to providers and will be 
available to deal with questions and problems on a day-to-day basis.
    (c) Recordkeeping requirements for new providers. A newly 
participating provider of services (as defined in Sec. 400.202 of this 
chapter) must make available to its selected intermediary for 
examination its fiscal and other records for the purpose of determining 
such provider's ongoing recordkeeping capability and inform the 
intermediary of the date its initial Medicare cost reporting period 
ends. This examination is intended to assure that--
    (1) The provider has an adequate ongoing system for furnishing the 
records needed to provide accurate cost data and other information 
capable of verification by qualified auditors and adequate for cost 
reporting purposes under section 1815 of the Act; and

[[Page 540]]

    (2) No financial arrangements exist that will thwart the commitment 
of the Medicare program to reimburse providers the reasonable cost of 
services furnished beneficiaries. The data and information to be 
examined include cost, revenue, statistical, and other information 
pertinent to reimbursement including, but not limited to, that described 
in paragraph (d) of this section and in Sec. 413.24.
    (d) Continuing provider recordkeeping requirements. (1) The provider 
must furnish such information to the intermediary as may be necessary 
to--
    (i) Assure proper payment by the program, including the extent to 
which there is any common ownership or control (as described in Sec. 
413.17(b)(2) and (3)) between providers or other organizations, and as 
may be needed to identify the parties responsible for submitting program 
cost reports;
    (ii) Receive program payments; and
    (iii) Satisfy program overpayment determinations.
    (2) The provider must permit the intermediary to examine such 
records and documents as are necessary to ascertain information 
pertinent to the determination of the proper amount of program payments 
due. These records include, but are not limited to, matters pertaining 
to--
    (i) Provider ownership, organization, and operation;
    (ii) Fiscal, medical, and other recordkeeping systems;
    (iii) Federal income tax status;
    (iv) Asset acquisition, lease, sale, or other action;
    (v) Franchise or management arrangements;
    (vi) Patient service charge schedules;
    (vii) Costs of operation;
    (viii) Amounts of income received by source and purpose; and
    (ix) Flow of funds and working capital.
    (3) The provider, upon request, must furnish the intermediary copies 
of patient service charge schedules and changes thereto as they are put 
into effect. The intermediary will evaluate such charge schedules to 
determine the extent to which they may be used for determining program 
payment.
    (e) Suspension of program payments to a provider. If an intermediary 
determines that a provider does not maintain or no longer maintains 
adequate records for the determination of reasonable cost under the 
Medicare program, payments to such provider will be suspended until the 
intermediary is assured that adequate records are maintained. Before 
suspending payments to a provider, the intermediary will, in accordance 
with the provisions in Sec. 405.372(a) of this chapter, send written 
notice to such provider of its intent to suspend payments. The notice 
will explain the basis for the intermediary's determination with respect 
to the provider's records and will identify the provider's recordkeeping 
deficiencies. The provider must be given the opportunity, in accordance 
with Sec. 405.372(b) of this chapter, to submit a statement (including 
any pertinent evidence) as to why the suspension must not be put into 
effect.

[51 FR 34793, Sept. 30, 1986, as amended at 61 FR 63749, Dec. 2, 1996]