Title: Section 446.1 - Introduction
Section 446.1 Introduction. (a) Public Law 95-142, section 19, requires that for the purposes of reporting the cost of services provided by, of planning and of measuring and comparing the efficiency of and effective use of services in, hospitals, the Secretary of Health and Human Services shall establish by regulation a uniform system for reporting certain types of information. It further states that in reporting under such a system, hospitals shall employ such chart of accounts, definitions, principles and statistics as the Secretary of Health and Human Services may prescribe in order to reach a uniform reconciliation of financial and statistical data for specified uniform reports to the Secretary of Health and Human Services.
(b) First, hospitals must follow a set of uniform reporting policies and practices as specified in Part 442 of this Article. Items such as methods of capitalization and depreciation of assets and direct charging of medical supplies and payroll-related employee benefits to using centers are examples of important policies which must be followed for reporting purposes. When these policies differ from those of the hospital, reconciliations must be made to reflect the required policies in completing the uniform financial report.
(c) Secondly, the principles and concepts utilized in the preparation of the uniform financial report will be based upon a portrayal of the hospital's activities on a functional basis regardless of third-party reimbursement policies. The uniform financial report described in this Manual has been designed to flow directly into the Federal cost reports required for Titles 18 and 19 where the functional trial balance of expenses is subject to grouping, reclassification and adjustment as the data moves to the reimbursement worksheets.
(d) The third key principle affecting the preparation of the uniform financial report is the requirement that costs will be measured at a level where uniformity can be obtained and a standard output measurement applied. For purposes of reporting, it was determined that standard units of measure would be applied to cost centers. Therefore, for uniform functional reporting of revenue and expense there may be a need for reclassification to convert revenue or costs from the responsibility reporting format to a functional reporting format.
(e) Responsibility reporting is defined as the reporting of costs according to organizational units such as departments.
(f) Functional reporting is defined as the reporting of costs according to type of activity.
(g) Total costs are the same with either functional or responsibility reporting. However, because organization structures vary among hospitals, responsibility reporting does not allow the comparability necessary for reasonable evaluation. Therefore, the reporting system for hospitals was developed to allow comparable reporting of hospital costs while hospitals maintain responsibility accounting systems if they so desire.
(h) Hospitals are required to report:
(1) hospital profile data--data identifying the control, type, services offered, certification(s) , programs, coverage, etc. of the facility;
(2) assets, liabilities and equity--all balance sheet accounts whose titles are capitalized in the listing of accounts and whose numerical code ends in "0" when such assets, liabilities and equity exist (and certain subaccounts as noted in section 446.8 of this Part);
(3) daily hospital services--all revenue and expense centers whose titles are capitalized in the listing of accounts and whose numerical code ends in "0" when such revenue centers and cost centers exist and are located in a discrete unit of the facility (and certain subaccounts as noted in section 446.9 of this Part). A discrete unit is a separately organized, staffed and equipped unit of the facility;
(4) where two or more daily hospital services, as defined in Part 444 of this Article, are provided in the same unit, the revenue and expense applicable to that unit must be reported in the functional revenue and cost centers which best describe the principal patient service provided in the combined unit. For example, assume that a hospital maintains a combined acute care unit which provides medical/surgical, pediatric and obstetrics acute care. Also assume that principal patient care service provided in this unit is medical/surgical acute care. The hospital in this situation will report the revenue and expense applicable to this unit as being medical/surgical acute care. Furthermore, the hospital, when completing the Services Inventory Worksheet, will indicate that Pediatric Acute Care and Obstetrics Acute Care are being reported as medical/surgical acute care in the reporting forms by entering the Medical/Surgical Acute account number;
(5) all other revenue centers and cost centers--all other revenue centers and cost centers whose titles are capitalized in the listing of accounts and whose numerical code ends in "0" when the services or function exists or is performed in the hospital, irrespective of whether or not it is a discrete unit (and certain subaccounts as noted in section 446.9 of this Part); (6) units of measure--the required standard unit of measure must be accumulated and reported for all expense centers indicated in Part 444 of this Article;
(7) natural classification of expense--all natural classifications of expense, except salaries and wages, whose numerical code ends in 0". All of the salaries and wages sub-natural classifications e.g., .01 Management and Supervision, .02 Technician and Specialist, .03 Registered Nurse, etc.) must be reported for each functional cost center, as appropriate;
(8) other supplemental reimbursement reporting--for other third-party reimbursement as described in sections 446.7 through 446.44 of this Part.
(i) All data reported must be presented in accordance with the listing of accounts and definitions, identified in other parts of this Manual. No line or column description may be changed under any circumstances, unless an exception has been granted. For Medicare purposes only, substitute cost reporting forms may be used. All substitute cost reporting forms must be identical in all respects to the Health Care Financing Administration (HCFA) forms, including designation by some distinctive symbol or character of those areas which are shaded on the official HCFA forms. Substitute cost reporting forms may be accepted for use in lieu of the official HCFA forms, subject to review and acceptance by HCFA. HCFA will also accept the report in machine-readable media subject to the specifications to be prescribed by HCFA at a later date.
VOLUME C (Title 10)