Medicare Cost Report

Key facts

Legal basis

42 CFR 413.20 and 413.24

Hospital form

CMS-2552-10

Filing deadline

Generally five months after the end of the provider's fiscal year

Filed with

The provider's Medicare Administrative Contractor (MAC)

Public dataset

Healthcare Cost Report Information System (HCRIS)

What is a Medicare cost report?

Before prospective payment, Medicare paid most institutions based on their reported costs, and the cost report was the settlement document. Most providers now receive prospective rates, but cost reports still settle cost-based items such as graduate medical education, bad debt and Critical Access Hospital payments, and they supply data CMS uses to set future rates.

Hospitals, skilled nursing facilities, home health agencies, hospices, dialysis facilities, rural health clinics, federally qualified health centers and community mental health centers file cost reports, each on its own form. Hospitals use Form CMS-2552-10, and skilled nursing facilities use Form CMS-2540-10.

How a hospital cost report is structured

The hospital report is organized into worksheets. Key ones include:

• Worksheet S series: provider identification and ownership, beds, patient days and discharges by payer (S-3), and uncompensated and indigent care (S-10).
• Worksheet A: expenses by cost center, with reclassifications and adjustments.
• Worksheet B: allocation of overhead costs, such as buildings, administration and housekeeping, to patient care departments.
• Worksheet C: departmental costs and charges used to compute cost-to-charge ratios.
• Worksheets D and E: apportionment of costs to Medicare and calculation of the Medicare settlement.
• Worksheet G: balance sheet and statement of revenues and expenses.

Why cost reports matter

Cost reports are the broadest public source of standardized financial and operating data for U.S. hospitals, covering for-profit, nonprofit and government facilities alike:

• Analysts derive operating margins, payer mix, cost-to-charge ratios, staffing, uncompensated care and bed counts, all keyed to the CMS Certification Number.
• Cost report data feeds the Medicare wage index, uncompensated care payments and outlier calculations, so it shapes future payment rates.
• Investors and consultants use multi-year cost report trends to screen acquisition, partnership and turnaround targets.

Limitations of cost report data

Public HCRIS data reflects reports as filed, amended or settled, so values can change after contractor review. Fiscal years differ across hospitals, cost allocation methods vary, many statistics are self-reported with limited audit, and data typically lags by one to two years. Compare hospitals on the same form version and period, and check for implausible outliers before relying on a figure.