Community Mental Health Cost (CMHC) Report

Chapter 45
COMMUNITY MENTAL HEALTH CENTER COST REPORT
FORM CMS-2088-17
Section
General. .............................................................................................................................. 4500
Rounding Standards for Fractional Computations............................................................. 4500.1
Acronyms and Abbreviations ............................................................................................ 4500.2
Recommended Sequence for Completing Form CMS-2088-17. ....................................... 4501
Worksheet S - Community Mental Health Center Provider Cost Report. ......................... 4502
Part I - Cost Report Status ..................................................................................... 4502.1
Part II - Certification by Officer or Administrator of Provider ............................. 4502.2
Part III - Settlement Summary ............................................................................... 4502.3
Worksheet S-1 - Community Mental Health Center Identification Data .......................... 4503
Part I - Identification Data ..................................................................................... 4503.1
Part II – Statistical Data ......................................................................................... 4503.2
Worksheet S-2 - Community Mental Health Center Reimbursement
Questionnaire ............................................................................................................... 4504
Worksheet A - Reclassification and Adjustment
of Trial Balance of Expenses. ...................................................................................... 4505
Worksheet A-6 - Reclassifications..................................................................................... 4506
Worksheet A-8 - Adjustments to Expenses. ...................................................................... 4507
Worksheet A-8-1 - Statement of Costs of Services From Related
Organizations ............................................................................................................... 4508
Worksheet A-8-2 - Provider-Based Physicians Adjustments ............................................ 4509
Worksheet B - Cost Allocation - General Service Costs and Worksheet B-1 Cost Allocation - Statistical Basis. ................................................................................ 4510
Worksheet C - Apportionment of Patient Service Costs. .................................................. 4511
Worksheet D - Calculation of Reimbursement Settlement for Community
Mental Health Centers. .................................................................................................. 4512
Worksheet D-1 - Analysis of Payments to Community Mental Health Center for
Services Rendered to Program Beneficiaries. ................................................................. 4513
Financial Statements Worksheets ...................................................................................... 4514
Worksheet F - Balance Sheet, ........................................................................................... 4514.1
Form CMS-2088-17 Worksheets ....................................................................................... 4590
Electronic Reporting Specifications for Form CMS-2088-17 ........................................... 4595

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4500
4500.

FORM CMS-2088-17

DRAFT

GENERAL

The Paperwork Reduction Act of 1995 establishes the requirement that the private sector be
informed why information is collected and how it will be used by the government. In accordance
with §§1815(a), 1866(e)(2), and 1861(v)(1)(A) of the Social Security Act (the Act), providers of
medical and other healthcare services as defined under §1861(ff), participating in the Medicare
program are required to submit annual information to achieve settlement of costs for health care
services rendered to Medicare beneficiaries. Community mental health centers (CMHCs)
providing partial hospitalization program (PHP) services must file cost reports in accordance with
42 CFR 413.24(f). The data submitted on the cost reports supports management of federal
programs. The information reported on Form CMS-2088-17, must conform to the requirements
and principles set forth in the Provider Reimbursement Manual, CMS Pub. 15-1, as well as those
set forth in the Medicare Benefit Policy Manual, CMS Pub. 100-02, chapter 6, §70.3.
Form CMS-2088-17 must be used by all freestanding CMHCs for cost reporting periods beginning
on or after October 1, 2017. CMHCs that file as part of a hospital healthcare complex must use
the Form CMS-2552. Cost reports are due on or before the last day of the fifth month following
the close of the period covered by the report. For cost reports ending on a day other than the last
day of the month, cost reports are due 150 days after the last day of the cost reporting period, in
accordance with 42 CFR 413.24(f)(2). The CMHC cost report must be submitted to your Medicare
administrative contractor (MAC) (hereafter referred to as contractor) electronically in accordance
with 42 CFR 413.24(f)(4).
The CMHC cost report provides for the determination of allowable costs which are reasonable and
necessary and the calculation of an overall cost-to-charge ratio (CCR). CMHCs are paid under the
outpatient prospective payment system (OPPS) for furnished Medicare PHP services. The OPPS
incorporates an outlier adjustment to ensure that outpatient services with variable and potentially
significant costs do not pose excessive financial risk to providers. For CMHCs, CMS determines
whether billed PHP services are eligible for outlier payment using the CMHCs CCR. The outlier
payment is a percentage of the difference between the cost estimate and the multiple threshold.
OPPS high cost outlier payments may be reconciled upon cost report settlement to account for
differences between the overall ancillary CCR used to pay the claim at its original submission by
the provider, and the CCR determined at final settlement of the cost reporting period during which
the service was furnished.

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4500.1

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a
collection of information unless it displays a valid OMB control number. The valid OMB control
number for this information collection is 0938-0037 (Expires 09/30/2020). The time required to
complete this information collection is estimated average 90 hours per response, including the
time to review instructions, search existing data resources, gather the data needed, and complete
and review the information collection. If you have any comments concerning the accuracy of the
time estimate(s) or suggestions for improving this form, please write to:
Centers for Medicare and Medicaid Services
PRA Reports Clearance Officer
7500 Security Boulevard
Mail Stop C4-26-05
Baltimore, Md. 21244-1850
Please do not send applications, claims, payments, medical records or any documents containing
sensitive information to the PRA Reports Clearance Office. Please note that any correspondence
not pertaining to the information collection burden approved under the associated OMB control
number listed on this form will not be reviewed, forwarded, or retained. If you have questions or
concerns regarding where to submit your documents, please contact 1-800-MEDICARE.
4500.1 Rounding Standards for Fractional Computations.--Throughout the Medicare cost
report, required computations result in the use of fractions. The following rounding standards
must be employed for such computations:
1.

Round to 2 decimal places
a. Percentages
b. Averages
c. Full time equivalent employees
d. Per diems, hourly rates

2.

Round to 6 decimal places
a. Ratios (e.g., unit cost multipliers, cost/charge ratios)

If a residual exists as a result of computing costs using a fraction, adjust the residual in the largest
amount resulting from the computation. For example, in cost finding, a unit cost multiplier is
applied to the statistics in determining costs. After rounding each computation, the sum of the
allocation may be more or less than the total cost being allocated. Adjust this residual to the largest
amount resulting from the allocation so that the sum of the allocated amounts equals the amount
being allocated.

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4500.2 Acronyms and Abbreviations.--Throughout the Medicare cost report and instructions, a
number of acronyms and abbreviations are used. For your convenience, commonly used acronyms
and abbreviations are summarized below.
A&G
CAP REL
CCN
CFR
CMHC
CMS
COL
ECR
FR
FTE
HCRIS
HFS
KPMG
OPPS
PHP
PPS
WKST

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Administrative and General
Capital-Related
CMS Certification Number
Code of Federal Regulations
Community Mental Health Center
Centers for Medicare & Medicaid Services
Column
Electronic Cost Report
Federal Register
Full Time Equivalent
Healthcare Cost Report Information System
Health Financial Systems
Klynveld, Peat, Marwick, & Goerdeler
Outpatient Prospective Payment System
Partial Hospitalization Program
Prospective Payment System
Worksheet

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FORM CMS-2088-17

4501

4501.

RECOMMENDED SEQUENCE FOR COMPLETING FORM CMS-2088-17

Step

Worksheet

Instructions

1

S

Read §§4502 through 4502.2. Complete Part I.

2

S-1

Read §4503.

Complete entire worksheet.

3

S-2

Read §4504.

Complete entire worksheet.

4

A

Read §4505.

Complete columns 1 through 3, all lines.

5

A-6

Read §4506.

Complete entire worksheet.

6

A

Read §4505.

Complete columns 4 and 5, all lines.

7

A-8

Read §4507.

Complete entire worksheet.

8

A-8-1

Read §4508.

Complete entire worksheet, if applicable.

9

A-8-2

Read §4509.

Complete entire worksheet, if applicable.

10

A

Read §4505.

Complete columns 6 and 7, all lines.

11

B & B-1

Read §4510.

Complete entire worksheets.

12

C

Read §4511.

Complete entire worksheet.

13

D

Read §4512.

Complete lines 1 through 15.

14

D-1

Read §4513.

Complete entire worksheet.

15

D

Read §4512.

Complete lines 16 through 19.

16

S

Read §4502.3. Complete Part II and III.

17

F

Read §4514.1. Complete entire worksheet.

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4502
4502.

FORM CMS-2088-17

DRAFT

WORKSHEET S - COMMUNITY MENTAL HEALTH CENTER COST REPORT

4502.1 Part I - Cost Report Status.--This section is to be completed by the provider and
contractor as indicated on the worksheet.
Provider use only.--The provider completes lines 1 through 4.
Line 1.--Indicate if this cost report is being filed electronically by checking the box in column 1.
If this is an electronically filed cost report, enter the creation date and time in columns 2 and 3,
respectively. The date and time are archived in the ECR as an identifier for the file. This file is
your original submission and must not be modified.
Line 2.--Indicate if this cost report is a manual submission by checking the box in column 1. Only
complete this line if this is an approved low utilization cost report in accordance with CMS Pub.
15-2, chapter 1, §110 or the provider’s demonstrating financial hardship in accordance with §133.
Line 3, column 1.--If this is an amended cost report, enter the number of times the cost report has
been amended.
Line 4, column 1.--Enter an “F” if this is full cost report, an “L” for a low Medicare utilization
cost report or an “N” for no Medicare utilization. A provider that has not furnished any covered
services to Medicare beneficiaries during the entire cost report period may file a no Medicare
utilization cost report in accordance with CMS Pub. 15-2, chapter 1, §110(A). Providers must
obtain contractor approval prior to submitting a low Medicare utilization cost report. (See
CMS Pub. 15-2, chapter 1, §110(B).)
Contractor use only.--The contractor completes lines 5 through 12.
Line 5, column 1.--Enter the Healthcare Cost Report Information System (HCRIS) cost report
status code that corresponds to the status of the cost report: 1=as submitted; 2=settled without
audit; 3=settled with audit; 4=reopened; or 5=amended.
Line 6, column 2.--Enter the date (mm/dd/yyyy) an accepted cost report was received.
Line 7, column 2.--Enter the contractor number.
Lines 8 and 9, column 2.--If this is the very first cost report for this provider CMS certification
number (CCN), enter “Y” for yes on line 8. If this is the final (terminating) cost report for this
provider CCN, enter “Y” for yes on line 9. If the cost report is not a first or a final cost report for
this provider CCN, enter “N” for no on each respective line.
Line 10, column 3.--Enter the Notice of Program Reimbursement (NPR) date (mm/dd/yyyy). The
NPR date must be present if the cost report status code is 2, 3, or 4.

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4503.1

Line 11, column 3.--Enter the software vendor code of the cost report software used by the
contractor. Enter “3” for KPMG or “4” for HFS.
Line 12, column 3.--If this is a reopened cost report (response to line 5 is “4”), enter the number
of times the cost report has been reopened. This field is only to be completed if the cost report
status code in line 5, is 4.
4502.2 Part II - Certification.--The certification statement is read, completed, and signed by an
officer or administrator of the provider after the cost report has been completed in its entirety.
4502.3

Part III - Settlement Summary.

Line 1, column 1.--Enter the balance due to or from the CMHC. Transfer the settlement amount
from Worksheet D, line 19.
4503.

WORKSHEET S-1--COST REPORT IDENTIFICATION DATA

4503.1 Part I - Identification Data.--The information required on this worksheet is needed to
properly identify the provider.
Line 1, columns 1 through 4.--Enter in the appropriate column the site name, Provider CCN, core
based statistical area (CBSA) code (rural CBSA codes are assembled by placing the digits “999”
in front of the two digit state code, e.g., for the state of Maryland the rural CBSA code is 99921),
and certification date (mm/dd/yyyy).
Line 1, column 5.--Indicate the type of control under which the CMHC operates by entering a
number from the list below:
1
2
3
4
5
6
7

= Voluntary Nonprofit, Church
= Voluntary Nonprofit, Other
= Proprietary, Individual
= Proprietary, Corporation
= Proprietary, Partnership
= Proprietary, Other
= Governmental, Federal

8
9
10
11
12
13

= Governmental, City-County
= Governmental, County
= Governmental, State
= Governmental, Hospital District
= Governmental, City
= Governmental, Other

Line 2, columns 1 and 2.--Enter the street address and P.O. Box if applicable.
Line 3, columns 1 through 4.--Enter the city, state, ZIP code, and county for this CMHC.
Line 4.--Enter in column 1, the cost report beginning date and enter in column 2, the cost report
ending date.

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Lines 5.--Indicate if this CMHC is part of a chain organization as defined in CMS Pub. 15-1,
chapter 21, §2150 that claimed home office costs in a home office cost statement. Enter “Y” for
yes or “N” for no. If yes, complete lines 6 through 8. Otherwise, skip to line 9.
Lines 6 through 8.--If line 5 is yes, enter the name of the chain organization, the street address,
P.O. Box (if applicable), the home office CCN, city, state, and ZIP code.
Line 9.--Indicate if your CMHC is legally required to carry malpractice coverage. Enter “Y for
yes or “No” for no. Malpractice insurance premiums are money paid by the CMHC to a
commercial insurer to protect the CMHC against potential negligence claims made by their
patients/clients.
Line 10.--If line 9 is yes, indicate if your malpractice insurance is a claims-made or occurrence
policy. A claims-made insurance policy covers claims first made (reported or filed) during the
year the policy is in force for any incidents that occur that year or during any previous period
during which the insured was covered under a “claims-made” contract. The occurrence policy
covers an incident occurring while the policy is in force regardless of when the claim arising out
of that incident is filed. Enter 1, if the malpractice insurance is a claims-made policy. Enter 2, if
the malpractice insurance is an occurrence policy.
Line 11.--Enter in column 1, the total amounts of malpractice premiums. Enter in column 2 the
total amount of paid losses, and enter in column 3, the total amount of self-insurance premiums.
Malpractice insurance premiums are money paid by the provider to a commercial insurer to protect
the provider against potential negligence claims made by their patients/clients. Malpractice paid
losses is money paid by the healthcare provider to compensate a patient/client for professional
negligence. Malpractice self-insurance is money paid by the provider where the healthcare
provider acts as its own insurance company (either as a sole or part-owner) to financially protect
itself against professional negligence. Often providers will manage their own funds or purchase a
policy referred to as captive insurance, which provides insurance coverage they need but could not
obtain economically through the mainstream insurance market.
Line 12.--Indicate whether malpractice premiums paid, paid losses, or self-insurance are reported
in a cost center other than the A&G cost center. Enter “Y” for yes or “N” for no. If yes, submit
supporting schedule listing cost centers and amounts.
Line 13.-- Did this facility participate in any payment demonstrations during this cost reporting
period? Enter "Y" for yes or "N" for no. If column 1 is yes, enter the type of demonstration in
column 2. If the CMHC participated in more than one demonstration, subscript this line
accordingly.

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4503.2

FORM CMS-2088-17

4503.2

Part II - Statistical Data.--This section collects unduplicated days data.

Columns 1 and 3.--Enter on the appropriate lines the number of Medicare visits in column 1 and
total visits in column 3, by type of service. If more than one treatment was furnished to a patient
in the same visit, record a separate visit for each different treatment rendered to the patient.
Column 2.--Enter on the appropriate lines the number of visits by type of service for all other
patients by subtracting Medicare visits reported in column 1 from total visits reported in column
3.
Columns 4 and 6.--Enter on the appropriate lines the number of Medicare patient days in column
4 and total patient days in column 6, who received services during the cost reporting period,
regardless of the number of visits for each individual patient. For example, if a patient receives
multiple services on the same day, he or she is counted once for each service rendered in
accordance with billing guidelines.
Column 5.-- Enter on the appropriate lines the number of patient days by type of service for all
other patients by subtracting Medicare patient days reported in column 4 from total patient days
reported in column 6.
Columns 7 through 10.--Enter on columns 7 through 10 the number of full-time equivalent
employees (FTE) for each cost center. The average number of FTEs for the period may be
determined either on a quarterly or semiannual basis. When quarterly data is used, add the total
number of hours worked by category for all employees using the first week of the first payroll
period for each quarter, and divide the sum by 160 (4 times 40). When semiannual data is used,
add the total number of hours worked by category for all employees using the first week of the
first payroll period for the first and seventh months of the cost reporting period. Divide this sum
by 80 (2 times 40).
Line 11.--Enter the sum of lines 1 through 10 for all columns as appropriate.
Line 12.--Enter in the appropriate column (columns 4 through 6) the unduplicated census count
for Medicare patient days and all other patient days provided by employees of the provider or
provided under contract during the reporting period. Count each patient day only once for each
day of care they received at this facility. The total unduplicated census count may not equal the
total patient days reported on line 11.

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4504
4504.

FORM CMS-2088-17

DRAFT

WORKSHEET S-2--COST REPORT REIMBURSEMENT QUESTIONNAIRE

The information required on this worksheet (formerly Form CMS-339) must be completed by all
CMHCs submitting cost reports to the contractor under title XVIII of the Act. Where the
instructions for this worksheet direct you to submit documentation/information, mail or otherwise
transmit to the contractor with submission of the electronic cost report (ECR). The contractor has
the right under §§1815(a) and 1883(e) of the Act to request any missing documentation.
NOTE: The responses on all lines are “yes” or “no” unless otherwise indicated. When the
instructions require documentation, indicate on the documentation the Worksheet S-2 line number
that the documentation supports. Lines 1 through 14 must be completed.
Line Descriptions
Line 1.--Indicate whether the CMHC has changed ownership and this is the first cost report filed
under this new ownership? Enter “Y” for yes or “N” for no in column 1. If column 1 is “Y”, enter
the date the change of ownership occurred in column 2. Also, submit the name and address of the
new owner and a copy of the sales agreement with the cost report.
Line 2.--Indicate whether the CMHC has terminated participation in the Medicare program. Enter
“Y” for yes or “N” for no in column 1. If column 1 is “Y”, enter the date of termination in column
2, and “V” for voluntary or “I” for involuntary in column 3.
Line 3.--Indicate whether the CMHC is involved in business transactions, including management
contracts, with individuals or entities (e.g., chain home offices, drug or medical supply companies)
that are related to the CMHC or its officers, medical staff, management personnel, or members of
the board of directors through ownership, control, or family and other similar relationships. Enter
“Y” for yes or “N” for no in column 1. If column 1 is “Y”, submit a list of the individuals, the
organizations involved, and a description of the transactions with the cost report.
NOTE: A related party transaction occurs when services, facilities, or supplies are furnished to
the provider by organizations related to the provider through common ownership or control. (See
CMS Pub. 15-1, chapter 10 and 42 CFR 413.17.)
Line 4.--Indicate whether the financial statements were prepared by a certified public accountant;
enter “Y” for yes or “N” for no in column 1. If column 1 is “Y”, enter “A” for audited, “C” for
compiled, or “R” for reviewed in column 2. Submit a complete copy of the financial statements
(i.e., the independent public accountant’s opinion, the statements themselves, and the footnotes)
with the cost report. If the financial statements are not available for submission with the cost report
enter the date they will be available in column 3.
If you answer “N” in column 1, submit a copy of the financial statements you prepared, and written
statements of significant accounting policy and procedure changes affecting Medicare
reimbursement which occurred during the cost reporting period. You may submit the changed
accounting or administrative procedures manual in lieu of written statements.

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4504 (Cont.)

Line 5.--Indicate whether the total expenses and total revenues reported on the cost report differ
from those on the financial statements. Enter “Y” for yes or “N” for no in column 1. If yes, submit
a schedule reconciling the financial statements with the cost report.
Line 6.--Indicate whether you are seeking reimbursement for bad debts resulting from Medicare
deductible and/or coinsurance amounts which are uncollectible from Medicare beneficiaries. (See
42 CFR 413.89(e) and CMS Pub. 15-1, chapter 3, §§306 through 324 for the criteria for an
allowable bad debt.) Enter “Y” for yes or “N” for no in column 1. If you answer “Y” in column
1, submit a completed Exhibit 1, or internal schedules that at a minimum duplicate the
documentation requested on Exhibit 1, to support the bad debts claimed.
Exhibit 1 requires the following documentation:
Columns 1, 2, 3, 4 - Patient Names, Health Insurance Claim (HIC) Number, and Dates of Service
(From - To).--The documentation required for these columns is derived from the beneficiary’s bill.
Furnish the patient’s name, health insurance claim number, and dates of service that correlate to
the filed bad debt. (See CMS Pub. 15-1, chapter 3, §314 and 42 CFR 413.89.)
Columns 5 & 6 - Indigence/Medicaid Beneficiary.--If the patient included in column 1 has been
deemed indigent, place a check in column 5. If the patient in column 1 has a valid Medicaid
number, include this number in column 6. See the criteria in CMS Pub. 15-1, chapter 3, §§312
and 322 and 42 CFR 413.89 for guidance on the billing requirements for indigent and Medicaid
beneficiaries.
Columns 7 & 8 - Date First Bill Sent to Beneficiary & Date Collection Efforts Ceased.--This
information should be obtained from the provider’s files and should correlate with the beneficiary
name, HIC number, and dates of service shown in columns 1, 2, 3 and 4 of this exhibit. The date
in column 8 represents the date that the unpaid account is deemed worthless, whereby all collection
efforts, both internal and by an outside entity ceased, and there is no likelihood of recovery of the
unpaid account. (See CFR 413.89(e) and (f), and CMS Pub. 15-1, chapter 3, §§308, 310, and 314.)
Column 9 - Medicare Remittance Advice Dates.--Enter in this column the remittance advice dates
that correlate with the beneficiary name, HIC number, and dates of service shown in columns 1,
2, 3, and 4 of this exhibit.
Columns 10 & 11 - Deductibles & Coinsurance.--Record in these columns the beneficiary’s unpaid
deductible and coinsurance amounts that relate to covered services.
Column 12 - Total Medicare Bad Debts.--Enter on each line of this column, the sum of the amounts
in columns 10 and 11. Calculate the total bad debts by summing up the amounts on all lines of
column 12. This “total” must agree with the bad debts claimed on the cost report. Attach
additional supporting schedules, if necessary, for bad debt recoveries.
Line 7.--If line 6 is yes, indicate whether your bad debt collection policy changed during the cost
reporting period. Enter “Y” for yes or “N” for no in column 1. If column 1 is “Y”, submit a copy
of the policy with the cost report.

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Line 8.--If line 6 is yes, indicate whether patient deductibles and/or coinsurance amounts were
waived. Enter “Y” for yes or “N” for no in column 1. If column 1 is “Y”, ensure that they are not
included on the bad debt listings (i.e., Exhibit 1 or your internal schedules) submitted with the cost
report.
Line 9.--Indicate whether the cost report was prepared using the PS&R report only. Enter “Y” for
yes or “N” for no in column 1. If column 1 is “Y” enter the paid through date of the PS&R in
column 2. Also, submit a crosswalk between revenue codes and charges found on the PS&R to
the cost center groupings on Worksheet C of the cost report. This crosswalk will reflect a cost
center to revenue code match only.
Line 10.--Indicate whether the cost report was prepared using the PS&R for totals and provider
records for allocation. Enter “Y” for yes or “N” for no in column 1. If column 1 is “Y” enter the
paid through date of the PS&R used to prepare this cost report in column 2. Also, submit a detailed
crosswalk between revenue codes and charges on the PS&R to the cost center groupings on
Worksheet C of the cost report. This crosswalk must show dollars by cost center and include
which revenue codes were allocated to each cost center. The total revenue on the cost report must
match the total charges on the PS&R (as appropriately adjusted for unpaid claims, etc.) to use this
method. Supporting work papers must accompany this crosswalk to provide sufficient
documentation as to the accuracy of the provider records. If the contractor does not find the
documentation sufficient, the PS&R will be used in its entirety.
Line 11.--If you entered “Y” on either line 9 or 10, indicate whether adjustments were made to the
PS&R data for additional claims that have been billed but not included on the PS&R used to file
this cost report. Enter “Y” for yes or “N” for no in column 1. If column 1 is “Y”, include a
schedule which supports any claims not included on the PS&R. This schedule should include
totals consistent with the breakdowns on the PS&R, and should reflect claims that are unprocessed
or unpaid as of the cut-off date of the PS&R used to file the cost report.
Line 12.--If you entered “Y” on either line 9 or 10, column 1, indicate whether adjustments were
made to the PS&R data for corrections of other PS&R information. Enter “Y” for yes or “N” for
no in column 1. If column 1 is “Y”, submit a detailed explanation and documentation which
provides an audit trail from the PS&R to the cost report.
Line 13.--If you entered “Y” on either line 9 or 10, column 1, indicate whether other adjustments
were made to the PS&R data. Enter “Y” for yes or “N” for no in column 1. If column 1 is “Y”,
include a description of the other adjustments and documentation which provides an audit trail
from the PS&R to the cost report.

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4504 (Cont.)

Line 14.--Indicate whether the cost report was prepared using CMHC records only. Enter “Y” for
yes or “N” for no in column 1. If column 1 is “Y”, submit detailed documentation of the system
used to support the data reported on the cost report. If detail documentation was previously
supplied, submit only necessary updated documentation with the cost report.
The minimum requirements are:
•

Internal records supporting program utilization statistics, charges, prevailing rates
and payment information broken into each Medicare bill type in a manner
consistent with the PS&R report.

•

A reconciliation of remittance totals to the provider’s internal records.

•

The name of the system used and system maintainer (vendor or provider). If the
provider maintained the system, include date of last software update.

NOTE: Additional information may be supplied such as narrative documentation, internal flow
charts, or outside vendor informational material to further describe and validate the reliability of
your system.

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EXHIBIT 1
LISTING OF MEDICARE BAD DEBTS AND APPROPRIATE SUPPORTING DATA
PROVIDER __________________
CCN __________________ ______
FYE _________________________
(1)
Patient
Name

(2)
HIC.
No.

PREPARED BY _____________________
DATE PREPARED ____________________

(3)
Dates of
Service

From

(4)
Indigence /Medicaid
Beneficiary
(Check if applicable)
To

Yes

(5)
Date First
Bill Sent
to
Beneficiary

(6)
Date
Collection
Efforts
Ceased

(7)
Remittance
Advice
Dates

(8)
Deductible
*

(9)
Co-Insurance

(10)
Total
Medicare Bad
Debts*

Medicaid
Number

*These amounts must not be claimed unless the CMHC bills for these services with the intention of payment.
See instructions for columns 4 - Indigence/Medicaid Beneficiary, for possible exception. These amounts must not be claimed if they
were included on a previous Medicare bad debt listing or cost report.

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4505.

FORM CMS-2088-17

4505

WORKSHEET A - RECLASSIFICATION AND ADJUSTMENT OF TRIAL
BALANCE OF EXPENSES

Worksheet A provides for recording the trial balance of expense accounts from the CMHC’s
accounting books and records. It also provides for reclassification and adjustments to certain
accounts. The cost centers on this worksheet are listed in a manner that facilitates the combination
of the various groups of cost centers for purposes of cost finding. Cost centers listed may not apply
to every provider using these forms. Complete only those lines that are applicable.
If the cost elements of a cost center are separately maintained on the accounting books, reconcile
the costs from the accounting books and records with those reported on this worksheet. The
reconciliation is subject to review by the contractor.
Standard (i.e., preprinted) CMS line numbers and cost center descriptions cannot be changed. If
additional or different cost center descriptions are needed, add (subscript) additional lines to the
cost report. Where an added cost center description bears a logical relationship to a standard line
description, the added label must be inserted immediately after the related standard line. The added
line is identified as a numeric subscript of the immediately preceding line. For example, if two
lines are added between lines 5 and 6, identify them as lines 5.01 and 5.02. If additional lines are
added for general service cost centers, add corresponding columns for cost finding.
Submit the working trial balance of the facility with the cost report. A working trial balance is a
listing of the balances of the accounts in the general ledger to which adjustments are appended in
supplementary columns and is used as a basic summary for financial statements.
Cost center coding is a methodology for standardizing the meaning of cost center labels as used
by health care providers on the Medicare cost report. Form CMS-2088-17 provides for preprinted
cost center descriptions on Worksheet A. In addition, a space is provided for a cost center code.
The preprinted cost center labels are automatically coded by CMS approved cost reporting
software. These cost center descriptions are hereafter referred to as the standard cost centers. The
CMS approved cost reporting software also accommodates cost centers that are frequently used
by health care providers but not included as standard cost centers, hereafter referred to as the
nonstandard cost centers.
This coding methodology allows providers to continue to use labels for cost centers that have
meaning within the individual institution. The four digit cost center codes that are associated with
each provider label in the ECR provide standardized meaning for data analysis. Providers are
required to compare any added or changed label to the descriptions offered on the standard and
nonstandard cost center tables. A description of cost center coding and the table of cost center
codes are in §4495, table 5.

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Column Descriptions
List on the appropriate lines in columns 1, 2, and 3 the total expenses incurred during the cost
reporting period. Any needed reclassifications and adjustments must be rendered in columns 4
and 6, as appropriate. Blank lines are provided for additional cost centers, as required.
Column 1.--Salaries are the gross salaries paid to employees before taxes and other items are
withheld. Salaries include deferred compensation, overtime, incentive pay, and bonuses. (See
CMS Pub. 15-1, chapter 21.) Enter salaries from the CMHC’s accounting books and records.
Column 2.--Enter all costs other than salaries and contracted purchased services from the CMHC’s
accounting books and records.
Column 3.--Enter all the costs of contracted purchased services from the CMHC’s accounting
books and records.
Column 4.--For each cost center, add the amounts in columns 1 through 3 and enter the total in
column 4.
Column 5.--For each cost center, enter the net amount of reclassifications from Worksheet A-6.
The net total of the entries in column 5 must equal zero on line 100. Show reductions to expenses
as negative numbers.
Column 6.--For each cost center, enter the total of the amount in column 4 plus or minus the
amount in column 5. The total on column 6, line 100 must equal the total on column 4, line 100.
Column 7.--For each cost center, enter the net of any increase and decrease amounts from
Worksheet A-8, column 2. The total on Worksheet A, column 7, line 100 must equal Worksheet
A-8, column 2, line 50.
Column 8.--For each cost center, enter the total of the amount in column 6 plus or minus the
amount in column 7.
Transfer the amounts in column 8, lines 2 through 100, to the corresponding line on Worksheet B,
column 0.
Line Descriptions
The Worksheet A segregates the trial balance of expenses into general service cost centers,
reimbursable cost centers, and nonreimbursable cost centers to facilitate the transfer of costs to the
various worksheets.

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GENERAL SERVICE COST CENTERS
General service cost centers include expenses incurred in operating the CMHC as a whole that are
not directly associated with furnishing patient care such as, but not limited to mortgage, rent, plant
operations, administrative salaries, utilities, telephone, and computer hardware and software costs.
General service cost centers furnish services to other general service cost centers and to
reimbursable and nonreimbursable cost centers.
Lines 1 and 2 - Capital Related Costs-Buildings & Fixtures and Capital Related Costs-Moveable
Equipment.--These cost centers include the capital-related costs for buildings and fixtures and the
capital-related costs for movable equipment including depreciation, leases and rentals for the use
of the facilities and/or equipment, interest incurred in acquiring land and depreciable assets used
for patient care, insurance on depreciable assets used for patient care and taxes on land or
depreciable assets used for patient care. Do not include in these cost centers the following costs:
costs incurred for the repair or maintenance of equipment or facilities; amounts included in the
rentals lease payments for repairs and/or maintenance; interest expense incurred to borrow
working capital or for any purpose other than the acquisition of land or depreciable assets used for
patient care; general liability of depreciable assets; or taxes other than those assessed on the basis
of some valuation of land or depreciable assets used for patient care.
Line 3 - Employee Benefits.--This cost center includes the costs of the employee benefits
department. In addition, this cost center includes the fringe benefits paid to, or on behalf of, an
employee when a provider’s accounting system is not designed to accumulate the benefits on a
departmentalized or cost center basis. (See CMS Pub. 15-1, chapter 21, §2144).
Line 4 - Administrative and General.--The administrative and general (A&G) cost center includes
a wide variety of provider administrative costs that benefit the entire facility. Examples include
fiscal services, legal services, accounting, data processing, taxes, and malpractice costs. Marketing
and advertising costs that are not related to patient care, fundraising costs, and other
nonreimbursable costs are not included here, but are reported in the appropriate nonreimbursable
cost center.
If the physician is paid a salary that compensates him or her for both provider services and
professional services, then include the salary in this cost center. The cost attributable to the
professional services is subsequently removed by an adjustment computed using Worksheet A-82. See Worksheet A-8-2 for the instructions on that adjustment.
The professional services of physicians, physician’s assistants (PA) and clinical psychologists
(CP) are not considered as provider services and are not includable as an element of cost in the
provider’s cost report. These services are billed directly to a carrier for payment. A provider must
distinguish between professional services and provider services of the physicians, PA, and CP.
The provider services are includable on the cost report. The payment for services of a physician
to providers is discussed in CMS Pub. 15-1, chapter 21, §2108. Not all provider services of
physicians are entered as an administrative and general cost, i.e., if a physician supervises a
revenue cost center such as physical therapy, then the physician’s salary or part of it is a cost of
the physical therapy cost center.

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Line 5 - Maintenance & Repairs.--This cost center includes the maintenance of the facility grounds
such as landscaped and paved areas, streets on the property, sidewalks, fenced areas, fencing,
external recreation areas, and parking facilities. In addition it may include routine painting,
plumbing, and electrical repairs, mowing and snow removal. The costs of maintaining the safety
and well-being of personnel, visitors, and the provider’s facilities are also included in this cost
center.
Line 6 - Operation of Plant.--Plant operation costs include utility systems such as heat, light, water,
air conditioning and air treatment.
Line 7 - Laundry and Linen Service.--This cost center includes the cost of routine laundry and
linen services whether performed in-house or by outside contractors.
Line 8 - Housekeeping.--This cost center includes the cost of routine housekeeping activities such
as mopping, vacuuming, cleaning restrooms, lobbies, waiting areas, and otherwise maintaining
patient and non-patient care areas.
Line 9 - Cafeteria.--This cost center includes the cost of preparing food for provider personnel,
physicians working at the provider, visitors to the provider.
Line 10 - Central Services and Supplies.--This cost center includes the costs for minor medical or
surgical supplies. These are supplies for which patients are not separately charged, and for which
the recording of use by each individual patient is extremely time consuming and costly for
providers. Examples include cotton balls and alcohol prep.
Line 11 - Medical Records and Library.--This cost center includes the direct costs of the medical
records cost center including the medical records library.
Line 12 - Professional Education and Training (Approved).--This cost center includes training and
educational services related to the care and treatment of a patient’s disabling mental health
problems.
Line 13 - Other (Specify).--Use this line to report the costs of other general service costs not
previously identified on lines 1 through 11. If more than one other general service is offered,
subscript this line and provide an appropriate description and cost center code.
Lines 14 through 22.--Reserved for future use.
Line 23 - Drug and Biologicals.--This cost center includes drugs and biologicals that are (1)
prescribed by a physician and administered by or under the supervision of a physician or a
registered professional nurse; and (2) not excluded from Medicare Part B payment for reasons
specified in 42 CFR §410.29.

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Line 24 - Occupational Therapy.--This cost center includes the costs of purposeful goal-oriented
activities in the evaluation, diagnosis, and/or treatment of persons whose function is impaired by
physical illness or injury, emotional disorder, congenital or developmental disability, or the aging
process, in order to achieve optimum functioning, to prevent disability, and to maintain health.
Occupational therapy services may be provided for purposes of symptom control or to enable the
individual to maintain activities of daily living and basic functional skills.
Line 25 - Behavioral Health Treatment Services.--This cost center includes the costs for staff for
providing care and services to psychiatric patients. Administrative services, such as supervisory
duties, rendered by these individuals are includable in the administrative and general cost center.
Any services by these individuals which are nonreimbursable activities, such as diversionary
activities, social, or recreational therapies, custodial or respite care, vocational trainging, etc., shall
be entered in the appropriate nonreimbursable cost center.
Line 26 - Individual Therapy.--This cost center includes the costs for individual therapy with
physicians, psychologists, or other mental health professionals to the extent authorized under State
law. Do not include professional services of physicians, PAs, or CPs if billable to a Medicare
carrier.
Line 27 - Group Therapy.--This cost center includes the costs for group therapy with physicians,
psychologists, or other mental health professionals to the extent authorized under State law. Do
not include the expenses of professional services of physicians, PAs, or CPs if billable to a
Medicare carrier.
Line 28 - Activity Therapy.--This cost center includes the costs for individualized activity
therapies that are not primarily recreational or diversionary.
Line 29 - Family Therapy.--This cost center includes the costs for family counseling services, the
primary purpose of which is treatment of the beneficiary’s condition.
Line 30 - Psychiatric Testing.--This cost center includes costs for psychological and
neuropsychological tests which includes tests performed by technicians and computers in addition
to those performed by physicians, clinical psychologists, independently practicing psychologists,
and other qualified non-physician practitioners.
Line 31 - Education Training.--This cost center includes the costs for patient training and education
to the extent the training and educational activities are closely and clearly related to the
beneficiary’s care and treatment.
Lines 33 through 41.--Reserved for future use.

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NONREIMBURSABLE COST CENTERS
Nonreimbursable cost centers include costs of nonreimbursable services and programs. Report the
costs applicable to nonreimbursable cost centers to which general service costs apply. If additional
lines are needed for nonreimbursable cost centers other than those shown, subscript one or more
of these lines with a numeric code. The subscripted lines must be appropriately labeled to indicate
the purpose for which they are being used. However, when the expense (direct and all applicable
overhead) attributable to any non-allowable cost area is so insignificant as to not warrant
establishment of a nonreimbursable cost center, remove the expense on Worksheet A-8. (See CMS
Pub. 15-1, chapter 23, §2328.)
Line 42 - Sheltered Workshops.--This cost center consists of programs to provide remunerative
employment or other occupational activities of an educational, therapeutic nature for individuals
whose earning capacity is impaired by physical, mental, and/or social handicaps. Workshops may
provide job training, vocational evaluation, sheltered employment, and/or work adjustment
services.
Line 43 - Recreational Programs.--This cost center includes the costs for programs which are
primarily recreational.
Line 44 - Resident Day Camps.--This cost center includes the costs incurred by residential day
camps.
Line 45 - Diagnostic Clinics.--This cost center includes the costs incurred by the operation of
diagnostic clinics.
Line 46 - Physicians’ Private Offices.--A nonreimbursable cost center must be established to
accumulate the cost incurred by you for services related to the physicians’ private practice.
Examples of such costs are depreciation costs for the space occupied, movable equipment used by
the physicians’ offices, administrative services, medical records, housekeeping, maintenance and
repairs, operation of plant, drugs, medical supplies, and nursing services.
Line 47 - Fund Raising.--This cost center includes the costs of services related to fund raising (see
CMS Pub. 15-1, chapter 21, §2136).
Line 48 - Coffee Shops & Canteen.--This cost center includes the costs incurred for the operation
of a coffee shops and/or canteen.
Line 49 - Research.--This cost center includes the costs incurred by research.
Line 50 - Investment Property.--This cost center includes the costs incurred by owning investment
properties.
Line 51 - Advertising.--This cost center includes the costs incurred by advertising.

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Line 52 - Franchise Fees and Other Assessments.--This cost center includes the costs incurred by
franchise fees and other assessments.
Line 53 - Pro Ed & Training (Not Approved).--This cost center includes the costs incurred by
professional education and training (Not Approved).
Line 54 - Meals & Transportation.--This cost center includes the costs incurred by providing meals
and transportation.
Line 55 - Activity Therapies.--This cost center includes programs which are primarily recreational
or diversional.
Line 56 - Psychosocial Programs.--This cost center includes community support groups for
chronically mentally ill persons for the purpose of social interaction. Partial hospitalization
programs may include some psychosocial components, and to the extent these components are not
primarily for social purposes, they are covered.
Line 57 - Vocational Training.--This cost center includes the costs of services related solely to
specific employment opportunities, work skills, or work settings.
4506.

WORKSHEET A-6 - RECLASSIFICATIONS

Worksheet A-6 provides for the reclassification by cost centers of certain amounts necessary for
proper cost allocation.
Some providers may charge some of these amounts to the proper cost centers before the end of the
accounting period. Therefore, use Worksheet A-6 only to the extent that expenses have been
included in cost centers that effect improper cost allocation.
Any expenses that are includable in the administrative and general or capital related cost centers,
e.g., insurance or lease expense, but which were recorded in other cost centers on Worksheet A,
must be reclassified on Worksheet A-6.
It may be necessary to reclassify certain expenses pertaining to buildings, fixtures, and movable
equipment. These expenses must be directly assigned or allocated on the same basis as the
depreciation expense for the respective buildings, fixtures or movable equipment. Examples of
these expenses include insurance, rent on buildings, fixtures, or movable equipment, real estate
taxes, and personal property taxes. Interest on funds borrowed to purchase buildings, fixtures, or
movable equipment are included in these expenses. Interest borrowed for operating funds is not
included. Interest on funds borrowed for operating funds must be allocated with administration
and general expenses.
Employee health and welfare costs must be considered as part of each employee’s compensation
and charged to the various cost centers in the same proportion that the salary is charged.

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Column 1.--Identify each reclassification adjustment by assigning an alpha character (e.g., A, B,
C) in column 1. Do not use numeric designations.
Columns 2, 3, 4 and 5.--For each increase reclassification, enter the corresponding cost center
description in column 2, the Worksheet A cost center line number reference in column 3, and
reclassification amount in columns 4 and 5.
Columns 6, 7, 8 and 9.--For each decrease reclassification, enter the corresponding cost center
description in column 6, the Worksheet A cost center line number reference in column 7, and
reclassification amount in columns 8 and 9.
For line 100, the sum of all increases in columns 4 and 5 must equal the sum of all decreases in
columns 8 and 9. Submit (with the cost report) copies of work papers used to compute the
reclassifications.
Transfer the amounts on Worksheet A-6, to Worksheet A, column 5, line as appropriate.
4507.

WORKSHEET A-8 - ADJUSTMENTS TO EXPENSES

In accordance with 42 CFR 413.9(c)(3), where operating costs include amounts not related to
patient care, specifically not reimbursable under the program, or flowing from the provision of
luxury items or services (i.e., those items or services substantially in excess of or more expensive
than those generally considered necessary for the provision of needed health services), such
amounts are not allowable. This worksheet provides for the adjustments in support of those listed
on Worksheet A, column 7. These adjustments, required under Medicare principles of
reimbursement, are made on the basis of cost or, only if the cost (including direct cost and all
applicable overhead) cannot be determined, amount received (revenue). If the total direct and
indirect cost can be determined, enter the cost. Adjustments to expenses based on cost cannot be
based on revenue in subsequent cost reporting periods. Indicate the basis used in column 1. There
are, however, items on the worksheet which are adjusted on one basis only. For these items, the
basis for adjustment is printed in column 1. Line descriptions indicate the more common activities
which affect allowable cost or result in costs incurred for reasons other than patient care and thus
require adjustments.
If any of the adjustments you make on Worksheet A-8 flow from Worksheets A-8-1, complete that
worksheet before completing Worksheet A-8.
Line Descriptions
Lines 1 and 2.--If depreciation expense computed in accordance with the Medicare principles of
reimbursement differs from depreciation expense per your books enter the difference on lines 1
and/or 2. (See CMS Pub. 15-1, §100ff.)

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Line 3.--Enter the amounts received for rendering administrative services to others, including
physicians and therapists. For example, you may arrange to process billings and collect the
proceeds on behalf of such specialists and charge a fee for these services. Reduce allowable costs
by the amount of such fees.
Line 4.--Reduce interest expense by investment income, except investment income earned by:
• Grants, gifts and endowments, (whether restricted or unrestricted),
• Funded depreciation,
• Pension funds, and
• Deferred compensation funds.
The offset of investment income against interest expense cannot exceed the total interest expense
included in allowable cost.
Lines 5 and 6.--Enter these discounts, rebates, and refunds on these lines only when such receipts
have not already been netted against the appropriate expense in the accounting records.
The recommended offset of these amounts against the administrative and general cost center is
appropriate only if the related expense cannot be identified. (See CMS Pub. 15-1, §804.)
Line 11.--If the expense applicable to these activities is insignificant, make the adjustment on this
line. However, these and similar activities are normally set up as nonreimbursable cost centers on
Worksheet B since the amounts involved are usually significant.
Line 15.--Obtain any amount entered on this line from Worksheet A-8-1.
Line 16.--Enter the amount obtained from Worksheet A-8-2, column 18, the total line.
NOTE: Make the adjustments on Worksheet A, column 7 for the various cost centers affected by
provider-based physicians by referring to the adjustments for the corresponding cost centers on
Worksheet A-8-2, column 18. Reasonable compensation equivalent limits do not apply to a
medical director, a chief of medical staff, or to the compensation of any physician employed in a
capacity not requiring the services of a physician, such as a controller.
Lines 17 through 49.--Enter any additional adjustments which are required under the Medicare
principles of reimbursement. Appropriately label the lines to indicate the nature of the required
adjustments.
Line 50.--Enter the total of lines 1 through 49. Transfer all the amounts on lines 1 through 49,
column 2, to the appropriate lines on Worksheet A, column 7.

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WORKSHEET A-8-1 - STATEMENT OF COSTS OF SERVICES FROM RELATED
ORGANIZATIONS

Worksheet A-8-1 provides for the computation of any needed adjustments to costs applicable to
services, facilities, and supplies furnished to the provider by organizations related to the provider
by common ownership or control. In addition, certain information concerning the related
organizations with which the provider has transacted business must be shown. (See CMS Pub. 151, chapter 10, §1004.)
Part I.--Cost applicable to services, facilities, and supplies furnished to you by organizations
related to you by common ownership or control are includable in your allowable cost at the cost
to the related organizations. However, such cost must not exceed the amount a prudent and cost
conscious buyer pays for comparable services, facilities, or supplies that are purchased elsewhere.
Part II.--Use this part to show your relationship to organizations and/or home office for which
transactions were identified in Part I. Show the requested data relative to all individuals,
partnerships, corporations, or other organizations having either a related interest to you, a common
ownership with you, or control over you as defined in CMS Pub. 15-1, chapter 10, §1004 in
columns 1 through 6, as appropriate.
Complete only those columns which are pertinent to the type of relationship which exists.
Column 1.--Enter the appropriate symbol which describes relationship of the provider to the
related organization.
Column 2.--If the symbol A, D, E, F, or G is entered in column 1, enter the name of the related
individual in column 2.
Column 3.--If the individual indicated in column 2 or the organization in column indicated in
column 4 has a financial interest in the provider, enter the percent of ownership as a ratio.
Column 4.--Enter the name of the related corporation, partnership or other organization.
Column 5.--If the individual in column 2 or the provider has a financial interest in the related
organization, enter the percent of ownership in such organization as a ratio.
Column 6.--Enter the type of business in which the related organization engages (e.g., medical
drugs and/or supplies, laundry and linen service).

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4509

WORKSHEET A-8-2 - PROVIDER-BASED PHYSICIAN ADJUSTMENTS

In accordance with 42 CFR 413.9, 42 CFR 415.55, 42 CFR 415.60, 42 CFR 415.70, and 42 CFR
415.102(d), you may claim as allowable cost only those costs which you incur for physician
services that benefit the general patient population of the provider. 42 CFR 415.70 imposes limits
on the amount of physician compensation which may be recognized as a reasonable provider cost.
Worksheet A-8-2 provides for the computation of the allowable provider-based physician cost you
incur. 42 CFR 415.60 provides that the physician compensation paid by you must be allocated
between services to individual patients (professional services), services that benefit your patients
generally (provider services), and nonreimbursable services such as research. Only provider
services are reimbursable to you through the cost report. This worksheet also provides for the
computation of the reasonable compensation equivalent (RCE) limits required by 42 CFR 415.70.
The methodology used in this worksheet applies the RCE limit to the total physician compensation
attributable to provider services reimbursable on a reasonable cost basis.
NOTE: Where several physicians work in the same department, see CMS Pub. 15-1, chapter 21,
§2182.6C for a discussion of applying the RCE limit in the aggregate for the department
versus on an individual basis to each of the physicians in the department.
Column Descriptions
Columns 1 and 10.--Enter the line numbers from Worksheet A for each cost center that contained
compensation for physicians subject to RCE limits. Enter the line numbers in the same order as
displayed on Worksheet A.
Columns 2 and 11.--Enter the description of the cost center used on Worksheet A. When RCE
limits are applied on an individual basis to each physician in a department, list each physician on
successive lines directly under the cost center description line, or list the first physician on the
same line as the cost center description line and then each successive line below for each additional
physician in that cost center.
List each physician using an individual identifier (not the physician’s name, NPI, UPIN or social
security number of the individual), but rather, Dr. A, Dr. B…, Dr. AA, Dr. BB, etcetera. However,
the identity of the physician must be made available to your contractor upon audit. When RCE
limits are applied on a departmental basis, insert the word "aggregate" (instead of the physician
identifiers) on the line below the cost center description.
Columns 3 through 9 and 12 through 18.--When the aggregate method is used, enter the data for
each of these columns on the aggregate line for each cost center. When the individual method is
used, enter the data for each column on the individual physician identifier lines for each cost center.

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Column 3.--Enter the total physician compensation paid by the provider for each cost center.
Physician compensation is monetary payments, fringe benefits, deferred compensation, costs of
physician membership in professional societies, continuing education, malpractice, and any other
items of value (excluding office space or billing and collection services) that a provider or other
organization furnishes a physician in return for the physician’s services. (See 42 CFR 415.60(a).)
Include the compensation in column 4 of Worksheet A or, if necessary, through appropriate
reclassifications or as a cost paid by a related organization through Worksheet A-8-1.
Column 4.--Enter the amount of total remuneration included in column 3 which is applicable to
the physician’s services to individual patients (professional component). These services are
reimbursed on a reasonable charge basis by the Part B carrier in accordance with 42 CFR
415.102(a). The written allocation agreement between you and the physician specifying how the
physician spends his or her time is the basis for this computation. (See 42 CFR 415.60(f).)
Column 5.--Enter the amount of the total remuneration included in column 3, for each cost center,
applicable to general services to you (provider component). The written allocation agreement is
the basis for this computation. (See 42 CFR 415.60(f).)
NOTE: 42 CFR 415.60(b) requires that physician compensation be allocated between physician
services to patients, the provider, and nonallowable services such as research. Physicians'
nonallowable services must not be included in columns 4 or 5. The instructions for column 18
ensure that the compensation for nonallowable services included in column 3 is correctly
eliminated on Worksheet A-8.
Column 6.--Enter for each line of data, as applicable, the reasonable compensation equivalent
(RCE) limit applicable to the physician’s compensation included in that cost center. The amount
entered is the limit applicable to the physician specialty as published in the Federal Register
before any allowable adjustments.
The RCE limits are updated annually on the basis of updated economic index data. A notice is
published in the Federal Register, which sets forth the new limits. The RCE applicable to the
various specialties is obtained from that notice. If the physician specialty is not identified in the
table, use the RCE for the total category in the table. The beginning date of the cost reporting
period determines which calendar year (CY) RCE is used. Your location governs which of the
three geographical categories are applicable: non-metropolitan areas, metropolitan areas less than
one million, or metropolitan areas greater than one million.
Column 7.--For each line of data enter the physician’s hours allocated to provider services. For
example, if a physician works 2080 hours per year and 50 percent of his/her time is spent on
provider services, then enter 1040. The hours entered are the actual hours for which the physician
is compensated by the provider for furnishing services of a general benefit to its patients. If the
physician is paid for unused vacation, unused sick leave, etc., exclude the hours paid from the
hours entered in this column. Time records, or other documentation that supports this allocation,
must be available for verification by the contractor upon request. (See CMS Pub. 15-1, chapter
21, §2182.3E.)

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Column 8.--Enter the unadjusted RCE limit for each line of data. This amount is the product of
the RCE amount entered in column 6 and the ratio of the physician’s provider component hours
entered in column 7 to 2080 hours.
Column 9.--For each line of data enter five percent of the amounts entered in column 8.
Column 12.--The computed RCE limit in column 8 may be adjusted upward, up to five percent of
the computed limit (column 9), to take into consideration the actual costs of membership for
physicians in professional societies and continuing education paid by the provider.
Enter, for each line of data, the actual amounts of these expenses paid by you.
Column 13.--For each line of data enter the result of multiplying the amount in column 5 by the
amount in column 12 and divide the result by the amount in column 3.
Column 14.--The computed RCE limit in column 8 may also be adjusted upward to reflect the
actual malpractice expense incurred by you for the services of a physician or group of physicians
to your patients.
Enter for each line of data the actual amounts of these malpractice expenses paid by you.
Column 15.--For each line of data enter the result of multiplying the amount in column 5 by the
amount in column 14 and divide the result by the amount in column 3.
Column 16.--For each line of data enter the sum of the amounts in columns 8 and 15 plus the lesser
of the amounts in columns 9 or 13.
Column 17.--Compute the RCE disallowance for each cost center by subtracting the RCE limit in
column 16 from your component remuneration in column 5. If the result is a negative amount,
enter zero in this column.
Column 18.--The adjustment for each cost center to be entered represents the provider-based
physician (PBP) elimination from costs entered on Worksheet A-8, column 2, line 16. Compute
the amount by deducting, for each cost center, the lesser of the amounts recorded in column 5
(provider component remuneration) or column 16 (adjusted RCE limit) from the total
remuneration recorded in column 3.
Line 100 - Total Line.--Total the amounts in columns 3 through 5, 7 through 9, and 12 through 18.

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WORKSHEET B - COST ALLOCATION - GENERAL SERVICE COSTS AND
WORKSHEET B-1 - COST ALLOCATION - STATISTICAL BASIS

In accordance with 42 CFR 413.24, cost data must be based on an approved method of cost finding
and on the accrual basis of accounting except where governmental institutions operate on a cash
basis of accounting. Cost finding is the process of recasting the data derived from the accounts
ordinarily kept by a provider to ascertain costs of the various types of services rendered. It is the
determination of these costs by the allocation of direct costs and proration of indirect costs. Obtain
the total direct expenses from Worksheet A, column 7.
Worksheets B and B-1 facilitate the step-down method of cost finding. This method recognizes
that general services of the CMHC are utilized by other general service, direct patient care service,
and nonreimbursable cost centers. Worksheet B provides for the equitable allocation of general
service costs based on statistical data reported on Worksheet B-1. To facilitate the allocation
process, the general format of Worksheets B and B-1 is identical. The column and line numbers
for each general service cost center are identical on the two worksheets. Prepare these worksheets
in conjunction with each other.
The statistical basis shown at the top of each column on Worksheet B-1 is the recommended basis
of allocation. The total statistic for cost centers using the same basis (e.g., square feet) may differ
with the closing of preceding cost centers.
Close the general service cost centers in accordance with 42 CFR 413.24(d)(1) so that the cost
centers rendering the most services to and receiving the least services from other cost centers are
closed first (see CMS Pub. 15-1, chapter 23, §2306.1). If a more accurate result is obtained by
allocating costs in a sequence that differs from the recommended sequence, the CMHC must
request approval in accordance with CMS Pub. 15-1, chapter 23, §2313.
If the amount of any cost center on Worksheet A, column 8, has a negative balance, show this
amount as a negative balance on Worksheet B, column 0. Allocate the costs from the overhead
cost centers to applicable cost centers, including those with a negative balance. If after receiving
costs from the applicable overhead cost centers, a general service cost center has a credit balance
at the point it is to be allocated, do not allocate such general service cost center. Rather, enter the
credit balance in parenthesis on line 100 of the appropriate column, as well as the first line of the
column.
This enables you to cross foot column 14, line 100 to column 0, line 100. After receiving costs
from the applicable overhead cost centers, if a revenue producing cost center has a credit balance
on Worksheet B, column 14, do not carry such credit balance forward to Worksheet C.

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4510 (Cont.)

On Worksheet B-1, enter on the first line of each column the total statistics applicable to the cost
center being allocated (e.g., in column 1, Capital-Related Costs - Buildings and Fixtures, enter on
line 1 the total square feet of buildings on which depreciation was taken). Use accumulated cost
for allocating A&G expenses.
For each cost center being allocated, enter that portion of the total statistical base applicable to
each cost center receiving services. For each column, the sum of the statistics entered for cost
centers receiving services must equal the total statistical base entered on the first line. Such
statistical base, including accumulated cost for allocating A&G expenses, does not include any
statistics related to services furnished under arrangements except where:
•

Both Medicare and non-Medicare costs of arranged for services are recorded in the
CMHC’s books/records; or

•

The contractor determines that the CMHC is able to and does gross up the costs and
charges for services to non-Medicare patients so that both cost and charges are recorded
as if the CMHC had furnished such services directly to all patients. (See CMS Pub.
15-1, chapter 23, §2314.)

Enter on line 101 the total expenses of the cost center being allocated. Obtain this amount from
the same column and line number on Worksheet B used to enter the total statistical base on
Worksheet B-1. (In the case of buildings and fixtures, this amount is on Worksheet B, column 1,
line 1.)
Divide the amount entered on line 101 by the total statistical base entered in the same column on
the first line. Enter the resulting unit cost multiplier on line 102. Enter the resulting unit cost
multiplier (rounded to six decimal places) on line 102.
Multiply the unit cost multiplier by that portion of the total statistical base applicable to each cost
center receiving the services rendered. Enter the result of each computation on Worksheet B in
the corresponding column and line.
After the unit cost multiplier has been applied to all the cost centers receiving the services rendered,
the total cost (line 101) of all of the cost centers receiving the allocation on Worksheet B must
equal the amount entered on the first line. Perform the preceding procedures for each general
service cost center. Complete the column for each cost center on both Worksheets B and B-1
before proceeding to the next column for the cost center.
After all the costs of the general service cost centers have been allocated on Worksheet B, enter in
column 14, the sum of expenses on lines 23 through 100, columns l through 13. The total expenses
entered in column 14, line 101, must equal the total expenses entered in column 0, line 101.

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4510 (Cont.)

FORM CMS-2088-17

DRAFT

Transfer the totals in column 14, lines 23 through 32 of Worksheet B to Worksheet C, column l.
Do not transfer the nonreimbursable cost centers, lines 42 through 100.
NOTE: Whenever an adjustment is required to expenses after cost allocation, submit a supporting
worksheet showing the computation of the adjustment, the amount applicable to each cost center,
and the cost center balances which are to be carried forward from Worksheet B for cost
apportionment to the health care programs.
Column Descriptions
Column 1.--Depreciation on buildings and fixtures and expenses pertaining to buildings and
fixtures e.g., insurance, interest, rent, and real estate taxes are combined in this cost center to
facilitate cost allocation. Allocate all expenses to the cost centers on the basis of square feet of
area occupied.
If a CMHC occupies more than one building, it may allocate the depreciation and related expenses
by building, using a supportive worksheet showing the detail allocation and transferring the
accumulated costs by cost center to Worksheet B, column 1.
Column 2.--If you do not directly assign the depreciation on movable equipment and expenses
pertaining to movable equipment, e.g., insurance, interest and rent, as part of your normal
accounting systems, you must accumulate the expenses in this cost center. Allocate all expenses
(e.g., interest, personal property tax) for movable equipment to the appropriate cost centers on the
basis of square feet of area occupied or dollar value.
Column 3.--The salary statistics used for employee health and welfare cost allocation must be
reconcilable to total salaries and salary by department shown on Worksheet A, column 1.
Adjustments are necessary to take into account salaries reclassified in column 5 of Worksheet A
and the salaries adjusted in column 7 of Worksheet A.
Column 4.--Allocate the administrative and general expenses on the basis of accumulated cost.
Therefore the amount entered in Worksheet B-1, column 4 is the sum of Worksheet B, columns 1
through 3, lines as applicable.
A negative cost center balance in the statistics for allocating administrative and general expenses
causes an improper distribution of this overhead cost center. Exclude negative balances from the
allocation statistics.
Worksheet B-1, Column 4A.--Enter the costs attributable to the difference between the total
accumulated cost reported on Worksheet B, column 3A, line 101 and the accumulated cost
reported on Worksheet B-1, column 4, line 4. Enter any amounts reported on Worksheet B, column
3A for (1) any service provided under arrangements to program patients that is not grossed up and
(2) negative balances. Including these costs in the statistics for allocating administrative and
general expenses causes an improper distribution of overhead. In addition, report on line 4 the
administrative and general costs reported on Worksheet B, column 4, line 4 since these costs are
not included on Worksheet B-1, column 4 as an accumulated cost statistic.

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FORM CMS-2088-17

4511

For subscripted A&G cost centers, the accumulated cost center line number must match the
reconciliation column number. Include in the column number the alpha character "A", i.e., if the
accumulated cost center for A&G is line 4 (A&G), the reconciliation column designation must be
4A.
Worksheet B-1, Column 4.--The administrative and general expenses are allocated on the basis of
accumulated costs. Therefore, the amount entered on Worksheet B-l, column 4, line 4, is the
difference between the amounts entered on Worksheet B, column 3A and Worksheet B-1, column
4A. A negative cost center balance in the statistics for allocating administrative and general
expenses causes an improper distribution of this overhead cost center. Exclude negative balances
from the allocation statistics.
4511.

WORKSHEET C - APPORTIONMENT OF PATIENT SERVICE COSTS

To determine the allowable costs applicable to the Medicare program, apportion the costs between
the Medicare beneficiaries and the other patients. The basis of the apportionment is the gross
amount of charges for each reimbursable cost center.
Column 1.--Enter the total cost of each cost center as computed on Worksheet B, column 14,
corresponding lines. Do not bring forward any cost center with a credit balance from Worksheet
B, column 14.
Column 2.--Enter on each line (from your records) the gross total patient charges for each cost
center.
Column 3.--Divide the cost for each cost center in column 1 by the corresponding gross charges
in column 2 to determine the ratio of cost to charges for each cost center. Carry the ratio out to six
decimal places.
Column 4.--Enter, from your records or PS&R, the Medicare program charges for each cost center
If you charge some patients less than the customary charges for services rendered because of the
patients’ inability to pay or for any other reason, those charges are increased (for apportionment
purposes) to reflect the gross amounts.
Thus, for computing reimbursable costs on this worksheet, the individual amounts applicable to
Medicare program patients must not differ from the amounts applicable to all other patients for the
same services.
When certain services by a provider are furnished under arrangements and an adjustment is made
on Worksheet A-8 to gross up costs, the related charges entered on Worksheet C are also grossed
up in accordance with CMS Pub. 15-1, chapter 23, §2314.
Column 5.--Calculate the Medicare cost by multiplying the cost to charge ratio from column 3 by
the Medicare charges in column 4 for each reimbursable cost center listed for lines 23 through line
32.
Line 50.--Enter the total of lines 23 through 32.
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4512
4512.

FORM CMS-2088-17

DRAFT

WORKSHEET D - CALCULATION OF REIMBURSEMENT SETTLEMENT FOR
COMMUNITY MENTAL HEALTH CENTERS - TITLE XVIII

Worksheet D applies to title XVIII only and provides for the reimbursement calculation of CMHC
services rendered to Medicare beneficiaries.
Line Descriptions
Line 1.--Enter the gross APC/PPS payments (includes deductible and coinsurance).
Line 2.--Enter the amount of outlier payments.
Line 3.--Enter the outlier reconciliation amount from line 54.
Line 4.--Enter the sum of lines 1 through 3.
Line 5.--Enter the amounts paid or payable by primary payers when Medicare liability is secondary
to that of the primary payer.
Line 6.--Enter the total amount of deductibles billed to program patients (do not include
coinsurance).
Line 7.--Enter in the applicable the column the gross coinsurance amount billed to Medicare
beneficiaries.
Line 8.--Enter the sum of line 4 minus lines 5, 6, and 7.
Line 9.--Enter the gross reimbursable bad debts, net of bad debt recoveries, applicable to any
Medicare deductibles and coinsurance. The amount entered applicable to CMHC PPS must not
exceed the discounted coinsurance applicable to Medicare beneficiaries.
Line 10.--Enter the adjusted Medicare bad debt, line 9 (including negative amounts) times 65
percent.
Line 11.--Enter the reimbursable bad debts for dual eligible beneficiaries. This amount is reported
for informational purposes and is a subset of the amount reported on line 9.
Line 12.--Enter the result of line 8 plus line 10.
Line 13.--Enter any other adjustments. Enter increases to costs as a positive amount and
decreases as a negative amount.
Line 14.--Enter all demonstration payment adjustment amounts before sequestration.
Line 15.--Amount due before sequestration (line 12, minus lines 13 and 14).

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FORM CMS-2088-17

4512 (Cont.)

Line 16.--Enter the sequestration adjustment amount as follows: (2 percent times (total days in
the cost reporting period that occur during the sequestration period, divided by total days in the
entire cost reporting period, rounded to four decimal places) times line 15).
Line 17.--Enter all demonstration payment adjustment amounts after sequestration. Enter
increases to costs as a positive amount and decreases to costs as a negative amount.
Line 18.--Amount due after sequestration (line 15, minus lines 16 and 17).
Line 19.--Enter the total interim payments applicable to this cost reporting period from
Worksheet D-1, line 4.
Line 20.--For contractor final settlement, report the amount from Worksheet D-1, line 5.99.
Line 21.--Enter the amount from line 18 minus the amounts on lines 19 and 20. This represents
the amount due to or from the provider. Transfer this amount to Worksheet S, Part III, line 1.
Line 22.--Enter protested amounts.
DO NOT COMPLETE THE REMAINDER OF WORKSHEET D, LINES 50 THROUGH
54 ARE FOR CONTRACTOR USE ONLY.
Line 50.--Enter the original outlier amount from line 2.
Line 51.--Enter the outlier reconciliation adjustment amount in accordance with CMS Pub. 10004, chapter 4, §§10.7.2.2 through 10.7.2.4.
Line 52.--Enter the rate used to calculate the time value of money. (See CMS Pub. 100-04, chapter
4, §§10.7.2.2 through 10.7.2.4.)
Line 53.--Enter the time value of money.
Line 54.--Enter sum of lines 51 and 53.

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4513
4513.

FORM CMS-2088-17

DRAFT

WORKSHEET D-1 - ANALYSIS OF PAYMENTS TO COMMUNITY MENTAL
HEALTH CENTERS FOR SERVICES RENDERED TO PROGRAM
BENEFICIARIES

Complete this worksheet for Medicare interim payments only. (See 42 CFR §413.64.)
Complete lines 1 through 4. The remainder of the worksheet is completed by your contractor.
Line Descriptions
Line 1.--Enter the total Medicare interim payments paid to the CMHC. Include all Prospective
Payment System (PPS) payments for CMHC services. Do not include payments received for
services reimbursed on a fee schedule basis. The amount entered reflects the sum of all interim
payments paid on individual bills (net of adjustment bills) for services rendered in this cost
reporting period. The amount entered must include amounts withheld from the CMHC’s interim
payments due to an offset against overpayments to the CMHC applicable to prior cost reporting
periods. It does not include any retroactive lump sum adjustment amounts based on a subsequent
revision of the interim rate or tentative or net settlement amounts; nor does it include interim
payments payable. If the CMHC is reimbursed under the periodic interim payment method of
reimbursement, enter the periodic interim payments received for this cost reporting period.
Line 2.--Enter the total Medicare interim payments payable on individual bills. Since the cost in
the cost report is on an accrual basis, this line represents the amount of services rendered in the
cost reporting period, but not paid as of the end of the cost reporting period, and does not include
payments reported on line 1.
Line 3.--Enter the amount of each retroactive lump sum adjustment and the applicable date.
Line 4.--Enter the total amount of the interim payments (sum of lines 1, 2, and 3.99). Transfer
these totals to Worksheet D, line 19.
DO NOT COMPLETE THE REMAINDER OF WORKSHEET D-1. LINES 5 THROUGH
7 ARE FOR CONTRACTOR USE ONLY. (EXCEPTION: IF WORKSHEET S, PART I,
LINE 5, IS “5” (AMENDED COST REPORT), THE PROVIDER MAY COMPLETE THIS
SECTION.)
Line 5.--List separately each tentative settlement payment after desk review together with the date
of payment. If the cost report is reopened after the Notice of Program Reimbursement (NPR) has
been issued, report all settlement payments prior to the current reopening settlement on line 5.
Line 6.--Enter the net settlement amount (balance due to the provider or balance due to the
program) for the NPR, or, if this settlement is after a reopening of the NPR, for this reopening.
NOTE: On lines 3, 5, and 6, when an amount is due provider to program, show the amount and
date on which the provider agrees to the amount of repayment, even though total
repayment is not accomplished until a later date.

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4514.1

Line 7.--Enter the sum of the amounts on lines 4, 5.99 and 6. The amount must equal Worksheet
D, line 18.
4514.

FINANCIAL STATEMENT WORKSHEET

Prepare this worksheet from the CMHC accounting books and records. Cost reports received
with an incomplete worksheet F are returned to you for completion. If you do not follow this
procedure, you are considered as having failed to file a cost report.
4514.1 Worksheet F - Statement of Revenues and Expenses.--This worksheet requires the
reporting of total revenues for the entire facility and total operating expenses for the entire facility.
If cost report total revenues and total expenses differ from those on your filed financial statements,
submit a reconciliation report with the cost report submission.
Line 1 - Total Patient Revenue.--Enter on this line total patient revenues.
Line 2 - Less: Allowance and Discounts on Patient’s Accounts.--Enter on this line total patient
revenues not received. This includes:
Provision for Bad Debts,
Contractual Adjustments,
Charity Discounts,
Teaching Allowances,
Policy Discounts,
Administrative Adjustments, and
Other Deductions from Revenue
Line 3 - Net Patient Revenues.--Line 1 minus line 2.
Line 4 - Less: Total Operating Expenses.--Transfer from Worksheet A, column 4, line 100.
Line 5 - Net Income from Service to Patients.--Line 3 minus line 4.
Lines 6 through 22.--Enter on the appropriate line 6 through 19 all other revenue not reported on
line 1. Obtain these amounts from your accounting books and/or records.
Line 20 - Other (Specify).--Enter all other revenue not reported on lines 6 through 19. Obtain this
from your accounting books and/or records. Subscript this line as necessary.
Line 21 - Total Other Income.--Enter the sum of lines 6 through 20.
Line 22 - Total.--Enter the sum of lines 5 and 21.
Lines 23 through 25.--Enter on the appropriate lines 23 through 25, expenses from your books and
records.

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FORM CMS-2088-17

DRAFT

Line 26 - Other Expenses (Specify).--Enter all other expenses not reported on lines 23 through 25.
Subscript this line as necessary.
Line 27 - Total Other Expenses.--Enter the sum of line 23 through 26.
Line 28 - Net Income (or Loss) for the Period.--Enter the result of line 22 minus line 27.

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FORM CMS-2088-17
EXHIBIT 1 - Form CMS-2088-17

4590

The following is a listing of the Form CMS-2088-17 worksheets and the page number location.

Rev. 1

Worksheets

Page(s)

Wkst. S, Parts I-III
Wkst. S-1, Part I and II
Wkst. S-2
Wkst. A
Wkst. A-6
Wkst. A-8
Wkst. A-8-1
Wkst. A-8-2
Wkst. B
Wkst. B-1
Wkst. C
Wkst. D
Wkst. D-1
Wkst. F

45-303
45-304
45-305
45-306
45-307
45-308
45-309
45-310
45-311 - 45-312
45-313 - 45-314
45-315
45-316
45-317
45-318

45-301