Contractor’s Responsibility If the Provider Fails to File a Cost

10.2 – Contractor’s Responsibility If the Provider Fails to File a Cost Report Timely or the Cost Report is Rejected (Rev. 27, 12-19-03) If the provider fails to submit a cost report timely (see PRM-II, §104.A.4 and Chapter 3, §30.1.A of this manual,) or if the cost report is rejected because it is not acceptable, the contractor should suspend payments in accordance with 42 CFR 405.371. (See PRM-II, §130.4 for explanation of a grace period for suspension of payments applicable to cost reports that were filed early but were subsequently rejected.) Terminated providers should immediately have 100 percent of their payments suspended for failure to file a cost report in a timely manner. If other than a terminated provider submitted a request for reduction in the rate of suspension (see §10.1 of this chapter) and it was approved, the contractor should suspend 50 percent (or a percentage approved by the RO) of the provider’s payment for the first 60 days that the cost report is late. If an acceptable cost report has not been filed on the 61st day after the due date, the contractor should change the rate of suspension to 100 percent. If the provider did not request a reduction in the rate of suspension, or the contractor did not concur with the request for a reduced suspension rate, then 100 percent of the provider’s payments should be suspended if an acceptable cost report is not filed by the due date. If system limitations preclude you from suspending payments based on a reduced percentage rate, base the suspension on the dollar amount that results from applying the applicable percentage rate to the average payment for the six (6) months prior to the suspension. Prepare a demand letter(s) for all previous payments in accordance with Chapter 4, §§10 and 20 of this manual. Payment due dates and interest assessments are still based on the due date of the cost report.