Timing and Completion of Home Office Audits

120.4 – Timing and Completion of Home Office Audits (Rev. 84, Issued: 11-16-05; Effective Date: 12-05-05; Implementation Date: 12-05- 05) Home offices of chain organizations are not providers, thus their costs are not directly payable by Medicare. Home office costs are payable only when they are allocated to the providers in the chain and become part of the providers’ allowable costs. Since the allocation of home office costs usually affects all providers in the chain, the audit of the home office cost statement should be performed by the responsible/designated contractor as soon as possible after the receipt of the home office cost statement so that the servicing contractors can expeditiously finalize the settlement or reopening of provider cost reports pending the results of the home office audit. CMS expects that if a home office cost statements is not scheduled for an audit, the cost statements should be finalized within 12 months from the date of acceptance. This is effective for all home office cost statements received on or after October 2005. When you as the responsible/designated contractor begin the audit of the home office cost statement, notify all the other contractors that service the providers within the chain and keep them informed of the progress of the audit and any significant developments. Also, notify the servicing contractor(s) if during the audit you identify adjustments that may affect other providers within the chain that are not being audited. After such notification, you may need to expand the scope of the home office audit if a servicing contractor requests that you audit the issue on site because it is not possible for that contractor to resolve it any other way. In this situation, the servicing contractor should assist you in preparing the expanded audit steps and forward to you any working papers that you may need. Any issues relating to the determination and allocation of home office costs are to be resolved by the responsible/designated contractor. If you are the responsible/designated contractor, forward the audit results to the other contractors that service providers within the chain prior to the finalization of the audit adjustments. If any of the other servicing contractors do not agree with your interpretation and application of a policy on a certain issue, that contractor may request that you obtain an interpretation from CMS. Where you do request an interpretation of policy from CMS, delay the resolution of the issue/adjustment until you receive a reply from CMS.