A recent cover story in MODERN HEALTHCARE (Oct. 12, p. 4) may have left an erroneous impression in some readers' minds about the issue of reserve cost reports. The story referred to these documents as a "second set of books." They are not. In fact, reserve cost reports are simply accounting work papers used to determine the amount of receivables due from Medicare.
Because of the complexity of Medicare issues and the lack of clarity of the manuals, rules and regulations associated with them, generally accepted accounting principles require that all hospitals in the country that provide services to Medicare patients estimate the net realizable value of amounts due from Medicare.
Hospitals use various methods to determine and document their Medicare receivables-and preparation of reserve cost reports is one of those methods historically accepted by the accounting profession. Columbia/HCA Healthcare Corp. believes that the preparation of reserve cost reports is a thorough and accurate method to determine a hospital's Medicare receivables.
I hope this helps your readers understand that reserve cost reports are not "two sets of books" and that all U.S. hospitals, regardless of ownership, are required to make their best estimates of what they will ultimately be paid by Medicare.
Senior vice president
Columbia/HCA Healthcare Corp.