CMS Pub. 100-06, ch. 8, § 110

If the provider changes contactors, the outgoing contractor is responsible for auditing the

last cost report that the provider filed while still being serviced by that contractor. This is

based upon the contractual functions to be performed by contractors outlined in Article II,

Sections A, B, and C of the Agreement. These sections require the contractor to make

determinations of the amounts of payments to be made to providers, to account for funds

in making such payments, and to audit their records. This clearly calls for the contractor

servicing the provider to account for all transactions that have taken place while the

relationship existed. This includes an audit of the provider's records and determination of

the final settlement as well as finishing any work related to appeals of cost reports that

you were responsible for settling.

If you are the outgoing contractor, upon its request, forward to the incoming contractor

copies of the last as-submitted and settled cost report that you are responsible for and any

other requested information/documentation. This provides cost report information so the

incoming contractor can review and, if necessary, adjust the interim rate and perform the

subsequent year’s audit. If you need any of the working papers to complete the work on

pending appeals that you are responsible for and you did not retain copies of those

working papers, request that the incoming contractor send you copies at the time you

need them.

If you are the incoming contractor, you should generally audit the first cost report filed by

a provider that is new to you as a result of changing contractors unless the provider (e.g.,

SNF or HHA) is paid entirely under the prospective payment methodology or the amount

of Medicare reimbursement is insignificant. This gives you a basis from which to review

and evaluate subsequent years' cost reports. The audit of a cost report from a provider

that changed contractors is:

• Limited to those issues, if any, pending from prior cost report examinations in

the case of the contractor closing its final cost report, or

• Performed to the extent necessary to supplement information received from

the prior contractor in the case of the contractor examining the provider's first

cost report.