CMS Pub. 100-06, ch. 8, § 120.4

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.