CMS Pub. 100-06, ch. 8, § 20.2

The UDR is comprised of an acceptability checklist, a clerical review, selection of

professional desk review type, either a limited professional desk review or a full

professional desk review, and a summary of UDR exceptions.

NOTE: The UDR is issued by CMS separately and is not included in this manual.

A. Acceptability Checklist

Complete the appropriate Acceptability Checklist for the type of provider submitting the

cost report for all cost reports received. The objective of the Acceptability Checklist is to

determine whether the provider has submitted a complete cost report, Form CMS-339,

IRIS diskette, if applicable, and that the electronic cost report passes all Level I edits.

NOTE: Effective October 2, 2006, Part II of the Acceptability Checklist shall be

eliminated and only Part I of the Acceptability Checklist is required to be completed by

the contractor.

Follow the instructions in §10.3 of this chapter pertaining to rejection of a cost report

and the manner in which to handle missing items that are requested but not required for

acceptance of the cost report.

Ensure that the completed Acceptability Checklist is given to the individuals responsible

for completion of the remainder of the UDR. When all the workpapers prepared to settle

the cost report are completed, include the completed Acceptability Checklist in your desk

review workpaper files. Indicate the location, within your working paper files, of the

documents that the provider submitted with the cost report if they are not included in the

same section as the Acceptability Checklist.

B. Clerical Review

A clerical desk review consists of the following:

• Verification of the mathematical accuracy of the submitted cost report

through footings, cross-footings, and calculations for those cost reports

that are not filed electronically. Clerical errors are to be corrected and

noted in total as adjustments for the purpose of final settlement. If

extensive clerical errors exist in the cost report that may require a

significant amount of time to correct, the cost report may be returned to

the provider for correction on the basis that the provider failed to submit

an acceptable cost report. (See §10.3 of this chapter.)

• Preparation of a comparative analysis of the cost report data between the

prior and current year when needed for a full professional desk review.

C. Selection of Professional Desk Review Type

Selection of the appropriate type of professional desk review is critical in making the

desk review/audit process more efficient and economical. Accordingly, select the

appropriate professional desk review (limited or full) based on provider type and

thresholds in accordance with the instructions contained in the UDR program.

Currently only a limited professional desk review is required for Skilled Nursing

Facilities (SNFs) and Home Health Agencies (HHAs). Thresholds are applied to the cost

reports of other types of providers to determine whether a limited or full professional

desk review should be completed.

The thresholds published in the UDR are recommended guidelines that CMS expects the

contractors to implement. However, if you believe the published thresholds are

inappropriate to a specific situation or to a provider group, you may request an approval

from the CMS regional office to change those thresholds. Your request must contain a

justification for the change. The regional office will either approve or disapprove the

request in writing.

D. Limited Professional Desk Reviews

Appropriate limited professional desk review (depending on provider type) is completed

for cost reports filed by providers other than hospitals that are almost entirely reimbursed

under PPS or the fee screen. It may also be completed for cost reports filed by PPS

hospitals and cost reimbursed providers (including hospitals) that fall below the desk

review thresholds established by CMS. (See §20.2.C of this chapter.)

The UDR contains separate limited professional desk review programs for hospitals,

SNFs, HHAs, and outpatient facilities. All the areas/issues in these programs must be

addressed by the contractor because they are limited to only those that are essential in

those cost reports. However, these UDRs contain specific thresholds for most of the

areas/issues, thus all the steps may not have to be completed.

E. Full Professional Desk Reviews

A full professional desk review is an analysis of the cost report and the provider’s

background. Its completion creates and documents an immediate awareness of changes,

open issues, and problem areas.

The full professional desk review is completed for cost reports filed by providers other

than SNFs and HHAs if they exceed the desk review thresholds established by CMS.

(See §20.2.C of this chapter.) However, you are not prohibited from completing a full

professional desk review on a cost report for any of those providers even if it falls below

the desk review thresholds if your professional judgment so dictates. In this situation,

you must document the reason for performing a full professional desk review.

The UDR contains separate full professional desk review programs for hospitals and

outpatient facilities. These programs contain thresholds for most of the areas/issues

addressed therein, thus all the steps (even if the area/issue is applicable) may not have to

be completed. Furthermore, the individual review steps for each reimbursement issue

may be expanded or omitted as necessary to address specific circumstances. However,

the reasons for omitting steps must be documented. If expansion is necessary, try to limit

any changes to the full professional desk review to the information readily available in

the cost report (including Form CMS-339 Provider Cost Report Reimbursement

Questionnaire), prior audit files, if any, and the permanent reference file.

F. Summary of UDR Issues

Use the “Uniform Desk Review - Summary of Issues” worksheet (see Exhibit I in §170

of this chapter) to list the exceptions identified through the UDR process. You may use

an alternative format if it contains, at a minimum, the information in Exhibit I.

Number each exception in the first column. This facilitates future cross-referencing of

issues flowing through audit, settlement, and if applicable the appeals process. In column

2 identify the UDR section and the step/question specific to the exception. If in your

judgment there are other issues that did not surface as desk review exceptions but need to

be considered as possible audit issues, list them after the desk review exceptions at the

bottom of this exhibit. Continue numbering them in Column 1 as though they are desk

review exceptions but identify them as “other” in Column 2. In Column 3 write a brief

description of the issue for each item listed in Column 1 (both desk review exceptions

and other exceptions).

Where applicable, insert the units and/or dollar amounts pertaining to each exception in

column 4. Leave column 4 blank in situations where the amount cannot be established at

the time of the desk review.

Do not transfer mathematical errors (i.e., footing, cross-footing, tracing, calculations) to

this schedule. They remain on the appropriate clerical worksheets as exceptions. (See §§

20.2.B and 10.3 of this chapter.)

Use columns 5 through 7 to document the audit selection and scoping process for those

issues that could not be resolved during the desk review. Explain the basis for those

decisions in column 9 (Comments) and reference the working paper(s) documenting the

decision in Column 10. For example, if column 5 or 6 was checked, give reason such as

immaterial, budgetary constraints, etc. in column 9 and in Column 10 reference the

working paper documenting the process used to arrive at that decision. (See §50.1 of this

chapter containing instructions for scoping the field audit.) Where the item is scoped for

audit, also outline the audit requirements and objectives in column 9.

If an exception was resolved during the desk review explain this in Column 9. If an

adjustment resulted from the desk review exception resolution, annotate this in Column 8

and prepare an adjustment. Record this adjustment in the audit adjustment report (see

Exhibit VI in §170 of this chapter).

Identify the audit or desk review exception resolution working paper where the exception

was addressed in column 10 (UDR Resolution or Audit W/P Ref).

Indicate in the designated boxes at the top of the "UDR Summary of Issues" the decision

regarding the next step for the cost report (e.g., in-house audit, field audit, settlement

without further review). The rationale for the decision should be consistent with the plan

used to formulate the audit budget for the fiscal year. (See §§40ff and 50ff of this

chapter.)