As a Federally Qualified Health Center (FQHC), accurate and timely cost reporting is more than a compliance requirement, as it directly affects your reimbursement and financial health. Each year, FQHCs must file a cost report with the Centers for Medicare & Medicaid Services (CMS) using Form CMS-224-14. This annual filing reconciles Medicare settlement payments and demonstrates compliance with federal regulations, while also providing essential transparency and accountability in showing how federal funds support patient care.

In this article, we’ll review what’s included in the cost report, the common challenges that FQHCs face, best practices to strengthen your reporting process, and how our team at SEK can help.

What’s Included in the Cost Report

The cost report is a comprehensive reporting document that requires:

• Trial balance of expenses: A listing of all operating costs for the fiscal year.
• Reclassifications & adjustments: Shifting costs into appropriate categories and removing non-allowable expenses.
• Statistical data: Measures like patient visits, full-time equivalents, and related benefit costs.
• Settlement calculations: Determining whether CMS owes the FQHC additional reimbursement or whether repayment is due.

Together, these key components form the foundation of an accurate and compliant FQHC cost report that ensures your organization receives appropriate reimbursement while maintaining regulatory transparency.

Common Challenges for FQHCs

FQHCs commonly face obstacles when preparing cost reports, including:

• Allocating shared costs, such as administrative salaries, utilities, facility expenses.
• Submitting reports within five months of fiscal year-end.
• Keeping up with changing CMS regulations and instructions.
• Providing sufficient documentation to withstand desk reviews or audits.

It’s important to be aware of and actively mitigate against these challenges, as they can have an impact on your reimbursement rates and expose your organization to compliance risk. 

Best Practices to Strengthen Your Cost Reporting Process

Implementing best practices in your cost reporting process is essential for ensuring accuracy, compliance, and optimal reimbursement for your FQHC. A few of the best practices we recommend are:

• Maintaining clean financial records year-round to avoid last-minute reconciliations.
• Ensuring proper documentation for all expenses and allocations.
• Reviewing prior year reports to identify trends and recurring issues.
• Educating your leadership team on how cost reporting affects reimbursement and compliance.
• Working with experienced advisors who understand the unique rules for FQHCs.

Applying these strategies can help your organization effectively approach cost reporting and support continued financial stability.

Partner with SEK for Your Success

Cost reporting is more than a compliance requirement—it’s a strategic opportunity to ensure your FQHC is properly reimbursed and financially sustainable. With the right guidance, your organization can maximize reimbursement, minimize compliance risks, and stay focused on its mission of serving the community.

At SEK, we specialize in helping Federally Qualified Health Centers navigate the complexities of cost reporting and Centers for Medicare & Medicaid Services (CMS) audits. Our FQHC team understands the unique challenges FQHCs face and is ready to guide you through every step of the process.

Learn more about our FQHC services, or contact us today using the form below to learn how we can help strengthen your organization and maximize reimbursement.