Managers Decide
Medicare Recognizes the Importance of support Department Cost allocation
Since 1966, Medicare has required all health care providers to allocate the costs of service departments to revenue producing department The Medicare cost report requires that health care requires that health care providers use the step-down (Sequential) method or the double-apportionment method (which is a two-stage variation of the step-down method to calculate operating costs for patient care departments health care organizations rarely use the direct method because service departments provide many services to other departments and because the direct method is not allowed on Medicare cost report.The Medicare guideline for the step-down method requires that the order of the sequence bi from the service center that renders the greatest service to the least. The magnitude of service is determined by the number of other centers served. If two centers render service to an equal number of centers then the center wigh the greatest amount of expense is allocated first.