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Worksheet S-10 & Uncompensated CareUnderstand the Changes and Optimize Uncompensated Care Reported
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Agenda Medicare DSH/Uncompensated Care Reimbursement WS S-10 Overview WS S-10 Clarifications/Examples WS S-10 Audits Action Plan
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Audience Participation (1) What is your role in your organization?
a) Provider - Reimbursementb) Provider - Revenue cyclec) Provider - Finance d) Third party consultant e) Other
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Medicare DSH/Uncompensated Care CMS reimbursement of hospitals that serve a disproportionally
high percentage of uninsured and under-insured patients DSH payments started in 1986 Historically, reimbursed based on the hospital’s disproportionate
patient percentage x DRG payments In 2010, as a result of the ACA, the Federal Medicare
Disproportionate Share Hospital (DSH) payment calculation was updated, for calculating DSH beginning FY 2014 25% - historical DSH formula 75% - establishing a fixed Uncompensated Care pool – shared by qualified
hospitals nationally
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Medicare DSH/Uncompensated Care DSH/UC Payment Calculation:
Mechanism 1 (25% of the traditional payment calculation “empirically justified” amount) – sum of two fractions (15% and above to qualify)
1. Medicare fraction (SSI Percentage)Days of patients entitled to Medicare Part A and SSI benefits Days of patients entitled to Medicare Part A
2. Medicaid Fraction Days of patients eligible for Title XIX Medicaid, but entitled to Medicare Part A Total acute care patient days
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Medicare DSH/Uncompensated Care DSH/UC Payment Calculation:
Mechanism 2 (75%) – uncompensated care pool – prospectively determined amount paid to Medicare disproportionate share hospitals based on 3 factors
Factor 1: Fund UC Pool with 75% of total projected DSH payments – CMS Actuary estimate
Factor 2: Adjustment for change in uninsured (comparing to the 18% in 2013, the last year before ACA expansion) - CMS Actuary estimate
Factor 3: Distribute funds to hospitals based on their UC as a proportion of total UC nation wide
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Medicare DSH/Uncompensated CareFactors 1 & 2
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FYE DSH Est. $ Factor 1
75% of DSH % of
Uninsured Factor 2 %Factor 2 $
Factor 1 * Factor 2 %
2014 12,772,000,000 9,579,000,000 17.00% 94.30% 9,032,997,000
2015 13,383,462,196 10,037,596,647 13.75% 76.19% 7,647,644,885
2016 13,411,096,528 10,058,322,396 11.50% 63.69% 6,406,145,534
2017 14,396,635,710 10,797,476,783 10.00% 55.36% 5,977,483,147
2018 15,552,939,524 11,664,704,643 8.15% 58.01% 6,766,695,163
2019 16,294,703,939 12,221,027,954 9.48% 67.51% 8,250,415,972
Medicare DSH/Uncompensated Care CMS timeline of the use of S-10 data FY2018 IPPS final ruling – incorporating data from WS S-10 to calculate
1/3 of Factor 3 (3 year average) FY2019 IPPS final ruling – advance one year to further phase-out the low-
income days proxy, instead using 2 fiscal years of S-10 data to calculate Factor 3 FY2013 low-income insured days and FY2016 SSI data FY2014 UC cost per WS S-10 FY2015 UC cost per WS S-10
FY 2020 IPPS final ruling – CMS to abandon the average of 3 cost reporting periods, and use only 1 year of S-10 data from FY 2015 100% of a hospital’s share of the pool will be derived from 1 year of S-10 data
(instead of 3 years…may go back to 3 audited years?)
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Medicare DSH/Uncompensated Care The change to the use of uncompensated care cost (WS S-10 Line
30) was a significant change in methodology Shift from Medicaid and Medicare indigency to charity care and
bad debt “Zero-sum” game – qualifying hospitals are competing for their
pro-rata portion. Benefits states that did not expand Medicaid – higher non-
Medicaid indigency patient population
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S-10 - Overview Reports Hospital Uncompensated and Indigent Care Data Prior to 2018, a cost report schedule used only for EHR incentive
payments Now used to calculate 75% of the Medicare DSH payment which is a
$8.6B+ pool CMS issued clarification on reporting Instructions were revised for cost reports beginning on or after
October 1, 2016
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S-10 - Overview
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S-10 - Overview
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Line 30 is ultimately what is used to determine your hospital’s relative share of uncompensated care costs
S-10 - Overview
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Overall cost to charge ratio calculated based on WS C is utilized to estimate the cost of uncompensated care on WS S-10 Emphasis of accurate cost allocation
Line 2 - Net revenue from Medicaid both FFS and Managed Care and DSH/Supplemental payments from Medicaid, net of provider taxes (HFF)
Line 6 – Gross revenue from Medicaid both FFS and Managed Care
S-10 - Overview
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Children’s Health Insurance Program (CHIP) Other state or local government indigent care programs (HCAP) Line 19 = total unreimbursed cost for Medicaid, CHIP, and state and
local indigent care programs
S-10 - Clarifications What is considered “charity care”? Discounts given to uninsured patients who meet the hospital’s charity care
criteria (Transmittal 10) This includes full or partial discounts given to uninsured patients who meet the
hospital’s charity care policy OR financial assistance policy (FAP) (Transmittal 11)
Modification of the application of the cost-to-charge ratio (CCR) Not applied to the deductible and coinsurance amounts for insured patients
approved for charity care and non-reimbursed Medicare bad debt Is applied to uninsured patients approved for charity care or an uninsured
discount, non-Medicare bad debt, and charges for non-covered days exceeding a LOS imposed on patients covered by Medicaid or other indigent care program
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S-10 - Clarifications
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Overall CCR
Applied
NoCCR
Applied
Line 20 – based on write off date in fiscal year (rather than date of service) beginning with cost reports beginning on or after 10/1/16 Column 1 – total charges or portion of total charges written off to charity care for
uninsured patients and patients with coverage from an entity that does not have a contract with the provider who meet the charity care policy or FAP
Column 2 – deductible and coinsurance payments required by insured patients covered by a public program or private insurer which has a contract with the provider that were written off to charity care. Exclude amounts claimed as Medicare bad debt
S-10 - Clarifications
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Overall CCR
Applied
NoCCR
Applied
Line 22 – based on payment date in fiscal year (rather than date of service) beginning with cost reports beginning on or after 10/1/16 Column 1 – payments received from uninsured patients and patients with coverage
from an entity that does not have a contract with the provider who meet the charity care policy or FAP for charges currently or previously included in line 20
Column 2 – payments received from insured patients covered by a public program or private insurer which has a contract with the provider for deductibles and coinsurance currently or previously included in line 20
S-10 - Example
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Line 23 Column 1= $16,190,294*0.115970 = $1,877,588 - $0 = $1,877,588Line 23 Column 2= $7,310,863 - $338,695 = $6,972,168Line 23 Column 3 = $8,849,756
S-10 - Clarifications Bad Debt Clarifications Line 26 is to include both Medicare and non-Medicare bad debt net of recoveries Line 27.01 was added, Medicare allowable bad debts, used to compute the non-
Medicare bad debt separately from the non-reimbursed Medicare bad debt non-Medicare bad debt – subject to CCR Non-reimbursed Medicare bad debt (deductible and coinsurance) not subject to CCR
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Line 30 = the sum of the cost of charity care + cost of non-Medicare bad debt + non-reimbursable Medicare bad debt expense
S-10 - Example
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Line 29 = 32,701,323*0.115970 + 4,132,190 * (1 – 65%) = 5,238,638
S-10 - Example
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Line 30 = 8,849,756 + 5,238,638 = 14,088,394
S-10 - Audits Inaugural audits in Fall 2018 CMS audited FY 2015 S-10 data 600 of 2,400 qualifying hospitals Data supporting the charity care and bad debt data reported on S-10 – up to 18
requests of information Patient-detailed charity care listings (tied to S-10, line 20), comprise of 20 data elements for every
transaction Patient- detailed Medicare and non-Medicare bad debt listings, reconciliation of bad debt write-offs to
bad debt reported on S-10 (line 26) Copy of hospitals’ charity care and/or financial assistance policy Hospital’s procedures in determining insurance status and charity care write-offs Comparison of current vs. prior year charity care charges from audited financial statement, and
explanation for significant changes and/or reconciliation between detail listing and amounts reported on S-10
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S-10 - Audits Not if, but when your hospital is selected for MAC audit Audit Sampling Criteria varied by MAC Sample sizes – currently small, 40-60 patients, large extrapolations Sample patients – insured, uninsured, inpatient and outpatient Support documentation Patient account history UBs, remittance advices, charity applications, proof of income, and approval forms (eligibility period)
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Audience Participation (2) and (3) Was your hospital selected for WS S-10 audits?
a) Yes – initial auditb) Yes – subsequent audit c) Yes – both d) No – we have not been selected
If you have been audited, has your hospital historically qualified for DSH?
a) Yesb) No
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Action Plan Coordination Among Teams Revenue Cycle Reimbursement Finance IT/Data Support Internal Audit/Compliance
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Action Plan Review and Update Financial Assistance Policies
Revenue Cycle, Reimbursement, Finance
Ensure FAP/charity care policies clearly state how discounts are applied to uninsured patients and insured patients
If presumptive care is applicable, making sure this is clearly outlined in your policy
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Action Plan Review Cost Allocation
Revenue Cycle, Reimbursement, Finance
Review adjustments and cost allocations in the cost report to ensure accuracy and appropriateness
Monitor changes in overall CCR Ensure the proper split in charity care between uninsured versus insured
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Action Plan – Cost Calculation
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Action Plan Review Revenue Transaction Codes
Revenue Cycle, Reimbursement, IT/Data Support, Compliance
Charity Care FAP Adjustments Indigent Sliding fee schedule Catastrophic charity care Ensure presumptive care write-offs are captured as uncompensated
care, not a contractual adjustment (in accordance with the hospital policy)
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Action Plan Review Patient Level Detail Support
Revenue Cycle, Reimbursement, IT/Data Support, Compliance
Similar to preparing Medicare Bad Debt listing Standard format has not been issued by CMS; however, hospitals that have
been audited have seen the level of detail requested by the intermediaries Segregate patient populations between Inpatient Outpatient Uninsured Insured
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Action Plan Other Considerations Patient Accounting System conversions Multiple-hospital System recent mergers Patient accounting systems Charity care policies Transaction codes Audit support documentation storage and retrieval
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Concluding Thoughts Accurate reporting on WS S-10 = optimization of DSH
reimbursement What is the return on investment for UC costs (WS S-10, Line 30)
~25.72%?
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Total UC costs (per FY 19 CN DSH PUF)
33,693,280,185 Est. Pool
8,665,920,509 Return on investment from UC costs
25.72%
Thank you for your time!
Any questions?
Sue W. [email protected](630) 215-9555
Ashley [email protected](614) 222-9129
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