Medicare Cost Report: The New Worksheet S-12

Thoughtware Alert Published: Dec 17, 2020
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We are nearing the end of a very eventful 2020, a year that filled our proverbial glasses to the brim with nonstop current events. In this spirit, CMS has added a few extra changes for our healthcare providers to address. In the federal fiscal year (FFY) 2021 final rule, CMS outlined significant changes to various parts of the Medicare cost report. One of these changes that many may have overlooked is the addition of a new cost report schedule, Worksheet S-12. 

Worksheet S-12 was introduced in the proposed rule for FFY 2021 and later finalized with some minor changes. Worksheet S-12 seeks to gather market-based payment rate information by MS-DRG in order to rebase MS-DRG rates starting in FFY 2024.

The goal of Worksheet S-12 is to use the accumulated market-based rates to reduce reliance on hospitals’ chargemasters so Medicare fee-for-service (FFS) payments further reflect the relative market value for inpatient items and services.

The proposed rule initially sought to obtain the following:

  1. The median payer-specific negotiated charge for all Medicare Advantage (MA) organizations by MS-DRG
  2. The median payer-specific negotiated charge for all third-party payers by MS-DRG

It is important to note that CMS defines “payer-specific negotiated charge” as “the charge that a hospital has negotiated with a third-party payer for an item or service.” After considering public comment, CMS chose to forgo requiring third-party data and only require MA payers. The median rate was chosen as the common measure due to it being less influenced by outlier values.

The final rule requires all subsection (d) hospitals to report this information; critical access hospitals are not subsection (d) hospitals and are excluded from this data collection requirement. In addition, CMS chose to make Worksheet S-12 applicable for cost reports ending on or after January 1, 2021

Logistically, CMS estimates it will take 15 hours per hospital to comply with this request. This hours budget is based on the assertion that providers can crosswalk their hospital price transparency data to MS-DRGs and report from the same data set. Many of the commenters in the final rule did not agree with this assessment, and the cost estimates ranged anywhere from $20,000 to $210,000 to comply.

There are a lot of unanswered questions outstanding related to Worksheet S-12. Even still, CMS believes there is enough guidance for providers to comply with this new requirement. If you have any questions or concerns about your facility’s ability to report this information, please reach out to your BKD Trusted Advisor™ or submit the Contact Us form below.

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