Worksheet S-10 Uncompensated Care Audits Have Begun

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In the federal fiscal year (FFY) 2018 Inpatient Prospective Payment System final rule, the Centers for Medicare & Medicaid Services (CMS) finalized its proposal to begin incorporating uncompensated care data from Worksheet S-10 of the Medicare cost report into the calculation for the disproportionate share hospital uncompensated care payment.

CMS is distributing roughly $8.3 billion in uncompensated care payments for FFY 2019, an increase of approximately $1.5 billion from the FFY 2018 amount. The significant increase is largely a result of the Office of the Actuary’s estimated rate of the uninsured population. It’s unlikely such an increase will occur in FFY 2020; however, we anticipate the redistribution trend of payments to continue from states that expanded Medicaid to those that didn’t. For FFY 2019, CMS will use Worksheet S-10 data from FFY 2014 and 2015 cost reports in combination with insured low-income days data from the FFY 2013 cost reports to determine the distribution of uncompensated care payments.

Hospitals have recently started receiving audit requests from the Medicare Administrative Contractors (MAC) on the Worksheet S-10 data for Medicare cost reports beginning in FFY 2015. As expected, the requests for information are quite extensive.

Some of the items MACs are requesting include:

  • Patient-level detail by revenue code to support the charity and bad debt amounts reported

  • Copies of the hospital’s charity care policy and/or financial assistance policy

  • Explanations on the query logic used to prepare the detail patient listings

  • Explanations for variances between the current year and prior year

  • Reconciliation of the bad debt write-offs reported on Worksheet S-10 to the bad debt expense reported on the hospital’s financial statements

It’s important to have this information available in the event a report is selected for audit. In addition, hospitals will be required to submit a detail listing of charity patients beginning with the FFY 2019 Medicare cost report, or the report will be rejected. There are strategies hospitals should consider as well that can significantly affect the allowable amount of uncompensated care cost reported on Worksheet S-10.

To further complicate matters, the Worksheet S-10 instructions have been revised over the last couple of years and are different depending on the fiscal year being filed. Hospitals should be aware of these changes and how they affect their organization.

For more information regarding Worksheet S-10 compliance and strategies, contact William or your trusted BKD advisor.


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