In a report published by the Alliance for Integrity and Reform of 340B (AIR340B), the authors concluded that 340B hospitals appear to provide only a minimal amount of charity care thus calling into question whether or not Congress’ intentions for the 340B program are being met. The data used to reach this conclusion was derived from the Medicare Cost Report, CMS-2552-10, Worksheet S-10 – the very data that CMS did not use as the basis to allocate the 9 billion dollar uncompensated care pool for 2014 due to apparent flaws in the data. CMS did not use S-10 data to distribute the 2015 uncompensated care pool either for primarily the same reasons as 2014 (see SCA's 2014 and 2015 Notice of Proposed Rulemaking comment letters for more information). This is just one more reason hospitals should evaluate the time, attention and resources being invested in reporting S-10 data.
Hospitals continue to face increased pressure on federal and state payments as a result of changes made via the Affordable Care Act. One such change affects the former Medicare DSH payment, which is now a combination of the “historical” DSH formula and a new uncompensated care pool distribution formula. Initial thoughts were that the uncompensated care pool payments would be allocated using cost report S-10 data until CMS agreed in 2013, that the reported data was flawed. However, CMS has signaled that it intends to migrate to S-10 data once the process around its reporting is revised and the data becomes more reliable. No one knows when that will be. So it would seem that it is OK for hospitals to wait to implement comprehensive programs targeting the reporting of S-10 data until further instructions or notifications are received from CMS. But is it really wise to wait? NOT REALLY!
First, the data currently being reported on S-10 influences the calculation of the Medicare Electronic Health Record Incentive Payment calculated on worksheet E-1. Reported charity care (as well as the Medicare and Medicaid share calculation) impacts the computed incentive payment. Therefore, the data currently being reported matters to current hospital payments!
Second, the AIR340B report launches an attack on 340B hospitals using provider reported charity care data as the baseline for the argument. The conclusion of that report urges Congress to make changes that would potentially affect hundreds of millions of dollars in discounts based on an analysis using flawed data by stating in its conclusion:
“The 340B program was intended to support access to outpatient drugs for uninsured and vulnerable patients. The program’s design allows eligible providers to benefit from steeply discounted prices in return for their support of uninsured, indigent and vulnerable patient populations. The analysis presented in this report demonstrates that current eligibility criteria for hospitals have allowed the majority of hospitals participating in the program to receive 340B discounts without providing meaningful levels of charity care. To promote a well-functioning 340B program underpinned by sound policy and designed to support access for needy patients, Congress should reconsider the eligibility criteria for hospitals.”
In summary, in addition to the robust efforts that hospitals should be investing into 340B program integrity and compliance activities, hospitals should also be seriously evaluating their efforts in reporting accurate cost report data, including S-10 data. Cost report data is being used by others to push their own agendas; agendas that could have a significant financial impact on your operations.
Fast forward to 2018, where 340B and S-10 collide again. You can read about it HERE!