In a January 11, 2016 letter to the Medicare Payment Advisory Commission (MedPAC), the American Hospital Association (AHA) again addressed the issue of using cost report worksheet S-10 to distribute uncompensated care (UC) pool dollars and recommended that the change be phased in over three years.
AHA stated that S-10 data has the potential “to serve as a more exact measure of the treatment costs of uninsured patients” if the data is reported accurately and consistently. AHA called for the revision of the cost report S-10 worksheet and improvement in its reporting instructions. AHA further called for “extensive” education for all stakeholders in advance of, or in conjunction with the use of the S-10 UC cost data. A copy of the letter is available HERE.
At its January 14, 2016 meeting, MedPAC voted to recommend that Congress:
- Reduce Medicare payments to 340B hospitals by 10% of a drug’s average sales price,
- Direct the applicable savings (estimated to be $300 million) from reducing Part B drug rates to the uncompensated care pool,
- Distribute the uncompensated care pool using uncompensated care costs per cost report worksheet S-10, and
- Phase in the shift to worksheet S-10 over three-years
Although there was a fair amount of debate regarding whether or not delving into issues related to the 340B program was within the jurisdiction of MedPAC, there was no real debate regarding the use of S-10 to distribute the UC pool. MedPAC continues to assert that UC costs using cost worksheet S-10, even if used today, is a better distribution method than using Medicaid plus SSI days as a proxy for uncompensated care. In addition, MedPAC also reiterates its view that S-10 data will improve over time and that CMS should implement audit procedures at least for a subset of hospitals to ensure that reported data is accurate. In fact, one commissioner commented – “my experience at CMS was until payment was based on a schedule, the accuracy of that schedule did not tighten up. As soon as payment is made on the schedule, there will be great degree of attention paid to the accuracy.” A copy of the MedPAC meeting brief, transcript and presentation is available HERE.
As a reminder, verbiage from the 2016 IPPS rule indicated that a change to this S-10 proxy is on the horizon:
“At this time, we are considering a possible timeline for using worksheet S-10 data to calculate Factor 3, and we intend to discuss this further in the FY 2017 IPPS proposed rule, which is typically released in April of the preceding fiscal year.” -CMS
Additionally, MedPAC has been the most recognized and vocal proponent supporting the move from using low-income days to using the cost report S-10 worksheet to distribute the UC pool advocating for this change in each of its last three proposed rule comment letters and most recently in its January 14th vote.
We continue to stress that with regards to S-10, “objects in the mirror are closer than they appear.” As the cost report S-10 worksheet continues to gain momentum in the provider reimbursement realm, hospitals will need to continue evaluating what may occur and make some decision regarding how they will approach addressing all the issues surrounding the complexity associated with reporting S-10 data. SCA's comprehensive S-10/UC compliance practice can assist you in navigating how to address the issues surrounding S-10 data and we are available to discuss what the migration to S-10 may look like for your provider(s). Please contact SCA or visit our website to learn more about our S-10 services.
