Southwest Consulting Associates Blog

On April 8, 2019, SCA was provided multiple copies of a MAC letter informing hospitals of potentially aberrant data reported on Worksheet S-10 for federal FY 2017.  While we have only seen a few letters to date, it is our understanding that this is a CMS initiative affecting many hospitals. Here is what we have been told at this point:

On January 23, 2015, Michael Newell, SCA’s President, authored a blog article entitled 340B meets S-10, which can be found HERE.  The impetus for this article was a report published by the Alliance for Integrity and Reform of 340B (AIR340B).  In this article, 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, S-10 – the very data that CMS currently uses as the basis to allocate the uncompensated care pool for the Medicare DSH/uncompensated care program. 

The FY 2018 IPPS proposed rule was published April 28, 2017. Public comments have been submitted and we are awaiting the final rule.  For reference, the 2017 IPPS final rule was posted the first week in August 2016 so we are on the cusp on the 2018 final rule.  

In our last proposed rule post, while we stated that there was a brief moment of deja vu with regards to using Worksheet S-10 to distribute the uncompensated care payment to qualifying Medicare DSH hospitals for FY 2018, we also stated that based on the language used in the proposed rule, we believe that the change will stick this time.  Despite challenges on the accuracy of Worksheet S-10 data, CMS goes out of their way to lay out the reasoning for using S-10 now.  And, with the issuance of Transmittal 1863 and the notice about FY 2014 S-10 revisions, our case may be even stronger now.   From experience, we all know that anything can happen but we think Medicare DSH hospitals should take notice (and quickly) with this proposed rule, subsequent Transmittal and Notice and prepare themselves as best they can to deal with this significant change. Here’s what we recommend hospital’s be working on in advance of the final rule, in order of priority.

On April 28, 2017, CMS published the FFY 2018 IPPS Proposed Rule in the Federal Register.  Go HERE for our summary of the Medicare DSH/Uncompensated care payment portion of the proposed rule.  After years of discussion on Worksheet S-10 and false starts on the use of uncompensated care data for Medicare DSH/UC pool distribution purposes, CMS appears to finally be moving forward with implementation.  Did anyone else have a moment of deja vu?  

On April 28, 2017, CMS published the FFY 2018 IPPS Proposed Rule in the Federal Register.  After years of discussion on Worksheet S-10 and false starts on the use of uncompensated care data for Medicare DSH/UC pool distribution purposes, CMS appears to have finally moved forward with implementation.  Go HERE for our summary of the Medicare DSH/Uncompensated care payment portion of the proposed rule.  In this post, we will take a dive into Factor 2 as described in the proposed rule.  For a quick refresher on Factor 2, go HERE.

On April 28, 2017, CMS published the FFY 2018 IPPS Proposed Rule in the Federal Register.  After years of discussion on Worksheet S-10 and false starts on the use of uncompensated care data for Medicare DSH/UC pool distribution purposes, CMS appears to have finally moved forward with implementation.  Go HERE for our high-level summary of the Medicare DSH/Uncompensated care payment portion of the proposed rule.  In this post, we will take a dive into Factor 1 as described in the proposed rule.  For a quick refresher on Factor 1, go HERE.

While Provider Reimbursement Review Board (PRRB) and/or Medicare Administrative Contractor (MAC) jurisdiction challenges used to be relatively infrequent occurrences, they have become more frequent and should be prepared for.  At some point in the provider’s appeal process, it is highly likely that the MAC, PRRB or both will challenge jurisdiction, and the PRRB will review the appeal documentation and record and determine whether the appeal stands up to the current threshold.  Unfortunately, through the end of 2014, the trend of PRRB jurisdictional decisions against providers continues to be the norm.

On May 23, 2014, the Provider Reimbursement Review Board (PRRB) issued Alert 10 following its decision in Danbury Hospital v. Blue Cross Blue Shield Association (Danbury). This decision, and subsequent Alert, further signals a continuing trend relating to the documentation of Medicaid paid/eligible days and the importance of claiming all such “allowable costs” (or eligible patient days in the Medicare DSH context) in the initial cost report filing.

Alert 10, in conjunction with changes made to 405.1811(a)(1) and 405.1885(a)(1) in 2008 and the Agency’s interpretation of the United States Supreme Court decision in Bethesda Hospital Association v. Bowen, highlights the PRRB’s view regarding the requirement that hospitals must claim all allowable costs in its initial cost report filing and must show that any costs claimed through an appeal for Medicaid paid/eligible days could not have been claimed in the initial cost report filing. Let’s dig into this in more detail and review the actual Alert 10 requirements and why this is an issue that REQUIRES YOUR ATTENTION.

Filing an appeal with the Provider Reimbursement Review Board (PRRB) has transformed through metamorphosis several times over many years, resulting in a process littered with tripping points for providers seeking a hearing for an issue with which it is dissatisfied.  At some point in the provider’s appeal process, it is likely that the MAC, PRRB or both will challenge jurisdiction.  The PRRB will review the appeal documentation to determine whether the provider’s filing passes muster and can proceed past go (there’s that monopoly reference again).  

Unfortunately, most jurisdictional decisions being issued are resulting in providers not proceeding past go and appeals are being dismissed prior to providers’ cases being heard.  It is important that providers and/or their counsel continually review what is happening at the PRRB and evaluate their practices against the decisions rendered so that the rug is not pulled out from under their issues like in more than 80% of the cases we are about to review!

Being at the height of the fall cost reporting season, hospital reimbursement teams are busy compiling data to prepare cost reports in compliance with program laws, regulations and manual instructions. However, hospitals should not be turning a blind eye to changes CMS’ has signaled interest in but may not yet have fully enacted.

For example, in the 2015 IPPS Proposed Rules, CMS attempted to revise cost reporting regulations to require hospitals to appropriately claim costs in either the initial/as-filed cost report or an amended cost report (that must be accepted by the Medicare contractor to be of any value in this exercise), in order for a hospital to potentially be reimbursed for the specific item. Due to the number of comments on the issue, CMS delayed implementing this requirement, FOR NOW.  However, it is important to understand what CMS is trying to accomplish, its impact on cost reporting in general and its impact on Medicare DSH reimbursement.