Southwest Consulting Associates Blog

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 

Since CMS first contemplated using cost report worksheet S-10 as the source of Factor 3, which is used for the distribution of the uncompensated care pool under the Affordable Care Act (ACA), most stakeholders have objected and advised CMS to delay the use of S-10. Their objections are based primarily on the fact that there are anomalies with the data being reported and that CMS needs to revise the form and instructions to facilitate more accurate and uniform reporting of uncompensated care data. However, from the outset there has been one group advocating the use of S-10, or something like it, that being the Medicare Payment Advisory Commission (MedPAC).

As a follow up to our previous post IPPS Final Rule, Medicare DSH, Factor 3 & the Timing of Medicaid Days, we will again examine the current landscape of Medicare DSH reimbursement but this time with regards to Medicaid eligible days and how Barberton Citizens Hospital v CGS Administrators, LLC/Blue Cross and Blue Shield Association (Barberton) will affect a hospital's work identifying Medicaid eligible days for As-Filed cost reports and on a retroactive basis.

The Provider Reimbursement Review Board’s (PRRB) jurisdiction decision in the case of Barberton highlighted a number of issues that support the need for hospitals to perform retrospective reviews of their as-filed DSH calculations. Hospitals should be evaluating their overall DSH compilation program to ensure that it is timely, comprehensive and captures all the Medicaid eligible days the hospital is legally entitled to claim.

In this post, we will examine the current landscape of Medicare DSH reimbursement with regards to Factor 3 and how the FY 2016 IPPS final rule will affect a hospital's work identifying Medicaid eligible days for As-Filed cost reports and on a retroactive basis.

CMS is implementing an important change to the data used to develop Factor 3 of the DSH computation for federal fiscal year 2016, effective October 1, 2015. The reaction to this change should include an examination of how providers prepare their as-filed DSH calculation and what retrospective work should be done to affect their federal fiscal year 2017 factor – as the opportunity to make changes is fast closing.

OVERVIEW:

This is the first in a series of updates related to the new Medicare DSH payment under the Affordable Care Act (ACA), specifically as it relates to the identification of Uncompensated Care (UC) Cost as computed by the Medicare Cost Report Worksheet S-10. CMS, in its FY 2016 proposed rule issued in April 2015, simply stated that:

• “Because of concerns regarding variations in the data reported on Worksheet S-10 and the completeness of the data, we did not propose to use data from the Worksheet S-10 to determine the amount of uncompensated care for FY 2014.”

• For the same reasons stated above, CMS elected not to use S-10 data for FY 2015.

• CMS stated that, “For FY 2016, we believe it remains premature to propose the use of Worksheet S-10.”

So at first blush, it appeared that CMS just “kicked the can” down the road again and while the agency reaffirmed its objective of moving to S-10 as the Factor 3 methodology, it didn’t necessarily sound as if that change was just around the corner. At least not until CMS responded to the many public comments (published in the 2016 IPPS final rule) that it received in this latest round of rulemaking.

CMS issued CMS Ruling 1498-R2 on April 22, 2015 concerning SSI ratios for periods before October 1, 2004. In addition, CMS also posted revised SSI ratios in accordance with the terms of the ruling.

CMS Ruling 1498-R was originally issued in 2010 as a result of the court’s decision in the Baystate case. Generally, the ruling called for the recalculation of SSI ratios for open cost reports and for properly pending Disproportionate Share Hospital (DSH) appeals on the Baystate issue, in accordance with the court’s ruling in that case. However, also included was a provision to incorporate into the revised ratios non-covered Part A days, which was contrary to CMS’ policy and practice during those years.

Included in the 2016 budget proposal issued by the Obama Administration on February 2, 2015, OPA is requesting a >100% in funding. A portion of the increase ($7,000,000) is budget based and the balance, $7,500,000, would be derived from user fees the agency plans to initiate. Among other things, OPA plans to double its current staff through this additional funding. If approved at this level, the budget for OPA will be more than 5.5 times its 2012 operating budget and the additional funding will be to further advance the agency's program integrity initiatives. 

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.

As we wrap up the 2014 calendar year, it is important to remember that the HHS Office of Inspector General is already well into their 2015 fiscal year.  On October 31, 2014, the HHS Office of Inspector General (OIG) issued its fiscal year 2015 work plan. The plan in its entirety can be accessed on the OIG’s website via the following link:  

https://oig.hhs.gov/reports-and-publications/workplan/index.asp.

 Some items to be aware of include: 

Thursday November 20, 2014, I testified before the Provider Reimbursement Review Board (PRRB) in a jurisdictional hearing concerning the May 2014 issuance of PRRB Alert 10 that resulted from an adverse decision in the Danbury case. Much has been written about PRRB jurisdiction, and specifically, the Danbury decision and subsequent PRRB Alert 10 – including pieces authored by Southwest Consulting Associates. However, this was the first hearing that I am aware of since the issuance of Alert 10 to delve deeply into specifics of what that alert requires. If there was any question in your mind regarding the shift in the “jurisdictional” ground beneath providers’ feet, I am here to confirm for you that the ground is in fact shifting and the dominos are now falling.