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 

Worksheet S-10 hasn’t exactly been in the forefront of the Medicare cost reporting process as, other than EHR/HIT payments, Worksheet S-10 is not directly tied to reimbursement today. However, providers have been put on notice that CMS is eyeing a switch to S-10 as the distribution model for Uncompensated Care (UC) reimbursement in the future.  Currently, the UC pool is allocated based on a proxy of low-income days (Factor 3).  Yet verbiage from the most recent 2016 IPPS rule indicates that a change to this proxy is on the horizon:  

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).

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.

The 2016 IPPS Final Rule was published in the Federal Register on August 17, 2015 and will be effective October 1, 2015.  Below is SCA’s “as brief as we can make it” summary on the rule as it affects disproportionate share hospitals (DSH).  We will be rolling out more detailed analysis in the coming weeks with our take on the impact to Uncompensated Care Reimbursement (UC).

The 2016 IPPS Proposed Rule for Acute Care Hospitals was put on display on April 17, 2015. All comments to the rule were to be submitted by June 16, 2015. As in past years, Southwest Consulting Associates (SCA) performed extensive analysis of the Proposed Rule and submitted detailed comments in response to CMS’ 2016 IPPS Notice of Proposed Rulemaking (NPRM). SCA’s comments primarily related to the proposed changes to the Payment Adjustment for Medicare Disproportionate Share Hospitals (DSH) including the Uncompensated Care (UC) payment component.

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.