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Category: Cost Reports

Transmittal 18 New Cost Reporting Instructions – Section IV. COVID-19 Public Health Emergency Updates 

Transmittal 18 COVID-19 Public Health Emergency Updates include:
A. Temporary COVID-19 Beds and Adjustments 
Cost Reports in Effect March 1, 2020 – May 11, 2023 (likely)  
Transmittal 18 clarifies the reporting of COVID-19 beds. Providers will report “Temporary Expansion COVID-19 PHE acute care beds” on Worksheet S-3 Part I, new Line 34. This will reduce the bed count on Worksheet E Part A (used for IME reimbursement) by the number of these temporary beds.   
Toyon’s take: Additional clarification may be needed defining a temporary expansion COVID-19 PHE acute bed (to be excluded during the PHE, but reported after the PHE expiration). Toyon recommends that providers ensure temporary COVID-19 beds are not, or have not, been reported on Worksheet E part A on cost reports between March 1, 2020 – May 11, 2023 (likely, see below).   
B. Subacute Provider Teaching Adjustments 
Cost Reports Beginning After February 29, 2020 and Before May 11, 2023 (likely) 
Transmittal 18 includes an update on the determination of the teaching adjustment during certain cost reporting periods. Inpatient Psychiatric Facilities’ (IPF) and Inpatient Rehabilitation Facilities’ (IRF) teaching adjustments will be the higher of the calculated teaching adjustment factor or the teaching adjustment factor for the cost reporting period immediately preceding February 29, 2020. 
An Announcement on February 9, 2023 from HHS states that the PHE is planned to expire at the end of the day on May 11, 2023. In this announcement, HHS also states: 
“Certain Medicare and Medicaid waivers and broad flexibilities for health care providers are no longer necessary and will end. During the COVID-19 PHE, CMS has used a combination of emergency authority waivers, regulations, and sub-regulatory guidance to ensure and expand access to care and to give health care providers the flexibilities needed to help keep people safe. States, hospitals, nursing homes, and others are currently operating under hundreds of these waivers that affect care delivery and payment and that are integrated into patient care and provider systems. Many of these waivers and flexibilities were necessary to expand facility capacity for the health care system and to allow the health care system to weather the heightened strain created by COVID-19; given the current state of COVID-19, this excess capacity is no longer necessary.” 
Please see CMS’s Hospitals and CAHs (including Swing Beds, DPUs), ASCs and CMHCs: CMS Flexibilities to Fight COVID-19 and CMS COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers that tracks each of the flexibilities that has ended or have ended or will end at the expiration of the PHE. 
For further information, please contact Robert Howey at 888.514.9312 or
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Transmittal 18 New Cost Reporting Instructions – Section VII. Other Notable Changes and Clarifications

Other notable changes and clarifications in Transmittal 18 include, but are not limited to, the following: 
  • Identification of providers purchasing greater than 50% of its professional services from an unrelated organization located outside the main hospital’s local area labor market (WS S-2 Line 123) 
  • New Worksheet A lines for CAR T-cells (line 78) and Medicare-enrolled opioid treatment program (line 102) 
  • Clarification of Non-Chargeable Drugs Charged to Patients (WS A Line 73) 
  • Sequestration calculation in the cost report settlement schedules during and after the Protecting Medicare and American Farmers from Sequester Cuts Act of 2021 (PAMA). 
  • Information collection for the Community Health Access and Rural Transformation (CHART) model  
  • Renal Dialysis costs for pediatrics and Maintenance AKI (WS I series) 
  • End Stage Renal Disease (ESRD) payment information (WS I-5 Part III) 
  • Extension of the relaxed low volume adjustment requirements and Medicare Dependent Hospital (MDH) status through December 23, 2024, in accordance with sections 4101 and 4102 of the Consolidated Appropriates Act, 2023.
  • Recording of permanent adjustments to the TEFRA target amount per discharge 
  • MAC Outlier Reconciliation at Tentative Settlement (Worksheet E-5) 
Toyon’s take: Although the new Worksheet S-2 question on purchased services outside a hospital’s local labor market area seems informational on the surface, this information may be used for reimbursement purposes going forward. Per the OMB response to initial comments, the data collected is to “obtain a more recent estimate of the proportion of legal, accounting and auditing, engineering, and management consulting services that meet our definition of labor-related services.” The OMB also notes “the requested information ultimately impacts the labor-related share of the wage index for IPPS hospitals, as well as the labor-related share for inpatient rehabilitation facility, inpatient psychiatric facility, and long-term care hospitals.”   
For further information, please contact Robert Howey at 888.514.9312 or
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Comments on Proposed Cost Reporting Instructions

CMS recently released new proposed Medicare cost reporting instructions, available for download here on the CMS website. Comments are due to CMS by July 22, and can be submitted electronically at this link
Please see Toyon’s comments on CMS’s proposed cost report instructions here. Additionally, to assist with comments to CMS, providers may download the Hospital | Health System template here. Please review all comments prior to submitting, and feel free to use some or all of the content in this letter. Providers may also amend the language to best articulate comments to CMS using hospital-specific examples, etc. 
Toyon comments on the following:
  • Worksheet S-2 Lines 24 and 25: Medicaid DSH Eligible Days
  • Worksheet S-2 Line 89: TEFRA Adjustment Date
  • Worksheet S-2 Line 123: Purchased Administrative Services
  • Exhibit 2A: Listing of Medicare Bad Debts
  • Exhibit 3A: Listing of Medicaid Eligible Days for DSH Eligible Hospitals
  • Worksheet S-10: Financial Assistance Policies
  • Worksheet S-10: Acute Care Only
  • Worksheet S-10: Medically Necessary Healthcare
  • Worksheet S-10: Uninsured Charity Care
  • Worksheet S-10: Insured Charity Care
  • Worksheet S-10: Inferred Contractual Relationships
  • Worksheet S-10: Total Bad Debt
  • Exhibit 3B (Charity Care Listing)
  • Exhibit 3C (Listing of Total Bad Debts)
Worksheet S-10 UC DSH
Amongst other proposed revisions, CMS calls for providers to report Uncompensated Care (UC) costs for acute care services only (based on hospital Medicare provider number) on Worksheet S-10 Part II. Please note Section IV of the Hospital | Health System template requests CMS to omit this reporting requirement, as delineating Worksheet S-10 UC cost between acute care and sub-acute care adds another administrative burden to Worksheet S-10 reporting. Toyon acknowledges the reporting of acute care only for UC DSH payments may result in a shift in UC DSH payments for certain hospitals (depending on whether a DSH provider has material charity and bad debt related to subacute providers). Toyon is not commenting on a potential shift in payments, and only focuses on the additional administrative effort of collecting and reporting Worksheet S-10 data.   
Organ Acquisition Changes
Toyon is not commenting on CMS’s proposed changes related to Organ Acquisition reporting and reimbursement. Toyon agrees with CMS’s proposed changes, which were also included in the previous PRA package from November 2020. Listed below are CMS’s proposed changes related to Organ Acquisition. 
Worksheet A, Lines 78 and 102
CMS is adding lines 78 (CAR T-Cell Immunotherapy) and 102 (Opioid Treatment Program), which will require hospitals to create separate G/L departments to track these expenses and charges. Line 78 is used for reporting IPPS (D-3) and OPPS (D Part V) charges from the PS&R. Line 102 is informational only and is not included in the PS&R charges.
Worksheet D-6 series
This is a new form used to obtain cost-based reimbursement for allogeneic stem cell acquisition costs. CMS made several noteworthy updates to this form from the previous PRA in November 2020. First, there’s no longer a checkbox to include CAR T-Cell acquisition costs in this section which was to be reported for informational purposes only (see comment above for Worksheet A line 78).
Second, the Medicare reimbursement for allogeneic stem cell acquisition costs will now be based on the ratio of Medicare to total transplants, much like the methodology for solid organ. Previously, the form required only to include donor charges for Medicare recipients to determine the Medicare portion. Worksheet D-6 (Part I) now requires hospitals to capture donor charges for all payers. This methodology is a departure from the CMS comments in the FFY 2019 IPPS Final Rule, so CMS may issue a separate rule with comment period for this change.
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Please feel free to share questions to Fred Fisher, Specific to Organ Acquisition reimbursement, please contact Robert Howey at
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