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Category: Transmittals

Transmittal 18 New Cost Reporting Instructions – Section III. Medicare Bad Debt

Transmittal 18 Changes to Medicare Bad Debt include the following:

A. Changes to Medicare Bad Debt Schedules and Reporting

Exhibit 2A Medicare Bad Debt Template 

CMS finalized and released the required template hospitals must use to report their Medicare Bad Debt. The previous exhibit (Exhibit 2) instructed hospitals to complete 10 columns, the new exhibit (Exhibit 2A) includes 24 columns to be populated when preparing the Medicare Bad Debt patient listing. Notably, Exhibit 2A requires: 

·    A separate exhibit is required for bad debt resulting in inpatient and outpatient services. 

·    A separate exhibit is required for each CCN. 

Toyon’s take: The issuance of Exhibit 2A does not impact or change the policies and guidelines that hospitals must follow in order to compliantly claim Medicare Bad Debt under 42 CFR 413.89. The expectation is all hospitals will report and file their Medicare Bad Debt patient listings in a standard format. Hospitals must submit Exhibit 2A with the Medicare cost report. 

For further information, please contact Dylan Chinea at 888.514.9312 or

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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 V. Graduate Medical Education

Transmittal 18 New Cost Reporting Instructions for Graduate Medical Education reflect the following:
A. Correction of the Weighted DGME FTE Count on Worksheet E-4 
Transmittal 18 includes new cost report lines for the new weighted FTE count on Worksheet S-2 and Worksheet E-4, resulting from the Milton S. Hershey Medical Center, et al. v. Becerra Case (No. 19-2680), and per the FFY 2023 IPPS Final Rule:
If the hospital’s unweighted FTE count exceeds the FTE cap, and the number of weighted FTE residents also exceeds the FTE cap, then the respective primary care and OB/GYN weighted FTE count and other weighted FTE count are adjusted to make the total weighted FTE count equal to the FTE cap.  
Toyon’s Take: Regarding the DGME weighted cap change, Transmittal 18 (Worksheet S-2, line 68) asks if permission was obtained from the MAC to apply the formula correction on cost reports prior to FFY 2023 (cost reports starting on or after 10/1/2022). More information is needed from CMS as to what constitutes permission from the MAC. In the meantime, Toyon recommends that providers determine the eligible years and impacts of all cost reports with no Notice of Program Reimbursement (NPR), as well as cost reports within the three-year reopening window. Toyon encourages applicable teaching providers to set expectations that open cost reports will be corrected for the new weighted FTE calculation before issuance of an NPR from their MACs. Please contact Fred Fisher at for the estimated impacts of the GME change at your hospital(s). 
B. Changes per the Consolidated Appropriations Act, 2021 
Effective academic year or cost reporting year as defined in the CAA 
Transmittal 18 updates statistical and teaching reimbursement schedules for provisions in the Consolidated Appropriations Act, 2021 (CAA). Teaching provisions for providers include: 
Sec. 126 – Provides 1,000 new resident FTE cap slots over five years (200 per year) to qualifying teaching hospitals that begin new programs or formally expand programs. Worksheet E part A Line 8.21 (Indirect GME) and Worksheet E-4 Line 4.21 (Direct GME) are designated to record and recognize the awarded Sec. 126 slots.   
Sec. 127 – Makes changes to the rural training track (RTT) rules to increase flexibility in the partnership of urban and rural hospitals in order to expand the use of RTT programs in family medicine and other specialties. Worksheet E part A Line 6.26 (Indirect GME) and Worksheet E-4 Line 2.26 (Direct GME) are established to record the rural track program FTE cap limitation adjustment after the cap-building window has closed for the particular rural track program. E Part A Line 16 and E-4 Line 15 adjust the FTE counts for these FTEs during the cap building process.    
Sec. 131 – Provides opportunities for certain qualifying hospitals to reset per-resident amounts (PRA) and/or FTE caps (PRAs and caps established using less than 1 FTE before FFY 1998, or less than 3 FTEs after FFY 1998). Worksheet E part A Lines 5.01 and 16 (Indirect GME), and Worksheet E-4 Lines 1.01 and 18.01 (Direct GME) captures these adjustments.   
C. Rural Track Affiliated Group Agreement Expansion for Family Practice 
Effective Date – Academic years beginning 7/1/2023 or after 
Worksheet E Part A Line 7.02 (Indirect IME) and Worksheet E-4 Line 3.02 (DGME) are established to adjust a hospital’s rural track FTE limitation for newly allowed rural track Medicare GME affiliation agreements (per 87 FR 49075, August 10, 2022). 
For further information, please contact Tom Hubner at 888.514.9312 or 
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