- Worksheet S-10 Uncompensated Care (UC) reporting for Federal Fiscal Year 2023 (beginning on/after 10/1/2022) and subsequent years.
- Amongst other proposed revisions, CMS proposes a significant change that UC cost represents “only the general short-term hospital inpatient and outpatient services billable under the hospital CMS Certification Number (CCN).”
- CMS proposes a standard Worksheet S-10 data format under Exhibit 3B and Exhibit 3C.
- Empirical DSH Medicaid eligible days reported using Exhibit 3A, with applicable instructions to §4004.1 and requirements at 42 CFR 413.24(f)(5)(i)(C) starting with Federal Fiscal Year 2023 cost reports.
- Medicare bad debt reporting using Exhibit 2A, with applicable instructions to §4004.2 and requirements at CFR 413.24(f)(5)(i)(B) starting with Federal Fiscal Year 2023 cost reports.
- COVID-19 PHE temporary expansion bed reporting. New cost reporting line effective March 1, 2020 through the end of the COVID-19 PHE.
- Worksheet D-4 Organ Acquisition updates and additions.
- CMS updates cost reporting instructions to reflect the codification for Medicare organ acquisition payment policies at transplant hospitals as included in FR 73416 (December 27, 2021).
- For cost reporting periods beginning on or after October 1, 2022, CMS proposes providers separately identify revenue for organs sold associated with Medicare Secondary Payer (MSP organs, subscript of line 66) and a separate subscripted line (informational only) for the transplant payment portion.
- For cost reporting periods beginning on or after October 1, 2022, CMS proposes providers separately identify organs transplanted into Medicare beneficiaries, kidneys transplanted into Medicare Advantage (MA) beneficiaries, organs transplanted as Medicare Secondary Payer, and organs transplanted for all other payers (subscript line 75).
- Worksheet D-6 Allogeneic Hematopoietic Stem Cell Transplant (HSCT) Acquisition Costs
- CMS proposes further changes to this new worksheet series to calculate inpatient reimbursement for allogeneic stem cell acquisition costs associated with Federal Fiscal Year 2021 cost reports (beginning on or after 10/1/2020).
- CMS proposes to apply key changes (from the initial PRA package issued in November 2020) which include basing payment on the ratio of Medicare transplants to total transplants and reporting all-payer charges related to donors (follows the same methodology as solid organ transplants).
Tag: S-10 Uncompensated Care
Thank you for working with Toyon Associates and our Uncompensated Care Recognition Services (UCRS). CMS’s requirements for reporting UC cost, and subsequent UC Disproportionate Share (DSH) payments, rely heavily on ever-changing regulations and language in the financial assistance policy (FAP). Importantly, as recently reported in the FFY 2021 IPPS Final Rule, CMS states:
“(CMS) does not set charity care criteria policy for hospitals, and within reason, hospitals can establish their own criteria for what constitutes charity care in their charity care and/or financial assistance policies.”
A hospital’s determination of its own financial charity care criteria – likely within reason of patients qualifying under federal poverty level [FPL] thresholds – provides hospitals discretion on how patient financial discounts are articulated in the FAP.
To compliantly position hospitals for this important impact on reimbursement, Toyon is sharing recommended language for FAP consideration as it relates to Medicare UC DSH. Toyon’s recommendations are to assist hospitals compliantly report core areas of UC cost on worksheet S-10 of the Medicare cost report.
For assistance on implementing best practices for FAP language and associated means of capturing the charges written off as charity care, please contact Toyon’s lead of Uncompensated Care Recognition Services, Fred Fisher at 888.514.9312, email@example.com.
Toyon’s recommendations are focused on the following UC cost areas:
- Charity care for insured and underinsured
- Self-pay discounts
- Discounts to insurers with no contractual or inferred contractual relationship
- Presumptive charity eligibility process
- Non-covered and denied Medicaid as charity care
- Bad Debt and Implied Price Concessions
Below are Toyon’s updated recommendations for FAP language related to Medicare cost report worksheet S-10 and UC DSH. Some of Toyon’s recommendations include FAP language italicized in blue. Any language changes considered by hospitals and health systems should follow the appropriate approval procedure with hospital leadership / board of directors.
- Non-Covered Charges for Medicaid or other Indigent Care Program
Medicare cost report instructions allow charges related to “non-covered services for Medicaid eligible patients” to be included as UC cost, provided this coverage is specified in the FAP. There are different industry interpretations regarding the level of specificity of non-covered Medicaid that must be in an FAP. Toyon recommends hospitals consider FAP language stating:
“Non-covered and denied services provided to Medicaid eligible beneficiaries are considered a form of charity care. Medicaid beneficiaries are not responsible for any forms of patient financial liability and all charges related to services not covered, including all denials, are charity care. Examples may include, but are not limited to:
- Services provided to Medicaid beneficiaries with restricted Medicaid (i.e., patients that may only have pregnancy or emergency benefits, but receive other hospital care)
- Medicaid-pending accounts
- Medicaid or other indigent care program denials
- Charges related to days exceeding a length-of-stay limit
- Out-of-state Medicaid claims with no payment”
- Presumptive Charity Care
In the FFY 2021 IPPS Final Rule, CMS affirmed presumptive eligibility tools are not allowable to determine patient financial status for Medicare bad debt reporting. Toyon recommends the following regarding presumptive charity care determinations are applied by hospitals:
- Presumptive charity care is applied to everyone except indigent Medicare fee for service patients.
- For all patients receiving presumptive eligibility to qualify for financial assistance, it is recommended hospitals maintain a log of each instance, as well as any documentation from an outside agency to support presumptive eligibility (such as PARO like resources).
- Patient Billing – External Collection Agencies
Hospitals may discover additional charity care associated with patient accounts in collections. Typically, outstanding patient receivables relate to coinsurance, copayment and deductible (C+D) amounts. This is a significant population, considering when C+D are reported as charity care, these amounts are not reduced by the cost to charge ratio.
Toyon recommends hospitals consider updating the FAP language to include additional information when charity is discovered during the collections process. Example language may state:
“Discovery of Patient Financial Assistance Eligibility During Collections – Determination of patient financial assistance as close to the time of service as possible is optimal. However, additional time and resources are sometimes required to determine eligibility, and therefore some patients eligible for financial assistance may have not been identified as eligible for patient financial assistance prior to initiating external collection action. Collection agencies shall be made aware of this possibility and are requested to refer-back patient accounts that may be eligible for financial assistance. When it is discovered an account is eligible for financial assistance, [Hospital | Health System] will reverse the account out of bad debt and document the respective discount in charges as charity care.”
- Insured Patients Not Under Contract with the Hospital
Related to HHS CARES Provider Relief Funding (PRF)
CMS permits UC costs can include “patients with coverage from an entity that does not have a contractual relationship with the provider who meet the hospital’s FAP.”
For cost reports beginning on after October 1, 2020, CMS clarifies providers may report amounts related to inferred contractual relationships. CMS defines an inferred contractual relationship in new cost report instructions as:
“a contractual relationship between an insurer and a provider will be inferred where a provider accepts an amount from an insurer as payment, or partial payment, on behalf of an insured patient”
Also importantly, the Terms and Conditions (T&C) for providers receiving CARES Provider Relief Funding prohibit billing in excess of:
“…an amount greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network Recipient”.
Toyon recommends hospitals update FAP language to:
- Stipulate when a carrier is “under contract” vs. obligated to reimburse the hospital as an “inferred contractual relationship”; and
- Confirm “out of network” for a presumptive or actual case of COVID-19 is provided at an amount no greater than if the care was provided at an in-network provider.
- Listed below is FAP language for hospital consideration:
“Insured Patients Not Under Contract with the Hospital” – Negotiations with insurance carriers involving inferred contractual relationships, for insured patients not under contract with [hospital / health system] will be conducted by executive management at [hospital/health system]. Although [hospital / health system] may agree to the terms of the negotiations with insurance companies, an inferred contractual relationship is not representative of a patient “under contract” with [hospital / health system]. All unreimbursed amounts are a form of patient financial assistance and determined as the difference between gross hospital charges and hospital reimbursement. Any care provided to a presumptive or actual case of COVID-19 is provided at an amount no greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider.”
- Financial Assistance for Patients with Insurance
Medicare cost report instructions allow and differentiate the reporting of financial assistance for insured patients as:
- Amounts related to charity C+D amounts. These amounts have a material impact on the determination of uncompensated care cost, as they are not reduced by the cost to charge ratio.
- Charges representing an insured patient’s liability for medically necessary hospital services, other than Charity C+D amounts. These amounts are reduced to cost using a hospital’s overall cost to charge ratio.
Toyon recommends hospitals consider updating FAPs, articulating insured patients are eligible for discounts related to charity C+D amounts as well as charge discounts to an insured patient’s liability for medically necessary hospital services.
- Access to Healthcare Crisis FAP Language
In recognition for the extraordinary demand pandemics have on the healthcare system (including COVID-19), Toyon has crafted the FAP language below. This is draft template language to assist hospitals if necessary.
“An Access to Healthcare Crisis must be proclaimed by [hospital leadership / approved by the board of directors] and attached to this patient financial assistance document as an addendum. An Access to Healthcare Crisis may be related to an emergent situation whereby state / federal regulations are modified to meet the immediate healthcare needs of [hospital / health system’s] community during the Access to Healthcare Crisis. During an Access to Healthcare Crisis [hospital / health system] may “flex” its patient financial assistance policy to meet the needs of the community in crisis. These changes will be included in the patient financial assistance policy as included as an addendum. Patient discounts related to an Access to Healthcare Crisis may be provided at the time of the crisis, regardless of the date of this policy (as hospital leadership may not be able to react quickly enough to update policy language in order to meet more pressing needs during the Access to Healthcare Crisis).”
We appreciate the opportunity to provide regulatory and reimbursement services to you and your team. At any point in time, should you have any questions about our work, or need any further assistance, please contact Fred Fisher at 888.514.9312, firstname.lastname@example.org.
Toyon Associates, Inc.
 FAP language changes should follow the approval procedure with hospital leadership / board of directors.
 A contractual relationship between an insurer and a provider will be inferred where a provider accepts an amount from an insurer as payment, or partial payment, on behalf of an insured patient.
 Per the FFY 2021 IPPS Final Rule, related to Medicare Bad Debts “Although presumptive eligibility tools may reduce a provider’s burden when evaluating indigence, we disagree that presumptive eligibility tools should be used to determine a Medicare beneficiary’s indigence status for Medicare bad debt purposes.”
 For cost reports beginning on/after October 1, 2020.
Toyon’s Uncompensated Care Recognition Services (UCRS) is pleased to provide this update on Medicare Uncompensated Care (UC) DSH. For more information, Please contact Fred Fisher at 888.514.9312, email@example.com.
In this Update:
- 2018 S-10 Audits
– CMS is auditing FFY 2018 UC costs for all DSH hospitals
– Initial data requests:
- May 15 deadline for hospitals in receipt of audit letters
- Remaining audit letters to be sent out week of May 18
- FAP Updates
– Discovery of charity while accounts are in bad debt
– Insured patients not under contract with the hospital
– Access to Healthcare Crisis
- Current S-10 Reporting
– Annual amendments a new standard when filing UC costs
– Annual consistency with charity care and bad debt write-offs for
1. FFY 2018 Worksheet S-10 Audits
MACs will be auditing every DSH hospital’s UC listing for FFY 2018 (i.e., FYE 12/31/2018, 6/30/2019). Due to the COVID-19 crisis, audit deadlines are fluid. All hospitals currently in receipt of 2018 audit requests, are eligible to receive deadline extensions until May 15. All other DSH hospitals should anticipate receiving an audit notification the week of May 18.
Action Requested – COVID-19 Challenges
Please feel free to provide Toyon any information related to delays and/or the inability to produce information during these audits due to COVID-19. For instance, hospital personnel being on-site to pull large patient data files, charity care applications / approvals, etc. This also includes the delays due to hospital personnel working from home and/or prioritization of other work related to COVID-19. Please send any comments to Fred Fisher (contact information listed above).
2. Financial Assistance Policy (FAP) Updates
Hospitals may only report UC amounts on worksheet S-10 of the Medicare cost report if the discounts are specified in the FAP. As recent in the FFY 2020 IPPS Final Rule, CMS states:
“In Transmittal 10, we clarified that hospitals may include discounts given to uninsured patients who meet the hospital’s charity care criteria in effect for that cost reporting period …As a result, nothing prohibits a hospital from considering a patient’s insurance status as a criterion in its charity care policy. A hospital determines its own financial criteria as part of its charity care policy.”
A hospital’s determination of its own financial criteria thereby provides hospitals discretion on how patient financial discounts are articulated in the FAP. Whereas traditional FAPs are in plain language as public facing documents, the complex nature of cost reporting instructions now warrants the need for hospitals to craft policy disclosures related to the accounting of patient financial discounts. In this respect, Toyon has prepared template FAP language concerning emerging categories of UC cost. Any language ultimately adopted by providers should follow the approval procedure with hospital leadership / board of directors.
FAP – Discovery of Patient Financial Assistance Eligibility During Collections
Changes in revenue reduction under ASC Topic 606, may result in hospitals discovering additional charity care associated with patient accounts in collections. Typically, outstanding patient receivables relate to coinsurance, copayment and deducible (C+D) amounts. This is a significant population, considering when C+D are reported as charity care, these amounts are not reduced by the cost to charge ratio.
Example FAP language may state – In certain cases, further investigation is required to determine eligibility for patient financial assistance. If it is discovered a patient may qualify for a financial discount, and the patient’s balance is in billing/collections, the patient’s account will be returned from billing/collections. If it is determined the account is eligible for financial assistance, [provider] will reverse the account out of bad debt and document the associated charges as a patient financial discount.
FAP – Patients with Insurance Not Under Contract with Providers
CMS permits hospitals can include charges related to insured patients that do have a contractual relationship with the hospital. CMS states hospitals may report the following as uncompensated care:
“portion of the total charges, written off to charity care, for uninsured patients, and patients with coverage from an entity that does not have a contractual relationship with the provider who meet the hospital’s charity care policy or FAP.”
It is important to note CMS does not prescribe any further instruction or guidance on 1) when it is determined a payer is “under contract” nor 2) an industry standard for the determination of charges written-off as charity care for this category of patients.
Example FAP language may state – Negotiations with insurance carriers involving single case agreements for insured patients not under contract with [provider] will be conducted by leadership or representation of [provider]. Although [provider] may agree to the terms of the negotiations with insurance companies, a single case agreement is not representative of a patient “under contract” with [provider]. All unreimbursed amounts are a form of patient financial assistance and determined as the difference between gross hospital charges and hospital reimbursement.
FAP – Access to Healthcare Crisis
As the healthcare industry encounters COVID-19, providers may experience high volumes of care to the most critically vulnerable population of underinsured and uninsured patients. CMS only recognizes, and reimburses, for this charity if it is articulated in the FAP.
Example FAP language may state – An Access to Healthcare Crisis must be proclaimed by [hospital leadership / approved by the board of directors] and attached to this patient financial assistance document as an addendum. An Access to Healthcare Crisis may be related to an emergent situation whereby state / federal regulations are modified to meet the immediate healthcare needs of the hospital’s community during the Access to Healthcare Crisis. During an Access to Healthcare Crisis [provider] may “flex” its patient financial assistance policy to meet the needs of the community in crisis. These changes will be included in the patient financial assistance policy included as an addendum. Patient discounts related to an Access to Healthcare Crisis may be provided at the time of the crisis, regardless of the date of this policy (as hospital leadership may not be able to react quickly enough to update policy language in order to meet more pressing needs during the Access to Healthcare Crisis).
3. Current S-10 Reporting
Toyon recommends an annual evaluation is conducted each year to determine if an amended worksheet S-10 UC DSH listing is necessary. Through our experience with UC DSH audits, it is common to “refresh” and update the UC DSH listing after the cost report is filed, five months after the close of a hospital’s fiscal year. This is analogous to the process of reporting Medicare bad debts and the empirical DSH.
This annual evaluation and update is not to determine or reassess the charity and non-covered Medicaid write-offs that fall within the fiscal year, but rather to redetermine insurance coverage on charity and non-covered Medicaid claims. These determinations are important as they may impact:
· Charity care related to coinsurance, copayments and deductibles (C+D). These costs are reported on Worksheet S-10, Line 20 Column 2 (an important population to correctly identify, as these amounts are not reduced by a hospital’s cost to charge ratio); and
· The amount of non-covered/denied Medicaid charges reported with uninsured charity care on Worksheet S-10, Line 20, Column 1.
Charity care related to coinsurance, copayments and deductibles (C+D)
A significant step reporting UC DSH listing is to identify amounts related to charity C+D; these amounts are not reduced by the cost to charge ratio. Importantly, there is no industry standard on how these amounts are determined. CMS’ auditors review these amounts using an audit template inclusive of fields for hospital teams to populate for “insured” patients vs. “uninsured” patients. The process of obtaining insurance may take up to a year. Please consider:
· At the time of filing the UC DSH listing, five months after the fiscal year end, it may be determined certain patients were “uninsured”, therefore the amount written-off during the year is reported as charity on Worksheet S-0 Line 20, Column 1. This write-off amount is reduced by the cost to charge ratio.
· The determination of “uninsured” may be driven by the presence of certain transactional data, like an insurance payment.
· When certain patients subsequently obtain insurance, the hospital will have more accurate data (i.e., an insurance payment), five months after the cost report is filed.
· An amended UC DSH listing thereby allows accurate reporting of these charity care write-offs as “insured” to Worksheet Line 20, Column 2. This write-off amount is not reduced by the cost to charge ratio.
Toyon has experienced hospitals identifying larger amounts of charity to report as C+D by refreshing insurance status a year after filing the cost report. If CMS’s expectation is for hospitals to “smooth” this occurrence using a year over year adjustment, there is no industry standard. Moreover, any year over year smoothing efforts may be complex as they involve amounts reported as “uninsured” on Worksheet S-10 Line 20, Column 1 vs. “insured” on Worksheet Line 20, Column 2.
Non-Covered/Denied Medicaid Charges
The assessment of reporting non-covered/denied Medicaid accounts is an important part of Toyon’s annual evaluation to determine if an amended UC DSH listing is necessary. In many cases, identifying the charge write-off for non-covered Medicaid goes beyond the reported patient transaction amount. For instance, consider:
· The transaction amount may not always represent the charge write-off, instead it may represent the payment not received from Medicaid. Therefore, in some cases (i.e., when there is no Medicaid payment), it is more accurate to report total hospital charges as opposed to the transaction amount.
· There is no industry standard on how hospitals account for non-covered and denied Medicaid transactions. In circumstances when non-covered Medicaid accounts are written-off and reversed in transaction detail, this occurrence creates annual reporting anomalies when considering the reporting of total hospital charges vs. transaction amounts (year over year).
· Medicaid coverage and operations are state-specific, impacting the time it takes to processes Medicaid coverage/payments.
At the time of filing the UC DSH listing, five months after the fiscal year end, it may appear there is no Medicaid payment, and therefore a hospital may report the entire hospital charge as “uninsured” charity on Worksheet S-10, Line 20 Column 1. However, Medicaid may eventually make a payment, thereby making it improper to report the entire hospital charge. In other occasions, Medicaid may recoup payment, and it would be proper to report the entire hospital charge.
Toyon also recommends providers assess annual UC reporting for year over year consistency. CMS’s use of a single base year for UC funding may cause large variations in annual DSH funding. As hospital teams look for more predictability in annual payments, hospital teams may consider smoothing the timing of charity and bad debt write-offs so there is mitigated variation in UC cost from year to year (aside from other market conditions).
Toyon is committed to apprising providers with important reimbursement updates. Please contact Fred Fisher at 888.514.9312 or firstname.lastname@example.org if you have any questions.
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