Worksheet S-10 Reimbursable Impact

By: David Verbaro  

June 30th has come and gone and summer is well under way. All hospitals have now had their first encounter with the new 2552-10 Medicare cost report forms. Although the cost reports have been submitted, the impact these changes to the cost report forms will have on a hospital’s reimbursement remains to be seen. No worksheet has seen more alterations than Worksheet S-10. Hospital CFOs and reimbursement directors should understand how the changes to this worksheet will influence the amount of reimbursement they currently receive. So what is the potential impact the new S-10 will have on hospitals?

Until recently, the S-10 form had no reimbursement impact and, in fact, the Centers for Medicare and Medicaid Services (CMS) did not even require that hospitals complete the form. Starting in 2010, CMS has instructed all acute care and critical access hospitals to complete the form to calculate hospitals’ cost of providing care for which they are not compensated. Going forward, Worksheet S-10 will play a vital role in the distribution of a hospital’s Electronic Health Record (EHR) incentive payments and may be used in the calculation of future Disproportionate Share (DSH) payments.

To determine a hospital’s uncompensated care costs on Worksheet S-10, a hospital records charges and payments, and calculates costs (using the cost-to-charge ratio (CCR) from Worksheet C) for the following:

• services to Medicaid patients;
• services to SCHIP patients;
• services to patients covered by a State or local government indigent care program; and
• services to patients who are given a discount under a hospital’s charity care policy.

In addition, Worksheet S-10 includes costs (again, using the CCR from Worksheet C) for:

• non-Medicare and non-reimbursable Medicare bad debt.

Worksheet S-10 Impact on EHR Payments

A hospital’s EHR payment is driven by the amount of charity care it provides. Higher documented charity care will result in a more substantial EHR payment. The hospital’s uncompensated care amount consists of charity care and bad debt, both non-Medicare and non-reimbursable. This amount of uncompensated care is now calculated on line 20 of the 2552-10 Worksheet S-10. A hospital’s individual charity care policy will determine what services are eligible for line 20. A less stringent charity care policy will most likely result in a higher amount of reported charity care. Accordingly, hospitals should continue to review their charity care policy, which are usually governed in part by State regulations. If a hospital fails to submit any information on the S-10, it may put EHR payments at risk. This omission could jeopardize millions of dollars in payments. Calculating EHR payments may not be the sole purpose of the Worksheet S-10.
Worksheet S-10’s Possible Impact on Future DSH Payments

Beginning in federal fiscal year (FY) 2014 (October 2013) hospitals will receive only 25% of their current DSH payments. The remaining 75% (or most of it) will be included in an uncompensated care pool. A hospital will receive funding from this pool based upon its ratio of uncompensated care provided compared to the ratio of uncompensated care provided by all hospitals. The Medicare statute [42 U.S.C. §1395ww(r)(2)(C)(i)] states that “appropriate data” will be the basis for a hospital’s amount of uncompensated care. CMS has not issued a rule specifying the specific data it will use. It seems very likely, however, that CMS will use data on Worksheet S-10 to calculate the amount of a hospital’s payment from the uncompensated care pool. Regardless of the specific source of data, hospitals should begin to shift their focus from the current DSH methodology to refining their methods of capturing uncompensated care payments.

Hospitals will soon have to contend with an increased amount of hospitals eligible for these payments. Now is the time for hospitals to evaluate their charity care policies to determine they are in accordance with CMS regulations. Hospitals should ensure they have included all of the proper documentation to support their amounts, while also trying to maximize their share of the uncompensated care pool.

Conclusion

Hospitals have a significant number of issues to consider when completing their Worksheet S-10. These considerations include data collection, classification of uncompensated care, and various reporting requirements. With regards to data collection, hospitals will now have to determine who is responsible for obtaining the necessary information to support their amounts. Each line of the Worksheet S-10 may have its own interpretation. For example, hospitals will need to determine how they will record partial payments from charity care patients. Data collection will be a key factor in completing this form. Understanding the impact that this data will have on your reimbursement will be critical to maintain your current level of payment. Hospitals may have an additional opportunity to review their submission, but it is not certain, so careful preparation and review is essential.

For more information about the changes to the Worksheet S-10 and the impact on reimbursement, please contact David Verbaro at dverbaro@besler.com or (732) 392-8242