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S10 changes you should know about [PODCAST]

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The Hospital Finance Podcast

In this episode, DeLicia Pierce, Director of Reimbursement Integrity at BESLER, reviews important year end deadlines and key changes to the S10 amendment process.

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Mike Passanante: Hi, this is Mike Passanante. And welcome back to the Hospital Finance Podcast. Today, I’m joined by DeLicia Pierce who is the Director of Reimbursement Integrity at BESLER.

If you’re involved in the cost report preparation at your hospital, you may be aware that CMS has extended the deadline regarding amendments to the S10. DeLicia is here today to break down those changes for us and let us know what they mean for you. DeLicia, welcome to the program.

DeLicia Pierce: Hi Mike! How are you doing today?

Mike: I’m great! We’re excited to have you. So first, why don’t you tell us why the S10 is so important to hospitals?

DeLicia: Well, historically, the S10 has been a schedule on the cost report that’s only been used for EHR incentive payments. In 2014 and ’15, it came out that CMS has said “we’re going to use the S10 to calculate Medicare DSH payments.”

Well, they’ve delayed it. They’ve delayed it multiple times. And then for FY ’18, they came in and are now using the S10 data to calculate the 75% portion of the Medicare DSH payment.

So, what has happened, 2018 is now using days proxy for 2012, days proxy for 2013. And they’re using the 2014 S10 data. So it’s a hybrid, SSI days, and now a portion of the uncompensated care that is reported on the S10.

So, historically, the S10 hasn’t been utilized to calculate the Medicare DSH payment which is the 75%, which is a pool. Hospitals are competing for their pro-rata share of the Medicare DSH pool, the UCC pool—which is, in 2018, it’s about $5.7 billion. So every hospital is competing for their pro-rata portion of the set pool of dollars.

And the pool over the years has gone down in 2018. Because they came back and recalculated the uncompensated, uninsured dollar numbers for the country, we got a big kind of a gift from CMS of $800 million. Well, with that being said, a lot of hospitals benefited from that.

But going forward, they’re going to use S10. For 2019, the trifecta effect of Medicaid days, SSI days, they’re going away from the old calculation and moving to using more of the S10. In ’19, 2014 S10 and 2015 S10 will be utilized to calculate the pro-rata share of each hospital’s uncompensated care pool. So, that’s why it’s so important.

And they’re phasing it in at 100% in 2020. So, the S10 will be used for all hospitals for the 75% DSH calculations. So that pro-rata share of this pool, we know that it will change every year. We’re not sure what it’s going to be in ’19, we’re not sure what it’s going to be in ’20. But we do know what it is in ‘18.

So, whereas this has just been for reporting purposes in the past, it is now affecting a large piece of Medicare reimbursement for all hospitals. And that’s why it’s so important.

Mike: Thanks for that, DeLicia. And as you alluded to in your answer, CMS tends to change the deadline for different things around reporting. And it’s happened again. It’s extended the deadlines for the submission of amended cost reports.

What are some of the important dates hospitals should know?

DeLicia: Well, one of the most important dates—to give you a little bit of history, CMS has given us a deadline to resubmit our 201 and 2015 S10 data. And that was for September 29th.

Lo, and behold, they came out with an extension two days before. They gave hospitals a more extensive instruction to go along with that. They also published a MedLearns Matter article which gave hospitals more specific instructions on how to treat charity patients and how to do the reporting. It was really nice of them to do this. But when they extended it, they extended it to January 2nd.

So, hospitals still now have the opportunity to re-submit their 2014 and ’15 data. And depending on your year end, your 2016.

So, what I highly recommend hospitals do is resubmit all three of those cost reports, their data on the S10. Make sure that they’re focusing on the charity, how you’re reporting that bad debt, making sure that each line item on the S10 is accurate. And you can provide support in the event that they do go back and audit this.

So, make sure that you resubmit. It’s very important that you do.

When we were given the opportunity last year to resubmit our S10 for 2014—and only 25% of the hospitals in the country resubmitted their S10. Nobody was really thinking that the S10 is going to be used in 2018 for Medicare DSH reimbursement, but it is. So, you wouldn’t want only 25% of the hospitals resubmitting their data—either that or they know that their data is accurate. But if there’s any opportunity to make sure that you make changes, you get that information in, then you need to take advantage of the CMS extension and get your data in by January 2nd.

Need assistance with S10 preparation or review? BESLER can help!

Mike: And let’s touch on something that you mentioned there around changes to the instructions. You did mention that CMS did release changes to the S10 instruction. So, what was the reason for that?

DeLicia: Well, the reason was because the hospital industry as a whole basically has concerns about how other hospitals are reporting the data and the vague instructions that were provided initially. And it goes into much more detail.

And I’m going to keep going back to the MedLearns Matter article or lesson that they have released. It’s out on the CMS website. You may want to go back because it gives individual examples of charity, uncompensated care, uninsured. So you want to use what they have given us to help because what they were trying to do is give additional guidelines to make sure the hospitals are reporting their information this accurately, not getting into the habit—

CMS doesn’t want to get into the habit of telling hospitals how to report charity. But really, in theory, they are giving into that. They’re telling us how to report it. And they’re giving us specific examples. You want to take advantage of the fact that they have gone through the process of providing examples.

And not every hospital does it the same way and not every hospital has the same charge master, transaction code master. So everybody has a different way of looking at their data. But at the end of the day, the most important thing is to get it in the right bucket.

Mike: And if a hospital has reached final settlement with their cost report, do they have to re-open it or can they amend?

DeLicia: They’re just going to resubmit the 2014 and ’15. You don’t have to go through a re-opening or an amendment. You just need to go get with your MACs, resubmit your 2014, 2015, and if need be, your 2016 cost report. So, it’s not as laborious as going through a re-opening or amending.

Mike: So, let’s talk about some of the details of the S10 itself. Will the S10 data be utilized in the calculation of uncompensated care?

DeLicia: Absolutely! So what it will be used for going forward as I alluded at the beginning is it’s going to be calculating. And the S10 schedule will tell CMS what the uncompensated care costs are which will be used to divvy up—I guess for lack of a better word, divvy up—hospital’s pro-rata share of the uncompensated care pool.

Now, I expect that the uncompensated care pool will either go down or up over the next couple of years as they re-evaluate the uninsured. But for the most part, this is the biggest change for hospitals that’s come out since one of the wage index changes.

So, this is very important. It will be used to calculate their uncompensated care.

Not to mention, several hospital associations have been talking about the possibility of the states using this for their supplemental funding mechanisms. So whereas typically, just historically, it would affect Medicare DSH, it may very well be used as the one source stop for uncompensated care and be used to divvy up the state’s supplemental funding.

Examples are 1115 waiver, UPL programs—which really have gone away—and UC programs.

So, as you look at what you’re doing from a Medicare perspective, we want to make sure that the data that’s on your S10 is as accurate as possible because it may be used to drive another funding mechanism.

Mike: What is the single, most important feature of a hospital’s charity care policy?

DeLicia: The most important feature of the hospital charity care policy is following your policy. Make sure that you are following your policies to the T. CMS has said they’re not going to audit the ’14, ’15. But we do think that they’re going to come out and start auditing 2017.

So, as hospitals are very different in their policies and procedures, the one thing that CMS has always followed is: “Are you following your policies?” So if your policy says, let’s hypothetically say, a Medicare patient or a Medicaid patient, their charges are denied because it wasn’t covered, if you don’t have something in your policy and procedures that says, “If their Medicaid and their services were not covered, either not medically necessary, exhausted benefits, if your policy doesn’t say that these would be considered charity patients, then you can’t count them in your uninsured charity.”

So, you want to make sure that you’re following your charity policy. You can support on each patient that you’re following the charity policy.

And this kind of gets into the audit that some of the hospitals across the country have gone through for their meaningful use. They’ve had some audits on those. And it is related to S10. But this could potentially be a more in-depth audit.

And it’s new to the auditors. It’s new to the hospitals. So making sure that you are following your policies and procedures is the most important thing—and that you can document that.

Mike: What’s the key factor driving these outcomes?

DeLicia: It’s your Medicaid charges, your cost-to-charge ratio, and the uncompensated care, the charity patients that you’re treating. So, make sure that if you’re saying it’s a charity patient, or if you’re saying it’s an uninsured patient, that you can prove that. At the end of the day, the way the S10 works, it’s going to drive your reimbursement.

Mike: DeLicia, as hospitals reach year-end and get ready to complete the cost report, what should they be doing to prep?

DeLicia: They should absolutely re-evaluate their policies and procedures, run their patient data. They should basically do a self audit to make sure that they’re putting the patients in the right category.

And historically, S10 has not been the most important driving factor of hospital’s reimbursement so this is a new step and a new process that they’re going to have to implement during their cost report prep and cost report filing process to make sure that they, number one, can support the number that are on the cost report and that they understand what’s in them.

The audit may not happen for two years, two or three years. You may have turnover. You may have done two cost reports since then. So making sure that you document everything when you’re filing your cost report, that you leave an audit trail for yourself or for anybody coming behind you is going to be very beneficial in the fact that you won’t have to try to go back and remember what you did. You set up a process, and you continue to follow that.

And as we get better and more experienced with S10 and the reporting, we are going to tweak the process. We’re going to tweak how we report it. But all the hospitals, we know hospitals want to report this data as accurately as possible. Plus, they want to get their pro-rata share of treating the uninsured and the disproportionate patients.

Mike: DeLicia, if a hospital is not currently a DSH hospital, and maybe they don’t ever project to be one, why should they care about filing an S10?

DeLicia: Well, number one, it’s a schedule on the cost report that you’re required to fill out. And by virtue of the regulations and the requirements, you’re supposed to make sure that your cost report is as accurate as possible. And the CFO or the administrator has to attest and certify that this cost report is accurate.

So, it doesn’t matter if you’re not getting DSH or not, you want to make sure that what you’re reporting on your cost report is accurate and compliant. It does affect EHR payment. And you are required to complete it for that purpose as well.

Mike: DeLicia, thanks for joining us today on Hospital Finance Podcast to talk about the latest goings-on with the S10.


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