In this episode, we are joined by Jeff Wolf, Director of Reimbursement Services at BESLER, to discuss issues to watch out for in the preparation of Worksheet S-10.Learn how to listen to The Hospital Finance Podcast® on your mobile device.
Highlights of this episode include:
- Insight on how worksheet S-10 is currently playing into the uncompensated care pool.
- The differences between the general ledger method and transaction code method of preparing S-10 worksheets.
- A review of three data sources used during the transaction code method: detailed charge records, payment and adjustment files, and 835 payment remittances.
- What critical data elements should be of focus, and how that data is analyzed and summarized for supporting documentation.
- And more…
Mike Passanante: Hi, this is Mike Passanante. And welcome back to the award-winning Hospital Finance Podcast®.
Today, we’re going to be talking about issues to watch out for in the preparation of worksheet S-10. And joining me to discuss that topic is Jeff Wolf who is the Director of Reimbursement Services at BESLER.
Jeff, welcome to the program.
Jeff Wolf: Thank you very much. Glad to be here.
Mike: So Jeff, before we dive into very specific issues around worksheet S-10, can you talk to our audience a little bit about how the S-10 is playing into the entire uncompensated care pool these days?
Jeff Wolf: Well, S-10, as most people know, has gained importance over the last couple of years in that the DSH proportionate share payments is being allocated 25% between the old empirical DSH calculation based on the eligible patients or Medicaid-eligible patients.
The S-10 has taken the 75% of that calculation and is being used to identify the amount of money that each hospital will be entitled to. So the importance of S-10 has really risen in the last three or four years.
Mike: For anyone who’s familiar with the S-10, there are two methods for preparing that worksheet. They are the GL versus the transaction codes. Can you tell us what the differences are between the two?
Jeff Wolf: Yeah, simply put, the general ledger method uses data that eventually booked into the general ledger or the trial balance for the hospital. And people use that to identify the net reimbursement for their charity care and their bad debts as they’re written off.
And that method works for identifying some totals, but it’s not very detailed. If you think of general ledger transactions, they’re not by patient. They’re not detailed enough for what these audits are looking for.
When we’re talking about the transaction code method on the other hand, it’s extremely detail-oriented. Basically, the data files are the transaction codes that are posted for every patient account during the year, identifying net reimbursement, charity care and bad-debt write-off’s. This means that the GL method do not contain that level of data, but the transaction codes do. And they’re going to be much better for audits.
Mike: Jeff, how does this affect the net revenue calculations?
Jeff Wolf: Well, the GL method is simply to utilize and to process the data. The values are easier to reconcile to the financial statements. What the GL method does not handle well is when the primary payer status changes after the provision of services. In these cases, the GL method is reporting incorrect values for the net reimbursement for the specific payers.
The transaction code method on the other hand is more difficult to use and has massive amounts of data that the facility must manage and process. But the results are more accurate since the transaction codes are derived from the patient accounting system. And that data can be generated with the current primary and secondary pairs rather than the data at the time of treatment.
So, the transition code method does have more difficulty with reconciliations. But the patient level of detail is exactly what’s needed during the audit.
Mike: And how does this affect charity care and bad debts?
Jeff Wolf: This is the section of S-10 where the GL method completely breaks down. Both the charity care and the bad debt listings must be by patient/encounter. Therefore, using the GL method for filing S-10 will cause a lot of data rework and reconciliation problems during the audit.
On the other hand, the transaction method, this is where it shines because you are in detail by patient, by transaction. You can absolutely show the transaction codes related to every charity care of bad debt write-off.
Again, since the transaction code method is derived from the patient accounting system, the data can be generated as needed, directly showing patient payments, the contractual adjustments, the write-off’s successful, et cetera.
That makes it much easier to manage for the requirements of audit.
Mike: And Jeff, if you’re recommending the use of the transaction method for the S-10, how do you identify and reconcile the detailed data?
Jeff Wolf: Well, when we talk about the transaction code method, we’re actually talking about utilizing a minimum of three different data sources in order to provide the necessary information. The minimum data sources are the detailed charge records, the transaction codes (or otherwise known as the payment and adjustment file), and the 835 payment remittances.
Each of these files need to be reconciled either to the general ledger or the financial statements to ensure that you’re dealing with the correct data.
Mike: So Jeff, let’s talk through the data sources. First, walk us through detailed charges.
Jeff Wolf: Okay. So the detailed charges are a summary by patient of all the charges posted for each encounter by rep code. At this point, we’re not bringing in the DRG or the HCPCS codes. But as S-10 evolves, these fields may be needed. So having that data available will be important.
To ensure that you have all the charges for all the patients treated in a year, that data must be reconciled from the total patient charges detailed file to the general ledger and/or the financial statements.
Mike: Okay. And now walk us through transaction codes.
Jeff Wolf: So, the transaction codes are detailed listing of all payments and adjustments to patient accounts for the year. This represents all of the claim processing and collection efforts that are performed on a patient encounter and claim.
While this data is massive, and it is co-mingled, you can separate out and ID certain categories of transactions and be able to reconcile those categories to the general ledger financial statements.
The kind of categories we’re talking about would be contractual adjustments. Those could be identified directly through the GL. Your total payments (in other words, your cash receipts), or your total write-off’s, all of those can be reconciled back to the GL as specific dollar amounts.
Mike: Jeff, the third data element is the 835/837 transactions. Tell us about those.
Jeff Wolf: So, the 835 transactions are summary claim adjustment data by patient encounter. These data elements include insurance payments, patient responsibilities, non-covered amounts. These payments should be reconciled in total by patient to the insurance payments in the transaction codes.
So, it’s very important to reconcile the transaction codes before you reconcile the 835 because the 835 only can be reconciled to individual claims and to individual patients.
So this kind of a hierarchy: you have to do the total charges first, you have to do the transaction code second, and then you have to be able to do the 835’s.
Mike: And if you’re using all of these detail records which can contain millions of records literally, Jeff, what are the critical data elements that people should be paying attention to?
Jeff Wolf: Well, one of the most important ones is identifying the critical payer’s primary and secondary payer types. Of those, you’ve got your Medicare, your Medicaid, you have your CHIP and your state and local-independent indigent programs. But you also need to know which private insurance are in network as well as out of network. And that takes a little bit of work with your patient accounting folks to make sure you identify which programs or which policies are in and out of network.
You also need to identify the transaction codes that represent some of the following categories, things like contractual adjustments, insurance payments, patient payments, write-off’s, length of stay adjustment, and other miscellaneous adjustments. Each of those categories needs to be a separate bucket of analysis under the transaction code, 1) so you can reconcile them back, but 2) so you can use them in the analysis by patient as you’re moving forward on your S-10.
Mike: Jeff, how does all of these data get summarized and analyzed for supporting documentation?
Jeff Wolf: Well, once you’ve reconciled the data, you’ll need to identify the patients in these specific buckets. The first thing you’ll need to do is identify the primary payers for that reimbursement calculations.
Then you’ll need to identify the transaction categories to identify the charity care versus the bad debt write-off amounts.
Be aware that a patient can end up in multiple categories—so, for instance, a Medicaid patient that could have a charity care write-off and could have a bad debt could end up in three different buckets as we’re walking through this.
What this means is you need to make sure you identify the transaction codes appropriately for charity versus bad debt so you can separately identify those and not count them twice on the listings.
Any patient that was written off in the current year that also had their services in the current year could be in the net reimbursement section as well as have patient responsibility that’s either is written off as charity or bad debt. So again, being aware of exactly what your transaction codes and putting them into the appropriate buckets is going to be very, very important.
In summary, it’s really, really critical to make sure that you look at the data categories, the transaction codes, putting them into the correct buckets based on the CMS guidelines. The quality and accuracy of your transaction codes in the patient accounting system will become more and more critical as we evolve through S-10.
Mike: And this is the third installment of our series around uncompensated care. We’ve previously covered bad debt and DSH. If you’d like to get our paper around uncompensated care to read more in-depth about all of those topics, you can go to Besler.com/insights. Just click on the reimbursement button, and you’ll see the paper there along with a host of other resources available around Medicare reimbursement.
Jeff, thank you so much for joining us on the podcast today.
Jeff Wolf: It was a pleasure being here. Thank you very much.