By: David Verbaro, and Tricia Ligato
The Patient Protection and Affordable Care Act (PPACA) contains significant cuts to Medicare disproportionate share hospital (DSH) payments. Beginning in fiscal year 2014, hospitals will receive only 25% of their current Medicare DSH reimbursement. In addition, each hospital will receive a distribution from a pool based on its share of national uncompensated care.
The formula for the uncompensated care pool is based on:
- The aggregate reduction in DSH payments to all hospitals attributable to the reduction in DSH payments (75% reduction value becomes the uncompensated care pool).
- The reduction in uninsured individuals (this pool is reduced by 2 factors, reduction in the uninsured percentage plus an artificial percentage decrease).
- Each hospital’s share of uncompensated care provided by all hospitals.
On Tuesday, January 8, 2013, the Centers for Medicare and Medicaid Services (CMS) held a National Provider Call on the topic: Implementation of Section 3133 of the Affordable Care Act: Improvement to Medicare Disproportionate Share Hospital Payments. According to a CMS press release, the purpose of the call was to “present findings of their analyses identifying possible data sources and definitions for measuring the change in uninsured and uncompensated care.” During the call, CMS reviewed the basic reimbursement framework for DSH payments and the new uncompensated care pool. The call also gave participants an opportunity to voice their concerns and request certain considerations be made by CMS when ironing out the details. CMS did not, however, give providers what they need most – clear direction as to the methodology by which CMS will calculate and distribute the uncompensated care pool.
Specifically, providers are still struggling to understand how the uncompensated care pool will be determined and what the sources of data will be. 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. There is a lot of interpretive leeway for CMS in the term “appropriate data.” CMS has not issued a directive specifying what specific data will be used and how providers will be reimbursed. CMS has stated it will use data on Worksheet S-10 to calculate the amount of a hospital’s payment from the uncompensated care pool, although CMS has not specified what lines from Worksheet S-10 will be used, whether uniform standards for reporting data on the S-10 will be adopted, and whether the data will be audited.
Unfortunately, providers will not get a full scale picture of how the new DSH/Uncompensated Care payment system will work until the FY 2014 IPPS Proposed Rule is released this spring. Nonetheless, hospitals should begin to shift their focus from the current DSH methodology to refining their methods of capturing uncompensated care data and getting a head start on their preparation for the imminent changes. It is important that providers accurately report the uncompensated care in which their facility provides on worksheet S-10 of the FY 2012 Medicare Cost Reports to capture the full uncompensated care costs being borne by the provider. It is critical that providers also verify that they have the necessary supporting documentation required for compliance purposes.
BESLER will continue to publish information regarding the future of Medicare DSH and uncompensated care as it becomes available. In the meantime please contact Tricia Ligato at firstname.lastname@example.org or Dave Verbaro at email@example.com with any questions or concerns you may have. Both contacts can be reached by phone at 609-514-1400.