Included in the proposed rule to update the fiscal year (FY) 2017 inpatient prospective payment system is the Centers for Medicare & Medicaid Services’ (CMS) proposal to begin incorporating Worksheet S- 10 data over a three-year period in the distribution methodology of uncompensated care payments beginning in FY 2018.

CMS proposes to define uncompensated care costs as the cost of charity care and non-Medicare and non-reimbursable Medicare bad debt as reported on Worksheet S-10, Line 30. CMS intends to revise the Worksheet S-10 cost report instructions to report charity care based on date of write-off rather than date of service. CMS is also considering proposals which would trim hospitals’ cost-to-charge ratios (CCRs) to control for data anomalies to ensure reasonable CCRs are used to calculate cost.

For the 2018 allocation, CMS is proposing to calculate Factor 3 using each of the following and averaging the three values:

  1. Low-income insured days proxy determined using Medicaid days from FY 2012 cost report and FY 2014 SSI ratio
  2. Low-income insured days proxy determined using Medicaid days from FY 2013 cost report and FY 2015 SSI ratio
  3. FY 2014 Worksheet S-10 data

After the three-year transition, CMS is proposing to only use Worksheet S-10 data to calculate Factor 3. For FY 2020, CMS would average FY 2014, FY 2015, and FY 2016 Worksheet S-10 data.

CMS’s fact sheet, which summarizes major provisions of the proposed rule, is located on our website at http://draffintucker.com/accounting/cms-posts-fact-sheet-on/.

CMS encourages providers to review their 2014 data and contact their Medicare Administrative Contractor as soon as possible to request revisions, if necessary. If you would like assistance in reviewing your data, please contact our Albany office at (229) 883-7878 or our Atlanta office at (404) 220-8494.