BKB - 2018 S-10 DSH SC HFMA · • Hospital’s uncompensated care as a percentage of the total uncompensated care for all eligible hospitals • Step 1: Low-income insured days proxy

Health Care

Are You Receiving the Appropriate DSH Payment for Your Uncompensated Care?Presented by:

Roxi Hoel, Senior Managing Consultant

Emily Reese, Managing Consultant

HIGHLIGHTS

• Background and Overview

• FFY 2019 IPPS Final Rule

• Medicare Cost Reporting & Provider Requirements

• SC Hospital Changes in Factor 3

• S-10 Audits

• Issues and Challenges

• Action Items

ANY TIME TO ADDRESS CHANGES?

Background and Overview

• Medicare Disproportionate Share Hospitals (DSH) receive an additional Medicare inpatient payment for treating a disproportionate share of low-income patients

• The Medicare DSH payment is an add-on to the hospital’s inpatient DRG payment

• Designed to compensate hospitals for the higher cost of treating low-income patients


• Effective October 1, 2014, there are two components in determining Medicare DSH payments

• Traditional Medicare DSH – 25%• Uncompensated Care Costs (UCC) – 75%


• Medicare DSH UCC payment factors• Factor 1

• 75% of the estimated traditional total Medicare payments for the current Federal Fiscal Year (FFY)

• Factor 2 • The change in the uninsured percent for

individuals under 65 from FFY 2013 to the current FFY

• Factor 1 multiplied by Factor 2 determines the total Medicare DSH UCC pool payments available


• Medicare DSH UCC payment factors• Factor 3

• Hospital specific

• Determined based upon a hospital’s uncompensated care as a percentage of the total uncompensated care for all Medicare DSH hospitals

• Determined based upon Medicaid days and SSI ratios for FFY 2014 to FFY 2017. Incorporating S-10 for 2018 & 2019.

• The hospital specific Factor 3 is multiplied by the total Medicare DSH UCC pool payments available

FFY 2019 IPPS Final Rule

• Factor 1 - 75% of the amount of Medicare DSH payments that would have otherwise been paid under the original DSH method

• Adjusted FFY18 - $11,700,000,000

• Adjusted FFY19 - $12,250,000,000

• Factor 2 - Uninsured population• Utilizing CMS’s Office of the Actuary (OACT) estimates to

determine the change in the uninsured population which is consistent with FFY18


• Factor 2 – OACT estimate for uninsured rate• FFY18 – 9.1%

• FFY19 – 9.48%

• Factor 2: Adjustment factor applied to the uncompensated care amount

• FFY18 – 58.01%

• FFY19 – 67.51% (weighted)

• Factor 2 – Uncompensated care pool• FFY18 – $6.7 billion ($6,766,695,164)

• FFY19 – $8.3 billion ($8,272,872,447)

UCC DSH Trending

-

2,000,000,000

4,000,000,000

6,000,000,000

8,000,000,000

10,000,000,000

12,000,000,000

14,000,000,000

16,000,000,000

18,000,000,000

2014 2015 2016 2017 2018 2019

UCC DSH Trends

Total DSH Factor 1 Factor 2


• Factor 3 • Final rule includes S-10 updated in HCRIS

through May 31, 2018

• S-10 data changed for FY14 & FY15 for roughly 50% of the hospitals eligible to receive Medicare DSH payments

• Worksheet S-10 data from FY14 & FY15

• Medicaid days data from FY13

• SSI days data from FY16


• Hospital’s uncompensated care as a percentage of the total uncompensated care for all eligible hospitals

• Step 1: Low-income insured days proxy based on FY13 cost report Medicaid days & the FY16 SSI ratios

• Step 2: FY14 Worksheet S-10 charity care & bad debt expense data

• Step 3: FY15 Worksheet S-10 charity care & bad debt expense data

• Step 4: Average of the values computed in Steps 1, 2, & 3 to determine the hospital specific Factor 3

• FY20 would be the first year using three years of S-10 data to allocate uncompensated care payments, based on FY14, FY15 & FY16

• When reviewing FY16 S-10 information for FY20, it is possible the 3 year averaging will be eliminated


• Key takeaways• Factor 1 & Factor 2 methodology is consistent with FFY 2018• Factor 3 is consistent & includes one more year of S-10

information & one less year of Medicaid days/SSI%• The increase in the FFY 2019 Factor 1 and change in source of

estimate for Factor 2 mask the impact of using Worksheet S-10 uncompensated care data

• The Medicare DSH UCC payment pool is budget neutral• Hospitals may not be able to rely upon an annual $1.5 billion

increase in the Medicare DSH UCC payment pool in future periods• Redistribution trend of payments continues from states that

expanded Medicaid to those who did not• S-10 audits to begin in the Fall of 2018

Medicare cost reporting & provider requirements

• Changes to Supporting Documentation Requirements (periods beginning on/after 10/1/18)

• Detail reports with required columns of patient data will have to be included with the initial cost report submission or it will be rejected

• Charity Care & Uninsured Discounts for S-10• Bad debts (Exhibit 2)• DSH

• Can still file amended cost reports within 12 months to add additional days, but new detail must be submitted again

Change in Factor 3

PROV Hospital Name 2019 ‐Factor 3 2018 ‐ Factor 3 Change % Change420078 GHS Greenville Memorial Hospital 0.002773651 0.002192589 0.000581062 26.50%420079 Trident Regional Medical Center 0.000865644 0.000518414 0.000347230 66.98%420085 Grand Strand Regional Medical Center 0.000704280 0.000410178 0.000294102 71.70%420065 St. Francis Xavier Bon Secours 0.000593563 0.000357062 0.000236501 66.24%420048 Kershaw Health 0.000437248 0.000205297 0.000231951 112.98%

PROV Hospital Name 2019 ‐Factor 3 2018 ‐ Factor 3 Change % Change420036 Springs Memorial Hospital 0.000209605 0.000229680 ‐0.000020075 ‐8.74%420091 Carolinas Hospital System 0.000357084 0.000412131 ‐0.000055047 ‐13.36%420070 Palmetto Health Toumey 0.000373673 0.000452650 ‐0.000078977 ‐17.45%420086 Palmetto Baptist 0.000640909 0.000736803 ‐0.000095894 ‐13.01%420018 Palmetto Richland 0.001780785 0.002055988 ‐0.000275203 ‐13.39%

Changes in South Carolina

• No decreases noted over the prior year.

PROV Hospital Name Factor 3 Final 2019 Final 2018 Change420078 GHS Greenville Memorial Hospital 0.002773651 22,946,061 14,836,581 8,109,480 420004 Medical University of SC 0.002373294 19,633,959 15,835,366 3,798,593 420079 Trident Regional Medical Center 0.000865644 7,161,362 3,507,950 3,653,412 420085 Grand Strand Regional Medical Center 0.000704280 5,826,419 2,775,549 3,050,870 420007 Spartanburg Regional Medical Center 0.001296710 10,727,516 7,851,038 2,876,478 420027 ANMED Health 0.000914715 7,567,321 4,706,047 2,861,274 420073 Lexington Medical Center 0.001137968 9,414,264 6,829,788 2,584,476 420065 St. Francis Xavier Bon Secours 0.000593563 4,910,471 2,416,130 2,494,341 420051 McLeod Regional Medical Center 0.001211263 10,020,624 7,766,095 2,254,529 420048 Kershaw Health 0.000437248 3,617,297 1,389,182 2,228,115

S-10 Audits - Beginning

• Recent audit requests from the MACs on FY15 S-10 data

• Short timeline (2 – 3 weeks)

S-10 Audits

• Requests include• Patient level detail by revenue code to support

charity and bad debt amounts reported• Copies of hospital’s charity care policy and/or

FAP• Explanations on the query logic used to

prepare detail patient listings• Explanations for variances between current

year and prior year• Reconciliation of the bad debt write-offs

reported on S-10 to the bad debt expense reported on the hospital’s financial statements

Issues and Challenges

• Complying with Worksheet S-10, Transmittal 11 instructions and definitions

• S-10 instructions are different depending on fiscal year• Cost report periods beginning on or after October 1, 2016,

write-offs are based on date of write-off (no longer date of service)

• Ensuring charity care charges comply with the hospital’s charity care policy

• Creating and implementing procedures for accumulating charity care and bad debt expense amounts

Regulation Updates S-10

Key Changes in Instructions

1. Clarification of definition of charity care, includes uninsured discounts (according to hospital’s FAP)

2. Medicare and non-Medicare bad debts must be net of recoveries

3. Addition of line 27.01, to separate Medicare and non-Medicare bad debts

4. Modification calculation of costs on insured charity care charges not subject to CCR

5. Non-covered services beyond length of stay limit subject to CCR

6. Application of CCR to non-Medicare bad debts

7. Non-reimbursed Medicare bad debts (ded/coins) not subject to CCR


• Avoiding significant Medicare UCC DSH payment reductions based upon audit findings

• Maintaining auditable documentation for charity care and bad debt amounts on Worksheet S-10

• State specific UCC payment programs beginning to use S-10 data for payment determinations

Action Items

• Verify that detailed patient listings are available to support S-10 amounts

• Establish that filed amounts are compliant with cost report instructions

• Determine impact of Transmittal 11 clarifications on amounts reported

• Check that charity care and bad debt policies, procedures and reporting are compliant and consistent with one another

Action Items

• Review charity care, bad debt, contractual allowance, and other administrative write-off codes

• Consider submitting revised S-10 data for FY15 – FY17

• Review Factor 3 data in CMS table

• Engage in rulemaking

South Carolina State DSH


• Medicaid Disproportionate Share Hospitals (DSH) receive DSH allotments from their states.

• States have discretion on how to determine payments, with limitations

• Designed to offset Medicaid Shortfall and unpaid costs of care for uninsured individuals


• State Limitations on Distributions• Uncompensated Care Provided

• Each Hospital is limited by cost of uncompensated care (UCC)

• UCC computed on State DSH surveys

• State Matching• State must match all Federal funds in order to distribute• Matching rate varies by state

• “Use it or Lose it” • Unused funds do not carry forward


• DSH Allotment: Federal Totals• FFY2018 - $12.3 B• FFY2019 - $12.6 B• FFY2020 – $12.9B

• ACA requires reductions (noncumulative)• $4 Billion – FFY2020

• $8 Billion– FFY2021-2025


• Federal DSH Allotments by state• Based on historical DSH Spending

prior to 1992• Updated for Inflation

“DSH Allotments have little meaningful relationship to measures meant to identify those hospitals most in need.”

- MACPAC Report to Congress on Medicaid and CHIP – March 2018

DSH Allotment: South Carolina

• FFY2018 – $368.1M

• FFY2019 - $376.6M

Starting in FY2020, $4B Reduction Proposed

• $385.6M (unreduced)

• $131.2M Reduction

• $254.4M Proposed Allotment

South Carolina DSH Process

• Interim DSH payments distributed based on historical base year data

• Final DSH payments are recalculated based on the results of the DSH Audits, performed three years later

• DSH payments are redistributed between hospitals based on the final DSH Audits

What are DSH Audits?

Medicare Cost Report

Allowable Cost / Allowable Charges= Cost to Charge Ratios

(CCRs)

DSH Survey

CCRs from Cost ReportX Charges related to Medicaid and Uninsured= Total Calculated Cost - Payments Received= Uncompensated Care (UCC)

Importance of DSH Audits

Federal -Allotments

State -Distributions

Hospital -Assets & Liabilities


• Integrity of Data (Completeness)

• Manipulation of Data in excel (potential errors)

• Inclusion/Exclusion of certain information• Other Medicaid Eligibles• Noncovered services• Commercial Claims with no payments• Professional fee payments

• Amount of hours need to prepare survey

• Short deadlines

• State provided data discrepancies

Action Items

• Review Cost Report for accuracy

• Ensure full patient population used

• State Matching, and reconciliation

• Quality Control Checks

• Evaluation of Commercial No-Pay claims for inclusion as Uninsured

Questions?

Thank You!Roxi Hoel// Senior Managing Consultant

[email protected] // 417.865.8701

Emily Reese// Managing [email protected] // 417.865.8701

Documents

BKB - 2018 S-10 DSH SC HFMA · • Hospital’s uncompensated care as a percentage of the total uncompensated care for all eligible hospitals • Step 1: Low-income insured days proxy