MINNESOTA HFMA 2019 Regulatory Conference Worksheet S-10 Here To - PowerPoint PPT Presentation

MINNESOTA HFMA 2019 Regulatory Conference Worksheet S-10 Here To Stay: A First Look at MAC S-10 Audits November 7, 2019 Jeff Norman, Senior Manager Kyle Pennington, Manager

OUTLINE • Uncompensated Care Background • Worksheet S-10 Audits • Notable CMS Comments from FFY 2020 IPPS Final Rule • Best Practices & Next Steps • Questions 2

UNCOMPENSATED CARE UNDER ACA • Starting with FFY 2014, qualifying Medicare DSH providers receive an empirically justified DSH payment, which is calculated at 25% of the traditional DSH formula • Remaining 75% of DSH reimbursement is distributed to all qualifying providers under an uncompensated care reimbursement formula • Fixed UC pool divided among providers based on their percentage of uncompensated care costs • FY 2018 – CMS first began using blend of UC data from Worksheet S-10 and low income days 3

UC FACTORS • Three factors and values for FFY 2020 Factor 1 Factor 2 Factor 3 75% fixed pool of Reduces Factor 1 Provider’s % of what DSH would based on the uncompensated have been as change in the care relative to all estimated by CMS national uninsured hospitals eligible for all hospitals rate for DSH combined under the pre-ACA formula $12.438B $8.351B Hospital proxy 4

UC FACTOR 3 – FFY 2020 • FFY 2020 IPPS Final Rule Factor 3: ➢ CMS has eliminated the averaging of three cost reporting periods ➢ CMS has finalized the use of FY 2015 S-10 data • Finalizing again the use of uncompensated care costs for purposes of calculating Factor 3 from Line 30 ➢ Cost of charity care – Line 23 ➢ Cost of non-Medicare bad debt – Line 29 5

UC FACTOR 3 DISTRIBUTION IMPACTS FFY 2019 FFY 2020 ( using 2015 UC ) Provider Type UC Reimbursement % UC Pool % Providers UC Reimbursement % UC Pool % Providers Redistribution Percent Governmental $ 2,014,829,461 24.35% 15.77% $ 2,445,693,126 29.29% 15.83% $ 430,863,665 21.38% Propietary $ 1,369,897,393 16.56% 25.09% $ 1,350,477,378 16.17% 24.71% $ (19,420,015) -1.42% Nonprofit $ 4,888,145,592 59.09% 59.13% $ 4,554,428,593 54.54% 59.46% $ (333,716,999) -6.83% • Full Impact of Worksheet S-10 on Factor 3 • Winners & Losers within each group 6

UC FACTOR 3 DISTRIBUTION IMPACTS Uncompensated Care Payment Summary MINNESOTA FFY 2016 FFY 2017 FFY 2018 FFY 2019 FFY 2020 $68,762,031 $62,852,004 $61,419,607 $56,977,380 $39,293,826 7

ABERRANT DATA REVIEWS • Aberrant S-10 Data – FY 2017 ➢ CMS conducted a comparison of FY 2015 and 2017 S-10 data ➢ Where there was a significant positive or negative difference in percentage of total UC costs to total operating costs, hospitals must justify its reporting fluctuations (tight window). • Two Options 1. If necessary, a hospital could amend its data 2. If the data remained unchanged without an acceptable response of explanation from the provider, CMS would trim the provider’s data in FY 2017 using data from FY 2015 in order to determine Factor 3 8

WORKSHEET S-10 ANOMALIES FFY 2017 FFY 2018 $0 Total Charity 62 28 66 28 $0 Uninsured Charity $0 Insured Charity 515 195 Line 22 Negative Amounts 6 1 202 64 Insured CC > Uninsured CC $0 Bad Debt 11 4 9

CMS AUDITS: FFY 2017 S-10 AUDIT REQUEST LETTER • Began July 2019 • S-10 audit data request letter similar among MACs ➢ 10 items requested 1. A copy of the hospital’s charity care policy and financial assistance policy (FAP) that was in effect during the cost report period under review. 2. A copy of the hospital’s audited financial statements and/or working trial balance for the cost report period under review. 10

CMS AUDITS – FINANCIAL ASSISTANCE POLICY Items to consider: • Do all of your policies list the effective or revision date(s)? • Providers should have a copy of each version of the financial assistance policy readily available. • Be aware that multiple versions of policies may be needed for one cost reporting period. • Consolidated vs. Hospital specific audited financial statements 11

CMS AUDITS – FINANCIAL ASSISTANCE POLICY • Line 20 Cost Report Instructions: … In addition, enter in column 1, charges for non-covered services provided to patients eligible for Medicaid or other indigent care programs if such inclusion is specified in the hospital’s charity care policy or FAP and the patient meets the hospital’s policy criteria… • Do you have language in your policy that grants these discounts and can your hospital currently capture these non-covered Medicaid charges from other contractual adjustments? • If your hospital is giving charity discounts for patients with a primary payer of Medicaid, MACs need to see the specific language that allows these discounts. 12

CMS AUDITS: S-10 AUDIT REQUEST LETTER 3. A reconciliation of the bad debts claimed on Worksheet S-10, Line 26 to the audited financial statements and/or working trial balance. 13

CMS AUDITS – RECONCILE • Bad debt reconcile has caused significant challenges for most hospitals ➢ Multiple campuses and/or clinics rolled up on same cost report each with their own accounts receivable/bad debt allowance account that needed to be reconciled • MACs previously had multiple reconcile templates and depending on MAC may accept either: ➢ Reconciling bad debt detail with activity in bad debt allowance account from balance sheet, or ➢ Reconciling prior year ending A/R balance with current year ending A/R that separately identifies charges, receipts, adjustments, write-offs, etc. 14

CMS AUDITS: S-10 AUDIT REQUEST LETTER 4. A detailed listing of the hospital’s transaction codes and their descriptions/explanations (e.g. write-off codes, discount codes, contractual adjustment codes). 15

CMS AUDITS – TRANSACTION/ADJUSTMENT CODES • Lack of consistency among MACs on focus of transaction/adjustment codes related to policy language ➢ Some spent considerable time understanding “charity” transaction codes as well as any other transaction codes associated with charity write-off accounts. ➢ Auditors asked how each transaction/adjustment code used to generate charity detail related to the financial assistance policies. ➢ Easier to do this on the front-end when filing report than at audit. 16

CMS AUDITS: S-10 AUDIT REQUEST LETTER 5. Detailed query logic that describes how the hospital identified patient charges included in the patient listing used to support charges on Worksheet S-10, Line 20. 6. Detailed query logic that describes how the hospital identified patient payments included in the patient listing used to support payments on Worksheet S-10, Line 22. 7. Detailed query logic that describes how the hospital identified bad debts included in the patient listing used to support bad debts on Worksheet S- 10, Line 26. ***New for 2017 audits*** 17

CMS AUDITS: S-10 AUDIT REQUEST LETTER 8. Detail patient listing (see attached Excel template for required detail fields) of charges claimed on Worksheet S-10, Line 20, Columns 1 and 2. a. Insurance Status When Services Were m. Revenue Code, Provided (insured or uninsured), n. Revenue Code Total Charges for the Claim, b. Primary Payor Plan, o. Date of Write-off to Charity Care, c. Secondary Payor Plan, p. Total Patient Payments for Services d. Payment Transaction Code, Provided, e. Patient Identification Number (PCN), q. Total Third Party Payments for Services f. Patient Name, Provided, g. Patient Date of Birth, r. Patient Charity Contractual Amount h. Social Security Number, s. Other Contractual Amount (insurance i. Patient Gender, write-off, courtesy discount, etc.). j. Admit Date, t. Non-covered Charges for Days Exceeding a k. Discharge Date, LOS Limit for Patients Covered by Medicaid l. Service indicator (inpatient or outpatient), or other Indigent Care 18

CMS AUDITS: S-10 AUDIT REQUEST LETTER 9. Detail patient listing (see attached Excel template for required detail fields) of patient payments claimed on Worksheet S-10, Line 22 , Columns 1 and 2. a. Insurance Status When Services Were m. Revenue Code, Provided (insured or uninsured), n. Revenue Code Total Charges for the Claim, b. Primary Payor Plan, o. Date of Write-off to Charity Care, c. Secondary Payor Plan, p. Total Patient Payments for Services d. Payment Transaction Code, Provided, e. Patient Identification Number (PCN), q. Total Third Party Payments for Services f. Patient Name, Provided, g. Patient Date of Birth, r. Patient Charity Contractual Amount h. Social Security Number, s. Other Contractual Amount (insurance i. Patient Gender, write-off, courtesy discount, etc.). j. Admit Date, t. Non-covered Charges for Days Exceeding a k. Discharge Date, LOS Limit for Patients Covered by Medicaid l. Service indicator (inpatient or outpatient), or other Indigent Care 19