Tackling uncompensated care with a holistic approach

By Jay Sutton, FACHE, CNRA; Eric J. Busch, CPA; and Nicholas L. West, CHFP
| 3/23/2021
Tackling uncompensated care with a holistic approach

Managing uncompensated care is a necessary but resource-intensive daily process for many healthcare providers. Without a streamlined, effective routine in place for managing uncompensated care reporting, including worksheet S-10 data, Medicare bad debt (MBD) reimbursement, and Medicare disproportionate share hospital (DSH) payments, organizations easily can become overwhelmed. They might also put themselves at risk for missing out on critical reimbursement that’s available to them.

Hospitals have provided more than $660 billion in uncompensated care to their patients since 2000, according to the American Hospital Association.1 A portion of this care might be reimbursable through the DSH uncompensated care pool, which is estimated at nearly $8.3 billion for federal fiscal year 2021.2 By taking a more holistic, integrated, and streamlined approach to managing uncompensated care, organizations can be better positioned to get reimbursed for some of that care and to stay compliant with uncompensated care reporting requirements.

Here is a description of a holistic approach to uncompensated care efforts, some of the main benefits of such an approach, and best practices for getting started.

What does a holistic approach look like?

In a holistic approach, organizations look at their uncompensated care efforts more globally. The key organizational departments charged with managing uncompensated care reporting – such as finance and reimbursement – work together, with open lines of communication.

In addition, the finance and reimbursement teams have access to the same essential data from across the healthcare network that serves as a single source of truth, streamlining overall uncompensated care efforts and contributing to more accurate reporting. A more integrated approach to managing uncompensated care creates an infinite loop of continuous process improvement.

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5 main benefits of a holistic approach

A more integrated approach to managing uncompensated care:

1. Helps reduce PHI risks. Today’s healthcare organizations are understandably apprehensive about providing data to external parties due to possible protected health information (PHI) exposure and the inherent cybersecurity risks. Yet managing uncompensated care reporting internally is labor-intensive for most organizations. Sharing sensitive data, therefore, is necessary in order for organizations to report – and get reimbursed for – uncompensated care.

As previously noted, in a more holistic approach to managing uncompensated care, organizations can rely on a single data feed that serves as one source of truth for information about uncompensated care. Relying on a single data feed eliminates the need to provide unnecessary data feeds to third-party vendors, which in turn reduces risk that sensitive PHI will be revealed. 

2. Reduces duplication of individual account testing. Organizations with financial assistance policies in line with both worksheet S-10 and Medicare bad debt reporting requirements can save valuable time by avoiding duplicate work. Organizations should review all financial assistance policies annually and look for compliance for both reimbursement programs at the same time.

3. Allows reallocation of limited resources. With today’s organizations facing limited financial and human resources, reducing duplication of efforts is essential. A holistic approach to managing uncompensated care efforts can allow organizations to take resources that previously might have been dedicated to uncompensated care reporting and reallocate those resources to other important initiatives. Shifting resources can allow team members to focus on the most pressing issues and remove some of the extra responsibilities that come with juggling multiple audits and report preparations.

4. Helps the organization efficiently respond to audit requests and regulation changes. Uncompensated care regulations change frequently. A holistic approach in which the right team members work together using a streamlined approach can allow an organization to stay nimble and better able to respond to a changing regulatory environment.

5. Minimizes errors and risks. Organizations that have a nimbler approach and deeply specialized uncompensated care reporting teams can avoid mistakes and minimize risks. In addition, a single source of data allows team members to more efficiently review, report, and manage uncompensated care data, which also helps minimize errors and reduce risk of noncompliance with reporting requirements. Having fewer errors optimizes uncompensated care reimbursement overall.

Leading practices for adopting a holistic approach

How can organizations adopt a holistic approach and streamline their uncompensated care reporting? These are some leading practices:

  • Use consistent data sets that tie to the general ledger. This will help ensure that reimbursable uncompensated care services are appropriately reported and can reduce the risk of audit adjustments.
  • Confirm general ledger mapping to bad debt expense for all Medicare bad debt accounts. Auditors want to see reconciliation of the amounts reported on line 26 of worksheet S-10 to the organization’s general ledger. Streamlining general ledger mapping and bad debt expense makes the reconciliation process smoother.
  • Cross-train team members to help them better understand the uncompensated care landscape. In addition, have team members review policies to see how everything is posting through. (For example, how are transactions being adjudicated and, ultimately, ending up as uncompensated care items?)
  • Have a single point of contact using consistent data sets. This is especially important, as the volume of documentation requests is expected to grow given the federal government’s increased focus on uncompensated care.3 Being able to efficiently respond to requests and supply consistent data (including community benefit, compliance, and state reporting) is essential in a streamlined process.
  • Implement a coordinated approach to reviewing appropriateness of uncompensated care accounts. This starts with review of financial assistance policies. Organizations should be able to quantify and identify risks (for example, incorrectly writing off charity care) on the front end rather than being surprised during an audit.
  • Perform calculations and reasonableness checks on S-10, DSH, and MBD listings prior to submission. Relying on a single source of data makes it easier to review posted activity data year over year, tie it to the general ledger, and identify areas where gaps might exist.

Seek help to get started

Taking a more global approach to uncompensated care efforts can help organizations streamline their processes, which can lead to increased reimbursement and reduced risks. Uncompensated care reporting is an evolving issue, with frequently changing regulations. Organizations should consider seeking assistance from qualified uncompensated care specialists to help with their efforts in taking a more holistic approach.

1 “Fact Sheet: Uncompensated Hospital Care Cost,” American Hospital Association, January 2021, https://www.aha.org/fact-sheets/2020-01-06-fact-sheet-uncompensated-hospital-care-cost
2 “FFY 2021 Inpatient PPS Final Rule Released by CMS,” Hall Render, Sept. 4, 2020, https://www.hallrender.com/2020/09/04/ffy-2021-inpatient-pps-final-rule-released-by-cms/
3 Chad M. Krcil, Jay Sutton, and Ronald K. Wolf, “Connecting the Dots on Uncompensated Care Reporting: IPPS Updates,” Crowe Healthcare Connection, Jan. 22, 2019, https://www.crowe.com/insights/healthcare-connection/connecting-the-dots-on-uncompensated-care-reporting-ipps-updates

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