Uncompensated Care Reporting

Uncompensated care continues to be a growing risk for hospitals. In addition to the fact that uncompensated care reimbursement is a growing financial strain on the healthcare industry, now it is an increasing focus for audits by the Centers for Medicare & Medicaid Services (CMS). In August 2018, CMS issued its Medicare Inpatient Prospective Payment System (IPPS) final rule for fiscal year (FY) 2019. As part of the final rule, CMS estimates that for FY19, total Medicare disproportionate share hospital payments will be $12.36 billion, with approximately $8.27 billion of those payments based on uncompensated care. Although CMS consistently has expressed through its rulemaking process a willingness to work with industry stakeholders to develop the appropriate clarifications and revisions to Medicare cost report instructions for purposes of reporting uncompensated care data on Worksheet S-10, such increases in payouts bring greater scrutiny.

With the final rule for FY19, CMS announced it intends to continue and further refine its efforts to review Medicare Cost Report Worksheet S-10 data submitted by hospitals, based on what has been learned both from the previous electronic health record (EHR) audits and as a result of additional reviews of data conducted for the FY19 rulemaking process. In previous IPPS final rules, CMS stated it intended to provide standardized instructions to Medicare administrative contractors (MACs) to guide them in determining when and how often a hospital’s Worksheet S-10 should be reviewed. The 2019 IPPS final rule states that CMS expects to begin conducting audits in fall of 2018.

While the rulemaking process does afford the opportunity to express views and opinions, the 2019 IPPS final rule has confirmed once again that this process alone is insufficient to answer all questions. With respect to the rules for reporting uncompensated care on Worksheet S-10, ambiguity and confusion remain. These new developments related to the S-10 audits should help limit the uncertainty:
  • The focus will be on the FY15 cost reports or those beginning on or after Oct. 1, 2014.
  • Each MAC has been tasked with 50 audits, which need to be completed or settled by Jan. 31, 2019. Presumably, this is so the corresponding Healthcare Cost Report Information System data can be incorporated into the FY20 IPPS rulemaking process.
  • Documentation request letters continue to be issued, with two to three weeks allowed for a response from providers.
Many hospital clients already have received the three- to four-page request letter, and it is onerous. Significant requirements include the following:
  • Copy of the hospital’s charity care policy and/or financial assistance policy (FAP) along with an explanation of how hospital personnel determine insurance status and charity care write-offs
  • Descriptions of the logic and process used when querying hospital records to obtain a detailed listing of accounts supporting charity care charges on S-10
  • Submission of a detailed listing of claimed charges and payments, including demographic and revenue code detail along with an explanation and reconciliation of any variance with reported amounts on S-101
  • Submission of a detailed listing of all bad debts for the hospital, including Medicare and non-Medicare and revenue code detail along with reconciliation from financial accounting records to reported amounts on S-10
The letter further indicates that the MAC will be selecting samples of charges/payments and bad debts from the aforementioned listings and will request patient documentation. As with EHR audits, the supporting documentation likely will include the following:
  • Charity care applications and supporting documentation such as pay stubs and bank statements that show that the patient qualifies for charity care2
  • Uniform billing and explanation of benefits materials
  • Medicaid remittance advice documentation, if applicable
Crowe RCA clients already have the information they need for meeting the reporting requirements for Worksheet S-10 of the Medicare cost report. The Crowe team reviews how transaction codes and insurance codes are mapped in RCA and provides an extract of uncompensated care data that is based on reporting requirements. The many advantages of using Crowe S-10 services include:
  • Accuracy
  • Consistency with other external financial reporting
  • Defensible, detailed, account-level listings (now required with cost report submission per 2019 IPPS final rule)
  • Time and cost savings (allowing users to focus on other strategic initiatives)
  • No additional data feeds to outside vendors

The Crowe team can augment these services with FAP reviews and mock audits of supporting documentation. Crowe provides peace of mind and the knowledge that the user’s share of uncompensated care reimbursement is protected.


The purpose of the revenue codes could be to allow the MAC to identify professional fees so that the fee information can be adjusted prior to the sampling process.
Be aware of potential adjustments of presumptive charity care accounts based on past EHR and Medicare bad debt audits related to lack of supporting documentation associated with predictive analytic tools.

The Crowe RCA Charge File is available for physician billing as of the RCA 2016 version and for hospital billing as of the RCA 2017 version. For more information on the Crowe RCA Charge File, please contact Andrew Holloway