May 1, 2018

Understanding Proposed Changes in Hospital Uncompensated Care Payments

The Centers for Medicare & Medicaid Services (CMS) published the 2019 Inpatient Prospective Payment System (IPPS) Proposed Rule April 24, 2018.  If finalized, many hospitals are likely to experience significant changes to their Medicare reimbursement, specifically their uncompensated care payment.

First, CMS proposes to increase the size of the uncompensated care pool— from $6.77B to $8.25B— to be distributed among qualifying hospitals.  This $1.5 billion increase is based on the expected uptick in the uninsured rate in the coming year.

Second, the proposed rule updates the formula for determining what percentage of the uncompensated care pool each qualifying hospital will receive.  CMS proposes to continue making the uncompensated care cost (UCC) calculation using the unaudited Worksheet S-10 data from each hospital’s Medicare cost report as a portion of the disproportionate share UCC payment mechanism.

Specifically, the proposed methodology to disperse available UCC funds for FY 2019 uses 2013 Medicaid days, 2014 and 2015 Worksheet S-10 data from Medicare cost reports, and 2016 Supplemental Security Income (SSI) ratios.  This change in reimbursement methodology may significantly impact providers dependent upon state Medicaid expansion and other requirements.

The 2019 proposed rule also addresses supporting documentation for the charity care amounts reported on Worksheet S-10 for audit purposes.  CMS proposes that Medicare cost reporting periods beginning on or after October 1, 2018, be rejected if a detailed charity care and/or uninsured discounts listing that supports the amount claimed on Worksheet S-10 is not provided at the time of filing.

To discuss  your hospital’s estimated Medicare reimbursement per discharge using the newly released FFY 2019 IPPS Proposed Rule rates, contact a leader of PYA’s Reimbursement team (Butch Bullock, Jonathan Skaggs, or Lori Foley) at (800) 270-9629.

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