Alert

2022 Proposed Changes to the Medicare Cost Report and Instructions

On June 22, 2022, The Centers for Medicare & Medicaid Services (CMS) issued a Federal Register notice pertaining to the CMS-2552-10 Hospital and Health Care Complex Cost Report, and included proposed changes to Medicare Cost Reporting instructions.

This new notice contains many of the same proposals from 2020 plus revisions to the Exhibit templates and, in some cases, instructions revised from the previous proposal.

Background

CMS previously issued a Federal Register notice on November 10, 2020, related to form CMS-2552-10 with a 60-day public comment period. In a supporting statement to the June 22, 2022, notice CMS said that due to the number of public comments plus some administrative issues, it was unable to process responses, and the form expired. The notice invited comments through July 22, 2022, on CMS’s intention to collect information from the public.

Supporting Documents

A downloadable zip file containing the full set of documents associated with the most recent federal register notice is available on the CMS website under the PRA Listing Section.

The files include:

  • CMS-2552-10. Instructions from Chapter 40 Hospital and Hospital Health Care Complex Cost Report Form CMS-2552-10 in the Medicare Provider Reimbursement Manual (PRM)
  • CMS-2552-10.___Crosswalk summarizing the changes and information to be collected
  • CMS-2552-10.Cost Report Form_(P240f) containing a draft of CMS Form 2552-10 which reflects the proposed changes
  • CMS-2552-10.Supporting_Statement_A_(30-day) detailing CMS reasoning and justification for new information collection

There are also select sections of Electronic Code of Federal Regulations (eCFR):

  • eCFR_413.17
  • eCFR_413.20
  • eCFR_413.24

Proposed Medicare Cost Report Changes

The Federal Register notice highlights changes to the PRM cost reporting instructions and changes to the cost reporting form. These changes include updates to current worksheets instructions and new worksheets.

The affected sections of the cost reporting form are summarized below:

  • Worksheet S-2, Part I
  • Worksheet S-2, Part II
  • Worksheet S-3, Part I
  • Worksheet S-10
  • Worksheets A, B, C, and D
  • Worksheet D-1
  • Worksheet D-4
  • Worksheet D-6
  • Worksheet E-3, Part V
  • Worksheet E-5
  • Worksheet L-1, Part I

Worksheet S-2, Part I

This worksheet features a new Exhibit 3A with a listing of Medicaid eligible days for Medicare Disproportionate Share Hospital (DSH) eligible hospitals.

Effective with cost reporting periods beginning on or after October 1, 2018, hospitals were required to submit a listing supporting Medicare DSH eligible days claimed in the cost report at the time of submission. Failure to do so would result in the rejection of the cost report. However, CMS offered no standardized format for submitting the required data. That will change.

In addition to revisions in reporting Medicare DSH eligible days’ data on Worksheet S-2, Part I lines 24 and 25, columns 1-6, CMS now presents a standardized format to submit the patient-level detailed information. This can be found in the new Exhibit 3A and is required for cost reporting periods beginning on or after October 1, 2022.

Patient-level detail is required for each category of days reported on lines 24 and 25, columns 1 through 6.

The new exhibit, which is found on page 56 of the CMS PRM Chapter 40, has 18 columns and includes the following data points:

  • Patient Last Name
  • Patient First Name
  • Date of Service From
  • Date of Service To
  • Patient Account Number
  • Medical Record Number
  • Medicaid Number
  • State Eligibility Code
  • Worksheet S-2 Part I Column
  • Medicaid Eligible Days
  • Medicaid Eligible Labor and Delivery room days
  • Medicaid Eligible Newborn Days
  • Primary Insurance/Payer
  • Secondary Insurance/Payer
  • Medicare A/B Indicator
  • Medicare Start Date
  • Medicare End Date
  • Comments

Worksheet S-2, Part II

For cost reporting periods beginning on or after October 1, 2022, hospitals are now expected to submit Exhibit 2A, a listing of Medicare bad debts. If applicable, a separate Exhibit 2A should be submitted for each provider number in the health care complex and separated by inpatient and outpatient as well. Also, the exhibits should distinguish between dually eligible crossover accounts and non-dually eligible accounts.

The previous requirement was that providers supply a listing (Exhibit 2) of Medicare bad debts for cost reporting periods beginning on or after October 1, 2018. Failure to do so would result in the rejection of the cost report.

The new exhibit, which is found on page 70 of the CMS PRM Chapter 40, has 25 columns and includes the following data points:

  • Patient Last Name
  • Patient First Name
  • Date of Service From
  • Date of Service To
  • Patient Account Number
  • Medicare Beneficiary ID
  • Medicaid Number
  • Deemed Indigent
  • Medicare Remittance Advice Date
  • Medicaid Remittance Advice Date
  • Secondary Payer Received Date
  • Beneficiary Responsibility Amount
  • Date First Bill Sent to Beneficiary
  • A/R Write-Off Date
  • Sent to Collection Agency Y/N
  • Return From Collection Agency Date
  • Collection Effort Ceased Date
  • Medicare Write-Off Date
  • Recoveries Only Amount Received
  • Recoveries Only Medicare FYE Date
  • Medicare Deductible Amount
  • Medicare Co-Insurance Amount
  • Current Year Payments Received Amount
  • Current Year Payment Received Source
  • Allowable Bad Debt Amounts
  • Comments

Worksheet S-3 Part I

An update adds Line 34 to report temporary expansion COVID-19 Public Health Emergency (PHE) acute care information.

Worksheet S-10: Proposed Instructions

CMS has revised the Worksheet S-10 instructions. The S-10 worksheet will have a Part I and Part II.

Part I will follow the current reporting instructions where the information reported for uncompensated and indigent care pertain to the entire hospital complex.

New Part II

This will report a subset of that information for only inpatient and outpatient services billed under the hospital CCN. This part focuses on data collection for uncompensated care; the instructions direct lines 2–19 shouldn’t be completed for the new worksheet.

These revised instructions would go into effect with cost reporting periods beginning on or after October 1, 2022.

Courtesy Discounts

CMS is clarifying the definition of courtesy discounts and what should be excluded from Worksheet S-10. It’s also recognizing an inferred contractual relationship between an insurer and a provider when a provider accepts an amount from an insurer as payment or partial payment, on behalf of an insured patient.

This may impact where charity dollars are reported on Worksheet S-10 as uninsured or insured.

Uninsured Provider Relief Fund (PRF) payments

As seen in current S-10 audits, CMS has updated the instructions to state that hospitals that receive HRSA-administered PRF payments for services provided to uninsured COVID-19 patients must not include the patient charges for those services on Worksheet S-10.

Worksheet S-10: Exhibit 3B

This worksheet has a new Exhibit 3B listing for charity care.

For cost reporting periods beginning on or after October 1, 2018, hospitals were required to submit a listing supporting charity care claimed in the cost report. Failure to do so would result in the rejection of the cost report. However, CMS offered no standardized format for submitting the required data.

For cost reporting periods beginning on or after October 1, 2022, Exhibit 3B represents the new standard format for reporting charity care amounts claimed in the cost report. The new exhibit, which is found on page 131 of the CMS PRM Chapter 40, has 21 columns and includes the following data points with revised definitions included in the proposed PRM:

  • Patient Last Name
  • Patient First Name
  • Date of Service From
  • Date of Service To
  • Patient Account Number
  • Insurance Status
  • Primary Payor
  • Secondary Payor
  • Total Charges for Claim
  • Physician Professional Charges
  • Deductible/Co-Insurance/Copayment
  • Total Third-Party Payments
  • Insured Contractual Allowance Amount
  • Non-Covered Charges
  • Total Patient Payments
  • Amounts Written Off as Bad Debt
  • Uninsured Discount Amounts
  • Charity Care Non-Covered Charges
  • Other Charity Care Charges
  • Amounts Written off to Charity Care and Uninsured Discounts
  • Write-Off Date

Worksheet S-10: Exhibit 3C

A total bad debt detail listing will now be required. This new form, Exhibit 3C, will be required for cost reporting periods beginning on or after October 1, 2022.

The new exhibit, which is found on page 135 of the CMS PRM Chapter 40, has 17 columns and include the following data points with definitions included in the proposed PRM:

  • Patient Last Name
  • Patient First Name
  • Date of Service From
  • Date of Service To
  • Patient Account Number
  • Insurance Status
  • Primary Payor
  • Secondary Payor
  • Service Indicator
  • Total Charges for Claim
  • Physician Professional Charges
  • Total Patient Payments
  • Total Third-Party Payments
  • Patient Charity Care Amount
  • Insured Contractual Allowance Amount
  • Write-Off Date
  • Amounts Written Off as Bad Debt

Worksheets A, B, C, and D

In Worksheet A; Parts I, II, and B-1 of Worksheet B; Parts I and II of Worksheet C; and Parts II, IV and V, D-3, D-5 Part IV of Worksheet D, instructions were updated to clarify reporting for:

  • Allogeneic hematopoietic stem cell
  • Chimeric antigen receptor T-cell therapy
  • Opioid Treatment Program acquisition costs

Worksheet D-1

Changes to the computation of inpatient operating costs include the addition of new lines to reflect temporary and permanent adjustments to TEFRA rates to properly calculate the TEFRA limit for inpatient costs.

Worksheet D-4

Instructions for computation of organ acquisition costs have been revised regarding the counting of organs including total usable organs, Medicare usable organs, organs for Medicare Advantage patients, and organs that have a primary and secondary payer.

Worksheet D-6

Worksheet D-6, Computation of Acquisition Costs, and instructions, was added to calculate the inpatient routine, ancillary, and other costs associated with the acquisition of allogeneic HSCT as required under Section 108 of the Further Consolidated Appropriations Act, 2020 (Pub. L. 116-94).

Worksheet E-3, Part V

Line 3.01 and instructions for cellular therapy acquisition cost were added.

Worksheet E-5

This worksheet, Outlier Reconciliation at Tentative Settlement, was added, with instructions, for contractor use, to report the outlier reconciliation amount during cost report tentative settlement.

Worksheet L-1, Part I

This worksheet was revised to add line 78 for CAR T-cell immunotherapy costs and to add line 102 for Opioid Treatment Program.

Potential Challenges and Considerations

It’s anticipated that CMS will likely release a final notice. Additional reporting requirements could bring up challenges for providers depending on their current cost reporting practices.

Providers that rely on Medicaid payment as documentation for inclusion in the Medicare DSH calculation now face the issue of having to report detailed Medicaid eligibility information on worksheet S-2—including state eligibility codes—in the new exhibit 3A for all patients.

The addition of the required templates for charity and bad debt creates several new challenges and increased effort for the provider on worksheet S-10. Each account on both listings will need to be reconciled to ensure that all the activity from each patient account is recorded in the correct columns.

We’re Here to Help

Please reach out to your Moss Adams professional to discuss how these proposed changes will affect your organization and Medicare cost reporting efforts.

You can also visit our Provider Reimbursement page for more insights.

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