New Supporting Documentation Requirements for Medicare Cost Reports

The Centers for Medicare & Medicaid Services (CMS) previously issued new requirements for supporting documentation to be submitted with Medicare cost reports as part of the fiscal year (FY) 2019 inpatient prospective payment system (IPPS) final rule-making cycle. 

The final rule was posted in 2018, but will soon go into effect for the first time for some hospitals, contingent upon when their cost report is due.

Below, we explore details of these changes and considerations for your organization when submitting cost reports.

Key Information

The FY 2019 IPPS final rule is applicable to cost reporting periods beginning on or after October 1, 2018.

Cost report types and items affected by these new requirements include:

  • Disproportionate share hospitals (DSH)
  • Charity care and uninsured discounts
  • Bad debt

Medicare DSH Data

Each DSH-qualifying hospital must include a detailed listing of its Medicaid eligible days that correspond to the Medicaid eligible days claimed in the cost report as supporting documentation.

Failure to provide the required support will result in cost reports being rejected for lack of supporting documentation. 

Going forward, if a hospital submits an amended cost report, whether that be the 12-month cost report or another amended cost report, supporting documentation must include either:

  • An amended listing
  • An addendum to the original listing

Worksheet S-10 Data

Additionally, for charity care detail, CMS provided examples of the information needed to support Worksheet S-10 data that corresponds to the amount claimed in the hospital’s cost report such as:

  • Patient name
  • Dates of service
  • Insurer
  • Amount of charity care or uninsured discounts provided

Summary Reports

Summary reports historically used to report S-10 values no longer suffice under this new requirement. 

Summary reports won’t meet Medicare Administrative Contractor (MAC) S-10 audit requirements because they can vary greatly from the actual detail of charity and bad debt write-offs that occurred during the fiscal year. 

When filing support for Worksheet S-10, it’s important to submit your uncompensated care data in an audit-ready format that contains all data specifications required by the MACs.

Medicare Bad Debt

CMS will also require the supporting detail for providers claiming Medicare bad debt.

Data Submission

There isn’t a current standard format for submitting this data, other than for bad debt. CMS, however, plans to include a template in the Paperwork Reduction Act notice. 

In the FY 2020 IPPS final rule, CMS also noted that the Paperwork Reduction Act would include proposed changes to the Worksheet S-10 instructions.

A public comment period will be provided for questions about and suggestions for modifications to Worksheet S-10.

We’re Here to Help

Moss Adams prepares over 550 Medicare DSH reports for hospital clients annually and prepares over 200 Uncompensated Care S-10 reports annually.

For more information on these new requirements, compiling the required data, or for help with your organization’s compliance needs, contact your Moss Adams professional.