CMS issued Transmittal 18 affecting the CMS-2552-10 Hospital and Health Care Complex Cost Report. The transmittal includes several critical revisions and new requirements. Transmittal 18 was issued December 29, 2022, is effective now, requires considerable documentation, and will be a heavy burden on hospitals.
Hospitals that haven’t reviewed the transmittal details and prepared for the changes will see reimbursement impacted considerably. The following are questions that surfaced during the What Hospitals Need to Know About CMS Transmittal 18 webcast.
- General questions on Transmittal 18
- Medicare disproportionate share hospital (DSH) reporting
- Worksheet S-10 uncompensated care cost (UCC) Reporting
- Medicare bad debt reporting
- Direct graduate medical education (DGME)
Questions on Transmittal 18
What’s included in Transmittal 18?
Transmittal 18 introduces new and revised cost reporting instructions, required templates, and worksheets.
What areas of the cost report are most affected by Transmittal 18?
Transmittal 18 affects multiple cost reporting topics. Most notably, it increased complex data requirements for:
- Medicare DSH reporting
- Worksheet S-10 UCC reporting
- Medicare bad debt reporting
What cost reporting years does the transmittal affect?
These changes are effective for Medicare cost reporting periods beginning on or after October 1, 2022. The first full 12-month cost report that would be subject to the new templates are the September 30, 2023, cost reports.
Where can you find CMS Transmittal 18 including the new templates?
How do you foresee Transmittal 18 affecting hospital reimbursement teams?
Transmittal 18 will likely mean additional work for hospitals, adjustments to reporting processes for providers unprepared for these changes, and increased compliance and audit risks that could lead to potential redistribution of pool payments.
Do Medicare-dependent hospitals (MDH) have to submit the templates even if they don’t qualify for DSH?
The charity care and total bad debt templates are only required for inpatient prospective payment system (IPPS) hospitals eligible for Medicare DSH and UCC. The instructions regarding Medicare DSH don’t speak to who’s exempt, however, it does mention that this template should be filled out for DSH eligible hospitals.
Will sole community hospitals with line 48 greater than 47 still need to use the old template to report DSH and S-10 charity and bad debt?
It doesn’t seem likely, per the instructions or any supplemental guidance, that hospitals will need to use the old template in this scenario.
Many hospitals may not be able to complete the extra template columns without manually reviewing patient accounts. With these new requirements, will there be a need for additional staff or can most of this be performed electronically?
While it’s difficult to answer this question globally as it’s really a hospital-specific item, it’s likely that this new reporting could require enhanced IT support as well as additional staff time.
For example, data needed to complete the account reconciliation fields can be obtained electronically from your systems. However, where individual account reconciliations don’t reflect the appropriate answer, staff intervention will be required.
Does Moss Adams have IT expertise for a majority of patient accounting systems hospitals may use in order to provide directions to provider IT teams on how to write the necessary specs easily?
Moss Adams has experience in virtually all patient account systems and has developed queries or scripts in many of these systems to extract the necessary data. Moss Adams also works directly with the hospital IT departments to streamline this process to accurately capture the data needed to compile all reports.
Medicare DSH Reporting Questions
Is Medicaid eligibility information required?
Yes. Providers will need Medicaid eligibility support for every patient included in the Medicare DSH calculation and to identify the differences between restricted and unrestricted Medicaid state codes for every claimed day. If patients are eligible for more than one code, this information needs to be reported in additional columns at the end of the exhibit.
Is Medicare eligibility information required?
Yes. Medicare eligibility information must be included on the Exhibit 3A template for all applicable records.
Does Transmittal 18 include changes to reporting newborn and mother eligibility?
The Exhibit 3A template includes extremely detailed instructions on reporting newborn baby days and the separation of days after the mother’s discharge. Instructions also include reporting the mother’s eligibility information on the baby’s record in cases of presumptive eligibility. This information has never been requested in the past and will likely be a change in process for the hospital and difficult to compile.
What are the anticipated audit repercussions of having inaccurate info in the DSH template state code columns and the Care A/B column?
Previously, auditors would only have a generic listing of patients that they would sample and then request the additional detailed information now being required of every patient up front.
With the new template, auditors can quickly review the patient information that was previously only supplied after a sample was pulled. This allows the auditor to target any perceived weak spots and sample more effectively.
Is the treatment of newborn days, reported in column 12 of the new Exhibit 3A and excluded from the days on S-2, a change from the current DSH policy?
The Transmittal 18 instructions appear to have inadvertently excluded column 12 newborn days in the Medicaid days totals reported on S-2. It’s expected for this to be addressed or clarified, as there’s no indication that CMS meant to exclude these days from the DSH calculation.
What’s an example of a user-defined restricted Medicaid eligibility program code?
There are a number of restricted Medicaid eligibility program codes. However, most of those examples like family planning, dental only, and other non-inpatient benefit codes wouldn’t be included in the DSH calculation. The two CMS examples of emergency services and pregnancy related services are the two most prevalent restricted codes that could be allowable in the Medicare DSH calculation.
Worksheet S-10 UCC Reporting Questions
Can you provide additional explanation for what’s meant by an inferred contractual relationship and how this affects reporting charity related to patients who are covered by an insurance that doesn’t have a contractual relationship with the hospital?
When a provider accepts an amount from an insurer as payment, or partial payment, on behalf of an insured patient this will constitute an inferred contractual relationship. Write-offs for these patients will now be claimed in Line 20, Column 2.
If the write-off is associated with coinsurance, deductible, or copay those won’t be subject to the CCR. If the write-off is associated with non-covered amounts, those will be recorded also in Line 25.01 and subject to the CCR.
What are some example amounts that would be reported on Worksheet S-10, line 25.01 since non-covered charges for Medicaid or indigent care programs and also patients with a non-contracted payer are reported on Worksheet S-10, line 20, column one? Is this the place to report charity related to non-covered charges for commercial insurance, as opposed to Medicaid or indigent care programs, assuming that the financial assistance policy (FAP) allows for charity in this circumstance?
With the new instructions, there will be no more non-contracted payers. If there’s a payment, it will constitute an inferred contractual relationship. Yes, 25.01 will be for non-covered non-Medicaid charity write-offs. Medicaid non-covered will still be reported in line 20, column 1. Medicaid exhausted limit or length of stay (LOS) limit will still be reported on Line 25.
Does the charity have to be written off to a charity general ledger (GL) account?
There’s no requirement that the charity recorded on Worksheet S-10 has to be written off to a charity GL account. The requirement is that the charity amounts recorded on S-10, line 20 are written off in accordance with the hospital’s written financial assistance policy or uninsured discount policy.
During the audit, providers will be asked to reconcile the charity GL to the amounts recorded on Worksheet S-10 so in instances where there is charity recorded on S-10 not written off to the charity GL, that information needs to be well documented so that you can support those categories of charity at audit.
What type of charity discounts can be claimed on S-10?
Transmittal 18 includes language requiring charity discounts claimed on S-10 be for medically necessary health care services. This will require identifying any discounts that aren’t eligible when compiling charity logs.
Is revenue code detail no longer required for each account?
These templates don’t require revenue code detail, but depending on the hospital’s patient financial system, revenue code detail may be necessary to identify and exclude the professional charges from the charity and bad debt reported on Worksheet S-10. Past audit requests have required revenue code details if the hospital charges and professional charges are commingled on the same system. If those charges are in two different systems, than revenue code detail hasn’t been required.
It’s also important to point out that revenue code detail may also need to be used to complete the new Part II section of Worksheet S-10 as again, depending on your system and how accounts transfer between units, this revenue code detail may be necessary to separate hospital versus sub-acute charges versus professional fee charges. All this adds another layer of complexity to these new templates.
Exhibit 3B includes a write-off date field. Is it a correct assumption that multiple adjustments to a single account will require reporting on separate lines? For example, initial qualification for 50% charity is updated to 90% when more data is received from the patient, which results in two charity postings to one account.
This is an issue with the current template and an item discussed in our webcast, What Hospitals Need to Know About CMS Transmittal 18. Every Medicare Administrative Contractor (MAC) for audit purposes requires only one account or row for each charity or bad debt write-off. However, as noted in this question, there’s only one write-off date field in the template.
For audits, it’s recommended to provide a supplemental listing that includes all write-offs for that year so the MAC can see if there are multiple write-offs for one account, and we consider this the best approach rather than separating the patient into two rows. If further clarification from CMS or the MACs is provided, we will update this answer accordingly.
Exhibit 3B doesn’t appear to account for open accounts receivable (AR) balances or any credit balance not yet resolved. Is that correct?
Correct, this is where additional information or fields may be helpful to understand each account. It will be interesting to see if MACs at the end of the day take these reports and use them in their S-10 audits or if they’ll request their own auditor’s template that in some cases requires more fields or for the fields to be shown a different way.
Exhibits for charity and bad debt include a lot of patient health information (PHI). Will CMS exclude these exhibits from the electronic cost report (ECR)? Seems like these should be submitted securely via their portal instead.
How the supplemental exhibits are submitted right now in cost reports seems unclear and neither CMS nor MACs have provided clarification. Several providers have addressed the massive amounts of data these exhibits require and if there’s been any thought on different submission alternatives for these templates.
Exhibits 3B and 3C show component CMS certification number (CCN) lines. Do you need a separate exhibit or listing for each sub-provider?
Per the instructions, the answer is yes. Each separate CCN would require its own exhibit. In the charity template instructions, the need for separate exhibits is implied as you’re expected to enter the component CCN value in the header of the exhibit if you have charity for that component so this would require you to separate the hospital CCN accounts from the other CCN accounts.
The bad debt instructions are clearer in that they state, “Complete a separate exhibit for the hospital and each component of the hospital complex (each CCN) and, on each listing, report only the data related to inpatient and outpatient services billed under that CCN.”
Does the new template for total bad debt require or permit consistency with the timing of Medicare bad debt when an outside collection agency is used (when returned instead of when sent)?
The answer depends on when accounts are written off the active AR and placed in bad debt. As seen through the S-10 audits and their bad debt reconciliation templates, MACs are expecting the hospitals to claim total bad debt based on when the account was written off active AR and transferred to bad debt.
This may not necessarily be the same timeline of when a bad debt is returned from the collection agency so you may have different timing with respect to write-off date from a Medicare bad debt versus a non-Medicare bad debt. This inconsistency in timing of claiming the write-off between non-Medicare and Medicare is the product of the S-10 instructions and we don’t expect this to change with the new template.
Does the change in the total bad debt template (Exhibit 3C) affect critical access hospitals, or just DSH?
Critical access hospitals aren’t required to complete the template. The template is only required for IPPS hospitals eligible for DSH and UCC.
Can you report an account on Bad Debt (Exhibit 3C) and Charity Care log (Exhibit 3B)?
A provider can report the same account in bad debt and the charity care log as long as they aren’t for the same charges. For example, an account may receive an uninsured discount for a portion of their charges and the remaining amount may be written off to bad debt at a later date. These accounts would then both be included in their respective template.
Medicare Bad Debt Reporting
Do all providers have to fill out Exhibit 2A for Medicare bad debts? Are there any exceptions?
If the provider is seeking reimbursement for Medicare bad debt claims, then yes, the new Exhibit 2A is required beginning with cost reports starting on or after October 1, 2022.
Direct Graduate Medical Education (DGME)
What were the Direct graduate medical education (DGME) changes contained in Transmittal 18?
Transmittal 18 implements FY 2023 IPPS final rule changes including DGME changes in regard to the Hershey litigation.
The Hershey litigation addressed the formula error that applied a penalty to providers that reported weighted and unweighted full-time employees (FTEs) above the Intern & Resident cap. In most cases, the calculation would set allowable FTE counts below the cap. The revision, will now default to the cap.
Can you elaborate on the DGME topic, stated as beginning October 1, 2022. Are they applying this retroactively or for the Medicare cost reports beginning on October 1, 2022?
Based on a recent court ruling, the DGME calculation has been revised for all eligible cost reports beginning with periods following October 1, 2001. All open cost reports impacted by the revised calculation should receive the revision and updated reimbursement. In addition, cost reports can also be reopened for the corrected reimbursement.
In regard to the S-2 part I, line 68 change, are you required to get MAC approval before using the new calculation?
There doesn’t seem to be guidance from CMS or the MAC requiring this approval. All providers impacted by the updated calculation are eligible for the correction and additional reimbursement.
We’re Here to Help
With the issuance of Transmittal 18, hospitals mustn’t wait until it’s time to file a cost report to account for the new templates and required data.
If you have further questions that weren’t included above, contact your Moss Adams professional or send us your question using the “ask a question” button below. You can find additional resources on the Provider Reimbursement service page including a deeper dive article and a webcast detailing Transmittal 18.