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CMS Issues Transmittal 1863 - FY2015 Worksheet S-10

Posted by Kyle Pennington on Jul 6, 2017 3:58:23 PM

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On Friday, June 30, 2017, CMS released Transmittal 1863 (beginning on page 2), which included, among other items, guidance for MACs to follow for accepting cost reports containing revised Worksheet S-10 information. Similar to last year's Transmittal 1681in order for MACs to accept amended cost reports due to revisions to Worksheet S-10 for FY 2015, CMS has put providers on notice by stating that “hospitals must submit their amended cost report containing the revised Worksheet S-10…no later than September 30, 2017.” CMS added, “Submissions received on or after October 1, 2017 will not be accepted.”


One of the key proposals detailed by CMS in the FFY 2018 IPPS Proposed Rule was their plan to adjust the DSH/UC distribution model to include data from Line 30 of Worksheet S-10 in addition to the Medicaid and SSI low-income days. For FFY 2018, CMS proposes to use three data sets to calculate a provider’s uncompensated care Factor 3 as follows:

2018 proposed rule Factor 3 chart.png1. FY 2012 Medicaid days plus FY 2014 SSI days

2. FY 2013 Medicaid days plus FY 2015 SSI days

3. FY 2014 S-10, line 30

Under this proposal, CMS will calculate a Factor 3 percentage based on each of the three data sets above. CMS will then average these three numbers to determine each provider’s Factor 3Therefore, one-third of the UC pool for FFY 2018 will be distributed based on FFY 2014 S-10 data.


Transmittal 1863, Change Request 10026, mentions that “in light of the possibility that CMS may finalize this proposal, we expect IPPS hospitals will express interest in revising the Worksheet S-10 submitted with their FY 2015 cost reports.”  CMS also indicates in the transmittal that FY 2015 Worksheet S-10 data will likely be used in the FFY 2019 rulemaking and this data will be needed at the time of rulemaking.


This is the second year in a row that CMS has issued a transmittal for MAC's to accept an amended cost report Worksheet S-10 by a given date.  This, coupled with the language in the FY 2018 proposed rule, could indicate that CMS will in fact finalize the proposed rule to incorporate Worksheet S-10 in Factor 3 calculations for fiscal year 2018.  You can read more about our prediction HERE.


The reaction to this transmittal notification should include an examination of how providers plan to revise and amend their FY 2015 Worksheet S-10 (cost reports starting on or after 10/1/14 and prior to 10/1/15), which would affect their federal fiscal year 2019 Factor 3. This latest transmittal makes clear that the opportunity to make changes is quickly closing for providers to ensure that the most complete and accurate data is being used for their hospitals. According to CMS, all of this MUST take place, at the latest, by or before September 30, 2017, in order to be incorporated into the Health Care Provider Cost Report Information System (HCRIS) timely, which will be used by CMS for its FFY 2019 Factor 3 calculation. This leaves very little time for providers to revise and amend the applicable Worksheet S-10 data for FY 2015.


Just as important, if a hospital believes its previously reported S-10 data is incomplete, incorrect, or not otherwise adequately supported (i.e. patient level detail) then a hospital should submit revised data to its MAC.  Although Transmittal 1863 mentions that submissions received on or after October 1st will not be accepted, we want to point-out that the same Transmittal also states “For requests to amend or submit FY 2015 worksheet S-10 received after September 30, 2017….MACs shall follow normal timelines and procedures.”  Consequently, even if unable to complete or amend in-time for the 09/30 deadline, hospitals should still work to submit to the MACs as soon as possible, as the MACs may be willing and able to accept and upload into HCRIS timely for future Factor 3 determinations.


We continue to stress that hospitals should ensure they have auditable documentation (i.e. patient detail) to support the charity care and non-Medicare bad debt costs filed on Worksheet S-10. Because Worksheet S-10 will now drive payment, it is a reasonable assumption that CMS would perform audit work prior to settlement. In fact, in the FY 2018 proposed rule, CMS states they are working on the development of an audit process to submit to the MACs.  We believe a Worksheet S-10 audit will include patient level detail testing and require providers to submit patient level detail reconciling to the data reported on Worksheet S-10. Failing to provide such patient detail could lead to an adjustment to S-10 data and depending on the timing, the hospital risks a reduction in their Factor 3, foregoing any UC reimbursement associated with that adjustment. AND, with the preclusion of review clause, any of that associated reimbursement likely becomes unrecoverable.


SCA’s Uncompensated Care Compliance Program can assist you in compiling the auditable documentation and revising the applicable Worksheet S-10 data for amending the cost report and submitting timely to the MAC. If you need assistance with your FY 2015 or prior/subsequent S-10 data, please reach out to Kyle Pennington at and we will be happy to discuss our S-10 service and how we can assist your organization.


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Topics: DSH Reimbursement, Medicare DSH Reimbursement, Industry Updates, S-10, worksheet s-10, factor 3, CMS transmittal

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