Southwest Consulting Associates Blog

Worksheet S-10 2017 Audit Letter

Posted by Jamie Pennington on Aug 1, 2019 10:48:20 AM

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audit-3929140_1920_Image by mohamed Hassan from Pixabay We began hearing from our client hospitals a few weeks ago that the MAC audits of Worksheet S-10 were starting for FFY 2017. Yes, that’s right, reviews of FFY 2015 data are over and we are onto round 2. We've heard that roughly 600 hospitals will be audited this time around, although we suspect that number is higher based on the audit count we've seen on behalf of our clients and other providers that have contacted SCA. Several hospitals that were selected for FFY 2015 S-10 audits were also selected for FFY 2017 but there have also been a good amount of first-timers in the 2017 S-10 audit pool. So far, the 32 S-10 MAC audit letter requests we’ve seen (5 different MACs) essentially mirror the initial requests for data for FFY 2015, with a few exceptions. This post will review the elements of the S-10 2017 audit letter but to get everyone up to speed on how we got here, we will start with a brief review.


Quick Refresh

In its 2019 final IPPS rule, CMS stated that, due to the overwhelming feedback from commenters emphasizing the importance of audits, they would begin the inaugural audits in fall 2018. And as many of you can attest, CMS stayed true to that promise. Hospital providers across the country received Worksheet S-10 audit letters from their MACs to review FFY 2015 S-10 data. The inaugural round of FY 2015 S-10 audits concluded at the beginning of this year and CMS wasted no time moving on to FFY 2017 data. Less than a month before CMS posted the FY 2020 IPPS proposed rule, they instructed MACs to reach out to certain providers where their 2017 S-10 data appeared potentially aberrant (much like they did for 2015) and asked those hospitals to justify its reporting fluctuations to the MAC and if necessary, amend their 2017 report. Not only did MACs review 2017 potentially aberrant S-10 data, they followed that up with a full roll out 2017 S-10 audits that began earlier this month. 


2017 S-10 Data Audit Letter Details

As stated in the opening of this post, we’ve seen 32 S-10 audit letters and much like the 2015 audits, providers were not given much time to turn the requests around - two weeks. There were generally 9 items (versus the list of 16-18 for 2015) requested up front in the 2017 letters. While the list may be shorter in this second iteration, the data required is very similar. The reduction in items can mainly be attributed to the removal of requested explanations, reconciliations and data reminders. The 2017 S-10 audit letter generally requests:

  1. A copy of the hospital’s charity care policy and financial assistance policy (FAP) that was in effect during the cost report period under review.

  2. A copy of the hospitals audited financial statements and/or working trial balance for the cost report period under review. 

  3. A reconciliation of the bad debts claimed on Worksheet S-10, Line 26 to the audited financial statements and/or working trial balance. 

  4. A detailed listing of the hospital’s transaction codes and their descriptions/explanations (e.g. write-off codes, discount codes, contractual adjustment codes). 

  5. Detailed query logic that describes how the hospital identified patient charges included in the patient listing used to support charges on Worksheet S-10, Line 20. 

  6. Detailed query logic that describes how the hospital identified patient payments included in the patient listing used to support payments on Worksheet S-10, Line 22. 

  7. Detailed query logic that describes how the hospital identified bad debts included in the patient listing used to support bad debts on Worksheet S-10, Line 26. ***New for 2017 audits***

  8. Detail patient listing (see attached Excel template for required detail fields) of charges claimed on Worksheet S-10, Line 20, Columns 1 and 2. 

  9. Detail patient listing (see attached Excel template for required detail fields) of bad debts claimed on Worksheet S-10, Line 26, Columns 1 and 2. 

It was noted that if a hospital tracks professional fees/physician charges in a separate system from the hospital charges, and therefore, professional fees and physician charges would have to be queried separately in order to be included in the patient detail listings, hospitals do NOT have to provide revenue code detail in the patient listings. Hospitals need to be sure to indicate that professional/physician charges are kept in a separate system in the cover letter when requested documentation is returned to the MAC. 


Unlike the 2015 letters, an Excel spreadsheet template was included along with the audit request letter. The template contained an updated version of Worksheet S-10 instructions that were last updated May 2nd, 2019, according to a note in the file. Please note that from our word-for-word review, there was only one change and that was to correct a typo to remove an extra word. Also included in the Excel file were general instructions for submitting patient detail supporting Worksheet S-10 data, the required data elements, and individual tabs to append charity care, patient cash collections and bad debt data. 


There was no mention of sampling and further patient documentation requests but we assume the MACs will complete some level of patient-detail review. The letter concluded with a warning if hospitals did not respond timely, their future Medicare uncompensated care payments could be significantly decreased or eliminated. 


As you know, the FY 2020 IPPS Final Rule is right around the corner and it will be interesting to see if CMS provides any commentary on the 2017 audits that are ongoing. Regardless, we are gearing up for our next webinar on the 2020 IPPS rule and Worksheet S-10, where we will be providing details on our experience with this latest round of audits.  If you have not already, save your seat by clicking the link below.


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Topics: worksheet s-10, S-10 audit

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