Southwest Consulting Associates Blog

2018 IPPS Final Rule: "What To Do Now" Recommendations

Posted by Michael Newell on Aug 24, 2017 8:45:00 AM

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time for action.jpgNow that the FY 2018 IPPS final rule has been published, we think that you need to do some things that are both in the here and now AND in the future.  Here are some of the top priorities that we are managing for our clients:



You should look at the data that is in the CMS file and make sure that it is correct and accurately reflects the most recent information that you have submitted. If it is not, contact CMS and do so by August 31st.  All providers must do their due diligence to ensure their UC reimbursement is accurate per the 2018 final rule.

  • You will want to verify Factor 3 incorporates the appropriate data inputs.  As a reminder, federal fiscal year 2012 and 2013 Medicaid days, 2014 and 2015 SSI days and 2014 Uncompensated care costs from S-10, line 30 are used to calculate FY 2018 Factor 3.  

  • Also, verify the latest cost report version, from the 2017 Q1 HCRIS file is being used.  If amended cost reports do not appear in HCRIS, document when the cost report was submitted to and accepted by your MAC and follow up as appropriate.

  • Did your provider merge anytime between 2012 through current date?  If so, the surviving provider should be listed on the Factor 3 merger list and the acquired provider’s data should have been combined with the surviving provider’s data to calculate Factor 3.

  • If your data was trimmed by CMS due to the appearance of an outlier, determine if your filed cost report data was accurate.  A perceived outlier could in fact be accurate in a variety of circumstances.

If you identify any data variances, the most important step is to contact CMS and start a dialog.  Factor 3 is precluded from judicial review; so your options for challenging via appeal are limited.  This is your lone opportunity to resolve data variances with the agency.  Remember, August 31st is your deadline.


Review your fiscal years 2014 and 2015 S-10 data and submit changes via an amended cost report by the deadline of September 30. CMS issued Transmittal 1863 in June, putting providers on notice to amend FFY 2015 Worksheet S-10 data by September 30, 2017, in order for this data to be included in the December HCRIS data for use in the Factor 3 computations of the FY 2019 IPPS proposed rule.  CMS then posted a notice on their website regarding a second opportunity to revise FY 2014 S-10’s in July.  Specifically, CMS is allowing providers one more opportunity to update their FFY 2104 S-10 data stating, “amended FY 2014 cost reports due to revised or initial submissions of Worksheet S-10 received by Medicare Administrative Contractors on or before September 30, 2017, will be uploaded to the Healthcare Cost Report Information System by December 2017”.  If you are one of the 75% of hospitals that did not amend Worksheet S-10 data for FFY 2014, this may be an area of concern, as this data will be used in Factor 3 for FFY 2018, 2019 and 2020 if CMS continues forward with the methodology described in the final rule.  While the window to impact this calculation for FFY 2018 has closed, it appears that FFY 2014 revised S-10 data could be used in calculating Factor 3 for FFY 2019 and 2020. 


We would suggest that you pay particular attention to if you are audit ready? For the first time, CMS stated in the 2018 final rule, "WE EXPECT COST REPORTS BEGINNING IN FY 2014, FY 2015, AND FY 2016, TO BE SUBJECT TO FURTHER SCRUTINY AFTER SUBMISSION."  If you aren’t audit ready with the data you previously submitted, we definitely recommend that you update that information with audit ready support and submit amended cost reports by September 30th.



We’d then follow closely behind with your fiscal year 2016 data….as there is no deadline yet to submit revised ‘16 data, so you should have some time, still, to evaluate that data and submit revisions if appropriate.  If CMS continues forward with the methodology described in the 2018 final rule, then FFY 2016 S-10 data will be used for the fiscal year 2020 Factor 3 computation.  And while that seems far off, if history repeats itself, CMS could likely request that updates be made to the 2016 S-10 data next summer.


Finally, we would definitely spend some time studying the 2018 final rule comments and CMS’ discussion about definitions, policies and procedures, and self-pay discounts, and evaluate changes that you may need to make to your programs. There is no way to generalize what you may or may not need to focus on as every situation is unique, but attention to this matter is advised.


Extra Credit - 2017 S-10:

Not only will FFY 2017 S-10 data be used for UC distribution purposes, but CMS indicated that audits of S-10 data will be conducted on this year.  In the FY 2018 IPPS final rule, CMS again stated, “We expect that cost reports beginning in FY 2017 will be the first cost reports for which the Worksheet S-10 data will be subject to a desk review.”  While a plan has yet to be developed, it is reasonable to speculate that CMS will need to “cast a wide net” in order to compile data as it reviews the need for further S-10 cost reporting instructions.  It is also reasonable to conclude that hospitals with higher UC costs, hospitals with data anomalies and hospitals with large changes in UC costs will stand out as audit candidates.  We recommend that hospitals put their best foot forward in preparing the audit detail for this year.  


If you will also recall, the substantive reimbursement requirement imposed by CMS as a part of the 2016 OPPS final rule requires hospitals to file of ALL costs in the initial cost report, either via a direct claim or under protest.  In a nutshell, for cost reports starting on and after 01/01/2016, in order for hospitals to potentially qualify for Medicare reimbursement related to any given issue, they MUST have first made a cost report claim for such reimbursement.  Alternatively, if the provider feels the reimbursement associated with a specific item does not adhere to current Medicare policy, they MUST file the cost report under protest.  Read more HERE.


We've compiled a cliff notes version of the 2018 final rule you can read HERE.  We are working on a cliff note version of the comments/CMS discussion to assist you with task #4.  Don't miss it...subscribe to our blog below!


Southwest Consulting Associates Worksheet S-10 blog


P.S. If you would like to talk more about the final rule and worksheet S-10, would like an analysis of how the transition to S-10 will affect your hospital's reimbursement over the next 3 years, or would even like a term sheet and/or proposal from us to assist you in reviewing and revising your uncompensated care cost data, please reach out to


Topics: DSH Reimbursement, Medicare DSH Reimbursement, S-10, final rule, worksheet s-10

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The climate of provider reimbursement is ever-changing and this blog is intended to keep you up-to-date on the latest information regarding:

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