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Worksheet S-10 Audits

Posted by Kyle Pennington on Feb 4, 2019 12:33:57 PM

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The Uncompensated Care pool reimbursement payment is viewed as a zero-sum game, with one hospital’s reimbursement gain through the program becoming another hospital’s loss.  While Worksheet S-10 has been used for UC reimbursement purposes for only a short time, audits of the S-10 data to ensure its accuracy and consistency have been a high priority for hospital providers.  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. 


Hospitals nationwide have since received requests from Medicare Administrative Contractors (MACs) to provide data and detailed explanations supporting the charity care and bad debt data reported on their FY 2015 Medicare cost report Worksheet S-10.  In many cases, the hospitals selected for audit were given a very short time frame of two weeks to respond to the MAC’s initial questions and requests for data, which were very extensive and generally included 18 required items. 


Requests from MACs include:

  1. a copy of the hospital’s charity care policy and/or financial assistance policy (for both uninsured and insured patients), along with an explanation of how hospital personnel determine insurance status and charity care write-offs,

  2. patient-detailed charity care and bad debt listings that tie to the cost report, and these patient listings require hospitals to comprise approximately twenty data elements including name, dates of service, DOB, SSN, gender, and write-off date, as well as revenue codes, payments received and contractual accounts for every transaction related to the stay,

  3. a comparison of current year vs. prior year charity care charges from the hospitals’ audited financial statements  with an explanation for any significant changes between the years, and

  4. a two-part reconciliation of the bad debt write-offs from the financial accounting records to the bad debts reported on line 26 of Worksheet S-10.

Upon submission of the audit support, MACs began sampling the data, which generally included 40-60 patients covering four categories: Insured, Uninsured, Inpatient and Outpatient.  The required sample support primarily consists of patient UBs, remittance advices, and even proof of income.  And upon sample completion, MACs have presented hospitals with proposed adjustments and have provided only one week response time, in most cases.


If you have not seen a full S-10 audit request letter from your MAC and you would like to view a sample, please email


What’s Next?

The prevailing thought with regard to FY 2015 S-10 audits is that MACs will likely complete their reviews in time for FY 2020 rulemaking this spring.  There may be no avenue which allows hospitals the opportunity to appeal adverse findings for purposes of the UC calculation. Hospitals should assume that any audit of S-10 data will be the only opportunity to have the correct S-10 data incorporated into the UC DSH calculation.  And looking forward, hospitals should place an absolute premium on getting the correct S-10 data into the As-filed cost report.


S-10 programs should be top-of-mind for qualifying hospitals.  FY 2016 S-10 data will presumably be used as part of the federal UC calculation starting with the 2020 UC payments.  CMS has made it very clear that hospitals have had sufficient time to review their UC data and processes, as well as to understand and implement cost report revisions as a result of Transmittal 11. Further, hospitals in states with Section 1115 Medicaid Waiver programs that have also adopted the use of S-10 for payment distributions should prepare now for the changes to their new UC measures.  In states like New Mexico and Texas, state waiver payments will utilize charity care charges from Worksheet S-10.  In addition, CMS will require hospitals to submit a detailed listing of charity patients beginning with the FFY 2019 Medicare cost report, or the report will be rejected.


S-10 is here to stay, and it has significant reimbursement impacts for hospitals nationwide.  It’s driving a nearly $8.3 billion federal reimbursement pool and billions more in state reimbursement pools.  Hospitals should make every effort to analyze their UC data, review their processes for collecting and maintaining the data, and most importantly at this time, take a deep-dive look at their charity and other financial assistance policies and ensure they conform to the program requirements.


We are gearing up for our next webinar on Worksheet S-10, MAC S-10 audits and the IPPS rule.  To save your seat, please click the link below.


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Topics: uncompensated care, S-10, worksheet s-10, Medicare Cost Report

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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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