THE FUTURE OF DSH UNCOMPENSATED CARE William D. Clark, CPA, FHFMA - - PDF document

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THE FUTURE OF DSH UNCOMPENSATED CARE

William D. Clark, CPA, FHFMA Director, BKD, LLP

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• DSH changes mandated by Section 3133 of

Affordable Care Act

• Empirical DSH Payment
• Uncompensated Care DSH
• UC changes proposed in FY 2017 IPPS Proposed

Rule

• Issues with Worksheet S-10
• FY 2017 IPPS Final Rule – No Worksheet S-10 (yet)

AGENDA

DSH CHANGES MANDATED BY SECTION 3133 OF ACA

• 25% of DSH payment remains the same

(Empirically Justified DSH)

• Rescrambles 75% of DSH egg

(Uncompensated Care Payment)

25% of Original DSH Payment 75% Of Original DSH Payments Change in Uninsured Uncomp Care Cost Ratio Total New DSH Payment

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EMPIRICAL DSH PAYMENT

• Nothing changed except payments are now
• nly made at 25% of the previous rate
• Hospitals must meet the 15% threshold in
• rder to qualify for these payments &

“Uncompensated Care” payments

25% of Original DSH Pmt

• Distribution of 75% pool based on 3 factors

Office of Actuary estimates $10.8 Billion Pool for FY17 CMS must decrease pool by change in uninsured

• Reduces pot by 45%
• Remaining pool approximately $6 Billion

Decrease of $400 Million for FY 2016 amount

A hospital’s Uncompensated Care divided by

aggregate amount of Uncompensated Care for all hospitals eligible for payment

UNCOMPENSATED CARE DSH

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• FY 2014–FY 2016 Factor 3

Inpatient Medicaid & Medicare SSI days as proxy Numerator is hospital-specific Denominator is aggregate For SSI – latest SSI data on website For Medicaid – March HCRIS data CMS expressed intention of moving to S-10 –

recognized concerns about accuracy & consistency

• f S-10 data

UNCOMPENSATED CARE DSH

• CMS proxy shortcomings

Ignores outpatient uncompensated care Ignores cost of services provided Does not recognize that different states have different

Medicaid eligibility requirements

Punishes states choosing not to expand Medicaid

• Lower Empirical DSH
• Lower Uncompensated Care proxy (in future years)
• Theoretically states choosing not to expand would see

increased uncompensated care relative to states expanding

UNCOMPENSATED CARE DSH

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• Factor 3 based on 3-year average of data to limit

yearly fluctuations

FY 2011–FY 2013 cost reports and FY 2012–FY 2014 SSI

ratios

• Begin using S-10 data for FY 2018 & subsequent

years

Uncompensated Care = Charity Care + Non-Medicare

Bad Debt

S-10 data for FY 2014 & days proxy for two earlier cost

reporting periods

Transition to using S-10 data only by FY 2020

FY 2017 IPPS PROPOSED RULE

• Partial charity can create negative costs of charity

care in certain instances

Example

• $20,000 total charges
• $2,000 deductible
• $800 charity write-off
• $750 patient payment
• $450 bad debt write-off

ISSUES WITH WORKSHEET S-10

Line Option 1 Option 2 Option 3 1 CC Ratio Flow from WS C 0.3500 0.3500 0.3500 20 Total Initial Obligation of Charity Care Patients input $2,000 $800 $800 21 Cost of Initial Obligation of Charity Care Patients calculated $700 $280 $280 22 Partial Payments by Charity Care Patients input $750 $750 $0 23 Cost of Charity Care calculated ($50) ($470) $280 28 Non-Medicare Bad Debt calculated $450 $450 $450 29 Cost of Non-Medicare Bad Debt calculated $158 $158 $158 30 Cost of Uncompensated Care calculated $108 ($313) $438

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• Presumptive charity – inconsistent treatment

by the MACs

• Current instructions state to report write-offs

& expected payments for services provided during the cost reporting period. Inconsistent with treatment of Medicare bad debt

• Sample selection methodology is not shared

during audit & is not verifiable by providers

ISSUES WITH WORKSHEET S-10

• Published by CMS on July 15, 2016
• Submit revised FY 2014 S-10 information by

September 30, 2016

• Seemed to support FY 2014 S-10 data would

be used for Uncompensated Care payments

CMS TRANSMITTAL 1681

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• CMS backed away from using the FY 2014 S-10
• Recognized commenters’ suggestions to clarify

& revise reporting instructions

• Intends to issue revised instructions & engage

in future rulemaking to begin using S-10 in Factor 3 computation by FY 2021

• FY 2017 S-10 used for FY 2021 Uncompensated

Care payments?

FY 2017 IPPS FINAL RULE

• Review Factor 3 data in CMS table
• Get ducks in a row on S-10
• Engage in rulemaking

PROVIDER ACTION ITEMS

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QUESTIONS?

FOR MORE INFORMATION

THANK YOU!

William D. Clark, CPA, FHFMA Director | BKD, LLP 918.584.2900 x42917 918.878.9052 Direct 918.584.2931 Fax wdclark@bkd.com

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