Transmittal 18 introduces new and revised cost reporting instructions, required templates, and worksheets.

Transmittal 18 affects multiple cost reporting topics. Most notably, it increased complex data requirements for:

• Medicare DSH reporting
• Worksheet S-10 UCC reporting
• Medicare bad debt reporting

These changes are effective for Medicare cost reporting periods beginning on or after October 1, 2022. The first full 12-month cost report that would be subject to the new templates are the September 30, 2023, cost reports.

The transmittal and new exhibit templates can be found on the CMS website. There are also downloadable Moss Adams templates.

Transmittal 18 will likely mean additional work for hospitals, adjustments to reporting processes for providers unprepared for these changes, and increased compliance and audit risks that could lead to potential redistribution of pool payments.

The charity care and total bad debt templates are only required for inpatient prospective payment system (IPPS) hospitals eligible for Medicare DSH and UCC. The instructions regarding Medicare DSH don’t speak to who’s exempt, however, it does mention that this template should be filled out for DSH eligible hospitals.

It doesn’t seem likely, per the instructions or any supplemental guidance, that hospitals will need to use the old template in this scenario.

While it’s difficult to answer this question globally as it’s really a hospital-specific item, it’s likely that this new reporting could require enhanced IT support as well as additional staff time.

For example, data needed to complete the account reconciliation fields can be obtained electronically from your systems. However, where individual account reconciliations don’t reflect the appropriate answer, staff intervention will be required.

Moss Adams has experience in virtually all patient account systems and has developed queries or scripts in many of these systems to extract the necessary data. Moss Adams also works directly with the hospital IT departments to streamline this process to accurately capture the data needed to compile all reports.

Yes. Providers will need Medicaid eligibility support for every patient included in the Medicare DSH calculation and to identify the differences between restricted and unrestricted Medicaid state codes for every claimed day. If patients are eligible for more than one code, this information needs to be reported in additional columns at the end of the exhibit.

Yes. Medicare eligibility information must be included on the Exhibit 3A template for all applicable records.

The Exhibit 3A template includes extremely detailed instructions on reporting newborn baby days and the separation of days after the mother’s discharge. Instructions also include reporting the mother’s eligibility information on the baby’s record in cases of presumptive eligibility. This information has never been requested in the past and will likely be a change in process for the hospital and difficult to compile.

Previously, auditors would only have a generic listing of patients that they would sample and then request the additional detailed information now being required of every patient up front.

With the new template, auditors can quickly review the patient information that was previously only supplied after a sample was pulled. This allows the auditor to target any perceived weak spots and sample more effectively.

The Transmittal 18 instructions appear to have inadvertently excluded column 12 newborn days in the Medicaid days totals reported on S-2. It’s expected for this to be addressed or clarified, as there’s no indication that CMS meant to exclude these days from the DSH calculation.

There are a number of restricted Medicaid eligibility program codes. However, most of those examples like family planning, dental only, and other non-inpatient benefit codes wouldn’t be included in the DSH calculation. The two CMS examples of emergency services and pregnancy related services are the two most prevalent restricted codes that could be allowable in the Medicare DSH calculation.

When a provider accepts an amount from an insurer as payment, or partial payment, on behalf of an insured patient this will constitute an inferred contractual relationship. Write-offs for these patients will now be claimed in Line 20, Column 2.

If the write-off is associated with coinsurance, deductible, or copay those won’t be subject to the CCR. If the write-off is associated with non-covered amounts, those will be recorded also in Line 25.01 and subject to the CCR.

With the new instructions, there will be no more non-contracted payers. If there’s a payment, it will constitute an inferred contractual relationship. Yes, 25.01 will be for non-covered non-Medicaid charity write-offs. Medicaid non-covered will still be reported in line 20, column 1. Medicaid exhausted limit or length of stay (LOS) limit will still be reported on Line 25.

There’s no requirement that the charity recorded on Worksheet S-10 has to be written off to a charity GL account. The requirement is that the charity amounts recorded on S-10, line 20 are written off in accordance with the hospital’s written financial assistance policy or uninsured discount policy.

During the audit, providers will be asked to reconcile the charity GL to the amounts recorded on Worksheet S-10 so in instances where there is charity recorded on S-10 not written off to the charity GL, that information needs to be well documented so that you can support those categories of charity at audit.

Transmittal 18 includes language requiring charity discounts claimed on S-10 be for medically necessary health care services. This will require identifying any discounts that aren’t eligible when compiling charity logs.

These templates don’t require revenue code detail, but depending on the hospital’s patient financial system, revenue code detail may be necessary to identify and exclude the professional charges from the charity and bad debt reported on Worksheet S-10. Past audit requests have required revenue code details if the hospital charges and professional charges are commingled on the same system. If those charges are in two different systems, than revenue code detail hasn’t been required.

It’s also important to point out that revenue code detail may also need to be used to complete the new Part II section of Worksheet S-10 as again, depending on your system and how accounts transfer between units, this revenue code detail may be necessary to separate hospital versus sub-acute charges versus professional fee charges. All this adds another layer of complexity to these new templates.

This is an issue with the current template and an item discussed in our webcast, What Hospitals Need to Know About CMS Transmittal 18. Every Medicare Administrative Contractor (MAC) for audit purposes requires only one account or row for each charity or bad debt write-off. However, as noted in this question, there’s only one write-off date field in the template.

For audits, it’s recommended to provide a supplemental listing that includes all write-offs for that year so the MAC can see if there are multiple write-offs for one account, and we consider this the best approach rather than separating the patient into two rows. If further clarification from CMS or the MACs is provided, we will update this answer accordingly.

Correct, this is where additional information or fields may be helpful to understand each account. It will be interesting to see if MACs at the end of the day take these reports and use them in their S-10 audits or if they’ll request their own auditor’s template that in some cases requires more fields or for the fields to be shown a different way.

How the supplemental exhibits are submitted right now in cost reports seems unclear and neither CMS nor MACs have provided clarification. Several providers have addressed the massive amounts of data these exhibits require and if there’s been any thought on different submission alternatives for these templates.

Per the instructions, the answer is yes. Each separate CCN would require its own exhibit. In the charity template instructions, the need for separate exhibits is implied as you’re expected to enter the component CCN value in the header of the exhibit if you have charity for that component so this would require you to separate the hospital CCN accounts from the other CCN accounts.

The bad debt instructions are clearer in that they state, “Complete a separate exhibit for the hospital and each component of the hospital complex (each CCN) and, on each listing, report only the data related to inpatient and outpatient services billed under that CCN.”

The answer depends on when accounts are written off the active AR and placed in bad debt. As seen through the S-10 audits and their bad debt reconciliation templates, MACs are expecting the hospitals to claim total bad debt based on when the account was written off active AR and transferred to bad debt.

This may not necessarily be the same timeline of when a bad debt is returned from the collection agency so you may have different timing with respect to write-off date from a Medicare bad debt versus a non-Medicare bad debt. This inconsistency in timing of claiming the write-off between non-Medicare and Medicare is the product of the S-10 instructions and we don’t expect this to change with the new template.

Critical access hospitals aren’t required to complete the template. The template is only required for IPPS hospitals eligible for DSH and UCC.

A provider can report the same account in bad debt and the charity care log as long as they aren’t for the same charges. For example, an account may receive an uninsured discount for a portion of their charges and the remaining amount may be written off to bad debt at a later date. These accounts would then both be included in their respective template.

If the provider is seeking reimbursement for Medicare bad debt claims, then yes, the new Exhibit 2A is required beginning with cost reports starting on or after October 1, 2022.

Transmittal 18 implements FY 2023 IPPS final rule changes including DGME changes in regard to the Hershey litigation.

The Hershey litigation addressed the formula error that applied a penalty to providers that reported weighted and unweighted full-time employees (FTEs) above the Intern & Resident cap. In most cases, the calculation would set allowable FTE counts below the cap. The revision, will now default to the cap.

Based on a recent court ruling, the DGME calculation has been revised for all eligible cost reports beginning with periods following October 1, 2001. All open cost reports impacted by the revised calculation should receive the revision and updated reimbursement. In addition, cost reports can also be reopened for the corrected reimbursement.

There doesn’t seem to be guidance from CMS or the MAC requiring this approval. All providers impacted by the updated calculation are eligible for the correction and additional reimbursement.