Medicare DSH – To Do List

Effective for discharges occurring on or after FY 2014, hospitals will receive 25 percent of the amount they previously would have received under the current statutory formula for Medicare DSH. The remainder, equal to 75 percent of what otherwise would have been paid as Medicare DSH, will become available for uncompensated care payments after the amount is reduced for changes in the percentage of individuals that are uninsured.

CMS published the proposed FFY 2014 PPS regulations that included a proposal to use low income patient days as a proxy to distribute the 75 percent pool, rather than uncompensated care costs from the Medicare cost report Worksheet S-10.

Reimbursement from the Uncompensated Care “Pool” Starting October 1, 2013 per the FFY 2014 PPS Proposed Rules:

  • Hospitals must qualify for DSH under the old formula (termed the “empirically justified” formula).
  • The proposed FFY 2014 proxy may reimburse hospitals about $209 per day for every SSI or Medicaid eligible day identified.
  • The uncompensated care payments will be paid through periodic interim payments (PIP) based on previously reported Medi-Cal days and CMS provided SSI data.
  • Final payments will be made based on actual data for the cost reporting period(s) in question through a settlement process.

California hospitals are unable to report finalized Medicaid eligible days on the filed cost reports due to the thirteen month lag in accessing eligibility responses from the State. In addition, Medicare audits are behind, creating less tension to seek updated Medicaid eligibility responses and amend cost reports.

  1. Ensure your filed DSH days are up to date
    Since the 2014 Federal payments will be based on recent cost reports (possibly FY 2010/2011), it is imperative to review the claimed days and if appropriate amend the cost report with corrected eligible days based on State eligibility responses or internal logs.
    This is even more important for smaller hospitals that have been capped at a 12 percent DSH adjustment factor. The distribution of the pooled payments will not be capped so these hospitals need to ensure that a full-focus DSH eligible day compilation is completed.
  1. Ensure that your reported S-10 data is accurate
    It is not known whether or when CMS will use S-10 uncompensated care costs for the proxy to distribute the pooled DSH payments. However, hospitals should start or continue to evaluate their processes to accumulate the data correctly. This may involve reviewing charity policies and business office procedures.
  1. Review the newly published FFY 2011 PPS SSI Ratios
    CMS recently published the FFY 2011 PPS SSI ratios.

For more information, e-mail Susan Starr (925-377-5181) or Laura Schoneman (818-851-9408).

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