Worksheet S-10 Audits

Overview of Worksheet S-10 Audits

CMS Overview of the Medicare Cost Report for Worksheet S-10

In the Fiscal Year (FY) 2018 Inpatient Prospective Payment System (IPPS) Final Rule, CMS finalized that uncompensated care data from the Medicare Cost Report Worksheet S-10 would be incorporated into Factor 3 of the Disproportionate Share Hospital Uncompensated Care Payment (DSH UCP). This payment methodology continued with the FY 2019 IPPS Final Rule, and was also proposed in the FY 2020 IPPS rule.

In the FY 2019 IPPS Final Rule, CMS indicated that audits of the data reported on providers' Worksheet S-10 of their Medicare Cost Reports were expected to begin in the fall of 2018. In the fall of 2018, CMS issued instructions to the Medicare Administrative Contractors (MACs) with steps for review of Worksheet S-10 for selected FY 2015 cost reports.

The S-10 audits included a review of provider's compliance with their own documented charity care and financial assistance policies (FAP) as well as the Medicare Cost Report instructions, the completeness and accuracy of provider's bad debts, reconciliation of the provider's financial accounting records with the bad debt amounts, and charity care/FAP amounts reported on Worksheet S-10. The audits of Worksheet S-10 may have resulted in adjustments to both bad debt and charity care amounts.

Uncompensated Care on Worksheet S-10

The Cost of Uncompensated Care on Worksheet S-10 Line 30 (sum of Lines 23 and 29) will be used in calculating the DSH UCP Factor 3 payment.

  • Line 23 - Cost of Charity Care is calculated based on the following:
    • Line 20 - Total Charity Care Charges for the entire facility
    • Line 22 - Payments received from patients previously written off as Charity Care
    • Line 25 - Charges for patient days beyond an indigent care program’s length of stay
  • Line 29 - Cost of Non-Medicare and Non-Reimbursable Bad Debts Expense is calculated based on the following:
    • Line 26 - Total Bad Debt Expense for the Entire Facility
    • All Medicare Bad Debt amounts reported on each settlement worksheet

Cost Report Instructions for Worksheet S-10

Line 20, Columns 1 and 2 - Charity Care

Charity care charges must be reported in the period in which they were written off, regardless of the patient’s service date.

  • Column 1 - Charges for Uninsured patients
    • Patients with insurance coverage with an entity that does not have a contractual relationship with the provider
    • Patients with non-covered services for Medicaid/Indigent Care Program
  • Column 2 - Charges for Insured patients
    • Non-covered charges related to days exceeding the length of stay limit for patients covered by Medicaid/Indigent Care Programs

Providers must exclude the below items from Line 20:

  • Any physician and other professional services
  • Any amounts related to insurer or other third-party liabilities
  • Bad Debts (Medicare or Non-Medicare) reported on Line 26

Line 22, Columns 1 and 2 - Patient Payments

Any patient payments should only relate to charges that were already reported on Line 20 and should be in the same column that the underlying charity care charge was reported.

Line 25, Column 1 - Charges for Patient Days Beyond Length of Stay Limit

These charges should also be reported on Line 20, Column 2.

Line 26, Column 1 - Total Bad Debts

The bad debts (Medicare and Non-Medicare) must be for amounts owed by patients and reported net of recoveries, in the period in which they were written off, regardless of the patient’s service date.

Providers must exclude the below items from Line 26:

  • Any physician and other professional services
    Any amounts related to insurer or other third-party liabilities

Initial Information Request for a Worksheet S-10 Audit

The Initial Request Letter will initiate the S-10 Audit which will include the following:

  • A copy of the hospital’s charity care policy and financial assistance policy (FAP) that was in effect during the cost report period under review.
  • A copy of the hospitals audited financial statements and/or working trial balance for the cost report period under review.
  • A reconciliation of the bad debts claimed on Worksheet S-10, Line 26 to the audited financial statements and/or working trial balance.
  • A detailed listing of the hospital’s transaction codes and their descriptions/explanations (e.g., write-off codes, discount codes, contractual adjustment codes).
  • Detailed query logic that describes how the hospital identified patient charges included in the patient listing used to support charity claimed on Worksheet S-10, Line 20.
  • Detailed query logic that describes how the hospital identified patient payments included in the patient listing used to support payments on Worksheet S-10, Line 22.
  • Detailed query logic that describes how the hospital identified bad debts included in the patient listing used to support bad debts on Worksheet S-10, Line 26.
  • Detailed patient listing of charges claimed on Worksheet S-10, Line 20, Columns 1 and 2.
  • Detailed patient listing bad debts claimed on Worksheet S-10, Line 26, Columns 1 and 2.
  • Detailed patient listing of patient payments claimed on Worksheet S-10, Line 22, Columns 1 and 2.

The following Attestations will be sent with the Initial Information Request Letter and should be completed (if applicable):

  • Physician/Professional Fees

If professional fees and physician charges are tracked in a separate system from the hospital charges, therefore professional fees and physician charges would have to be queried separately for the patient detail listings then revenue code detail would not be required for the S-10 Audit.

  • HRSA Fees should not be included on Worksheet S-10, based on the Coronavirus Aid, Relief, and Economic Security Act.

Auditors may request follow-up information based on our review of the submitted S-10 initial documentation.

If you have any specific questions on the instructions for Worksheet S-10, send an email to S10@noridian.com.

Last Updated Jun 25 , 2025