Worksheet S-10 Audits

Access the below related information from this webpage.

Overview

Worksheet S-10 is a critical component of the Medicare Cost Report used to determine uncompensated care costs for hospitals. It plays a central role in calculating Medicare Disproportionate Share Hospital (DSH) Uncompensated Care Payments (UCP), specifically influencing Factor 3 of the DSH payment formula.

Who Must Complete Worksheet S-10?

Background and Policy Evolution

  • In the Fiscal Year (FY) 2018 IPPS Final Rule, CMS finalized the use of Worksheet S-10 data in calculating DSH UCP payments.
  • This methodology continued in FY 2019 and was proposed again in FY 2020.
  • CMS began auditing Worksheet S-10 data in fall 2018, starting with FY 2015 cost reports.
  • In June 2019, CMS instructed Medicare Administrative Contractors (MACs) to begin audits of FY 2017 cost reports.
  • CMS updated the cost reporting instructions for Worksheet S-10 effective for cost reporting periods beginning on or after October 1, 2022.

Cost Reporting Periods Beginning On or After October 1, 2022

CMS has updated the cost reporting instructions for Worksheet S-10:

  • Both Parts I and II of Worksheet S-10 are now required.
    • Part I: Includes data for the entire hospital complex (all subunits and sub-providers).
    • Part II: Includes data only for the main hospital (excluding subunits).
  • Only Part I data is currently subject to audit, though this may change in future years.
  • CMS added instructions for Part II, but:
    • Only Part I data must be submitted using the S-10 template.
    • Part II data must be reported on the cost report, but no template submission is required.

Purpose of the Audit

The S-10 audit ensures:

  • Compliance with the hospital's charity care and financial assistance policies (FAP)
  • Adherence to Medicare Cost Report instructions
  • Accuracy and completeness of:
    • Bad debt reporting
    • Charity care and financial assistance policies (FAP) amounts
    • Reconciliation with financial accounting records

Audits may result in adjustments to reported bad debt and charity care amounts, which can directly impact future DSH payments.

Initial Documentation Request

As part of the initial request process, our auditors may ask you to provide the following documentation:

  • A copy of the Charity Care Policy and Financial Assistance Policy (FAP) in effect during the cost reporting period under review
  • A copy of the audited financial statements and/or working trial balance for the same period
  • A reconciliation of total hospital 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, including descriptions and explanations
  • Listings of write-off codes, discount codes, and contractual adjustment codes
  • A detailed explanation of query logic used to:
    • Identify patient charges included in the charity care listing supporting Worksheet S-10, Line 20
    • Identify patient payments included in the charity care listing supporting Worksheet S-10, Line 22
    • Identify bad debts included in the patient listing supporting Worksheet S-10, Line 26
  • Detailed patient listings for:
    • Charges claimed on Worksheet S-10, Line 20, Columns 1 and 2*
    • Bad debts claimed on Worksheet S-10, Line 26, Columns 1 and 2*
    • Patient payments claimed on Worksheet S-10, Line 22, Columns 1 and 2

* If your hospital tracks professional fees or physician charges in a separate system from hospital charges—and these must be queried separately to be included in your patient detail listings—you are not required to provide revenue code detail. However, please clearly indicate this in your cover letter when submitting the requested documentation.

Listing Workbook and Questionnaire

The questionnaire is designed to assist providers in gathering the appropriate data required for an S-10 audit listing. It also helps our audit team understand how the data was compiled.

The questionnaire includes key sections related to:

  • Charity care
  • Payments
  • Bad debt

If you choose not to use the provided questionnaire template, we kindly ask that you use column headings and terminology consistent with existing templates from Noridian or CMS. This consistency helps our audit staff efficiently identify, interpret, and organize your submitted information.

Uncompensated Care

Definition

Uncompensated care refers to the total value of hospital services provided for which no payment is received—either from the patient or an insurer. It includes:

  • Financial Assistance: Services provided free of charge or at a reduced rate to patients who qualify under the hospital's financial assistance policy.
  • Bad Debt: Amounts owed by patients who do not pay their bills and either do not apply for financial assistance or are unwilling to pay.

Note: Uncompensated care does not include underpayments from government programs like Medicaid or Medicare that reimburse less than the cost of care.

On Worksheet S-10

The Cost of Uncompensated Care is reported on Line 30 of Worksheet S-10 and is used in calculating the DSH Uncompensated Care Payment (UCP) Factor 3. Line 30 is the sum of Line 23 and Line 29:

  • Line 23 - Cost of Charity Care
    Calculated using:
    • Line 20: Total charity care charges for the entire facility
    • Line 22: Payments received from patients whose accounts were previously written off as charity care
    • Line 25: Charges for patient days that exceed the length-of-stay limit under indigent care programs
  • Line 29 - Cost of Non-Medicare and Non-Reimbursable Bad Debts
    Calculated using:
    • Line 26: Total bad debt expense for the entire facility
    • Medicare bad debt amounts reported on each applicable settlement worksheet

Charity Care and Uninsured Discounts

Charity care and uninsured discounts are based on a hospital's policy to provide all or a portion of services free of charge to patients who meet the criteria outlined in the hospital's Charity Care Policy or Financial Assistance Policy (FAP). These discounts may be full or partial, depending on the patient's eligibility.

If a patient does not qualify under the hospital's charity care policy or FAP, any discounts provided—such as reductions from standard managed care rates or prompt payment discounts—cannot be reported as charity care or uninsured discounts.

For Medicare purposes:

  • Charity care is not a reimbursable cost.
  • Any unpaid amounts associated with charity care cannot be claimed as allowable Medicare Bad Debt.
  • Hospitals may not claim unpaid deductibles or coinsurance amounts as charity care if they have already received reimbursement for those amounts from Medicare.

For further guidance on reporting charity care and uninsured discounts, please refer to the instructions for Line 20 in Worksheet S-10.

Important Cost Reporting Lines

Line 20, Columns 1 and 2 - Charity Care

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

  • Column 1 - Charges for Uninsured Patients
    Includes:
    • Patients with insurance from entities not contracted with the provider
    • Patients receiving non-covered services under Medicaid or Indigent Care Programs
  • Column 2 - Charges for Insured Patients
    Includes:
    • Non-covered charges for days exceeding the length-of-stay limit under Medicaid or Indigent Care Programs

Do not include the following on Line 20:

  • Physician or other professional services
  • Amounts related to insurers or third-party liabilities
  • Bad debts (Medicare or Non-Medicare), which should be reported on Line 26

Line 22, Columns 1 and 2 - Patient Payments

Report only patient payments that correspond to charges already reported on Line 20, and ensure they are placed in the same column as the original charity care charge.

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

Line 25 is used to report non-covered charges for Medicaid or Indigent Care Program patients who exceed the length-of-stay limit. These patients should be reported as Insured on Line 20, Column 2. When the same patient exceeds the stay limit, the charges beyond that limit must also be reported on Line 25.

  • These excess charges are included because their cost portion—calculated using the cost-to-charge ratio from Line 1—is added to the deductible and coinsurance amounts reported on Line 20, Column 2.
  • Any charge reported on Line 25 must also be included in the total reported on Line 20, Column 2.

Line 25.01 - Charges for Insured Patient's Liability

Used for traditional insured patients (non-Medicaid) who had a portion of their stay not covered for any reason.

  • Medicaid Patients partially non-covered
    • Services for Medicaid patients that are partially non-covered for reasons other than the length-of-stay limit are handled differently. These claims should be split into two components:
      • The non-covered portion is reported as Uninsured on Worksheet S-10, Line 20, Column 1.
      • The covered deductible and/or coinsurance portion is reported as Insured on Line 20, Column 2.

Line 26, Column 1 - Total Bad Debts

Report total bad debts (Medicare and Non-Medicare) for amounts owed by patients, net of recoveries, in the period they were written off, regardless of the service date.

Do not include the following on Line 26:

  • Physician or other professional services
  • Amounts related to insurers or third-party liabilities

Education

The S-10 Audit Team partners with Provider Outreach and Education to host an annual educational event—typically held in February or March. These sessions cover updates to S-10 audits from year to year, helpful reminders, and Noridian-specific changes.

Stay tuned to our Schedule of Events page for registration details, and access past training materials below:

Contact

If you have specific questions regarding the instructions for Worksheet S-10, please contact us at: S10@noridian.com.

Resources

Last Updated Jul 07 , 2025