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Medicare Uncompensated Care Payments



CMS distributes a prospectively determined amount of uncompensated care payments to “Medicare disproportionate share hospitals” based on their relative share of uncompensated care nationally. 

As required under law, this amount is equal to an estimate of 75 percent of what otherwise would have been paid as Medicare disproportionate share hospital payments, adjusted for the change in the rate of uninsured people. 

In this rule, CMS proposes distributing roughly $7.8 billion in uncompensated care payments in FY 2021, a decrease of approximately $0.5 billion from FY 2020.

For FY 2021, CMS proposes to use a single year of data on uncompensated care costs from Worksheet S-10 of the FY 2017 cost report to distribute these funds, in part because we have conducted audits of this data. Mindful of the unique challenges facing Indian Health Service and Tribal hospitals and Puerto Rico hospitals, 

CMS proposes to continue to use data regarding low-income insured days (Medicaid days for FY 2013 and FY 2018 SSI days) to determine the amount of uncompensated care payments for Puerto Rico hospitals and Indian Health Service and Tribal hospitals for one more year (FY 2021), similar to the FY 2020 methodology.

In addition, CMS is proposing for all eligible hospitals, except Indian Health Service and Tribal hospitals, to use the most recent available single year of audited Worksheet S-10 data to distribute uncompensated care payments for all subsequent fiscal years. 

We expect there to be an increasing number of hospitals audited for Worksheet S-10 with future cost reporting years. 

As a result, we have confidence that the best available data in future years will be the Worksheet S-10 data for cost reporting years for which audits have been conducted.

Source: MCR - Uncompensated Care Payments
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