1. Affordable Care Act Section 3133 Medicare DSH HFMA Education Session # 3 February 21, 2013 Presented by: Paul Bouganim Principal Financial Analyst Cedars-Sinai Medical Center Sec. 3133. Improvement to medicare disproportionate share hospital (DSH) payments.

2. 2 Agenda New DSH Formulas and Projections Wkst S-10 and Charity Care CMS National Provider Call, January 8, 2013 – Donna Anglin, 2552PROplus, LLC. Legal Update and Data Sources – John R. Hellow, Hooper Lundy & Bookman, Inc.

3. 3 DSH Payment Formula Effective FY 2014 (Discharges on/after 10/01/13) Base DSH Payment 25% of DSH payment computed under existing law – 42 CFR 412.106 Plus Add-on Payment - Product of three factors: Factor 1 = 75% of national aggregate DSH payments under existing law Factor 2 = A measure of the percentage change in the uninsured population age < 65 since 2013 (FY, CY)? Factor 3 = A hospital specific percentage of national aggregate charity care

4. 4 DSH Payment Formula Effective FY 2014 (Discharges on/after 10/01/13) Add-on Payment: Factor 2 = A measure of the percentage change in the uninsured population age < 65 since 2013 (FY, CY)? 1 minus the % change from 2013 to “most recent period” minus 0.1% in 2014 and minus 0.2% in 2015 through 2019 Factor 3 = A hospital specific percentage of national aggregate charity care Period not specified by Section 3133; left to Secretary to select period

5. 5 (-0.2% for FY2015 to FY2019) Let’s Take a Look…

6. 6 Huge Impact

7. 7 Charity Care and Wkst S-10 – Nothing Ties! Worksheet S-10 IRS Form 990 Financial Statements OSHPDMedicare

8. 8 Charity Care and Wkst S-10 Financial Statements Traditional Charity Care Unpaid cost of Medicaid* Unpaid cost of Medicare Research Other Community Benefits IRS Form 990 (Schedule H) Traditional Charity Care Unpaid cost of Medicaid* Unpaid cost of Medicare Research Other Community Benefits *Including State/Local Government Programs Consolidated Financials Medical Center Only Excludes GME Different Community Benefits

9. 9 Charity Care and Wkst S-10 Medicare (2552-10, Wkst S-10) Traditional Charity Care Unpaid cost of Medicaid* Non-Medicare Bad Debts OSHPD Traditional Charity Care Reported at gross charges *Including State/Local Government Programs Likely to be the default definition of Charity Care for DSH, maybe… S-10 Also Used for EHR Incentive Payments!

10. 10 Bonus Slide: (b) Medicare Share: IP Part A Days + IP Part C Days ÷ Total IP Days x [ (Total Charges - Charity Care Charges) ÷ Total Charges ]

11. 11 Charity Care and Wkst S-10 Overall Facility Cost-to-Charge Ratio, Wkst C, Part I Gross Medi-Cal and Medi-Cal HMO Charges (Provider Records) Unpaid Cost of Medicaid

12. 12 Charity Care and Wkst S-10 Gross Charges Internal Report of all Accounts with Charity Code Write-Off Separated between Accounts w/ Insurance Pmt and w/o Insurance Pmt Any payments posted to account are offset Charity Write-Off: Formal application and approval for Charity Care Traditional Charity Care EHR!

13. 13 Charity Care and Wkst S-10 Non-Medicare Bad Debt End Game: Unpaid Medicaid:$65,178,384 Traditional Charity Care:$52,438,879 Non-Medicare Bad Debt:$51,105,059 $168,722,322 Non-Medicare Bad Debt Ln 30 for DSH? Charity + Bad Debt Only