Georgia Medicare Uncompensated Care Pool Guide (2026)

When the Affordable Care Act became law in March 2010, one of the structural changes least visible to ordinary patients but most consequential for hospital finance was Section 3133. That section did not create a new benefit, did not expand insurance coverage, and did not affect any beneficiary's premium, deductible, or coinsurance. What it did was reshape the way the federal Medicare program had been paying disproportionate share hospitals (DSH) for more than two decades, on the theory that as insurance coverage expanded under the broader ACA framework, uncompensated care would fall, and the Medicare DSH adjustment, originally designed to compensate hospitals for serving low-income populations, needed to be restructured to reflect that anticipated reality.

The result was a split. The traditional DSH calculation under Section 1886(d)(5)(F) of the Social Security Act, which had paid hospitals an empirically justified amount based on their disproportionate patient percentage, was reduced. The remainder was redirected into a new pool, the Medicare Uncompensated Care (UCC) pool, distributed by a new three-factor methodology under Section 1886(r). Factor 1 estimates national uncompensated care. Factor 2 adjusts that estimate downward to reflect changes in insurance coverage. Factor 3 divides the resulting pool among qualifying hospitals based on each hospital's share of national uncompensated care as reported on a particular cost report worksheet, Worksheet S-10.

For Georgia, this restructuring matters more than it does in many other states. Georgia did not expand Medicaid under the ACA. Georgia's uninsured rate remains among the highest in the nation. Georgia's safety-net hospitals, the facilities that absorb the cost of treating uninsured patients in emergency departments, on inpatient floors, and in clinics, depend on UCC payments as a critical source of federal revenue. Grady Memorial Hospital in Atlanta, Augusta University Medical Center, Memorial Health in Savannah, Phoebe Putney Memorial in Albany, Northeast Georgia Medical Center in Gainesville, and many other Georgia hospitals receive UCC payments each year. Without that revenue stream, the financial picture for serving Georgia's uninsured would be materially worse.

This guide explains the Medicare UCC pool from the perspective of Georgia hospitals and the Medicare beneficiaries whose access to care depends on the financial viability of those hospitals. It covers the ACA Section 3133 restructuring, the Section 1886(r) statutory framework, the 42 CFR 412.106 and 412.106(g) regulations, the Factor 1, Factor 2, and Factor 3 methodology, Worksheet S-10 of the Medicare Cost Report Form CMS-2552-10, the annual IPPS final rule that updates the pool size, the audit and appeals processes, and the Georgia-specific dimensions of the UCC framework in a non-expansion state.

By Brevy Care Team · Last verified May 22, 2026

Before turning to the technical mechanics of the UCC pool, it is worth pausing on the practical question that families of Medicare beneficiaries in Georgia might reasonably ask: why should I, a senior with Medicare coverage, care about how Medicare pays hospitals for treating uninsured patients?

The answer is that the financial viability of the hospitals that treat you is shaped by their total revenue, and total revenue depends on payment streams that go well beyond what Medicare or Medicaid pays for your individual care. When a safety-net hospital absorbs the cost of treating uninsured patients in the emergency department or on the inpatient floor, that cost has to come from somewhere. Some of it is shifted to other payers through higher prices. Some of it is absorbed as operating losses. And some of it is offset by federal and state programs designed to compensate hospitals for serving low-income populations. The Medicare UCC pool is one of the largest of those federal programs.

Georgia is one of the states where this mechanism is most consequential. Georgia did not expand Medicaid under the Affordable Care Act, which means that working-age adults below the poverty line who would have qualified for Medicaid in an expansion state often remain uninsured in Georgia. When those uninsured adults need emergency care or are admitted for serious illness, Georgia hospitals provide that care without a payer to bill, or they bill a patient who cannot pay and write off the receivable as bad debt. Multiply that across the volume of uninsured patients served by Grady Memorial in Atlanta, Augusta University Medical Center, Memorial Health in Savannah, Phoebe Putney Memorial in Albany, and the dozens of other Georgia hospitals that serve substantial uninsured populations, and the total uncompensated care burden in Georgia is enormous.

The UCC pool is one of the federal mechanisms that helps offset that burden. When Worksheet S-10 of the Medicare Cost Report is filed accurately, when charity care and non-Medicare bad debt are documented properly, and when the rolling average is computed correctly, Georgia hospitals receive a share of the national pool. Those payments help keep emergency departments open, inpatient floors staffed, and outpatient clinics operating in communities where the alternative might be hospital closure.

The pre-ACA Medicare DSH framework

To understand what Section 3133 of the ACA changed, it helps to start with what existed before. The Medicare Disproportionate Share Hospital adjustment was originally added to the Medicare statute by Section 1886(d)(5)(F) of the Social Security Act in the late 1980s. The purpose was straightforward: hospitals that served a disproportionate share of low-income patients faced higher operating costs and lower revenues, and a payment adjustment was needed to keep those hospitals financially viable.

The empirical foundation of the DSH adjustment was the disproportionate patient percentage, or DPP. DPP is a hospital-specific calculation that captures two distinct dimensions of low-income service. The first is the Medicare-SSI fraction, which is the percentage of a hospital's Medicare patient days that are attributable to Medicare beneficiaries who are also entitled to Supplemental Security Income, in other words dual-eligible Medicare-SSI patients who typically have the lowest incomes among Medicare beneficiaries. The second is the Medicaid fraction, which is the percentage of a hospital's total inpatient days that are attributable to Medicaid patients not covered by Medicare. Adding the two fractions produces the DPP.

Under the pre-ACA framework, hospitals meeting the DPP threshold qualified for an empirically justified DSH payment calculated under a formula tied to DPP, federal rate per discharge, and inpatient volume. Hospitals below the threshold received no DSH payment. A few hospitals qualified through alternate thresholds intended to capture certain rural and urban hospitals not adequately reflected by the main DPP calculation. For the operative DPP threshold and alternate criteria, consult the current Section 1886(d)(5)(F) text and 42 CFR 412.106.

The pre-ACA DSH adjustment was substantial. Hospitals with high DPP, particularly safety-net hospitals in urban areas with large Medicaid populations and dual-eligible Medicare-SSI populations, received DSH payments that accounted for a meaningful share of total Medicare revenue. Grady Memorial in Atlanta, for example, derived substantial inpatient Medicare revenue from the DSH adjustment.

The pre-ACA framework had two characteristics that the ACA drafters viewed as needing reform. First, the calculation was based entirely on patient mix rather than on actual uncompensated care. A hospital with a high Medicaid census but few uninsured patients received a large DSH payment, while a hospital with fewer Medicaid patients but many uninsured patients received less. Second, the calculation did not adjust for changes in insurance coverage. If the broader ACA framework reduced uninsured rates through Medicaid expansion and exchange coverage, the DSH adjustment under the pre-ACA framework would not automatically decrease, even though the underlying uncompensated care burden it was originally meant to address would have fallen.

Section 3133 of the ACA addressed both of those characteristics through restructuring rather than elimination. The retained empirically justified component continues the DPP-based calculation. The redirected component created a new pool distributed by actual uncompensated care reported on Worksheet S-10 and adjusted annually for insurance coverage changes through Factor 2.

Section 3133 ACA Uncompensated Care framework and Section 1886(r) of the Social Security Act

Section 3133 of the ACA amended the Social Security Act by adding a new Section 1886(r), which establishes the framework: the Medicare DSH payment under Section 1886(d)(5)(F) is reduced, and the savings are redirected to a new pool distributed under the new methodology. The statute specifies the split between the retained empirically justified DSH and the redirected UCC pool, with the empirically justified amount reduced and the remainder allocated to the UCC pool.

The statute then specifies the three factors. Factor 1: the Secretary estimates, on an annual basis, the amount that would otherwise have been paid as Medicare DSH if the reduction were not applied; Factor 1 captures the aggregate national pool that would have been paid under pre-ACA DSH absent the reduction. Factor 2: the Secretary determines the percentage change in the percentage of individuals who are uninsured, comparing a baseline period to the most recent period for which data are available; Factor 2 adjusts Factor 1 downward to reflect the reduction in uninsured rates since the baseline. As insurance coverage has expanded, Factor 2 has fallen and the UCC pool has shrunk relative to what it would have been if uninsured rates had remained at baseline. Factor 3: each hospital's share of the UCC pool is determined by its share of the total amount of uncompensated care for all eligible hospitals; the data source, as implemented in federal regulations at 42 CFR 412.106 and as further specified in subsequent annual IPPS final rules, is Worksheet S-10 of the Medicare Cost Report CMS-2552-10.

The hospital-specific UCC payment for each eligible hospital is the product of Factor 1, Factor 2, and Factor 3. Aggregated across all eligible hospitals, the sum of hospital-specific UCC payments equals the national UCC pool, which is Factor 1 multiplied by Factor 2.

42 CFR 412.106 and 42 CFR 412.106(g)

The Centers for Medicare and Medicaid Services (CMS) implemented Section 1886(r) through 42 CFR 412.106 and the specific UCC provisions at 42 CFR 412.106(g). The regulation has been amended multiple times through annual IPPS rulemakings to refine the methodology, the data sources, and the audit framework.

42 CFR 412.106 sets forth the empirically justified DSH framework, including the DPP calculation, the Medicare-SSI fraction, the Medicaid fraction, the DPP threshold, the alternate special thresholds, and the resulting payment formula. The regulation applies to subsection (d) hospitals paid under IPPS and excludes critical access hospitals, rural emergency hospitals, and other facilities not subject to IPPS.

42 CFR 412.106(g) sets forth the UCC pool framework. The regulation defines Factor 1 as the amount that would have been paid as Medicare DSH absent the reduction, Factor 2 as the adjustment for insurance coverage changes, and Factor 3 as the hospital-specific share of uncompensated care. The regulation requires CMS to publish the annual Factor 1, Factor 2, and hospital-specific Factor 3 values in the IPPS final rule each year, and the regulation specifies that Worksheet S-10 of the Medicare Cost Report is the data source for Factor 3.

The regulation also addresses several operational issues. Hospitals must file Worksheet S-10 annually as part of their Medicare Cost Report. The data is subject to audit by the Medicare Administrative Contractor. The rolling average smooths annual variation in uncompensated care reporting. The hospital-specific Factor 3 is recalculated annually based on the most recent years of Worksheet S-10 data available, with a typical lag between the cost report year and the IPPS final rule year that uses the data.

Factor 1 in detail

Factor 1 represents the national pool that would have been paid as Medicare DSH if the reduction under Section 1886(r)(2)(A) were not applied. CMS estimates Factor 1 annually based on aggregate Medicare DSH payment data, projected to the upcoming fiscal year.

The Factor 1 estimate is published annually in the IPPS final rule, and CMS provides detailed methodological discussion of the data sources and assumptions used. For the current Factor 1 value, consult the most recent IPPS Final Rule.

Factor 2 in detail

Factor 2 is the most consequential annual adjustment in the UCC framework. It captures the percentage change in the uninsured rate since the baseline. When the uninsured rate falls, Factor 2 falls, and the UCC pool shrinks. When the uninsured rate rises, Factor 2 rises, and the UCC pool grows.

In the early years of the UCC pool, Factor 2 was relatively high, reflecting that the immediate post-ACA reduction in uninsured rates had not yet fully materialized. As Medicaid expansion took effect in expansion states and exchange coverage stabilized, the national uninsured rate fell, and Factor 2 fell with it.

The COVID-19 pandemic created complications for the Factor 2 calculation. Continuous enrollment provisions under the Families First Coronavirus Response Act kept Medicaid enrollment artificially high during the pandemic period, pushing the uninsured rate to historic lows and reducing Factor 2 accordingly. When the continuous enrollment provisions expired and Medicaid unwinding began, uninsured rates rose, and Factor 2 reflected that increase in subsequent IPPS rules. For the current Factor 2 value, consult the most recent IPPS Final Rule.

Factor 3 in detail and Worksheet S-10

Factor 3 is the hospital-specific share of the UCC pool. The calculation is each hospital's share of total national uncompensated care, where uncompensated care is defined as charity care plus non-Medicare bad debt, adjusted by the hospital's cost-to-charge ratio.

Worksheet S-10 charity care reporting

Worksheet S-10 of the Medicare Cost Report CMS-2552-10 includes a specific section for charity care. The charity care line reports total charity care charges, defined under CMS instructions as charges that meet the hospital's charity care policy and have been written off as uncollectible due to patient inability to pay. For the operative line number and reporting instructions, consult the current CMS-2552-10 Worksheet S-10 instructions.

Charity care must be supported by documentation. The hospital must have a written charity care policy that specifies eligibility criteria, typically based on income relative to federal poverty level. Patients who qualify must be identified through an application process or through a presumptive eligibility process. The charges written off as charity must be tied to specific patients who meet the policy criteria.

CMS has issued multiple rounds of clarifying guidance on charity care reporting, including instructions on how to handle discounted self-pay patients, patients who would have qualified for Medicaid in an expansion state but did not qualify in a non-expansion state, and patients with partial payments. The instructions have evolved over time, and Worksheet S-10 reporting has become more standardized across hospitals.

Worksheet S-10 non-Medicare bad debt reporting

The non-Medicare bad debt line on Worksheet S-10 reports bad debt from non-Medicare patients that has been written off as uncollectible. Unlike charity care, bad debt reflects amounts that the hospital initially billed expecting payment but ultimately could not collect.

Bad debt reporting requires documentation of reasonable collection efforts. The hospital must have a written collection policy, must have made reasonable efforts to collect from the patient or third-party payer, and must have written off the receivable in accordance with generally accepted accounting principles.

CMS instructions specify the categories of bad debt that may be reported on Worksheet S-10. Medicare bad debt is reported separately on the Medicare Cost Report and is not eligible for inclusion on the Worksheet S-10 non-Medicare bad debt line to avoid double-counting.

Cost-to-charge ratio adjustment

Both charity care charges and non-Medicare bad debt charges are reported in charge dollars on Worksheet S-10. To convert to cost, CMS applies the hospital's cost-to-charge ratio (CCR), which is calculated from other sections of the Medicare Cost Report. The CCR-adjusted charity care plus CCR-adjusted bad debt yields the hospital's uncompensated care cost.

Rolling average

To smooth annual variation in Worksheet S-10 reporting, CMS uses a rolling average of recent cost-report years for which audited data is available, with a typical lag from the cost report year to the IPPS application year. For the operative averaging window in any given rule year, consult the IPPS Final Rule methodology section.

Hospital-specific Factor 3

Each hospital's Factor 3 is calculated as the hospital's averaged uncompensated care divided by the total averaged uncompensated care for all eligible hospitals. Multiplied by Factor 1 and Factor 2, this yields the hospital-specific UCC payment.

Hospital eligibility for UCC payments

A hospital is eligible for UCC payments only if it qualifies for empirically justified DSH under Section 1886(d)(5)(F) and 42 CFR 412.106. Several categories of hospitals are excluded from the UCC framework.

IPPS hospitals

The UCC pool applies only to subsection (d) hospitals paid under the Medicare Inpatient Prospective Payment System (IPPS). General acute care hospitals located in the 50 states and the District of Columbia, paid under IPPS, are the primary universe of UCC-eligible hospitals.

Critical access hospitals (CAHs)

Critical access hospitals are paid under a separate cost-based reimbursement framework rather than the IPPS prospective payment system, and are not eligible for UCC payments. CAHs receive their uncompensated care offset through the cost-based reimbursement framework itself, since reasonable cost reimbursement covers the cost of services provided to Medicare patients, and CAHs do not face the same fixed-payment-versus-uncompensated-care mismatch that IPPS hospitals face.

Rural emergency hospitals (REHs)

Rural emergency hospitals, the Medicare provider type established by the Consolidated Appropriations Act of 2021, are not eligible for UCC payments. REHs receive their federal payment through a monthly facility payment and enhanced outpatient reimbursement, and they do not provide inpatient services that would trigger DSH or UCC eligibility. For the operative facility-payment and outpatient-rate parameters, consult the current REH regulations and CMS guidance.

Other excluded facilities

Inpatient rehabilitation facilities, long-term care hospitals, inpatient psychiatric facilities, children's hospitals, and cancer hospitals are paid under their own prospective payment systems or special arrangements and are generally not part of the UCC framework. Some children's hospitals and cancer hospitals have their own targeted federal funding mechanisms.

Threshold requirements

Among IPPS hospitals, only those that meet the DPP threshold or qualify under the alternate special thresholds receive both empirically justified DSH and UCC payments. Hospitals below the threshold receive neither.

The annual IPPS final rule and UCC updates

The Medicare Hospital Inpatient Prospective Payment System Final Rule is published annually by CMS, with provisions effective the following October 1. Each annual rule includes a detailed UCC pool section that updates Factor 1, Factor 2, and the hospital-specific Factor 3 calculations.

The IPPS final rule typically discusses the data sources used for each factor, the methodological refinements adopted in the most recent rulemaking cycle, the public comments received and CMS responses, and the hospital-specific impact tables showing the projected UCC payment for each eligible hospital.

For Georgia hospitals, the annual IPPS final rule is the authoritative source for UCC payment projections. The hospital-specific Factor 3 calculations published in the rule indicate the approximate UCC payment each Georgia hospital can expect for the upcoming federal fiscal year, subject to subsequent year-end reconciliation based on actual data.

Audit and Worksheet S-10 data quality

In the early years of the UCC pool, Worksheet S-10 data quality was a recognized weakness. Different hospitals interpreted the instructions differently, charity care policies varied widely, and audit attention was limited. CMS issued increasingly detailed instructions over time, and the Medicare Administrative Contractors, including Palmetto GBA serving Georgia, expanded their audit scope to include Worksheet S-10 review.

The Bipartisan Budget Act of 2018 reinforced Worksheet S-10 as the data source for Factor 3 and provided additional statutory authority for audit and verification. CMS has continued to refine the audit methodology and to issue clarifying guidance.

For Georgia hospitals, accurate Worksheet S-10 reporting is essential. A hospital that under-reports charity care will receive a smaller UCC payment than its actual uncompensated care burden would justify. A hospital that over-reports charity care risks audit findings, claim adjustments, and potential overpayment recovery. The standard Worksheet S-10 audit by Palmetto GBA verifies that charity care meets the hospital's documented charity care policy, that the policy is consistent with CMS instructions, that non-Medicare bad debt reflects reasonable collection efforts, and that the cost-to-charge ratio is correctly applied.

Worked example 1: Georgia hospital DSH plus UCC calculation

Consider a Georgia urban teaching hospital with high DPP (above the threshold) and a meaningful pre-ACA empirically justified DSH payment under Section 1886(d)(5)(F).

Under the post-ACA framework:

• The empirically justified DSH continues at a reduced share of the pre-ACA calculation
• The remainder of the hospital's pre-ACA DSH share contributes to the national UCC pool (this amount goes into the national pool, not back to this hospital specifically)

This hospital's UCC payment is then calculated from the product of Factor 1, Factor 2, and Factor 3:

• Factor 1: the national pre-ACA DSH equivalent (the operative figure is published in the IPPS Final Rule)
• Factor 2: the insurance-coverage adjustment (the operative figure is published in the IPPS Final Rule)
• Hospital's Factor 3: this hospital's share of national uncompensated care
• Hospital UCC payment = Factor 1 multiplied by Factor 2 multiplied by Factor 3

Total DSH and UCC for this hospital equals the empirically justified DSH plus the UCC payment.

Compared to its pre-ACA DSH, this hospital's total DSH-equivalent revenue has fallen, reflecting the combination of insurance coverage expansion since the baseline (Factor 2 effect) and the redistribution of the pool based on actual uncompensated care rather than DPP (Factor 3 effect).

The actual numbers vary substantially by hospital depending on Worksheet S-10 reporting accuracy and the hospital's actual uncompensated care burden relative to its pre-ACA DPP. Hospitals with high actual uncompensated care (high Worksheet S-10 reporting) come out relatively better under the new framework than under the pre-ACA framework. Hospitals with low actual uncompensated care but high DPP come out relatively worse.

Worked example 2: Worksheet S-10 charity care reporting

Consider a Georgia hospital's Worksheet S-10 charity care reporting for a recent cost report year:

• Total gross charges for the year
• Charity care charges (the charity care line)
• Non-Medicare bad debt charges (the non-Medicare bad debt line)
• Cost-to-charge ratio (from the hospital's cost report)

Calculation of uncompensated care cost:

• Charity care cost equals charity care charges multiplied by the CCR
• Non-Medicare bad debt cost equals non-Medicare bad debt charges multiplied by the CCR
• Total uncompensated care cost is the sum of the two cost figures

CMS would use this cost-report-year value, combined with the comparable values for the other years in the averaging window, to compute the rolling average for the operative IPPS Final Rule.

If the hospital's averaged uncompensated care is a given dollar figure and the total averaged uncompensated care for all eligible hospitals is another dollar figure, the hospital's Factor 3 is the ratio of the two. Multiplied by Factor 1 and Factor 2, this yields the hospital's UCC payment.

Worked example 3: Rolling average for Factor 3

The rolling average methodology is designed to smooth year-to-year variation in Worksheet S-10 reporting. Consider a Georgia hospital with the following Worksheet S-10 reported uncompensated care cost across three cost-report years: a moderate year, a high year, and a year in between. The averaged uncompensated care across those years is used as the numerator in the Factor 3 calculation for the corresponding IPPS Final Rule (which typically uses cost-report years lagging the rule year by several years due to audit settlement).

This approach prevents a single year of unusually high or low uncompensated care reporting from disproportionately affecting the hospital's UCC payment. It also creates an incentive for consistent year-over-year reporting practices, since variation in methodology between years can skew the average.

Worked example 4: Factor 1 × Factor 2 × Factor 3 hospital payment calculation

Putting the full hospital-specific UCC calculation together:

• Factor 1 multiplied by Factor 2 yields the adjusted national uncompensated care pool baseline
• The pool size is calibrated against the redirected share specified by Section 1886(r)
• For a Georgia hospital with a given Factor 3 (its share of national uncompensated care):
  • UCC payment equals the pool size multiplied by Factor 3

The exact pool size and hospital-specific Factor 3 are published in the IPPS final rule impact table, eliminating ambiguity for budgeting purposes.

Worked example 5: Pre-ACA vs post-ACA DSH revenue comparison

A meaningful question for Georgia safety-net hospitals is how their total DSH-equivalent revenue under the post-ACA framework compares to what they would have received under the pre-ACA framework. The comparison depends on the relationship between the hospital's DPP (which drives empirically justified DSH) and the hospital's Worksheet S-10 reported uncompensated care (which drives UCC).

Consider three stylized Georgia hospitals:

Hospital A (urban safety-net with high DPP and high uncompensated care):

• Pre-ACA DSH: meaningful
• Post-ACA empirically justified DSH: reduced
• Post-ACA UCC: high Factor 3 due to high uncompensated care
• Total post-ACA: comparable to pre-ACA, modestly lower

Hospital B (urban hospital with high DPP but moderate uncompensated care):

• Pre-ACA DSH: meaningful
• Post-ACA empirically justified DSH: reduced
• Post-ACA UCC: moderate Factor 3
• Total post-ACA: substantially lower than pre-ACA

Hospital C (rural hospital with moderate DPP and high uncompensated care):

• Pre-ACA DSH: smaller
• Post-ACA empirically justified DSH: reduced
• Post-ACA UCC: relatively high Factor 3 due to high rural uncompensated care
• Total post-ACA: close to or above pre-ACA level

The pattern, in stylized form, is that hospitals with high actual uncompensated care benefit from the UCC redistribution, while hospitals with high DPP but lower actual uncompensated care lose revenue. Georgia hospitals fall along this spectrum based on their specific characteristics.

Worked example 6: Georgia non-expansion impact on UCC

Georgia's status as a non-Medicaid-expansion state has direct implications for both empirically justified DSH and UCC payments. Under the pre-ACA DSH framework, Medicaid days were a major component of the disproportionate patient percentage, and a non-expansion state Medicaid eligibility floor produced relatively fewer Medicaid days than an expansion state Medicaid floor would produce. Under the UCC framework, the populations that would have been Medicaid-covered in an expansion state instead remain uninsured in Georgia, producing more charity care and more non-Medicare bad debt on Georgia hospitals' Worksheet S-10.

The net result is that Georgia hospitals tend to have relatively higher Worksheet S-10 reported uncompensated care than comparable hospitals in expansion states. This raises their Factor 3 share of the national UCC pool. At the same time, the Medicaid fraction component of DPP is lower than it would be in an expansion state, modestly reducing the empirically justified DSH base.

In aggregate, Georgia hospitals receive a larger share of national UCC payments than their share of national hospital count would predict, reflecting the higher uncompensated care burden in non-expansion states. This dynamic is one reason that hospital associations and safety-net hospital advocacy groups have closely watched the UCC framework methodology.

Best practices for Georgia hospital UCC management

1. Maintain a clear, documented charity care policy consistent with CMS Worksheet S-10 instructions and update it annually to reflect any changes in eligibility criteria or income thresholds.

2. Train financial counselors and registration staff on charity care screening to ensure that qualifying patients are identified and that charges are properly classified for Worksheet S-10 reporting.

3. Implement presumptive charity care screening for patients who lack the means to complete a charity application but clearly meet eligibility criteria based on available data.

4. Maintain documented collection efforts for non-Medicare bad debt to support reporting and withstand Palmetto GBA audit.

5. Reconcile Worksheet S-10 data with internal financial records before submitting the Medicare Cost Report to ensure accurate reporting of charity care and bad debt.

6. Monitor the annual IPPS final rule for changes to Factor 1, Factor 2, and Factor 3 methodology and assess the impact on the hospital's projected UCC payment.

7. Engage with the Georgia Hospital Association and national hospital associations on UCC advocacy and methodology refinement proposals.

8. Coordinate Worksheet S-10 reporting across multi-hospital systems to ensure consistency in charity care policy interpretation and bad debt classification.

9. Conduct internal pre-audit reviews of Worksheet S-10 data quarterly to identify and correct errors before annual cost report submission.

10. Document any methodology changes or interpretation shifts in Worksheet S-10 reporting to maintain audit-ready records.

11. Coordinate UCC analysis with 340B Drug Pricing Program eligibility tracking, since both depend on disproportionate share calculations.

12. Coordinate with the Georgia Department of Community Health on Medicaid DSH framework and uncompensated care reporting to avoid duplication or inconsistency.

13. Engage outside reimbursement consultants for complex Worksheet S-10 questions and audit defense.

14. Educate clinical and administrative leadership on the financial significance of UCC payments and the practical importance of charity care policy implementation at the patient encounter level.

Common issues with Georgia hospital UCC reporting and audit

1. Charity care policy not updated for current federal poverty level guidelines. Hospitals using outdated FPL tables may misclassify patients and produce non-compliant charity reporting.

2. Charity applications missing required documentation. Income verification, household size, and asset declarations must be on file for charity care charges to qualify for Worksheet S-10 inclusion.

3. Presumptive charity not consistently applied. Some hospitals apply presumptive charity inconsistently, producing audit findings on either over-inclusion or under-inclusion.

4. Bad debt collection efforts not documented. Without evidence of reasonable collection efforts, non-Medicare bad debt may be disallowed on audit.

5. Cost-to-charge ratio errors. Incorrect CCR application can substantially mis-state uncompensated care cost, affecting Factor 3 share.

6. Double-counting of Medicare bad debt on Worksheet S-10. Medicare bad debt belongs on the Medicare bad debt worksheet, not the Worksheet S-10 non-Medicare bad debt line, and inclusion on both produces audit findings.

7. Discounted self-pay treated as charity. Self-pay discounts that do not meet charity policy criteria should not be reported as charity care.

8. Insurance denial write-offs misclassified. Write-offs due to insurance contract issues are not uncompensated care for Worksheet S-10 purposes.

9. Methodology shifts not documented year over year. Internal classification changes between cost report years can produce audit findings about consistency.

10. Cost report filing delays. Late or amended cost report filings can delay UCC payment processing and create timing issues.

11. Worksheet S-10 reconciliation with general ledger missing. Without clear reconciliation, audit defense becomes difficult.

12. Charity care policy not communicated to patients. Federal regulations and ACA Section 501(r) for tax-exempt hospitals require patient notification, and audit findings can result from inadequate notice.

13. Joint venture and partnership uncompensated care not properly attributed. When multiple entities share patient care, attribution of uncompensated care must follow specific rules.

14. Hospital acquisitions and changes of ownership affecting Worksheet S-10 historical data. When ownership changes, the historical Worksheet S-10 baseline must be appropriately attributed.

Coordination with Medicaid DSH

The Medicare UCC pool is one of two major federal-state DSH frameworks. The other is the Medicaid Disproportionate Share Hospital framework administered jointly by CMS and state Medicaid agencies, including the Georgia Department of Community Health.

Medicaid DSH operates under Section 1923 of the Social Security Act and is structured differently from Medicare DSH and UCC. Medicaid DSH is capped per state, with each state receiving an annual federal allotment. States distribute Medicaid DSH to hospitals based on state-specific methodologies, subject to federal upper payment limits and hospital-specific DSH limits.

For Georgia hospitals, Medicaid DSH and Medicare UCC are separate payment streams that nonetheless reflect overlapping concerns about uncompensated care and serving low-income populations. A Georgia hospital may receive both Medicaid DSH from the state and Medicare UCC from the federal government. The two payment streams are coordinated to the extent of avoiding double-counting on the cost report, but the methodologies and timing are distinct.

The ACA originally contemplated reductions in Medicaid DSH similar to the Medicare DSH restructuring. The Medicaid DSH allotment reductions have been delayed multiple times through legislation and continuing resolutions. Future legislation could change this.

Coordination with the 340B Drug Pricing Program

The 340B Drug Pricing Program under Section 340B of the Public Health Service Act allows qualifying hospitals to purchase outpatient drugs at significant discounts. 340B eligibility for disproportionate share hospitals is tied to the Medicare DSH adjustment percentage. For the operative DSH adjustment percentage threshold, consult the current HRSA 340B eligibility guidance.

The post-ACA UCC restructuring did not change the 340B eligibility threshold. The DSH adjustment percentage used for 340B eligibility is calculated based on the disproportionate patient percentage methodology, the same calculation that drives the empirically justified DSH payment. Hospitals that qualified for 340B before ACA continue to qualify, assuming their DPP remains above the threshold.

For Georgia hospitals, 340B and UCC operate as parallel federal support mechanisms. Both depend on DSH framework participation. A safety-net hospital that qualifies for both receives 340B drug savings and UCC payments, both of which contribute to financial viability for treating low-income populations.

PRRB appeals on UCC issues

The Provider Reimbursement Review Board (PRRB) is the administrative tribunal that hears Medicare reimbursement disputes. Hospitals can appeal UCC payment determinations and Worksheet S-10 audit findings to the PRRB.

Typical UCC appeals address:

• Disallowance of charity care charges due to documentation deficiencies
• Disallowance of non-Medicare bad debt due to insufficient collection efforts
• Cost-to-charge ratio disputes
• Factor 3 calculation errors
• Rolling average computation issues
• Methodology disputes between CMS and hospitals

PRRB appeals require timely filing and procedural compliance. A hospital must file a request for hearing within 180 days of the final determination, and hospitals must follow the PRRB rules of practice. Outcomes can substantially affect UCC payments, particularly for large safety-net hospitals where Factor 3 differences translate to material dollar amounts.

For Georgia hospitals, PRRB appeals on UCC issues have become more common as audit attention has increased. The Georgia Hospital Association and outside reimbursement counsel often coordinate on PRRB strategy across multiple hospitals facing similar audit issues.

OIG audits and oversight

The Office of Inspector General of the Department of Health and Human Services audits UCC payments and Worksheet S-10 reporting. Recent OIG audit reports have identified systemic issues with Worksheet S-10 data quality, including inconsistent charity care policies, inadequate documentation of bad debt collection efforts, and cost-to-charge ratio errors.

OIG findings have informed CMS rulemaking and audit methodology refinements. The BBA 2018 codifications partly responded to OIG recommendations about Worksheet S-10 audit and data quality. Continued OIG attention is expected as the UCC pool remains a multi-billion-dollar annual federal payment with material financial significance for safety-net hospitals.

Industry perspectives

AHA position

The American Hospital Association has been cautiously supportive of the UCC framework while advocating for methodology refinements. AHA has raised concerns about Worksheet S-10 data quality, Factor 2 calculation methodology, and the relationship between the UCC pool size and actual uncompensated care burden. AHA advocacy has contributed to several IPPS rulemaking refinements.

America's Essential Hospitals

America's Essential Hospitals represents major safety-net hospitals nationally. The organization has been a vocal advocate for UCC framework improvements, including Worksheet S-10 data quality enhancements, Factor 2 calibration, and pool size adequacy. Grady Memorial in Atlanta and other Georgia safety-net hospitals are members.

MedPAC analyses

The Medicare Payment Advisory Commission (MedPAC) has analyzed the UCC framework in multiple reports, generally finding the framework reasonable in concept but identifying areas for improvement. MedPAC recommendations have addressed Worksheet S-10 data quality, Factor 2 methodology, and the coordination with Medicaid DSH and other federal uncompensated care programs.

CBO scoring

The Congressional Budget Office has scored UCC framework legislation and projected pool size over time. CBO analyses inform congressional decision-making on UCC framework modifications.

Future UCC reform discussions

Several ongoing policy debates affect the future of the UCC framework:

Worksheet S-10 data quality

CMS continues to refine Worksheet S-10 instructions and audit methodology. Future rulemaking may further standardize charity care reporting, bad debt documentation, and cost-to-charge ratio application.

Pool size adequacy

Some advocates argue that the UCC pool is insufficient to cover actual hospital uncompensated care, particularly in non-expansion states. Future legislative or regulatory action could adjust Factor 1 calibration or modify the empirically-justified-vs-UCC split.

Medicaid expansion coordination

The interaction between the UCC pool and state Medicaid expansion remains a subject of debate. Non-expansion states like Georgia argue for UCC framework adjustments that reflect the higher uninsured burden in non-expansion states.

Insurance coverage volatility

Factor 2 depends on the uninsured rate, which has been volatile during the COVID era and the post-pandemic Medicaid unwinding. Future Factor 2 methodology may incorporate longer averaging periods or alternative data sources to reduce volatility.

Major Georgia UCC recipient hospitals

Without publishing specific dollar amounts (which vary annually and are published in the IPPS final rule impact tables), the following Georgia hospitals are among the major UCC recipients:

• Grady Memorial Hospital, Atlanta: Major urban safety-net hospital serving Atlanta's uninsured population. Major UCC payment recipient. Operated by the Grady Health System.
• Augusta University Medical Center, Augusta: Academic medical center serving the Central Savannah River Area. Significant uncompensated care burden.
• Memorial Health, Savannah: Regional safety-net hospital and trauma center. Major UCC recipient for South Georgia.
• Phoebe Putney Memorial Hospital, Albany: Regional medical center serving Southwest Georgia. Significant UCC payments.
• Northeast Georgia Medical Center, Gainesville: Large regional medical system serving Northeast Georgia. Substantial UCC payments.
• Atrium Health Floyd, Rome: Northwest Georgia regional medical center. UCC recipient.
• Piedmont Atlanta Hospital, Atlanta: Major Atlanta teaching hospital. UCC recipient.
• Wellstar Kennestone Regional Medical Center, Marietta: Major suburban Atlanta facility. UCC recipient.
• Emory University Hospital and Emory University Hospital Midtown, Atlanta: Academic medical centers. UCC recipients.
• Children's Healthcare of Atlanta: Children's specialty system with its own dynamics.
• Other Georgia teaching, urban, and rural hospitals: Many additional Georgia hospitals receive UCC payments based on their Worksheet S-10 reported uncompensated care.

The exact dollar amounts are published annually in the IPPS final rule impact table and on the CMS website.

Palmetto GBA UCC payment processing

Palmetto GBA serves as the Medicare Administrative Contractor for Georgia, processing Medicare cost reports and administering UCC payments for Georgia hospitals. Palmetto GBA functions include:

• Receiving and reviewing annual Medicare Cost Reports CMS-2552-10 including Worksheet S-10
• Conducting Worksheet S-10 audit
• Issuing final settlement determinations
• Processing UCC payments based on IPPS final rule
• Providing technical assistance and provider education
• Handling reopenings and audit appeals

Georgia hospitals interact with Palmetto GBA throughout the cost report cycle, from initial filing through audit and final settlement. For the current Palmetto GBA Provider Customer Service contact details, consult the Palmetto GBA website.

Patient access implications

The UCC payment framework, while primarily a hospital reimbursement issue, has direct implications for Medicare beneficiary access to care in Georgia.

Hospitals that receive UCC payments are better positioned to maintain emergency department capacity, inpatient operations, and outpatient services in communities where the alternative might be downsizing or closure. Georgia's rural hospital crisis has been characterized by multiple closures over the past decade, and the survival of remaining rural and safety-net hospitals depends in part on federal payment streams including UCC.

For Medicare beneficiaries, particularly those in rural Georgia and in lower-income urban neighborhoods, the financial viability of their local hospital is a precondition for access to care. UCC payments contribute to that viability. Without UCC payments, the financial pressure on Georgia safety-net hospitals would be substantially greater, and the risk of service reduction or closure would be higher.

Workforce considerations

Safety-net hospitals receiving UCC payments employ substantial workforces, including emergency physicians, nurses, technicians, and administrative staff. UCC payments contribute to total hospital revenue and indirectly support workforce maintenance.

For Georgia safety-net hospitals, the workforce challenge is acute. Recruiting and retaining clinical staff in non-expansion state safety-net hospitals is difficult, and UCC revenue helps support competitive compensation and benefits. Workforce stability at safety-net hospitals matters for patient access and quality of care.

Telehealth and UCC implications

The Worksheet S-10 framework includes telehealth services as part of charity care reporting if the services meet the hospital's charity policy. As telehealth volume has grown post-pandemic, hospitals must address how telehealth charges are documented and reported on Worksheet S-10.

For Georgia, telehealth has become an important access tool for rural and underserved populations. Hospital telehealth charges to uninsured patients that qualify for charity care should be included in Worksheet S-10 reporting consistent with hospital charity policy.

Capital and infrastructure considerations

UCC payments contribute to overall hospital revenue and indirectly support capital investment. Safety-net hospitals receiving UCC payments are better positioned to maintain physical infrastructure, equipment, and information technology.

For Georgia, the capital needs of safety-net hospitals are substantial. Aging facilities, technology upgrades, and expansion to meet community needs all require capital investment, and UCC revenue is one of the funding sources that supports those investments.

Coordination with state and federal programs

The UCC framework operates alongside multiple other state and federal programs that support hospital uncompensated care and safety-net operations. These include:

• Medicaid Disproportionate Share Hospital (DSH): State-administered with federal matching
• 340B Drug Pricing Program: Outpatient drug discounts
• Bad Debt Reimbursement (Medicare): Separate from Worksheet S-10 bad debt
• Indigent Care Trust Fund (Georgia): State-specific uncompensated care support
• Tobacco settlement funds and other state mechanisms: Various state-specific support
• Federally Qualified Health Center grants: For clinic-based services
• Rural Health Clinic certifications: For rural clinic operations

Georgia hospitals navigating these multiple programs require sophisticated finance and reimbursement teams or external consulting support to optimize total federal and state revenue.

A few more common questions:

When did the UCC pool take effect? The UCC pool took effect at the start of federal fiscal year 2014. Annual updates to Factor 1, Factor 2, and hospital-specific Factor 3 occur through the IPPS Final Rule each year, with provisions taking effect on October 1 of each year.

Why was the UCC pool created? The ACA drafters viewed the pre-ACA DSH framework as needing reform because it was based entirely on patient mix through the disproportionate patient percentage (DPP) rather than on actual uncompensated care, and it did not automatically adjust for changes in insurance coverage. Section 3133 was designed to redirect a portion of DSH payments to hospitals based on actual uncompensated care reporting and to adjust the pool size annually as insurance coverage changed under the broader ACA framework.

What is the difference between empirically justified DSH and UCC? Empirically justified DSH is the retained component that continues to use the pre-ACA DPP-based calculation under Section 1886(d)(5)(F). It is paid as part of the IPPS inpatient base payment to qualifying hospitals. UCC is the redirected component distributed using the Factor 1 multiplied by Factor 2 multiplied by Factor 3 methodology based on Worksheet S-10 uncompensated care reporting.

What is the disproportionate patient percentage (DPP)? DPP is the metric used to determine empirically justified DSH eligibility and payment. It is calculated as the sum of two fractions: (1) the Medicare-SSI fraction, the percentage of Medicare patient days attributable to Medicare beneficiaries who also receive Supplemental Security Income, and (2) the Medicaid fraction, the percentage of total inpatient days attributable to Medicaid patients not covered by Medicare. Adding the two yields DPP.

How much money is in the UCC pool? The UCC pool size is published annually in the IPPS final rule and reflects Factor 1 (CMS estimate of pre-ACA DSH equivalent) multiplied by Factor 2 (adjustment for insurance coverage changes). For the current dollar amount, consult the most recent IPPS Final Rule.

What is Factor 1? Factor 1 represents CMS's estimate of what would have been paid as Medicare DSH under the pre-ACA framework without the reduction. It is the aggregate national pool baseline before Factor 2 adjustment. Factor 1 is published annually in the IPPS final rule.

What is Factor 2? Factor 2 is the adjustment for changes in insurance coverage since the baseline. It is calculated as the percentage change in the uninsured rate. Lower uninsured rates produce lower Factor 2 values and a smaller UCC pool. Factor 2 is published annually in the IPPS final rule.

What is Factor 3? Factor 3 is the hospital-specific share of the UCC pool, calculated as the hospital's averaged uncompensated care divided by the total averaged uncompensated care for all eligible hospitals. Worksheet S-10 of the Medicare Cost Report is the data source. Factor 3 is published annually for each eligible hospital in the IPPS final rule impact table.

What is the rolling average? To smooth annual variation in Worksheet S-10 reporting, CMS uses a rolling average of recent cost-report years (with a lag for audit settlement). For the operative averaging window, consult the IPPS Final Rule. This methodology prevents single-year reporting fluctuations from disproportionately affecting hospital UCC payments.

How are charity care and non-Medicare bad debt defined? Charity care is care provided to patients who meet the hospital's documented charity care policy criteria and have charges written off as uncollectible due to inability to pay. Non-Medicare bad debt is unpaid amounts from non-Medicare patients written off as uncollectible after reasonable collection efforts. Both must be documented per CMS instructions and the hospital's policies.

Which Georgia hospitals receive the most UCC? Major Georgia UCC recipients include Grady Memorial Hospital Atlanta, Augusta University Medical Center, Memorial Health Savannah, Phoebe Putney Memorial Albany, Northeast Georgia Medical Center Gainesville, and other safety-net and teaching hospitals. The exact dollar amounts are published annually in the IPPS final rule impact table.

Does UCC affect my Medicare cost-sharing? No. UCC payments are made directly to hospitals as part of the Medicare DSH framework. They do not affect Medicare beneficiary cost-sharing for Part A inpatient services or Part B outpatient services. The Part A deductible, coinsurance, and lifetime reserve days are unaffected by UCC.

What is the role of Palmetto GBA? Palmetto GBA is the Medicare Administrative Contractor for Georgia, processing Medicare cost reports, conducting Worksheet S-10 audits, issuing settlement determinations, and administering UCC payments. For current Palmetto GBA Provider Customer Service contact details, consult the Palmetto GBA website.

What is the relationship between UCC and 340B? The 340B Drug Pricing Program requires hospitals to qualify based on their Medicare DSH adjustment percentage. The post-ACA UCC restructuring did not change the 340B eligibility threshold. A hospital that qualifies for empirically justified DSH and UCC will also qualify for 340B if its DSH adjustment percentage exceeds the threshold.

How does UCC coordinate with Medicaid DSH? Medicare UCC under Section 1886(r) and Medicaid DSH under Section 1923 of the Social Security Act are separate payment frameworks. Medicare UCC is federally administered with federal-only funding. Medicaid DSH is state-administered with federal matching. A hospital may receive both.

How often is Factor 3 updated? Factor 3 is updated annually through the IPPS final rule. Each year, the most recent years of Worksheet S-10 audited data within the operative averaging window are used to calculate the new Factor 3 values. The hospital-specific Factor 3 may shift year over year based on changes in uncompensated care reporting and changes in the relative share among all eligible hospitals.

What happens to UCC payments if a hospital closes? A hospital that closes during a fiscal year may be eligible for partial UCC payments for the portion of the year it was operational, subject to specific CMS rules on partial-year payment adjustment. Following closure, the hospital is removed from the Factor 3 calculation pool for future years.

How does an audit by Palmetto GBA work? Palmetto GBA reviews the hospital's Worksheet S-10 reporting against the hospital's charity care policy, documentation of charity applications, evidence of reasonable bad debt collection efforts, and cost-to-charge ratio calculations. Audit findings may adjust reported amounts upward or downward. Hospitals can dispute findings through the reopening and PRRB appeals processes.

What is the future of the UCC framework? Future reform discussions address Worksheet S-10 data quality refinements, Factor 2 calibration methodology, UCC pool size adequacy, coordination with Medicaid expansion status, and potential adjustments to the empirically-justified-vs-UCC split. Legislative and regulatory action could modify the framework, though the structural elements have remained stable through multiple administrations.

How can a Georgia beneficiary or family member learn more? Medicare beneficiaries and families with general Medicare questions can call 1-800-MEDICARE. For Georgia-specific hospital and payment questions, the Georgia State Office of Rural Health, the Georgia Hospital Association, and the Georgia Department of Public Health provide relevant information.