"This Public Use File demonstrates the impact of a methodology that calculates Factor 3 for FY 2018 for using uncompensated care costs from Worksheet S-10 of hospitals' FY 2014 cost reports. Analyses reflect the impact on hospital types based on hospitals that were expected to receive DSH in FY2018. To the extent that hospitals not expected to receive DSH become DSH eligible, the estimated impact would be different."	
	
Methodology	
Data Sources:	
1.	SSI Ratio Files for FY 2014
2.	FY 2017 IPPS Final Rule Correction Notice
3.	FY 2017 IPPS Final Rule Correction Notice Impact File
4.	December 2016 POS File
5.	"FY 2014 Medicare Cost Reports (S-2, Column 1, Line 21) (to determine Type of Ownership only)"
6.	CMS-provided Mergers and Acquisitions list for FY 2018 (2/23/17)
7.	CMS-provided list of Sole Community Hospitals projected to be paid on their Hospital-specific Rate for FY 2018 (3/24/17)
8.	CMS-provided Terminated/Tied Out of Medicare List (2/23/17)
9.	2011 and 2012 Indian Hospital List (6/23/16)
10.	CMS-provided 2012 - 2013 Worksheets S-2/S-3 (2010 Format) with extracted Medicaid Days (2/23/17) (December 2016 HCRIS Update)
11.	CMS-provided 2014 Worksheet S-10 data (3/21/17) (December 2016 HCRIS Update)
12.	"CMS-provided Cost to Charge Ratios from Worksheet S-10, trimmed (3/20/17)"
13.	CMS-provided  DSH Eligible List (2/23/17)
14.	CMS-provided list of new hospitals (2/23/17)
	
Factor 3 Calculation:	
1.	"Determine list of hospitals to analyze by using all hospitals listed in any of data sources 6, 9, and 13 and not listed in data sources 7, 8 or 14. Further exclude Maryland hospitals. To be DSH-eligible for FY 2018, a hospital must have a DSH percentage in the CMS-provided data greater than or equal to 15 percent"
	
	Preliminary Calculation of Medicaid Days and SSI Days for FY 2013 for use in determining Factor 3 for HIS Hospitals and Hospitals in Puerto Rico
2.	Determine FY 2013 Medicaid Days from S-2 and S-3 (data source 10)
	" For hospitals with multiple records within a given FY worksheet, sum the S-2 Medicaid Days across the multiple records; sum the S-3 Medicaid Days across the multiple records; and sum the length of the reporting period across the multiple records"
3.	"For each hospital, determine its Medicaid Days for 2013 through the following sequence:"
	" If S-2 Medicaid Days > 0, use that value"
	" Otherwise, use S-3 Medicaid Days if S-3 Medicaid Days > 0"
	" Otherwise, Medicaid Days are missing for 2013"
	 Annualize all Medicaid days based upon the length of the cost reporting period to reflect one year of data: divide the length of a full year (365 days) by the total length of the hospital's cost reporting period. Multiply this quotient by the number of Medicaid days in the cost reporting period.
4.	"Determine SSI Days for all hospitals in 2014, except for Puerto Rican hospitals, using SSI Days from 2014 SSI Ratios File"
5.	"For hospitals in Puerto Rico (provider number '40XXXX'), assign [0.14  (Medicaid Days as determined in Step 3)] to be its SSI Days, rounded to the nearest whole number"
	
	Preliminary Calculation of Uncompensated Care Costs for FY 2014
6.	Calculate UCC as defined as Charity Care and Non-Medicare Bad Debt from Worksheet S-10:
	"[(Line 1 CCR adjusted by CMS' trim if applicable x charity care S-10 line 20, column 3)  (Payments received for charity care S-10 line 22, Column 3)] + [(Line 1 CCR adjusted by CMS' trim if applicable  x Non-Medicare and non-reimbursable Bad Debt S-10 line 28)]"
	 Missing values of each formula component are treated as zero in this step
	 Negative values of each formula component are left unchanged
	 Set all negative values for the resulting calculation of UCC to zero
	 Set UCC to zero for all hospitals that do not have data for Worksheet S-10
	 Set UCC to zero for all hospitals without a cost to charge ratio
	 Set UCC to zero for all IHS hospitals and hospitals in Puerto Rico
7.	Annualize UCC based upon the length of the cost reporting period to reflect one year of data: divide the length of a full year (365 days) by the total length of the hospital's cost reporting period and multiply this quotient by the calculated UCC
	
	Mergers and Acquisitions
8.	"Flag each hospital as being in the mergers and acquisitions list or not, and flag surviving hospitals in the list"
9.	"For each surviving hospital, add together 2013 Medicaid Days as determined in Step 3 and Medicaid Days of the non-surviving hospital(s)"
	 Assign the value of zero to acquired hospitals for Medicaid Days
10.	"For each surviving hospital involved in a merger or acquisition, add together 2014 SSI Days as determined after Step 4 (Step 5 for hospitals in PR) and SSI Days of the acquired hospital"
	 Assign the value of zero to acquired hospitals for SSI Days
11.	" For each surviving hospital involved in a merger or acquisition, for 2014, add together its UCC as determined after Step 7 with the UCC of the non-surviving hospital(s)"
	 Assign the value of zero to acquired hospitals for UCC
	Factor 3 and Exclusions
12.	Determine Insured Low Income Days for 2013 by adding 2013 Medicaid Days to 2014 SSI Days
13.	"For IHS hospitals and hospitals in Puerto Rico, calculate each hospital's 2013 Factor 3 to be its Insured Low Income Days proportion out of the total Insured Low Income Days for 2013, using the Insured Low Income Days after Step 12"
14.	"For all non-IHS and non-Puerto Rico hospitals, calculate each hospital's Factor 3 for 2014 to be its UCC proportion out of the total UCC in 2014, using the UCC after Step 7"
15.	"For IHS hospitals and hospitals in Puerto Rico, set the 2014 Factor 3 to the value of Factor 3 from 2013"
16.	"For each hospital, calculate the final scaled Factor 3 by multiplying the hospital's 2014 Factor 3 by the inverse of the sum of all 2014 Factor 3 values (the sum across all eligible hospitals)"
	
Impact Analysis:	
	2017 Constants:
	"Total DSH Estimate: $14,396,635,710 (provided by CMS)"
	Factor 2: 55.36% (provided by CMS)
	2018 Constants:
	"Total DSH Estimate: $16,002,553,460 (provided by CMS)"
	Factor 2: 58.01% (provided by CMS)
	Formulas:
	UCP Percent: 75%  Factor 2  Factor 3
	UCP Dollars: UCP Percent  Total DSH Estimate
	Modeled DSH Percent: 25%  (Previous Factor 3 from FY 2017 FR CN regardless of Eligibility) + 75%  Factor 2  Factor 3
	Modeled DSH Dollars: Modeled DSH Percent  Total DSH Estimate
	Notes:
	All hospital characteristics except for Type of Ownership are determined from the 2017 IPPS Correction Notice Impact File; the 2016 IPPS Correction Notice Impact File was used if the hospital did not appear in the 2017 file
	"Type of Ownership is determined by the December 2016 POS file, with FY 2014 Cost Reports used to supplement ownership when unknown in the POS file"
	"Analysis includes hospitals who are DSH eligible, are not SCHs, and have not been excluded for any other reason"
	 Sole Community Hospitals in FY 2018 are not included in these analyses
	 Maryland hospitals are not included in these analyses
	 Hospitals that have terminated or tied out of Medicare are not included in these analyses
	 New hospitals are not included in these analyses
	Hospitals not listed with a Factor 3 in the FY 2017 IPPS Final Rule Correction Notice will be assigned a 0.000 Factor 3 for FY 2017
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
