By Becca Meredith, CPA, FHFMA, Senior Manager at Blue & Co.
For Medicare cost reporting periods ending on or after January 1, 2026, many acute care hospitals will have to report using Worksheet S-12.
Worksheet S-12 requires hospitals to integrate Medicare cost reporting, price transparency MRF data, and patient accounting information into a single filing.
As with all changes to CMS guidance, our healthcare consulting team at Blue & Co., LLC is here to support your healthcare organization through the transition reporting Worksheet S-12. Becca Meredith, Senior Manager of Healthcare Reimbursement at Blue & Co. wrote an article providing an overview about this change in CMS guidance and how hospitals can start preparing.
She recently answered several frequently asked questions about Worksheet S-12.
What is Worksheet S-12, and who needs to pay attention to it?
Worksheet S-12 is a new Medicare cost report requirement for subsection (d) IPPS hospitals. This is not a requirement for Critical Access Hospitals to complete. It applies to cost reporting periods ending on or after January 1, 2026.
Hospitals need to:
- Identify their Medicare Advantage inpatient discharges during the cost reporting period
- Match those to the negotiated payment rates published in the hospital’s price transparency machine-readable file (MRF)
- Calculate the median negotiated rate for each MS-DRG and report it on the Worksheet S-12
Why is CMS requiring hospitals to complete Worksheet S-12?
Beginning in 2029, CMS intends to use the data from Worksheet S-12 to incorporate more market-based payment information to help set MS-DRG rates.
A hospital’s individual worksheet does not directly set its own payment rate. However, the information reported nationally can help shape future Medicare payment weights.
Why is this worksheet different from a typical cost report schedule?
Worksheet S-12 brings together data that often lives in completely different places.
To complete the worksheet, hospitals must combine data from multiple sources:
- Hospital Machine-Readable File (MRFs)
- Inpatient discharge records
- Medicare Advantage payer and contract information
This is a tedious process. In my view, the biggest challenge is not the median calculation, it’s making sure those data sources align and are complete.
What should hospitals expect when Worksheet S-12 is audited by the MACs?
CMS has not issued detailed audit procedures yet. Hospitals should prepare as though every calculation and mapping may need to be supported.
My advice is to retain a clear path to how the medians were calculated, not just the final number.
As we start to encounter different audit requests and trends, we will write thought leadership articles to keep our clients informed. Be sure to sign up at blueandco.com/newsletter.
What is one item you think the MACs will check for during audit that providers may not be prepared for?
The machine-readable file (MRF) file that is used to prepare the Worksheet S-12 needs to be the same file that is posted on your website on the day the cost report is filed.
Coordination with the price transparency team is important. Make sure there are no plans to post a new MRF before the cost report filing. Otherwise, you need to wait until the new file is out there to complete the Worksheet S-12.
You should take a screenshot of the MRF that is posted to the website on the date of the cost report filing.
Do you think CMS has plans to do more with Medicare Advantage reporting in the future?
We can’t really know CMS’s future plans until they issue additional guidance.
My view is that as the data becomes more consistent, I would not be surprised to see additional reporting requirements or expanded uses.
My hope is that CMS will continue to collect data to promote greater transparency and accountability in Medicare Advantage payment practices.
