Financial Reporting Requirements for Medicaid Quality Incentive Program

July 11, 2017

To:                       CFOs, Quality Leaders, Data Contacts, Public Policy Advisors (at PPS AND CPE hospitals)

From:                  Claudia Sanders, SVP, Policy Development & Andrew Busz, Policy Director, Finance

Staff Contact:   Andrew Busz, (206) 216-2533

Subject:             Financial Reporting Requirements for Medicaid Quality Incentive Program

Purpose            The purpose of this bulletin is to make hospitals aware of financial reporting requirements now tied to the Medicaid Quality Incentive Program (MQIP).

All prospective payment system hospitals eligible for MQIP.

Hospital staff should familiarize themselves with reporting requirements and timelines and ensure that financial data submissions to the Department of Health (DOH) are occurring in a timely manner. Failure to comply with these reporting requirements will jeopardize your hospital’s eligibility for quality incentive payments. These financial reporting requirements have been in effect for many years and apply to all hospitals, but are now tied to the quality incentive program to provide additional incentives for hospitals to comply with timely submissions. As noted below, hospitals should pay speedy attention to submission of CHARS data, especially the upcoming May 2017 discharge data due by July 15, 2017.

A new law was enacted recently to modify some of the provisions in the hospital safety net assessment program (House Bill 5815).  This new law has additional requirements for the Medicaid quality incentive program. The Medicaid quality incentive program provides a one percent increase in Medicaid rates to prospective payment and CPE hospitals if they have met performed well based on a set of quality measures during the prior year.

Under the new law provisions, starting with July 2018, hospitals are only eligible for the incentive increase if they are also in compliance with various existing DOH financial reporting requirements. These reporting requirements include year-end reporting requirements, timely submission of monthly CHARS data, and Databank submission. Hospitals that do not provide timely information will not qualify for the quality incentive payment.  These additional requirements were added to the quality incentive program because several legislators were frustrated that hospitals are not following the current laws on timely reporting of financial information, especially the information related to employee compensation.

Hospitals must be in compliance effective immediately to be eligible for SFY 2019 quality incentive payments DOH must determine whether hospitals have complied with the timely submission requirements by May 16th of each year.   For the Medicaid payment rate increases beginning July 1st 2019, DOH will be using a period from April 2017 to March 2018.  Importantly, DOH is already monitoring submissions. Timely submissions started with the monthly data reporting requirements for discharge data beginning with April data due on June 15th.  The next set of monthly data is due July 15th.  You may want to verify your hospital is reporting this data set in a timely way, or your hospital will not qualify for the MQIP payment increase next July. 

WSHA staff recently met with DOH and HCA staff to obtain details on how they plan to interpret and implement the requirements.  Below is a summary of the requirements.

CHARS Patient discharge information Monthly 45 days following end of month when the discharge occurred
Year-end reports Year-end financial information that includes revenues, expenses, charity care, and other information Annual 120 days following close of fiscal year, (unless granted up to 60-day extension)
Employee Compensation Copy of Form 990, schedule J including the compensation of the lead administrator or the DOH form for the top 5 compensated employees (including also the lead administrator) Annual 135 days following the end of the hospitals fiscal year if using 990 Schedule J, 135 days following end of the hospital’s calendar year if using DOH form.
Provider based clinic Number of provider based clinics charging a facility fee, the number of visits at each of these facilities, the revenue received from the facility fees, and the range of allowable facility fees paid by public or private payers Annual Form to be included with the year-end financial reports
Quarterly Reports Quarterly summary utilization and financial report Quarterly Within 45 days after the end of each calendar quarter

Hospital Discharge Data Reporting The law requires hospitals be in “substantial compliance” with Comprehensive Hospital Abstract Reporting System (CHARS) submission requirements for the period.  Substantial compliance is defined as having submitted data by the due date for at least 9 of the 12 months in the period.  For the Medicaid payment rate increase beginning in July 1st 2018, DOH will be using a data period beginning with CHARS April 2017 data to March 2018 or a compliance period of June 2017 through May 2018. Hospitals that did not submit their April data by June 15 already have one late submission and only three late submissions are allowed for eligibility.  The due date for May data is July 15.

Year-end Financial Reporting  Year-end reports are due 120 days from the close of the hospital’s fiscal year, unless the hospital requests and receives up to a 60-day extension. Our understanding is DOH will determine compliance based on the fiscal year prior to the May 16 date for each year. For hospitals that have received extensions which span May 16, DOH will determine compliance based on the year-end report for the hospital’s previous fiscal year.  As an example, hospitals which request and are granted an extension beyond May 16, 2018 will have eligibility based on whether their fiscal year 2016 year- end report was filed on time.

Employee Compensation Reporting Hospitals are required to provide compensation information for its most highly compensated employees and can provide this information either using the Form 990 schedule J or by using a DOH form.  Note the timeframe for submission varies depending on which form is used.  For hospitals reporting on Form 990 Schedule J, the information is due within 135 days of the end of the hospital’s fiscal year.  For hospitals using the DOH form, it is due within 135 days of the end of the calendar year. More information and forms are available here on the DOH website.

Hospital-based Clinic Reporting Since 2013, hospitals are required provide information related to clinic sites that bill the facility component as a hospital service separate from the professional billing. The information is reported using a DOH form and is due the same time as the hospital’s year-end report. Instructions and a copy of the form are available here on the DOH website.

Quarterly Utilization (Databank) Reporting Hospitals are also required to submit information for quarterly reports. This information is submitted to WSHA monthly through the Databank system and compiled and given to DOH on a quarterly basis, no later than 45 days after the end of each quarter. It is crucial that hospitals remain current on their monthly submissions to ensure the quarterly reports provided to DOH are current. If you have questions regarding your hospitals’ Databank submissions, please contact Jonathan Bennett at

Other information For a number of years hospitals were required to also submit copies of their annual budget to DOH as part of their annual financial information.  This information was used when the state had a rate setting program many years ago, but is no longer used.  While this requirement must be changed through rulemaking, DOH will not be requiring hospitals to submit an annual budget in order to be eligible for the Medicaid Quality Incentive program.

Next Steps Hospitals should ensure that information is submitted within the time period specified for each item.

  • Hospitals should ensure hospital staff or hospitals’ vendor submits CHARS data by the 15th of each month for the preceding month’s data.  We recommend you check to ensure May CHARS data is submitted by July 15.


  • Hospitals should note and track by calendar the other data submission dates. Data should be submitted by due date even if incomplete or preliminary, with any corrections or additions submitted as soon as the data is available.


  • Hospitals should pay special attention to timely submission of employee compensation information.

WSHA will monitor DOH and HCA’s implementation of the bill’s requirements and provide additional information as needed.  If you have questions, please contact Andrew Busz at


The new law, House Bill 5815 states:

To pay an amount sufficient, when combined with the maximum available amount of federal funds necessary to provide a one percent increase in Medicaid hospital inpatient rates to hospitals eligible for quality improvement incentives under RCW 74.09.611. By May 16, 2018 and by each May 16 thereafter, the authority, in cooperation with the department of health, must verify that each hospital eligible to receive quality improvement incentives under the terms of this chapter is in substantial compliance with the reporting requirements in RCW 43.70.052 and 70.01.040 for the prior period. For the purposes of this subsection, “substantial compliance” means, in the prior period, the hospital has submitted at least nine of the twelve monthly reports by the due date. The authority must distribute quality improvement incentives to hospitals that have met these requirements beginning July 1 of 2018 and each July 1 thereafter.


Contact Us

Washington State Hospital Association
999 Third Avenue
Suite 1400
Seattle, WA 98104

Map / Directions

206.281.7211 phone
206.283.6122 fax

Staff List