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Article

Worksheet S-12 is here: What hospitals need to know

June 29, 2026 · Authored by Jonathan Mason

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  • Healthcare
  • Healthcare Compliance
  • Hospitals & Health Systems

Worksheet S-12 has officially arrived.

Finalized in the 2026 OPPS Final Rule, it is the first addition to the S worksheets since 2016, making it one of the most significant statistical reporting changes in nearly a decade. It’s designed to identify the median charges a provider negotiates with Medicare Advantage Organizations for each applicable MS-DRG.

This is significant because in 2029, CMS will begin using the data from Worksheet S-12 to set IPPS MS-DRG weights. This transition will effectively move the MS-DRG payment weight-setting process toward a market-based approach.

Worksheet S-12 is now a required worksheet for most hospital cost reporting periods ending on or after Jan. 1, 2026. While it might not directly impact today’s reimbursement settlement, it will be an important worksheet for shaping how Medicare inpatient payments are developed in the future.

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The form is associated with price transparency efforts and market-based approaches in Medicare fee-for-service payments.

What is Worksheet S-12?

Officially called “Weighted Median Medicare Advantage Organization Payer-Specific Negotiated Charge Data,” Worksheet S-12 reports the weighted median of a provider’s negotiated charges associated with each Medicare Advantage Organization (MAO) for each applicable MS-DRG.

The worksheet features over 940 lines of MS-DRG codes.

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Jonathan Mason

Principal

Related sections

  • Healthcare
  • Healthcare Compliance
  • Hospitals & Health Systems
For each DRG line, you will enter your provider’s weighted median negotiated charge associated with any applicable Medicare Advantage Organizations. While the output seems simple and clear, the process for determining this number can be more complex. CMS estimates that it will take about 20 hours to complete the worksheet, but early efforts at completing the form are showing that it may take longer than expected.

Worksheet S-12 reflects a meaningful shift in the type of information being collected through the Medicare cost report. Historically, the Medicare cost report has focused heavily on facility characteristics, costs and charges, and financial statement data. But Worksheet S-12 adds a new data point into the mix: market-based negotiated charge data.

The form is associated with price transparency efforts and market-based approaches in Medicare fee-for-service payments.

For hospital finance and reimbursement leaders, Worksheet S-12 may be one of the clearest examples of how hospital price transparency data, Medicare Advantage contracting, and Medicare fee-for-service rate-setting are beginning to converge.

Who must complete Worksheet S-12?

Nearly all Medicare hospitals will be required to complete Worksheet S-12. Specifically, the instructions state that all subsection (d) hospitals and subsection (d) Puerto Rico hospitals are required to complete the form.

However, there are two exemptions:

  • Hospitals that only receive non-negotiated payment rates, such as certain federally owned and operated facilities or hospitals operated by an Indian Health Program.
  • Hospitals paid under the Maryland Total Cost of Care Model during the performance period of that model.

Practically speaking, if an IPPS hospital negotiates its rates with Medicare Advantage Organizations and has inpatient discharges tied to MS-DRGs during the cost reporting period, it will need to complete this worksheet.

What data do hospitals need for Worksheet S-12?

Worksheet S-12 brings together two core pieces of information:

  • MAO-specific negotiated charges for each applicable MS-DRG
  • Inpatient discharge volumes for each applicable MAO and MS-DRG

The charge information comes from the hospital’s machine-readable file. The specific data should include the MAO payer-specific negotiated charges, the MS-DRG codes associated with each negotiated charge, and enough supporting information to determine whether each charge should be included or excluded, based on the cost reporting instructions.

The discharge data should be organized around the provider’s applicable MAO’s. Specifically, the data should identify the number of inpatient discharges associated with each MAO and each MS-DRG.

These two pieces of information will work together. The rate file will be used to identify a specific MAO’s negotiated charge for each MS-DRG. The discharge file will identify the number of discharges that MAO had for the applicable MS-DRGs during the cost reporting period.

Together, this data will help providers build the weighted list needed for calculating the weighted median.

Why Worksheet S-12 might take longer than expected

While the calculation process may be relatively straightforward, the harder work may involve gathering, validating, excluding, and documenting the data. As a new cost report worksheet, it will likely require some coordination across departments to ensure that data is properly set up.

This could include working with the following teams:

  • Reimbursement
  • Managed care contracting
  • Revenue cycle
  • Patient accounting
  • Coding
  • Finance
  • Decision support
  • IT
  • Data analytics
  • Cost reporting

In addition to this coordination, the data itself may require multiple files, manual validation, rate-to-discharge matching, exclusion documentation, and reviews of crosswalk logic.

As providers navigate Worksheet S-12, they may experience several issues, including:

  • MAO names not matching across systems. The payer name in the machine-readable file may differ from the payer or plan name in the patient accounting system.
  • Contract terms may have changed between the cost reporting period and the filing date.
  • A hospital may have discharges for an MAO during the cost reporting period, but no current negotiated charge in the most recent machine-readable file. Conversely, the machine-readable file may include an MAO rate for a payer that had no relevant discharges.
  • Needing to exclude capitated arrangements and inpatient discharges paid on a capitated basis.
  • If a hospital negotiates MAO charges using a different coding or payment structure, it may need to crosswalk those codes to MS-DRGs before completing the calculation. If discharges are not already classified to MS-DRGs, they need to be classified before they are included.

These are the kinds of issues that can turn Worksheet S-12 into a larger data alignment project.

What hospitals should do now

Hospitals preparing for Worksheet S-12 may want to start by identifying who will own the process. Because the worksheet depends on both rate data and discharge data, ownership may not sit neatly within one department.

A practical readiness plan may include reviewing the instructions, identifying the most recent machine-readable file as of the cost report filing date, gathering inpatient discharge data for the cost reporting period, reconciling MAO names and identifiers across systems, identifying capitated rates and discharges, determining whether crosswalks are needed, and building a calculation file that can be reviewed and repeated.

As hospitals approach Worksheet S-12, they should view it as an opportunity to develop a reliable data-gathering and calculation process that can be set up for future cost reporting periods.

The strategic implication beyond compliance

Worksheet S-12 sits at the intersection of several major healthcare finance trends: Medicare cost reporting, hospital price transparency, Medicare Advantage contracting, and IPPS rate-setting.

That’s why hospitals should be careful about treating it as a low-priority informational requirement. The worksheet may not affect the current settlement, but OMB materials indicate that the data is intended to support future market-based MS-DRG relative weight calculations beginning in FY 2029.

For finance leaders, this creates several considerations.

First, data quality matters. If the data may inform future payment policy, hospitals should be thoughtful about the accuracy of their source files, assumptions, exclusions, and documentation.

Second, the worksheet may give hospitals a clearer view into their Medicare Advantage payment landscape by MS-DRG. That information may be useful beyond the cost report itself, especially for organizations evaluating reimbursement trends, contract performance, or service-line economics.

Third, the requirement reinforces the need for stronger governance around price transparency data. If machine-readable file data is now feeding a Medicare cost report worksheet, hospitals may want to review whether that data is accurate, usable, and aligned with internal contract and reimbursement records.

Bottom line

Worksheet S-12 is manageable, but it shouldn’t be underestimated.

For many hospitals, the worksheet will require coordination across data sources and departments that may not normally come together during cost report preparation. The calculation itself can be repeated across applicable MS-DRGs, but the quality of the result depends on the quality of the data behind it.

Hospitals that start early may be better positioned to identify data gaps, resolve mapping issues, document exclusions, and support the final values reported on the cost report.

For more information, contact our specialists