(Medicare Claims Processing Manual)

Total IRF outlier payout in 01/01/2010 - 12/31/2010 cost reporting period: $600,000  Weighted average CCR: 0.476   CCR  DAYS  Weight  Weighted CCR  0.40 90 0.247 (90 Days / 365 Days)  (a) 0.099 = (0.40 * 0.247)  0.50 275 0.753 (275 Days / 365 Days)  (b) 0.377 = (0.50 * 0.753)  TOTAL  365 365 (a)+(b) = 0.476   The IRF meets the criteria for IRF PPS outlier reconciliation in this cost reporting period because the variance from the weighted average CCR at the time the claim was originally paid compared to the CCR from the cost report at the time of settlement is g reater than 10 percentage points (from 0.476 to 0.35) and the provider received total IRF outlier payments greater than $500,000 for the entire cost reporting period.   B. - Providers Already Flagged for Outlier Reconciliation   Medicare contractors shall have until April 25, 2011 to submit via email to irf_outlier_reconciliation@cms.hhs.gov a list of providers that were flagged for outlier reconciliation prior to April 1, 2011  ( NOTE : Do not send this list prior to April 1, 2011 as this list shall include all providers flagged for outlier reconciliation prior to April 1, 2011). In this list, Medicare contractors shall include the provider number, provider name, cost reporting begin date, cost reporting end date, status of cost report (was the Notice of Program Reimbursement (NPR) issued), date of NPR, total outlier payments in t he cost reporting period, the CCR or weighted CCR from the time the claims were paid during the cost reporting period being reconciled and the final settled CCR. The CMS Central Office will then review this list and grant formal approval via email for Medicare contractors to reprice and reconcile the claims of those hospitals that have been flagged for outlier reconciliation. Upon approval from the CMS Central Office, Medicare contractors shall follow the procedures in 140.2.10 and complete the reconciliation process by October 1, 2011. If a Medicare contractor cannot complete the reconciliation process by October 1, 2011, the Medicare contractor shall contact the CMS Central Office for further guidance. NOTE : Those Medicare contractors that do not have any providers flagged for outlier reconciliation prior to April 1, 2011, shall also send an email to the address above indicating that they have no providers flagged for outlier reconciliation prior to April 1, 2011.  140.2.9 - Time Value of Money  (Rev. 2242, Issued: 06- 17-11, Effective: 07-01-11, Implementation: 07-01-11)  Effective for discharges occurring on or after September 30, 2003, at the time of any reconciliation under 140.2.9.10, outlier payment may be adjusted to account for the time value of money of any adjustments to outlier payments as a result of reconciliation. The time value of money is applied from the midpoint of the IRFs cost reporting period being settled to the date on which the CMS Central Office receives notification from the Medicare contractor that reconciliation should be performed.   If the IRFs outlier payments have met the criteria for reconciliation, the Medicare contractor shall follow the process in 140.2.10. The index that will be used to calculate the time value of money is the monthly rate of return that the Medicare trust fund earns. This index can be found at http://www.ssa.gov/OACT/ProgData/newIssueRates.html.  The following formula will be used to calculate the rate of the time value of money.   (Rate from Web site as of the midpoint of the cost report being settled / 365) * # of days from that midpoint until date of reconciliation. NOTE: The time value of money can be a positive or negative amount depending if the provider is owed money by CMS or if the provider owes money to CMS.  For purposes of calculating the time value of money, the date of reconciliation is the day on which the CMS Central Office receives notification. This date is either the postmark from the written notification sent to the CMS Central Office via mail by th e Medicare contractor, or the date an email was received from the Medicare contractor by the CMS Central Office, whichever is first.   The following is an example of the procedures for reconciliation and computation of the adjustment to account for the time value of money:   EXAMPLE C:   Cost Reporting Period: 01/01/2004- 12/31/2004 Midpoint of Cost Reporting Period: 07/01/2004 Date of Reconciliation: 12/31/2005  Number of days from Midpoint until date of Reconciliation: 549  Rate from Social Security Web site: 4.625%   CCR used to pay actual original claims in cost reporting period: 0.40 (This CCR could be from the tentatively settled 2002 or 2003 cost report)   Final settled CCR from 01/01/2004- 12/31/2004 cost report: 0.50  Total outlier payout in 01/01/2004- 12/31/2004 cost reporting period: $600,000.  Because the CCR fluctuated from .40 at the time the claims were originally paid to 0.50 at the time of final settlement and the provider has an outlier payout greater than $500,000, the criteria have been met to trigger reconciliation.  The Medicare contractor notifies the CMS Regional and Central Office.   The Medicare contractor reprocesses and reconciles the claims. The reprocessing indicates the revised outlier payments are $700,000.   Using the values above, determine the rate that will be used for the time value of money: (4.625 / 365) * 549 = 6.9565%   Based on the claims reconciled, the provider is owed $100,000 ($700,000- $600,000) for the reconciled amount and $6,956.50 ($100,000 * 6.9565 %) for the time value of money.   140.2.10 - Procedure for Medicare Contractors to Perform and Record Outlier Reconciliation Adjustments for IRFs  (Rev.  2111, Issued: 12- 03-10, Effective: 04 -01-11, Implementation: 04- 04-11)  The following is a step- by-step explanation of the procedures that Medicare contractors are to follow if an IRF is eligible for outlier reconciliation:   1) The Medicare contractor shall send notification to the CMS Central Office (not the IRF), via the street address or email address provided in 140.2.6 (F), and to the Regional Office that an IRF has met the criteria for reconciliation. Medicare contractors shall include in their notification the provider number, provider name, cost reporting begin date, cost reporting end date, total outlier payments in the cost reporti ng period, the CCR or weighted average CCR from the time the claims were paid during the cost reporting period eligible for reconciliation and the final settled CCR.   2) If the Medicare contractor receives approval from the CMS Central Office that reconciliation is appropriate, the Medicare contractor shall follow steps 3- 14 below. NOTE : Hospital cost reports will remain open until their claims have been processed for outlier reconciliation.  3) The Medicare contractor shall notify the IRF and copy the CMS Regional Office and Central Office in writing or via email (through the addresses provided in 140.2.6 (F) ) that the IRFs outlier claims are to be reconciled.   4) Prior to running claims in the *Lump Sum Utility, Medicare contractors shall update the applicable provider record in the Provider Specific File (PSF) by entering the final settled CCR from the cost report in the - 25 -Operating Cost to Charge Ratio field. No other elements in the PSF shall be updated for the applicable provider records in the PSF that span the cost reporting period being reconciled aside from the CCR.   a. *NOTE : The FISS Lump Sum Utility is a Medicare contractor tool that, depending on the elements that are input, will produce an extract that will calculate the difference between the original PPS payment amounts and revised PPS payment amounts into a Microsoft A ccess generated report. The Lump Sum Utility calculates the original and revised payments offline and will not affect the original claim payment amounts as displayed in various CMS systems (such as NCH).   5) Medicare contractors shall ensure that, prior to running claims through the FISS Lump Sum Utility, all pending claims (e.g., appeal adjustments) are finalized for the applicable provider.   6) Medicare contractors shall only run claims in the Lump Sum Utility that meet the following criteria:   7) Type of Bill (TOB) equals 11X  8) Previous claim is in a paid status (P location) within FISS  9) Cancel date is blank   10) The Medicare contractor reconciles the claims through the IRF Pricer software and not through any editing or grouping software.   11) Upon completing steps 3 through 7 above, the Medicare contractor shall run the claims through the Lump Sum Utility. The Lump Sum Utility will produce an extract, according to the elements in Table 1 below. NOTE :  The extract must be importable by Microsoft Access or a similar software program (Microsoft Excel).   12) Medicare contractors shall upload the extract into Microsoft Access or a similar software program to generate a report that contains elements in Table 1. Medicare contractors shall ensure this report is retained with the cost report settlement work papers.   13) For facilities paid under the IRF PPS, the Lump Sum Utility will calculate the difference between the original outlier amount (value code 17) and the revised outlier amount (value code 17). If the difference between the original and revised outlier amount is positive, then a credit amount (addition) shall be issued to the provider. If the difference between the original and revised outlier amount is negative, then a debit amount (deduction) shall be issued to the provider.   14) Medicare contractors shall determine the applicable time value of money amount by using the calculation methodology in 140.2.8. If the difference between the original and revised outlier amount (calculated by the Lump Sum Utility) is a negative amount, then the time value of money is also a negative amount. If the difference between the original and revised outlier amount (calculated by the Lump Sum Utility) is a positive amount, then the time value of money is also a positive amount. Similar to step 10, i f the time value of money is positive, then a credit amount (addition) shall be issued to the provider. If the time value of money is negative, then a debit amount (deduction) shall be issued to the provider. NOTE : The time value of money is applied to the difference between the original outlier amount (value code 17) and the revised outlier amount (value code 17).  15) For cost reporting periods beginning before May 1, 2010, under cost report 2552-96, the Medicare contractor shall record the original outlier amount from Worksheet E -3, Part 1 line 1.05, the outlier reconciliation adjustment amount ( the difference between the original outlier amount (value code 17) and the revised outlier amount (value code 17) calculated by the Lump Sum Utility) , the total time value of money and the rate used to calculate the time value of money on lines 50-53, of Worksheet E -3, Part 1 of  the cost report ( NOTE : the amounts recorded on lines 50, 51 and 53 can be positive or negative amounts per the instructions above) . The total outlier reconciliation amount ( the difference between the original outlier amount (value code 17) and the revised outlier amount (value code 17) calculated by the Lump Sum Utility plus the time value of money ) shall be recorded on line 15.99 of Worksheet E -3, Part 1. For complete instructions on how to fill out these lines, see 3633.1 of the Provider Reimbursement Manual, Part II.   a. For cost reporting periods beginning on or after May 1, 2010, under cost report 2552- 10, the Medicare contractor shall record the original outlier amount from Worksheet E -3, Part III, line 4, the outlier reconciliation adjustment amount ( the difference between the original outlier amount (value code 17)  and the revised outlier amount (value code 17) calculated by the Lump Sum Utility), the total time value of money and the rate used to calculate the time value of money on lines 50-53, of Worksheet E-3, Part III of the cost report ( NOTE : the amounts recorded on lines 50, 51 and 53 can be positive or negative amounts per the instructions above). The total outlier reconciliation amount ( the difference between the original outlier amount (value code 17) and the revised outlier amount (value code 17) calculated by the Lump Sum Utility plus the time value of money ) shall be recorded on line 30 of Worksheet E-3, Part 3.