(Medicare Claims Processing Manual)

E. - Notification to Hospitals Under the IPPS of a Change in the CCR   The Medicare contractor shall notify a hospital whenever it makes a change to its CCR.  When a CCR is changed as a result of a tentative settlement or a final settlement, the change to the CCR can be included in the notice that is issued to each provider a fter a tentative or final settlement is completed.  Medicare contractors can also issue separate notification to a hospital about a change to their CCR(s).   F. - Hospital Mergers, Conversions, and Errors with CCRs  Effective November 7, 2005, for hospitals that merge, Medicare contractors shall continue to use the operating and capital CCRs calculated from the Medicare cost report associated with the surviving provider number.  If a new provider number is issued, as explained in 20.1.2.2 below, Medicare contractors may use the Statewide average CCR because a new provider number indicates the creation of a new hospital (as stated in 42 CFR 412.84 (i)(3)(i), a new hospital is defined as an entity that has not accepted assignment of an existing hospitals provider agreement).  For non-IPPS hospitals (e.g., long term care, psychiatric, or rehabilitation hospitals) that convert to IPPS st atus, or IPPS hospitals that maintain their IPPS status but receive a new IPPS provider number the Statewide average CCR may be applied to that hospital. However, as noted in part C above, the Medicare contractor or the hospital may request use of a different CCR, such as a CCR based on the cost and charge data from the hospitals cost report before it converted to IPPS status, or received a new provider number. The Medicare contractor must verify the cost and charge data from that cost report. Use of the alternative CCR is subject to the approval of the CMS Central and Regional Offices.  In instances where errors related to CCRs and/or outlier payments are discovered, Medicare contractors shall contact the CMS Central Office to seek further guidance.  Medicare contractors may contact the CMS Central Office via email at outliersIPPS@cms.hhs.gov.  If a cost report is reopened after final settlement and as a result of this reopening there is a change to the CCR, Medicare contractors should contact the CMS Regional and Central Office for further instructions. Medicare contractors may contact the CMS Central Office via email at outliersIPPS@cms.hhs.gov .  G. - Maintaining a History of CCRs and Other Fields in the Provider Specific File   When reprocessing claims due to outlier reconciliation, Medicare contractors shall maintain an accurate history of certain fields in the provider specific file (PSF).  This history is necessary to ensure that claims already processed (from prior cost reporting periods that have already been settled) will not be subject to a duplicate systems adjustment in the event that claims need to be reprocessed.  As a result, the following fields in the PSF can only be altered on a prospective basis: -23 -Intern to Bed Ratio -24 --Bed Size -25 -Operating Cost to Charge Ratio -27 - SSI Ratio -28 - Medicaid Ratio -47 -Capital Cost to Charge Ratio 49 - Capital IME and 21 -Case Mix Adjusted Cost Per Discharge. A separate history outside of the PSF is not necessary. The only instances a Medicare contractor retroactively changes a field in the PSF is to update the operating or capital CCR when using the FISS Lump Sum Utility for outlier reconciliation or otherwise specified by the CMS Regional Office or Central Office.   20.1.2.2 - Statewide Average Cost -to-Charge Ratios  (Rev.  2111, Issued: 12- 03-10, Effective: 04-01-11, Implementation: 04-04-11)  For discharges prior to August 8, 2003, Statewide average CCRs are used in those instances in which a hospitals operating or capital CCRs fall above or below reasonable parameters.  CMS sets forth these parameters and the Statewide average CCRs in each years annual notice of prospective payment rates.   For discharges occurring on or after August 8, 2003, the Medicare contractor may use a Statewide average CCR if it is unable to determine an accurate operating or capital CCR for a hospital in one of the following circumstances:   1. New hospitals that have not yet submitted their first Medicare cost report.  (For this purpose, a new hospital is defined as an entity that has not accepted assignment of an existing hospitals provider agreement in accordance with 42 CFR 489.18.)  2. Hospitals whose operating or capital CCR is in excess of 3 standard deviations above the corresponding national geometric mean.  This mean is recalculated annually by CMS and published in the annual notice of prospective payment rates issued in accordance with  412.8(b) of the CFR.  3. Other hospitals which accurate data with which to calculate either an operating or capital CCR (or both) are not available.   However, the policies of 20.1.2.1 part C and part E can be applied as an alternative to the Statewide average.   For those hospitals assigned the Statewide average operating and/or capital CCRs, these CCRs must be updated every October 1 based on the latest Statewide average CCRs published in each years annual notice of prospective payment rates until the hospital i s assigned a CCR based on the latest tentative or final settled cost report or a CCR based on the policies of 20.1.2.1 part C of this manual.  A hospital is not assigned the Statewide average CCR if its CCR falls below 3 standard deviations from the national mean CCR.  In such a case, the hospitals actual operating or capital CCR is used.  20.1.2.3 - Threshold and Marginal Cost  (Rev.  2111, Issued: 12- 03-10, Effective: 04-01-11, Implementation: 04-04-11)  The Medicare contractor, using Pricer, determines an appropriate additional payment for inpatient services where hospital charges for covered services furnished to the beneficiary, adjusted for cost, are extraordinarily high.  CMS annually determines, and includes in the annual IPPS Final Rule and in Pricer, the threshold beyond which a cost outlier is paid.  The additional payment amount is the difference between the estimated cost for the discharge (determined by multiplying the hospital specific CCR by the hospitals charges for the discharge) and the threshold criteria established for the applicable DRG multiplied by a marginal cost factor of 80 percent.  (The marginal cost factor for burn cases is 90 percent, as described in 20.1.2.8.)  CMS includes the marginal cost factor in Pricer.  For more explanation on the calculation of outliers visit our Web site at http://www.cms.hhs.gov/AcuteInpatientPPS/04_outlier.asp#TopOfPage   20.1.2.4 - Transfers  (Rev.  2111, Issued: 12- 03-10, Effective: 04-01-11, Implementation: 04-04-11)  A.  Transfers Between IPPS Hospitals   For transfers between IPPS hospitals, the transferring hospital is paid based upon a per diem rate.  The transferring hospital may be paid a cost outlier payment.  The outlier threshold for the transferring hospital is equal to the outlier threshold for non-transfer cases, divided by the geometric mean length of stay for the DRG, multiplied by a number equal to the length of stay for the case plus one day.  The payment to the final discharging hospital is made at the full prospective payment rate.  The outlier threshold and payment are calculated the same as any other discharge without a transfer.  For further information on transfers between IPPS hospitals, see 40.2.4 part A of this manual.  B. - Transfers from an IPPS Hospital to Hospitals or Units Excluded from IPPS that do not Fall within a DRG that is Subject to the Postacute Care Transfer Policy   For transfers from an IPPS hospital to a hospital or unit excluded from IPPS with a DRG that is not subject to the postacute care transfer policy, the transferring hospital is paid the full IPPS rate.  The transferring hospital may be paid a cost outlier payment. The outlier threshold and payment are calculated the same as any other discharge without a transfer.  The payment to the final discharging hospital or unit is made at the rate of its respective payment system.  For further information on transfers from an IPPS hospital to hospitals or units excluded from IPPS that do not fall within a DRG that is subject to the postacute care transfer policy, see 40.2.4  part B of this manual.  C. - Transfers from an IPPS Hospital to Hospitals or Units Excluded from IPPS that Fall within a DRG that is Subject to the Postacute Care Transfer Policy   For transfers from an IPPS hospital to a hospital or unit excluded from IPPS with a DRG that is subject to the postacute care transfer policy, the transferring hospital is paid based upon a per diem rate.  The transferring hospital may be paid a cost outli er payment.  In general, the outlier threshold for the transferring hospital is equal to the outlier threshold for non- transfer cases, divided by the geometric mean length of stay for the DRG, multiplied by a number equal to the length of stay for the case  plus one day.  If a discharge is assigned to a special pay DRG subject to the post acute care transfer policy the outlier threshold is equal to the fixed-loss cost outlier threshold for non- transfer cases, divided by the geometric mean length of stay for the DRG, multiplied by 0.5 plus the product of the 0.5 multiplied by a number equal to the length of stay plus one day multiplied by 0.5.   The payment to the final discharging hospital or unit is made at the rate of its respective payment system.  For further information on transfers from an IPPS hospital to hospitals or units excluded from IPPS that fall within a DRG subject to the postacute  care transfer policy, see 40.2.4 part C and D.  20.1.2.5 - Reconciliation  (Rev. 4390, Issued: 09- 06-19, Effective: 10 -01-19, Implementation: 10- 07-19)  A. - General   Under 42 CFR 412.84(i )(4), for discharges occurring on or after August 8, 2003, high cost outlier payments may be reconciled upon cost report settlement to account for differences between the CCR used to pay the claim at its original submission by the provider, and the CCR det ermined at final settlement of the cost reporting period during which the discharge occurred.  This new regulation was implemented in two phases (further explanation on these two phases is provided below).  Hospitals that Medicare contractors identified using the criteria in I.A. of PM A -03-058 (under which Medicare contractors identified hospitals whose charges appeared to have been increasing at an excessive rate) are subject to the reconciliation policies described in this section for discharges occurri ng on or after August 8, 2003.  For all other hospitals, reconciliation is effective beginning with discharges occurring in a hospitals first cost reporting period beginning on or after October 1, 2003.   Subject to the approval of the CMS Central Office, a hospitals outlier claims will be reconciled at the time of cost report final settlement if they meet the following criteria:   1. The actual operating CCR is found to be plus or minus 10 percentage points from the CCR used during that time period to make outlier payments, and   2. Total outlier payments in that cost reporting period exceed $500,000.   To determine if a hospital meets the criteria above, the Medicare contractor shall incorporate all the adjustments from the cost report, run the cost report, calculate the revised CCR and compute the actual operating CCR prior to issuing a Notice of Progra m Reimbursement (NPR).  If the criteria for reconciliation are not met, the cost report shall be finalized.  If the criteria for reconciliation are met, Medicare contractors shall follow the instructions below in 20.1.2.7.  The NPR cannot be issued nor ca n the cost report be finalized until outlier reconciliation is complete.   The first criterion requires a 10 percentage point fluctuation in the operating CCR only (and not the capital CCR).  However, if a hospital meets both criteria, claims will be reconciled using the operating and capital CCRs from the final settled cost repo rt.  As stated above, if a cost report is reopened after final settlement and as a result of this reopening there is a change to the CCR (which could trigger or affect outlier reconciliation and outlier payments), Medicare contractors shall notify the CMS Regional and Central Office for further instructions.  Notification to the CMS Central Office shall be sent via email to  outliersIPPS@cms.hhs.gov.  Even if a hospital does not meet the criteria for reconciliation, subject to approval of the Regional and Central Office, the Medicare contractor has the discretion to request that a hospitals outlier payments in a cost reporting period be reconciled if the hospitals most recent cost and charge data indicate that the outlier payments to the hospital were significantly inaccurate.  The Medicare contractor sends notification to the Central Office via email at outliersIPPS@cms.hhs.gov.  Upon approval of the CMS Regional and Central Office that a hospitals outlier claims need to be reconciled, Medicare contractors should follow the instructions in 20.1.2.7.  B. - Reconciling Outlier Payments for those Hospitals Identified in PM A -03-058