(Medicare Claims Processing Manual)

Example B   Cost Reporting Period: 01/01/2004-12/31/2004   CCR used to pay original claims submitted during cost reporting period:    - 0.40 from 01/01/2004-03/31/2004 (This CCR is from the tentatively settled 2001 cost report)  - 0.50 from 04/01/2004-12/31/2004 (This CCR is from the tentatively settled 2002 cost report)   Final settled CCR from 01/01/2004-12/31/2004 cost report: 0.35   Total (short-stay and high cost) outlier payout in 01/01/2004-12/31/2004 cost reporting period: $600,000   Weighted Average CCR: 0.474, completed as follows:  CCR  Days  Weight  Weighted CCR  0.40  91  0.248 (91 Days / 366 Days)  (a) 0.099=   (0.40 * 0.248)  0.50  275  0.751 (275 Days / 366 Days )  (b) 0.375=   (0.50 * 0.751)  TOTAL  *366    (a)+(b) =0.4742   *NOTE : There are 366 days in the year because 2004 was a leap year.   The LTCH meets the criteria for reconciliation in this cost reporting period because the weighted average CCR at the time the claim was originally paid changed (by more than ten percentage points) from 0.474 to 0.35 at the time of final settlement, and the provider received (combined) outlier payments greater than $500,000 for the entire cost reporting period.   150.27 - Time Value of Money  (Rev. 2242, Issued: 06- 17-11, Effective: 07-01-11, Implementation: 07-01-11)  At the time of any reconciliation under 150.26, outlier payments 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 LTCH s 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 a LTCHs outlier payments have met the criteria for reconciliation, the Medicare contractor shall follow the process in 150.28.  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 the 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 0.40 at the time the claims were originally paid to 0.50 at the time of final settlement and the provider has total outlier payments greater than $500,000, the criteria have been met to trigger reconciliation.  The Medicare contractor notifies the CMS Regional Office and CMS Central Office.   The Medicare contractor reprices the claims in accordance with the process in 150.28 below.  The repricing 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.  150.28 - Procedure for Medicare Contractors to Perform and Record Outlier Reconciliation Adjustments  (Rev. 4390, Issued: 09- 06-19, Effective: 10-01-19, Implementation: 10-07-19)  The following is a step- by-step explanation of the procedures that Medicare contractors are to follow if a LTCH is eligible for outlier reconciliation:   1) The Medicare contractor shall send notification to the CMS Central Office (not the hospital), via email to outliersIPPS@cms.hhs.gov and CMS Regional Office that a hospital 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 short stay and high cost outlier payments in the cost reporting 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 hospital and copy the CMS Regional Office and Central Office via email at outliersIPPS@cms.hhs.gov that the hospitals 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 fr om the CCR.   *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 applicable LTCH 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 hospitals paid under the LTCH PPS, the difference between the Original PPS Payment Amount and Revised PPS Payment Amount from the Lump Sum Utility will reflect the difference between the total original short- stay and high cost outlier payment amount and the revised short -stay and high cost outlier payment amount. If the difference between the original and revised PPS Payment Amount is positive, then a credit amount (addition) shall be issued to the provider. If the difference between the original and revised PPS Payment 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 150.27. If the difference between the Original PPS Payment Amount and Revised PPS Payment Amount from 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 PPS Payment Amount and Revised PPS Payment Amount from the Lump Sum Utility is a positive amount then the time value of money is also a positive amount. Similar to step 10, if 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 PPS Payment Amount and Revised PPS Payment Amount.  15) For cost reporting periods beginning before May 1, 2010, under cost report 2552-96, the Medicare contractor shall record the original PPS  amount by summing lines 1.02 and 1.05 from Worksheet E -3, Part I, the outlier reconciliation adjustment amount (the difference between the Original PPS Payment Amount and Revised PPS Payment Amount from 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 I 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 PPS Payment Amount and Revised PPS Payment Amount (from the Lump Sum  Utility) plus the time value of money) shall be recorded on line 15.99 of Worksheet E -3, Part I. For complete instructions on how to fill out these lines please see 3633.1 of the Provider Reimbursement Manual, Part II.   16) For cost reporting periods beginning on or after May 1, 2010, under cost report 2552- 10, the Medicare contractor shall record the original PPS amount from Worksheet E -3, Part IV line 3, the outlier reconciliation adjustment amount (the difference between t he Original PPS Payment Amount and Revised PPS Payment Amount from 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 IV of the cost report ( NOTE : the amounts r ecorded 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 PPS Payment Amount and Revised PPS Payment Amount (from the Lump Sum Utility) plus the time value of money) shall be recorded on line 20 of Worksheet E -3, Part IV.   17) The Medicare contractor shall finalize the cost report, issue a NPR and make the necessary adjustment from or to the provider.   18) After determining the total outlier reconciliation amount and issuing a NPR, Medicare contractors shall restore the CCR(s) to their original values (that is, the CCRs used to pay the claims) in the applicable provider records in the PSF to ensure an accurate history is maintained. Specifically, for hospitals paid under the LTCH PPS, Medicare contractors shall enter the original CCR(s) in PSF field 25 -Operating Cost to Charge Ratio.  If the Medicare contractor has any questions regarding this process it should contact the Central Office, via email at outliersIPPS@cms.hhs.gov.   Table 1:  Data Elements for FISS Extract