(Medicare Claims Processing Manual)

 If total cost for the service exceeds both thresholds, the outlier payment is 50 percent of the amount by which the cost exceeds 1.75 times the OPPS payment.    The total cost of all packaged items and services, including the cost of uncoded revenue code lines with a revenue code status indicator of N, that appear on a claim is allocated across all separately paid OPPS services that appear on the same claim.  The proportional amount of total packaged cost allocated to each separately paid OPPS service is based on the percent of the APC payment rate for that service out of the total APC payment for all separately paid OPPS services on the claim.    To illustrate, assume the total cost of all packaged services and revenue codes on the claim is $100, and the three APC payment amounts paid for OPPS services on the claim are $200, $300, and $500 (total APC payments of $1000).  The first OPPS service or l ine-item is allocated $20 or 20 percent of the total cost of packaged services, because the APC payment for that service/line- item represents 20 percent ($200/$1000) of total APC payments on the claim.  The second OPPS service is allocated $30 or 30 percent of the total cost of packaged services, and the third OPPS service is allocated $50 or 50 percent of the total  cost of packaged services.    If a claim has more than one surgical service line with a status indicator (SI) of S or T and any lines with an SI of S or T have less than $1.01 as charges, charges for all S and/or T lines are summed and the charges are then divided across S and/or T lines in proportion to their APC payment rate. The new charge amount is used in place of the submitted charge amount in the line -item outlier calculation.    If a claim includes a composite payment that pays for more than one otherwise separately paid service, the charges for all services included in the composite are summed up to one line. To determine outlier payments, CMS estimates a single cost for the composite APC from the summarized charges.  Total packaged cost is allocated to the composite line item in proportion to other separately paid services on the claim.    In accordance with Section 1833(t)(5)(A)(i) of the Act, if a claim includes a device receiving pass -through payment, the payment for the pass -through device is added to the payment for the associated procedure, less any offset, in determining the associated procedures eligibility for outlier payment, and the outlier payment amount.  The estimated cost of the device, which is equal to payment, also is added to the estimated cost of the procedure to ensure that cost and payment both contain the procedure and device costs when determining the procedures eligibility for an outlier payment.    CMHC Outlier Payment Cap    Beginning for services provided on or after January 1, 2017, outlier payments made to CMHCs are subject to a cap, applied at the individual CMHC level, so that each CMHCs total outlier payments for the calendar year do not exceed 8 percent of that CMHCs total per diem payments for the calendar year.  Total per diem payments are total Medicare per diem payments plus the total beneficiary share of those per diem payments.    Future updates will be issued in a Recurring Update Notification.    10.7.2 - Outlier Reconciliation  (Rev. 1657, Issued: 12- 31-08, Effective: 01 -01-09, Implementation: 01 -05-09)  10.7.2.1 - Identifying Hospitals and CMHCs Subject to Outlier Reconciliation  (Rev.  2111, Issued: 12- 03-10, Effective: 04 -01-11, Implementation: 04- 04-11)  A. General   Under 419.43(d)(6)(i), for hospital outpatient services furnished during cost reporting periods beginning on or after January 1, 2009, OPPS high cost outlier payments may be reconciled upon cost report settlement to account for differences between the overall ancillary CCR used to pay the claim at its original submission by the provider, and the CCR determined at final settlement of the cost reporting period during which the service was furnished.  Hospitals and CMHCs that Medicare contractors identify using the criteria listed below are subject to the OPPS outlier reconciliation policies described in this section.  OPPS outlier payments are reconciled if the CMS Central Office and Regional Office confirm that reconciliation is appropriate.  Services with an APC payment paid at charges adjusted to cost a re not subject to reconciliation policies.   Subject to the approval of the CMS Central Office and Regional Office, a hospitals outpatient outlier claims are reconciled at the time of cost report final settlement if they meet the following criteria:  1. The actual overall ancillary CCR is found to be plus or minus 10 percentage points or more from the CCR used during that time period to make OPPS outlier payments, and    2. Total OPPS outlier payments in that cost reporting period exceed $500,000.   Subject to the approval of the CMS Central Office and Regional Office, a CMHCs outlier claims are reconciled at the time of cost report final settlement if they meet the following criteria:   1. The actual overall CCR is found to be plus or minus 10 percentage points or more from the CCR used during that time period to make OPPS outlier payments, and  2. Any CMHC OPPS outlier payments are made in that cost reporting period.  To determine if a hospital or CMHC 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 overall ancillary CCR prior to issuing a  Notice of Program Reimbursement (NPR).  If the criteria for OPPS outlier 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 10.7.2.4 of this chapter.  The NPR cannot be issued nor can the cost report be finalized until OPPS outlier reconciliation is complete.  These hospital and CMHC cost reports will remain open until their claims have been processed for OPPS outlier reconciliation.  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 OPPS outlier reconciliation and outlier payments), Medicare contractors shall notify the CMS Central and Regional Offices for further instructions.  Notification to the CMS Central Office shall be sent to the address and email address provided in 10.11.3.1.  Any cost report that has been final settled that meets the qualifications for OPPS outlier reconciliation shall be reopened. Medicare contractors shall notify the CMS Central Office and Regional Office that the OPPS outlier payments need to be reconciled, using the procedures included in 10.7.2.4.  After CMS approval of the reconciliation, the Medicare contractor shall issue a reporting notice to the provider.   B. Hospitals and CMHCs Already Flagged for Outlier Reconciliation   Medicare contractors shall have until April 25, 2011 to submit via email to outliersopps@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 re view this list and grant formal approval via email for Medicare contractors to reprice and reconcile the claims of those hospitals with open cost reports. Upon receiving approval for reconciliation from the CMS Central Office, Medicare contractors shall follow the procedures in 10.7.2.4 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.  10.7.2.2 - Reconciling Outlier Payments for Hospitals and CMHCs  (Rev. 1760, Issued:  06- 23-09; Effective Date:  07 -01-09; Implementation Date:  07-06-09)  For hospital outpatient services furnished during cost reporting periods beginning on or after January 1, 2009, all hospitals and CMHCs are subject to the OPPS outlier reconciliation policies set forth in this section.  If a hospital or CMHC meets the criteria in 10.7.2.1, the Medicare contractors shall notify the central office and regional office at the address and email address provided in 10.11.3.1.  Further instructions for Medicare contractors on reconciliation and the time value of money are provided below in 10.7.2.3 and 10.7.2.4 of this chapter.  The following examples demonstrate how to apply the criteria for reconciliation:  EXAMPLE A:   Cost reporting period:  01/01/2009- 12/31/2009  Overall ancillary CCR used to pay original claims submitted during cost reporting period:  0.40  (In this example, this CCR is from the tentatively settled 2007 cost report.)   Final settled overall ancillary CCR from 01/01/2009 -  12/31/2009 cost report:  0.50  Total OPPS outlier payout in 01/01/2009- 12/31/2009 cost reporting period:  $600,000  Because the CCR of 0.40 used at the time the claim was originally paid changed to 0.50 at the time of final settlement, and the provider received greater than $500,000 in OPPS outlier payments during that cost reporting period, the criteria are met for reconciliation, and therefore, the Medicare contractor notifies the central office and the regional office.  The providers OPPS outlier payments for this cost reporting period are reconciled using the correct CCR of 0.50.  In the event that multiple overall ancillary CCRs are used in a given cost reporting period to calculate outlier payments, Medicare contractors should calculate a weighted average of the CCRs in that cost reporting period.  Example B below shows how to wei ght the CCRs.  The Medicare contractor shall then compare the weighted CCR to the CCR determined at the time of final settlement of the cost reporting period to determine if OPPS outlier reconciliation is required.  Total OPPS outlier payments for the entire cost reporting period must exceed $500,000 in order to trigger reconciliation.   EXAMPLE B:   Cost reporting period:  01/01/2009- 12/31/2009  Overall ancillary CCR used to pay original claims submitted during cost reporting period:   - 0.40 from 01/01/2009 to 03/31/2009 (This CCR could be from the tentatively settled 2006 cost report.)   - 0.50 from 04/01/2009 to 12/31/2009 (This CCR could be from the tentatively settled 2007 cost report.)   Final settled operating CCR from 01/01/2009 -  12/31/2009 cost report:  0.35  Total OPPS outlier payout in 01/01/2009 - 12/31/2009 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  (a)+(b) = 0.476   The hospital meets the criteria for OPPS outlier reconciliation in this cost reporting period because the weighted average CCR at the time the claim was originally paid changes from 0.476 to 0.35 (which is greater than 10 percentage points) at the time of final settlement, and the provider received an OPPS outlier payment greater than $500,000 for the entire cost reporting period.