(Medicare Claims Processing Manual)

150.6 - Beneficiary Liability  (Rev. 1, 10- 01-03)  Beneficiary liability will operate the same as under the former TEFRA cost- based payment system, i.e., if Medicare payments are below the cost of care for a patient under prospective payment, the patient cannot be billed for the difference.   As under the former TEFRA cost -based payment system, beneficiaries (or their Medigap insurers or other private insurers, such as an employer -sponsored plan, as applicable) are responsible for all noncovered days, where Medicare has not made a full LTC -DRG payment.  For more detailed information regarding lifetime reserve days, refer to the Medicare Benefit Policy Manual, chapter 5.   150.7 - Patient Classification System  (Rev. 3030, Issued: 08- 22-14, Effective: ASC X12: January 1, 2012, ICD -10: Upon Implementation of ICD -10, Implementation: ICD -10: Upon Implementation of ICD -10, ASC X12: September, 23 2014)   The BBRA required the use of diagnostic -related groups (DRGs) for patient classification purposes in the PPS for LTCHs.  In general, a case is grouped based on the clinical characteristics of the Medicare beneficiary.   The patient classification system groupings are called LTC -DRGs , which are based on the existing CMS DRGs used under the acute care hospital inpatient PPS.  Patient discharges are grouped using ICD diagnosis codes reported on the claim for the principal diagnosis, up to twenty four additional diagnoses, and up to twenty five procedures performed during the stay, as well as age, sex, and discharge status of the patient.   The same GROUPER software developed by 3M for the acute care hospital inpatient PPS, is used but with LTCH -specific relative weights reflecting the resources used to treat the medically complex LTCH patients).   150.8 - Relative Weights  (Rev. 1, 10- 01-03)  Payment weights assigning a specific value representing the relative resource use of each LTC DRG are determined by the hospital -specific relative value method.  This methodology normalizes charges within each hospital and then compares them across hospita ls.  Relative weights are updated annually October 1 using the most recent available claims data.  Relative weights and the geometric average length of stay are in the Pricer program.   150.9 - Payment Rate  (Rev. 1547, Issued:  07- 03-08; Effective:  07 -01-08; Implementation:  07 -07-08)  Payments to LTCHs under the LTCH PPS are based on a single standard Federal rate for both the inpatient operating and capital -related costs (including routine and ancillary services), but not certain pass through costs (i.e., bad debts, direct medical educ ation, new technologies, and blood clotting factors).  This single standard Federal rate is updated annually by the excluded hospital with capital market basket index.  The formula for an unadjusted LTCH PPS prospective payment is as follows:    Federal Prospective Payment = LTC -DRG Relative Weight * Standard Federal Rate Case- Level Adjustments   Effective July 1, 2003, the annual update to the standard Federal rate is based on the LTCH PPS rate year of July 1 through June 30, rather than the Federal fiscal year (October 1 through September 30).  July 1, 2008, is the final rate year; LTCH PPS is moving back to a Federal Fiscal Year effective October 1, 2009.   150.9.1 - Case -Level Adjustments  (Rev. 1, 10- 01-03)  Payments are based on the LTC -DRG described as well as possible adjustments specific to the case.  Because LTCHs are distinguished from other inpatient hospital settings by an average length of stay of greater than 25 days, it was necessary to establish pa yment categories for certain cases that have stays of considerably less than the average length of stay.  The following case -level adjustments are applied to cases that, based on length of stay at the LTCH, receive significantly less than the full course o f treatment for a specific LTC -DRG.   150.9.1.1 - Short -Stay Outliers  (Rev. 2060, Issued: 10- 01-10, Effective: 10 -01-10, Implementation: 10- 04-10)   Generally, a short- stay outlier (SSO) is a case that has a covered length of stay between 1 day and up to and including 5/6 of the average length of stay for the LTC-DRG to which the case is grouped.  Effective for LTCH PPS discharges occurring on or before June 30, 2006, the adjusted payment for an SSO case is the least of:   120 percent of the cost of the case (determined using the facility- specific cost to charge ratio (CCR) and covered charges from the bill);    120 percent of the LTC-DRG specific per diem payment (determined using the LTC -DRG relative weight, the average length of stay of the LTC -DRG, and the length of stay of the case); or   The full LTC -DRG payment.   To compute 120% of cost:   Charges x CCR = Cost ($13,870.33) x (0.8114) = $11,254.39   120% of cost = $11,254.39 x 1.2 = $13,505.27  To compute 120% of the specific LTC- DRG per diem:    Full LTC -DRG payment / ALOS LTC -DRG x LOS of the case x 1.2  Full LTC -DRG payment:  $34,956.15 (FY 2003 standard Federal rate)  x 0.72885 (labor %)  $25,477.79 (labor share)   x 1.0301 (1/5th wage index value for FY 2003)  $26,244.67 (wage adjusted labor share)  + 9,478.36 (non-labor share=$34,956 x 0.27115)  $35,723.03 (adjusted standard Federal rate)  x 1.4103 (LTC -DRG 113 relative weight)  $50,380.19 (full LTC-DRG payment  Per Diem = $50,380.19 / 36.9 (ALOS LTC-DRG 113) = $1365.32 per day  If LOS of case is 10 days, then 120% of per diem = $1365.32 per day x 10 days x 1.2 = $16,383.80.  In this example, the case is paid 120% of cost ($13,505.27) since it is less than $120% of the specific LTC -DRG per diem ($16,383.80) and the full LTC -DRG payment ($50,380.19).   For discharges occurring on or after August 8, 2003, short -stay outlier payments are to be reconciled upon cost report settlement to account for differences between the estimated cost-to-charge -ratio and the actual cost -to-charge ratio for the period during which the discharge occurs.  For further information, refer to the June  9, 2003 High Cost Outlier final rule (68 FR 34506 -  34513).  For RY 2007, the SSO policy was revised as follows:    Effective for LTCH PPS discharges occurring on or after July 1, 2006, the adjusted payment for a SSO case is equal the least of:   o 100 percent of estimated cost of the case,   o 120 percent of the LTC -DRG per diem amount,   o the full LTC -DRG payment, or   o a blend of an amount comparable to what would otherwise be paid under the IPPS, computed as a per diem and capped at the full IPPS DRG comparable amount, and the 120 percent LTC -DRG per diem amount.   Under the blend alternative, the percentage of the 120 percent LTC -DRG per diem amount is based on the ratio of the (covered) length of stay of the case to the lesser of the SSO threshold for the LTC -DRG (i.e., 5/6ths of the geometric ALOS of the LTC -DRG) or 25 days.  As the length of stay reaches the lower of the five -sixths SSO threshold or 25 days, the adjusted SSO payment is no longer be limited by this fourth option.  This is because for SSO cases with a LOS of 25 days or more, the amount determined under the blend alternative is equal to 100 percent of the 120 percent of the LTC - DRG specific per diem amount and 0 percent of the IPPS comparable per diem amount. In addition, the LOS in the numerator cannot exceed the number of days in the denominator (i .e., the percentage may not exceed 100 percent).  The remaining percent of the blend alternative (that is, 100 percent minus the percentage applied to the 120 percent of the LTC -DRG per diem amount) is applied to the IPPS comparable per diem amount (capped at the full IPPS comparable amount).   The following examples illustrate how the blend alternative is calculated when the LTCH patient is grouped to hypothetical DRG XYZ.  For purposes of this example, for DRG XYZ, the full LTC DRG payment is $38,597.41, the LTCH PPS geometric ALOS is 33.6 days, the LTCH PPS SSO threshold (i.e., 5/6ths of the geometric ALOS) is 28.0 days, the full IPPS comparable amount is $8,019.82, and the IPPS geometric ALOS is 4.5 days.  SSO Example #1 - LOS equals 11 Days:  Step Number  Description of Step  Description of Calculation  Example of Calculation Result  1a Determine 120 percent of the LTC -DRG per diem amount Divide the full LTC -DRG payment by the geometric ALOS of LTC -DRG XYZ and multiply that per diem amount by both the covered LOS and 1.2  $38,597.41 x11 days x 1.2 33.6 days $15,163.27 1b* Calculate the percentage of the 120 percent of the LTC -DRG per diem amount  Divide the covered LOS by the lesser of the 5/6th ALOS of LTC -DRG XYZ or 25 days  11 days  25 days 0.44 1c Determine the LTC -DRG per diem portion of the blend alternative  Multiply the percentage determined in step (1-b) by the LTC-DRG per diem amount in step (1 -a) 0.44 x $15,163.28 $6,671.84 2a Calculate the IPPS comparable per diem amount  Divide the full IPPS comparable amount by the geometric ALOS of DRG XYZ and multiply by the covered LOS  $8,019.82 x 11 days 4.5 days $19,604.00 2b Determine the IPPS comparable per diem amount to be used in the blend alternative  Compare the full IPPS comparable amount to the IPPS comparable per diem amount to determine which is the least amount  The full IPPS comparable amount ($8,019.82) is lower than the IPPS comparable per diem amount ($19,604.00) $8,019.82 Step Number  Description of Step  Description of Calculation  Example of Calculation Result  2c Calculate the percentage of the IPPS comparable per diem amount Subtract the percentage determined in step (1-b) from 1 (i.e., 1 minus the covered LOS divided by the lesser of the 5/6th ALOS of LTC -DRG XYZ or 25 days)  1 - 0.44 0.56 2d Determine the IPPS comparable per diem  portion of the blend alternative  Multiply the percentage determined in step (2-c) by the IPPS comparable amount determined in step (2-b) 0.56 x $8,019.82 $4,491.10 3 Compute the blend alternative Add the LTC -DRG per diem portion determined in step (1-c) and the IPPS comparable per diem portion determined in step (2-d) $6,671.84 + $4,491.10 $11,162.94  * In this example, 25 days was used in the denominator since the 5/6th ALOS of LTC DRG XYZ (28.0 days) is greater than 25 days.  If the 5/6th ALOS of LTC- DRG XYZ was less than 25 days, that value would have been used in the denominator of this calculation.  In addition, the LOS in the numerator may not exceed the number of days in the denominator (i.e., the percentage may not exceed 100 percent).  SSO Example #2 - LOS equals 27 Days: