(Medicare Claims Processing Manual)

For discharges beginning on or after January 1, 2005, Medicare contractors are to use a CCR from the latest settled cost report or from the latest tentatively settled cost report (whichever is from the later period) to determine the IPFs CCR. Under the IP F PPS, Medicare contractors must update the IPFs CCR on the Provider Specific File to reflect the IPFs CCR from the most recent tentative settlements or final settled cost reports, (whichever is the later period). Revised CCRs shall be entered into the Provider Specific File not later than 30 days after the date of the latest settlement used in calculating the CCR.   Subject to the approval of CMS, an IPFs CCR may be revised more often if a change in a hospitals operations occurs which materially affects a hospitals costs or charges. A revised CCR will be applied prospectively to all IPF PPS claims processed after t he update.   F. - Alternative CCRs   Effective for discharges in cost reporting periods beginning on or after January 1, 2005, the CMS Central Office may direct Medicare contractors to use an alternative CCR to the CCR from the later of the latest settled cost report or latest tentatively settled cost report, if CMS believes this will result in a more accurate CCR. In addition, if the Medicare contractor finds evidence that indicates that using data from the latest settled or tentatively settled cost report would not result in the most accurat e CCR, the Medicare contractor shall contact the CMS Central Office to seek approval to use a CCR based on alternative data. Also, a facility will have the opportunity to request that a different CCR be applied in the event it believes the CCR being applie d is inaccurate. The IPF is required to present substantial evidence supporting its request. Such evidence should include documentation regarding its costs and charges that demonstrate its claim that an alternative ratio is more accurate. The CMS Regional Office and CMS Central Office must approve any such request after evaluation by the Medicare contractor of the evidence presented by the IPF.   G. - IPF Mergers, Ownership Changes, and Errors with CCRs   Effective April 1, 2011, in the case of a merger, the Medicare contractor shall use the CCR from the IPF with the surviving provider number. If a new provider number (i.e., a new provider agreement is signed because the new owner refused assignment of the existing provider agreement) is issued the Medicare contractor shall use the national CCR based on the facility location of either urban or rural.   In instances where errors related to CCRs and/or outlier payments are discovered, Medicare contractors shall contact CMS Central Office to seek guidance. Medicare contractors may contact the CMS Central Office via the address and email address listed in pa rt B of this section.   If a cost report is reopened after final settlement and as a result of this reopening there is a change to the CCR, Contractors shall contact the CMS regional and Central Office for further instructions. Contractors may contact the CMS Central Office via t he address and email address listed in part B of this section.   H. - 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 and 21 - Case Mix Adjusted Cost Per Discharge. A separate history outside of the PSF is not necessary. The only insta nces a Medicare contractor retroactively changes a field in the PSF is to update the CCR when using the FISS Lump Sum Utility for outlier reconciliation or otherwise specified by the CMS Regional Office or Central Office.   190.7.2.3 - Outlier Reconciliation  (Rev. 2242, Issued: 06- 17-11, Effective: 07 -01-11, Implementation: 07- 01-11)  A. - General   Under 412.424 (d) (3) (i ), for IPF services furnished during cost reporting periods beginning on or after January 1, 2005, IPF 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. IPF PPS outlier payments are reconciled if the CMS Central Office and Regional Office confirm that reconcil iation is appropriate.   Effective for cost reporting periods beginning on or after April 1, 2011, subject to the approval of the CMS Central Office and Regional Office, the Medicare contractor shall reconcile an IPFs outlier claims at the time of cost report final settlement if they meet the following criteria:   1. The actual 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 IPF outlier payments in that cost reporting period exceed $500,000.   To determine if an IPF 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 IPF 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 i n 190.7.2.5 of this chapter. The NPR cannot be issued nor can the cost report be finalized until IPF outlier reconciliation is complete. These IPF cost reports will remain open until their claims have been processed for IPF PPS 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 IPF PPS outlier reconciliation and outlier payments), Medicare contractors shall notify the C MS Central and Regional Offices for further instructions. Notification to the CMS Central Office shall be sent to the address and email address provided in 190.7.2.2(B) above.   Medicare contractors shall notify the CMS Central Office and Regional Office if a cost report was final settled and meets the qualifications for IPF PPS outlier reconciliation. Notification to the CMS Central Office shall be sent to the address and email address provided in 190.7.2.2 (B).  B. - Reconciling Outlier Payments IPFs   Beginning with the first cost reporting period starting on or after January 1, 2005, IPF outlier payments may be reconciled at cost report settlement to account for differences between the cost -to-charge ratio (CCR) used to pay the claim at its original su bmission by the provider, and the CCR determined at final settlement of the cost reporting period during which the discharge occurred.  Effective for cost reporting periods beginning on or after April 1, 2011, if an IPF meets the criteria in part A of this  section, the Medicare contractor shall follow the instructions below in 190.7.2.5. The following examples demonstrate how to apply the criteria for reconciliation (as discussed in part A above):   EXAMPLE A:   Cost Reporting Period:  01/01/2010- 12/31/2010  Operating CCR used to pay original claims submitted during cost reporting period:  0.40  (In this example, this CCR is from the tentatively or final settled 2007 cost report)   Final settled operating CCR from 01/01/2010- 12/31/2010 cost report:  0.50  Total IPF PPS outlier payout in 01/01/2010- 12/31/2010 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 IPF PPS 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 IPF PPS outlier payments for this cost reporting period are reconciled using the correct CCR of 0.50.  In the event that multiple 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 weight 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 IPF PPS outlier reconciliation is required. Total IPF PPS outlier payments for the entire cost reporting period must exceed $500,000 in order to trigger reconciliation.  EXAMPLE B:   Cost reporting period:  01/01/2010- 12/31/2010   Overall CCR used to pay original claims submitted during cost reporting period:     0.40 from 01/01/2010 to 03/31/2010 (This CCR could be from the tentatively settled 2006 cost report.)    0.50 from 04/01/2010 to 12/31/2010 (This CCR could be from the tentatively settled 2007 cost report.)   Final settled operating CCR from 01/01/2010 -  12/31/2010 cost report:  0.35   Total IPF 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 IPF meets the criteria for IPF 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 IPF outlier payments greater than $500,000 for the entire cost reporting period.   Even if the IPF does not meet the criteria for reconciliation in 190.7.2.3, subject to approval of the CMS Central and Regional Offices, the Medicare contractor has the discretion to request that IPF PPS outlier payments in a cost reporting period be reconciled if the IPFs most recent cost and charge data indicate that the IPF PP S outlier payments to the IPF were significantly inaccurate. The Medicare contractor sends notification to the CMS Regional Office and Central Office via the address and email address provided in 190.7.2.2 (B).  Upon approval of the CMS Central and Regional Office that IPFs outlier claims need to be reconciled, Medicare contractors should follow the instructions in 190.7.2.3.  190.7.2.4 - 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 January 1, 2005, at the time of any reconciliation under 190.7.2, IPF outlier payment may be adjusted to account for the time value of money of any adjustments to IPF outlier payments as a result of reconciliation.  The time value of money is applied from the midpoint of the IPFs cost reporting period being settled to the date on which the CMS Central Office receives notificatio n from the Medicare contractor that reconciliation should be performed.  If an IPFs outlier payments have met the criteria for reconciliation, Medicare contractors will calculate the aggregate adjustment using the instructions below concerning reprocessing claims and determine the additional amount attributable to the time value of money of that adjustment.  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 shall 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.