(Medicare Claims Processing Manual)

No.  140.2.5.4 - Teaching Status Adjustment (Rev. 2673, Issued: 03 -14-13, Effective: 04 -22-13, Implementation: 04- 22-13)  The teachi ng status adjustment is a  facili ty level adjustm ent made to the  Federal per discharge base rate to account f or the higher indirect operatin g costs experienced b y facilitie s that participate in graduate medical education.  The  adjustm ent is m ade on a c laim basis as an interim pa yment, with f inal payment in full for the cost reporting period m ade through the  cost report.  Any difference between the  interim payments and the  actu al teachi ng status adjustm ent amount comput ed in the  cost re port are adjust ed through lump sum payments/recoupm ents whe n the  cost re port is filed and later settled.  The  adjustm ent is b ased on the  IRFs teaching variable, which is the ratio of  the number of F TE re sidents training in the IRF (subj ect to the  FTE re sident ca p descr ibed belo w) to the IR Fs aver age daily ce nsus (ADC).  140.2. 5.4.1 - FTE Re sident Cap (Rev. 2673, Issued: 03 -14-13, Effective: 04 -22-13, Implementation: 04- 22-13)  There is a  cap on the nu mber of F TE re sidents tha t may be counted for purpose s of calcula ting the teaching adjustment, not the numb er of re sidents te aching institutions can hire or t rain. The F TE resident cap is id entical in fr eestanding teaching re habilitation hospita ls and in distinc t part rehabilitation units wi th GME p rogra ms. The cap is the number of F TE re sidents that trained in the IRF during a base year.  An IRFs FTE resident cap is det ermined based on the f inal settlement of the IR Fs most recent cost re porting period ending on or bef ore Nove mber 15, 2004. IRF s that first began training re sidents af ter Nove mber 15, 2004 will initially receive an F TE cap of z ero. The FTE caps for new IRFs (a s well as existing IRF s) that start training re sidents in a  new GME p rogram (as defined in 413.79(1)) may be subsequently adjusted in accordanc e with the  policie s that are being applied in the IPF PPS (a s described in 412.424(d)(1)( iii)(B )(2)), which in turn are made in accordance with the  policie s described in 42 CFR 413.79(e) .  For other types of Medic are provid ers (including long-ter m care hospita ls) that have been training re sidents and are curre ntly conv erting to IRFs, the f iscal inter mediary will determine  an F TE re sident cap for purposes of the IRF teaching status a djustment, appli cable beginning with the new I RFs payments under the IRF PPS based on the F TE count of re sidents durin g the  predecessor  facilitys most recent cost repor ting period ending on or bef ore No vember 15, 2004.  If the predece ssor facility did not begin training residents until af ter No vember 15, 2004, the fac ility would initially receive an F TE cap of zero.  The F TE caps for new IRF s (as well as existing IRF s) that start training re sident s in a ne w GME prog ram (as def ined in 413.79(1)), may be subsequently adjusted in accordance with the  policie s that are being applie d in the  IPF PPS (a s described in 412.424(d)(1)( iii)(B )(2)), which in turn are made in accordance with the  policie s described in 42 CFR 413.79(e) .  Once establish ed, the FT E resident cap for the t eaching status adjustme nt for the new IR F will be  subj ect to the  same rules and adjustme nts as any IR Fs FTE re sident cap.  CMS  will monitor  this policy closely to ensure tha t it is not b eing inappropriatel y manipulated.  IRFs are not per mitte d to aggregate the F TE re sident caps used to compute the IRF PPS teaching status adjustme nt through a ffiliation agr eements. Re sidents with l ess than full- time status and re sidents f loating through the re habilitation hospital or unit for le ss than a full year are counted in proportion to the time  they spend in the ir assignment with the  IRF (for example, a re sident on a full- time, 3-month rotation to the IRF would be  counted a s 0.25 F TEs for purpose s of counting re sidents to calcula te the ra tio). No FT E resident time counted for purpose s of the I PPS I ME adjustment is allowed to be counted for purpose s of the t eaching status adjustment for the IRF PPS.  The denomina tor used to cal culate the teachi ng status adjustm ent unde r the IRF PPS  is the IRFs average daily census (ADC ) from the  current cost re porting period. If a rehabilita tion hospit al or unit ha s mo re FTE residents in a  given year than in the  base year (the base year being used to establish the  cap) payments ar e based on the  lower number (the cap amount)  in th at year. If a rehabilita tion hospit al or unit w ere to ha ve fewer FTE residents in a  given year than in the  base year (that is, fe wer residents th an its FTE resident cap ) an adjustm ent in pa yments in th at year is based on the  lower numbe r (the actual numbe r of FTE residents the  facili ty hires and trains).  Effective for cost reporting periods beginning on or after October 1, 2011, the IRF FTE resident caps may be temporarily adjusted to reflect interns and residents added because of another IRFs closure or the closure of another IRFs residency training program.  An IRF is only eligible for the temporary cap adjustment if training the additional interns and residents would cause the IRF to exceed its FTE resident cap.  In addition, an IRF that closes a medical residency training program must agree to tempora rily reduce its FTE cap before other IRFs can receive temporary adjustments to their caps for training the IRFs interns and residents.  IRFs may qualify for the temporary cap adjustment for cost reporting periods beginning on or after October 1, 2011 if t hey are already training interns and residents displaced by IRF closures or residency training program closures that occurred prior to October 1, 2011.  140.2.5.5 - Outliers  (Rev. 2673, Issued: 03 -14-13, Effective: 04 -22-13, Implementation: 04- 22-13)  Section 1886(j)(4) of the Act provides the Secretary with the authority to make payments in addition to the basic IRF prospective payments for cases incurring extraordinarily high cost.  A case qualifies for outlier payment if the estimated cost of the cas e exceeds the adjusted outlier threshold.  CMS calculates the adjusted outlier threshold by adding the IRF PPS payment for the case (that is, the CMG payment adjusted by all of the relevant facility -level adjustments) and the adjusted threshold amount (als o adjusted by all of the relevant facility -level adjustments).  Then, CMS calculates the estimated cost of the case by multiplying the IRFs overall cost -to-charge ratio (CCR) by the Medicare allowable covered charge. If the estimated cost of the case is h igher than the adjusted outlier threshold, CMS makes an outlier payment for the case equal to 80 percent of the difference between the estimated cost of the case and the outlier threshold.   The adjusted threshold amount and upper threshold CCR are set forth annually in the IRF PPS notices published in the Federal Register.   140.2.6 - Cost -to-Charge Ratios  (Rev. 2323, Issued: 10- 26-11, Effective: 11 -28-11, Implementation: 11- 28-11)  For discharges beginning on and after January 1, 2002 thru September 30, 2003, the Medicare contractor shall use the instructions for calculating the CCR for purposes of determining outlier payments under the IRF PPS set forth in Transmittal A -01-131.   For discharges beginning on or after October 1, 2003, the Medicare contractor shall use a CCR from the most recent tentative settled cost report or the most recent settled cost report (whichever is the later period), specific to freestanding IRFs or for IR Fs that are distinct part units of acute care hospitals in accordance with the formulas set forth below.   Effective October 1, 2003, if an IRFs CCR is above the applicable ceiling set forth annually in the IRF PPS notices published in the Federal Register it is considered to be statistically inaccurate. As a result, CMS will assign the IRF an appropriate national average CCR. CMS does not use a lower threshold; an IRF will receive their actual CCR, no matter how low their ratio falls.   The IRF PPS covers operating and capital -related costs and excludes medical education and nurse anesthetist costs paid for on a reasonable cost basis. Therefore, total Medicare charges for IRFs will consist of the sum of the inpatient routine charges and t he sum of inpatient ancillary charges (including capital). Total Medicare costs will consist of the sum of inpatient routine costs (net of private room differential and swingbed) plus the sum of ancillary costs plus capital -related pass -through costs only.   The provider specific file (PSF) contains a field for the operating CCR (Field 25; file position 102- 105) and for the capital CCR (Field 42; file position 203- 206). Because the CCR computed for the IRF PPS includes routine, ancillary, and capital costs, the CCR for freestanding IRFs, units, and new providers described below will be entered on the provider specific file only in field 25; file position 102- 105. Field 42; file position 203- 206 of the provider specific file must be zero -filled.   The Medicare contractor shall continue to update the IRFs CCR each time a more recent cost report is settled (either final or tentative). Revised CCRs shall be entered into the PSF not later than 30 days after the date of the latest settlement used in calculating the CCR.   A. - Calculating Medicare CCRs for Freestanding IRFs   1) Identify total Medicare costs from Worksheet D -1, Part II, line 49 minus (Worksheet D, Part III, col. 8, lines 25 through 30 plus Worksheet D, Part IV, col. 7, line 101).   2) Identify total Medicare charges (the sum of routine and ancillary charges), from Worksheet D -4, Column 2, the sum of lines 25 through 30 and line 103 from the cost report; where possible, these charges should be confirmed with the PS&R data.   3) Divide the Medicare costs by the Medicare charges to compute the CCR.   B. - Calculating Medicare CCRs for IRF Distinct Part Units   1) Identify total Medicare costs from Worksheet D -1, Part II, line 49 minus (Worksheet D, Part III, col. 8, line 31 plus Worksheet D, Part IV, col. 7, line 101).   2) Identify total Medicare charges (the sum of routine and ancillary charges) from Worksheet D -4, Column 2, line 31 plus line 103 from the cost report; where possible, these charges should be confirmed with the PS&R data.   3) Divide the Medicare costs by the Medicare charges to compute the CCR.   All references to Worksheets and specific line numbers shall correspond with the sub-provider identified as the IRF unit that has the letter "T" or R in the third position of the Medicare provider number.   C. - Calculating Medicare CCRs for New IRFs   In the case of a New IRF unit (defined in 42 C.F.R. 412.30) or a New Inpatient Rehabilitation Hospital (defined as a hospital that has never entered into a provider agreement with the Secretary), the Medicare contractor shall use a national average CCR based on the facility location of either urban or rural. The national average CCRs applicable to IRFs shall be found in each years annual notice of prospective payment rates published in the Federal Register.