(Medicare Claims Processing Manual)

* 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:  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 x 27 days 33.6 days  x 1.2 $37,218.93 Step Number  Description of Step  Description of Calculation  Example of Calculation  Result  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; however, since the LOS in the numerator exceeds the number of days in the denominator, the percentage equals 100 percent  27 days  25 days is > 1; therefore percent is 1.00 1.00 1c Determine the 120 percent of the LTC -DRG per diem portion of the blend alternative  Multiply the percentage determined in step (1-b) by the 120 percent of the LTC -DRG per diem amount in step (1-a) 1.0 x $37,218.93 $37,218.93 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 $48,118.92 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 ($48,118.92) $8,019.82 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 - 1.00 0.00 Step Number  Description of Step  Description of Calculation  Example of Calculation  Result  2d Determine the IPPS comparable per diem  amount portion of the blend alternative  Multiply the percentage determined in step (2-c) by the IPPS comparable per diem amount determined in step (2 -b) 0.00 x $8,019.82 $0.00 3 Compute the blend alternative  Add the 120 percent of the LTC -DRG per diem portion determined in step (1-c) and the IPPS comparable per diem portion determined in step (2-d) $37,218.93 + $0.00 $37,218.93**  * 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).   ** Note that, since in this example the LOS of the SSO case exceeds 25 days, the blend percentage applicable to the 120 percent of the LTC -DRG specific per diem amount is 100 percent and the percentage applicable to the IPPS comparable per diem amount is 0  percent, therefore the amount computed under the blend option is equal to 120 percent of the LTC -DRG specific per diem amount.   Under the blend alternative of the SSO payment formula, an amount comparable to what would otherwise be paid under the IPPS (i.e., full IPPS comparable amount) includes payment for the costs of inpatient operating services based on the standardized amount determined under 412.64(c), adjusted by the applicable DRG weighting factors determined under 412.60 as specified at 412.64(g). This amount is further adjusted to account for different area wage levels by geographic area using the applicable IPPS labor -related share, based on the CBSA where the LTCH is physically located as set forth at 412.525(c) and using the IPPS wage index for non- reclassified hospitals published in the annual IPPS final rule. (In the RY 2006 LTCH PPS final rule (70 FR 24200), we di scuss the inapplicability of geographic reclassification procedures for LTCHs.) For LTCHs located in Alaska and Hawaii, this amount is also adjusted by the applicable proposed COLA factor used under the IPPS published annually in the IPPS final rule. (Curr ently, the same COLA factors are used under both the IPPS and the LTCH PPS.)   Additionally, an amount comparable to what would be paid under the IPPS for the case includes a disproportionate share (DSH) adjustment (see 412.106), if applicable, and includes an indirect medical education (IME) adjustment (see 412.105), if applicable.  For the comparable IPPS DSH adjustment, provider specific file elements 24 (Bed Size), 27 (Supplemental Security Income Ratio (SSI)), and 28 (Medicaid Ratio) are requir ed, as discussed below.  In determining a LTCHs SSI ratio and Medicaid ratio used in the calculation of the comparable IPPS DSH adjustment, refer to sections 20.3.1.1 and 20.3.1.2 of this manual.  For the comparable IPPS IME adjustment, provider specific file elements 23 (Intern/Beds Ratio) and 49 (Capital Indirect Medical Education Ratio) are required, as discussed below.  Furthermore, the IPPS comparable IME adjustment for a LTCH is determined by imputing a limit on the number of full -time equivalent (FTE) residents that may be counted for IME (IME cap) based on the LTCHs direct GME cap as set forth at 413.79(c)(2) (which will already be established for a LTCH which had residency programs). In de termining the IPPS comparable IME adjustment for a LTCH, if applicable, the use of a proxy for the IME cap is necessary because it would not be appropriate to apply the IPPS IME rules literally in the context of this LTCH PPS payment adjustment. The full I PPS comparable amount used under the blend alternative in the SSO payment adjustment, also includes payment for inpatient capital -related costs, based on the capital Federal rate at 412.308(c), which is adjusted by the applicable IPPS DRG weighting factor s. This amount is further adjusted by the applicable geographic adjustment factors set forth at 412.316, including wage index (based on the CBSA where a LTCH is physically located and derived from the IPPS wage index for non -reclassified hospitals as publ ished in the annual IPPS final rule), and large urban location, if applicable.  A LTCH PPS payment amount comparable to what would be paid under the IPPS does not include additional payments for extraordinarily high cost cases under the IPPS outlier policy (412.80(a)).  Under existing LTCH PPS policy, a SSO case that meets the criteria for a LTCH PPS high cost outlier payment at 412.525(a)(1) (i.e., if the estimated costs of the case exceeds the adjusted LTCH PPS SSO payment plus the fixed- loss amount) wi ll receive an additional payment under the LTCH PPS HCO high cost outlier at 412.525(a) (67 FR 56026; August 30, 2002).  Under the revised SSO payment formula, we will continue to use the fixed -loss amount calculated under 412.525(a), and not a fixed- loss amount based on 412.80(a), to determine whether a SSO case receives an additional payment as a high cost outlier case.   For RY 2008, the SSO policy was revised as follows:   Effective for LTCH PPS discharges occurring on or after July 1, 2007, and on or before December  28, 2007*, the payment adjustment formula for SSO cases was revised for those cases where the patients LTCH covered LOS is less than, or equal to an IPPS -comparable threshold.  For cases falling within this IPPS -comparable threshold, Medicare payment under the SSO policy is subject to an additional adjustment.  The IPPS- comparable threshold is defined as the geometric average length of stay for the same DRG under the IPPS plus one standard deviation (refer to Table 3 in the LTCH PPS RY 2008 final rule (72 FR 26870 at 27019-  27029)).   If the covered LOS at the LTCH is less than or equal to the IPPS -comparable threshold for the LTC -DRG, Medicare payment is based on the IPPS comparable per diem amount, capped at the full IPPS comparable amount.  This option replaces the blend amount in the adjusted LTCH PPS SSO payment formula.  Effective for discharges occurring on or after July 1, 2007 and on or before December 28, 2007*, therefore, the adjusted Medicare payment for an SSO case where the covered LOS at the LTCH is within the IPPS -comparable threshold, 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 the IPPS comparable per diem amount , capped at the full IPPS comparable amount   The IPPS comparable amount is determined by the same methodology as the IPPS comparable portion of the blend alternative, specified above in the above examples at 2a.   For SSO cases where the covered length of stay exceeds the IPPS threshold, payment is made under the SSO payment formula that became effective beginning in RY 2007, as specified above.   *NOTE:   On December 29, 2007, the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) was enacted that mandated a modification to the SSO payment adjustment formula for a 3- year period beginning on the date of enactment of the Act.  Specifically, section  114(c)(3) of the MMSEA specifies that the revision to the SSO policy implemented in RY 2008 shall not apply for a 3- year period beginning with discharges occurring on or after December 29, 2007.  Consequently, the fourth option in the SSO payment ad justment formula at 412.529(c)(3)(i) will not apply during this 3-year period, and therefore, there will be no comparison of the covered LOS of the SSO case to the IPPS threshold in determining the payment adjustment for SSO cases.  Therefore, for SSO d ischarges occurring on or after December 29, 2007, and before December 29, 2012, the adjusted payment for a SSO case is equal to 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.   As noted above, during this 3- year period specified by the MMSEA, all SSO cases (including those where the covered LOS exceeds the IPPS threshold) are paid under the SSO payment formula that became effective beginning in RY 2007, as described above.   Short Stay Outlier Policy for LTCHs qualifying under 1886(d)(1)(B)(II)   A subsection (II) hospital:    Was excluded as a LTCH in 1986    Has an average inpatient LOS of greater than 20 days, and    Demonstrates that 80 percent of its annual Medicare inpatient discharges in the 12-month reporting period ending FFY 1997 have a principal finding of neoplastic disease.