(Medicare Claims Processing Manual)

For newly classified LTCHs, that is those hospitals (e.g., short term acute, psychiatric, or rehabilitation hospitals) that meet the requirements set forth in 42 CFR 412.23(e), or LTCHs that receive a new LTCH provider number, the Statewide average CCR sho uld be used until a CCR can be computed from the LTCHs cost report data, as described in part A of this section. However, as noted in part C above, the Medicare contractor or the LTCH may request use of a different CCR, such as a CCR based on the cost and charge data from the hospitals cost report immediately preceding its classification as a LTCH or receiving a new LTCH provider number. The Medicare contractor must verify the cost and charge data from that cost report. Use of the alternative CCR is subject to the approval of the CMS Central and Regional Offices. NOTE: A newly classified LTCH must request an alternative CCR and receive approval from the CMS Central Office prior to the effective date of the hospitals classification as a LTCH  in order for that alternative CCR to be effective beginning on the date of classification (as a LTCH).  If the request and approval for an alternative CCR occurs after the effective date of the LTCH classification, then the use of the alternative CCR will be effective prospectively beginning with the date of the approval of the alternative CCR request.   In instances where errors related to CCRs and/or outlier payments are discovered, Medicare contractors shall contact the CMS Central Office to seek further guidance.  Medicare contractors may contact the CMS Central Office via email at outliersIPPS@cms.hhs.gov.   If a cost report is reopened after final settlement and as a result of this reopening there is a change to the CCR, Medicare contractors shall contact the CMS regional and Central Office for further instructions. Medicare contractors may contact the CMS Central Office via email at outliersIPPS@cms.hhs.gov.  G. - 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: 21 -Case Mix Adjusted Cost Per Discharge, 23 -Intern to Bed Ratio, 24 -Bed Size, 25 -Operating Cost to Charge Ratio, 27 -SSI Ratio and 28 -Medicaid Ratio. A separate history outside of the PSF is not necessary. ( NOTE : PSF elements 23, 24, 27, 28 and 49 are only required for LTCHs effective 7/11/06.). The only instances 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.    150.25 - Statewide Average Cost -to-Charge Ratios  (Rev.  2111, Issued: 12- 03-10, Effective: 04 -01-11, Implementation: 04- 04-11)  For discharges prior to August 8, 2003, the Statewide average CCR is used in those instances in which a LTCHs CCR falls above or below reasonable parameters.  CMS sets forth these parameters and the Statewide average CCRs in each years IPPS annual notice of prospective payment rates.   For discharges occurring on or after August 8, 2003, the Medicare contractor should use a Statewide average CCR if it is unable to determine an accurate CCR for a LTCH in one of the following circumstances:  1. New hospitals that have not yet submitted their first Medicare cost report.  (For this purpose, a new hospital is defined as an entity that has not accepted assignment of an existing hospitals provider agreement in accordance with 42 CFR 489.18.)  2. LTCHs whose overall CCR is in excess of 3 standard deviations above the corresponding national geometric mean.  Effective 10/1/2006, this mean is recalculated annually by CMS and published in the annual notice of prospective payment rates issued in acco rdance with 412.525(a)(4)(iv)(c)(2) and 412.529(c)(3)(iv)(c)(2) of the CFR.  3. Other LTCHs for whom accurate data with which to calculate an overall CCR are not available.   However, the policies of 150.24 part B and C can be applied as an alternative to the Statewide average CCR.   For those LTCHs assigned the Statewide average CCR, the CCR must be updated every October 1 based on the latest Statewide average CCRs published in each years IPPS annual notice of prospective payment rates (Table 8C for LTCHs) until the hospital is assig ned a CCR based on the latest tentative or final settled cost report or a CCR based on the policies of 150.24 part B and C of this manual.  A hospital is not assigned the Statewide average CCR if its CCR falls below 3 standard deviations from the national  mean CCR.  In such a case, the LTCH CCR is used.  150.26 - Reconciliation  (Rev. 4390, Issued: 09- 06-19, Effective: 10 -01-19, Implementation: 10- 07-19)  A. - General   For all LTCHs, reconciliation is effective beginning with discharges occurring in a hospitals first cost reporting period beginning on or after October 1, 2003.   Subject to the approval of the CMS Central Office, Medicare contractors shall reconcile a LTCHs 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 cost reporting period to make outlier payments, and   2. Applicable outlier payments exceed $500,000 in that cost reporting period.  For the purposes of determining whether outlier payments meet the $500,000 threshold, MACs shall combine the following applicable payments depending on the cost reporting period:  a. For cost reporting periods beginning before October 1, 2015, high cost outlier payments made under 42 CFR 412.525 and short -stay outlier payments made under 42 CFR 412.529 (OUTLIER and SHORT STAY OUTLIER PAYMENTS on PS&R Report 11S);  b. For cost reporting periods beginning on or after October 1, 2015 and ending before October 1, 2017, high cost outlier payments made under 42 CFR 412.525 (that is, both high cost outlier payments made to site neutral payment rate discharges described under  42 CFR 412.522(a)(1) and to standard payment rate discharges described under 42 CFR  412.522(a)(2)), and short -stay outlier payments made under 42 CFR 412.529 (OUTLIER and SSO STANDARD PAYMENTS on PS&R Report 11S ); c. For cost reporting periods beginning on or after October 1, 2015 and ending after October  1, 2017  i. For discharges before October 1, 2017, high cost outlier payments made under 42 CFR 412.525 (that is, both high cost outlier payments made to site neutral payment rate discharges described under 42 CFR 412.522(a)(1) and to standard payment rate discharges described under 42 CFR 412.522(a)(2)), and short -stay outlier payments made under 42 CFR 412.529 ( OUTLIER and SSO STANDARD PAYMENTS on PS&R Report 11S ); ii. For discharges after October 1, 2017, high cost outlier payments made under 42 CFR 412.525 (that is, both high cost outlier payments made to site neutral payment rate discharges described under 42 CFR 412.522(a)(1) and to standard payment rate discharges  described under 42 CFR 412.522(a)(2)) ( OUTLIER on PS&R Report 11S ); or d. For cost reporting periods beginning on or after October 1, 2017, high cost outlier payments made under 42 CFR 412.525 (that is, both high cost outlier payments made to site neutral payment rate discharges described under 42 CFR 412.522(a)(1) and to standard payment rate discharges described under 42 CFR 412.522(a)(2)) ( OUTLIER on PS&R Report 11S ).  To determine if a LTCH 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 CCR prior to issuing a Notice of Program Reimbursemen t (NPR).  If the criteria for 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 150.28.  The NPR cannot be issued nor can the cost report be finalized until outlier reconciliation is complete. The criteria above replaces the criteria published in III of PM A-03-058.  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 outlier reconciliation and outlier payments), Medicare contractors shall notify the CMS Regional and Central Office for further instructions.  Notification to the CMS Central Office shall be sent via email to outliersIPPS@cms.hhs.gov.   Even if a LTCH does not meet the criteria for reconciliation, subject to approval of the CMS Regional and Central Office, the Medicare contractor has the discretion to request that a LTCHs outlier payments in a cost reporting period be reconciled if the L TCHs most recent cost and charge data indicate that the outlier payments to the hospital were significantly inaccurate.  The Medicare contractor sends notification to the CMS Central Office via email to outliersIPPS@cms.hhs.gov.  Upon approval of the CMS regional and Central Office that a LTCHs high cost and short stay outlier claims need to be reconciled, Medicare contractors shall follow the instructions in 150.27 and 150.28.  B. Reconciling Outlier Payments   Beginning with the first cost reporting period starting on or after October 1, 2003, all LTCHs are subject to the reconciliation policies set forth in this section.  If a LTCH meets the criteria in part A of this section, the Medicare contractor shall follow the instructions below in 150.28.  Further instructions for Medicare contractors on reconciliation and the time value of money are provided below in 150.27 and 150.28.  The following examples demonstrate how to apply the criteria for reconciliation:   Example A   Cost Reporting Period: 01/01/2004-12/31/2004   CCR used to pay original claims submitted during cost reporting period:  0.40 (In this example, this CCR is from the tentatively settled 2002 cost report).  Final settled CCR from 01/01/2004-12/31/2004 cost report:  0.50.   Total outlier payments (short-stay and high cost outliers combined) in 01/01/2004-12/31/2004 cost reporting period: $600,000.   Because the CCR of 0.40 used at the time the claim was originally paid changed to 0.50 (by more than 10 percentage points) at the time of final settlement, and the provider received greater than $500,000 in (short-stay and high cost) outlier payments during that cost reporting period, the criteria has been met to trigger reconciliation, and therefore, the Medicare contractor notifies the CMS Regional Office and CMS Central Office.  The providers outlier payments for this cost reporting period will be reconciled using the actual CCR of 0.50.  In the event that multiple CCRs are used in a given cost reporting period, Medicare contractor shall calculate a weighted average of the CCRs in that cost reporting period.  (See Example B below for instructions on how to weight the CCRs).  The Medicare contractor shall then compare the weighted average CCR to the CCR determined at the time of final settlement of the cost reporting period to determine if reconciliation is required.  Again, total (combined short- stay and high cost) outlier payments for the entire  cost reporting period must exceed $500,000 in order to trigger reconciliation.  Example B   Cost Reporting Period: 01/01/2004-12/31/2004   CCR used to pay original claims submitted during cost reporting period:    - 0.40 from 01/01/2004-03/31/2004 (This CCR is from the tentatively settled 2001 cost report)  - 0.50 from 04/01/2004-12/31/2004 (This CCR is from the tentatively settled 2002 cost report)