(Medicare Claims Processing Manual)

10.8 - Geographic Adjustments  (Rev. 1, 10-03-03) A-01-93  Adjustments for differences in wages across geographical areas are made using inpatient hospital PPS wage index (post- reclassification, post -floor).   It is estimated that 60 percent of the group payment represents labor- related costs and are subject to the geographic adjustment.  10.8.1 - Wage Index Changes  (Rev. 1, 10-03-03) A-02-026 XIII, A-01-144  Refer to the CMS Web site http://www.cms.gov/medicare/hopsmain.htm  for wage index change information.  10.9 - Updates  (Rev. 132, 03-30-04)   Section 1833(t) of the Social Security Act (the Act) as amended by 4533 of the Balanced Budget Act (BBA) of 1997, authorizes CMS to implement a Medicare prospective payment system for hospital outpatient services, including partial hospitalization services; Certain Part B services furnished to hospital inpatients who have no Part A coverage ; Partial hospitalization services furnished by CMHCs; Hepatitis B vaccines and their administration, splints, cast, and antigens provided by HHAs that provide medical and other health services; Hepatitis B vaccines and their administration provided by CORFs; and Splints, casts, and antigens provided to hospice patients for treatment of non- terminal illness.   By statute, CMS is required to review and revise the APC groups, relative payment rates, wage adjustments, outlier payments and other adjustments required under the OPPS on an annual basis.  These annual updates are made final through the publication of proposed and final rules in the Federal Register.  The annual update Federal Register rules can be accessed on the OPPS Web site at:  http://www.cms.gov/Medicare/Medicare -Fee-for-Service- Payment/HospitalOutpatientPPS/  In addition to the annual update at the beginning of each calendar year, we also update the OPPS on a quarterly basis to account for mid- year changes such as adding new pass -through drugs and/or devices, adding new treatments and procedures to the new technology APCs, removing procedures from the inpatient list, and recognizing new HCPCS codes that may be added during the year.  The quarterly updates are issued as Recurring Update Notifications.  The quarterly Recurring Update Notifications can be found in Pub. 100-21, Recurring Update Notification, which can be accessed at the following Web si te:  http://www.cms.gov/Regulations- and-Guidance/Guidance/Manuals/Internet- Only -Manuals -IOMs.html  10.10 - Biweekly Interim Payments for Certain Hospital Outpatient Items and Services That Are Paid on a Cost Basis, and Direct Medical Education Payments, Not Included in the Hospital Outpatient Prospective Payment System (OPPS)  (Rev. 1, 10-03-03) A-01-32  For hospitals subject to the OPPS, payment for certain items that are not paid under the OPPS, but which are reimbursable in addition to OPPS, are made through biweekly interim payments subject to retrospective adjustment based on a settled cost report.  These payments include:   Direct medical education payments;   Costs of nursing and allied health programs;   Costs associated with interns and residents not in an approved teaching program as described in 42 CFR 415.202;   Teaching physicians costs attributable to Part B services for hospitals that elect cost- based reimbursement for teaching physicians under 42 CFR 415.160;   CRNA services;    For hospitals that meet the requirements under 42 CFR 412.113(c) , the reasonable costs of anesthesia services furnished to hospital outpatients by qualified nonphysician anesthetists (i.e., certified registered nurse anesthetists and anesthesiologists assistants) employed by the hospital or ob tained under arrangements;    Bad debts for uncollectible deductibles and coinsurance;   Organ acquisition costs paid under Part B.   For hospitals that are paid under the OPPS, interim payments for these items attributable to both hospital outpatients, as wel l as inpatients whose services are paid under Part B of the Medicare program are made on a biweekly basis.  The A/B MAC (A) determines the amount of the biweekly payment by estimating a hospitals reimbursement amount for these items for the cost reporting  period by using:    Medicare principles of cost reimbursement for cost -based items; and    Medicare rules for determining payment for graduate medical education for direct medical education, and dividing the total annual estimated amount for these items into  26 equal biweekly payments.   The estimated annual amount is based on the most current data available.  Biweekly interim payments are reviewed and, if necessary, adjusted at least twice during the reporting period, with final settlement based on a submitte d cost report.   Because hospitals subject to the OPPS have not received payment for these items attributable to services furnished on or after August 1, 2000, the date the OPPS was implemented, the first payment to each hospital included all the payments due to the hospital retroactive to August 1, 2000.  Thereafter, A/B MACs (A) continue to make payment on a biweekly basis.  Each payment is made two weeks after the end of a biweekly period of services.  The A/B MAC (A) was required to make retroactive paym ents and begin making biweekly interim payments to all hospitals that are due these payments no later than 60 days after March 8, 2001.   These biweekly payments may be combined with the inpatient biweekly payments that the A/B MAC (A) makes under 2405.2 o f the Medicare Provider Reimbursement Manual (CMS Pub.15- I).  However, if a single payment is made, for purposes of final cost report settlement, they must maintain records to separately identify the amount of the hospitals combined payment that is paid out of the Part A or Part B trust fund.  10.11 - Calculation of Overall Cost -to-Charge Ratios (CCRs) for Hospitals Paid Under the Outpatient Prospective Payment System (OPPS) and Community Mental Health Centers (CMHCs) Paid Under the Hospital OPPS  (Rev. 1445, Issued:  02- 08-08; Effective:  01- 01-08; Implementation:  03 -10-08)  10.11.1 - Requirement to Calculate CCRs for Hospitals Paid under OPPS and for CMHCs  (Rev. 2296, Issued: 09- 02-11, Effective: 10- 01-11, Implementation: 10- 03-11)  Medicare contractor s must calculate overall cost -to-charge ratios for hospitals paid under OPPS and for CMHCs using the providers most recent full year cost reporting period, whether tentatively settled or final settled, in accordance with the instructions in 10.11.7, 10.11.7.1, 10.11.8, 10.11.8.1 or 10.11.9 as applicable. The contractor must calculate a provider overall CCR whenever a more recent full year cost report becomes available. If a CCR is calculated based on the tentatively settled cost report, the contractor must calculate another overall CCR when the cost report is final or when a cost report for a subsequent cost reporting period is tentatively settled, whichever occurs first. If a CCR is based on a final settled cost report, the contractor must calculate the CCR when a cost report for a subsequent cost reporting period is tentatively settled.   10.11.2 - Circumstances in Which CCRs are Used  (Rev. 1657, Issued: 12- 31-08, Effective: 01- 01-09, Implementation: 01- 05-09)  The contractors must apply CCRs prospectively to calculate outlier payments (for hospitals paid under OPPS and CMHCs), Transitional Outpatient Payment System (TOPS) payments (for hospitals paid under OPPS), device pass -through payments (for hospitals paid under OPPS), and items and servi ces paid at charges adjusted to cost (for hospitals paid under OPPS).    10.11.3 - Selection of the CCR to be Used  (Rev. 1657, Issued: 12- 31-08, Effective: 01-01-09, Implementation: 01-05-09)   Contractors will use the CCR calculated for the most recent perio d of time, whether based on a tentatively settled cost report or a final settled cost report.  For example, if the CCR being used is the tentatively settled CCR for FY 2008, and a tentatively settled CCR for FY 2009 is determined before the final settled C CR for FY 2008, then the contractor uses the CCR based on the tentatively settled 2009 cost report.  10.11.3.1 - CMS Specification of Alternative CCR (Rev. 1657, Issued: 12- 31-08, Effective: 01-01-09, Implementation: 01-05-09)   Effective January 1, 2009, t he central office may direct Medicare contractors to use an alternative CCR if CMS believes this will result in a more accurate CCR.  Also, 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 accurate CCR, then the Medicare contractor shall notify the CMS central office and CMS regional office to seek approval to use a CCR -based on alternative data.  For example, CCRs may be revised more often if a change in a hospital or CMHCs operations occurs which materially affects a hospital or CMHCs costs and charges.  The central and regional offices must approve the Medicare contractors request before the Medicare contractor may use a CCR -based on alternative data.  Revised CCRs are applied prospectively to all OPPS claims processed after the update.  Medicare contractors shall send notification to the central office via the following address and e- mail address:   CMS  C/O Division of Outpatient Care - OPPS O utlier Team  7500 Security Blvd.  Mail Stop C4 -05-17 Baltimore, MD 21244 outliersopps@cms.hhs.gov  10.11.3.2 - Hospital or CMHC Request for Use of a Different CCR  (Rev. 1657, Issued: 12- 31-08, Effective: 01-01-09, Implementation: 01-05-09)   Effective January 1, 2009, CMS (or the Medicare contractor) may specify an alternative CCR if it believes that the CCR being applied is inaccurate.  In addition, a hospital or CMHC has the opportunity to request that a different CCR be applied for outlier payment calculation in the event it believes the CCR being applied is inaccurate.  The hospital or CMHC 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.  After the Medicare contractor has evaluated the evidence presented by the hospital or CMHC, the Medicare contractor notifies the CMS central office and CMS  regional office of any such request.  The CMS central and regional offices approve or deny any request by the hospital (or CMHC) or Medicare contractor for use of a different CCR.  Medicare contractors shall send requests to the CMS central office using the address and e-mail address provided above.  10.11.3.3 - Notification to Hospitals Paid Under the OPPS of a Change in the CCR  (Rev. 1657, Issued: 12- 31-08, Effective: 01-01-09, Implementation: 01-05-09)   The Medicare contractor shall notify a hospital or CMHC whenever it makes a change to its CCR.  When a CCR is changed as a result of a tentative settlement or a final settlement of the cost report, the change to the CCR can be included in the notice that is issued to each provider after a tentative or final settlement is completed.  Medicare contractors can also issue separate notification to a hospital about a change to its CCR(s).    10.11.4 - Use of CCRs in Mergers, Acquisitions, Other Ownership Changes, or Errors Related to CCRs (Rev. 1657, Issued: 12- 31-08, Effective: 01- 01-09, Implementation: 01- 05-09)  The contractors use the CCR for the surviving provider in cases of provider merger, acquisition or other such changes.