CMS Pub. 100-04, ch. 3, § 140.2.5.2

Payments are adjusted for facilities located in rural areas. A facility is considered to be

a rural IRF if they are located in a non-urban area.

For FY 2006 and FY 2007, a hold harmless policy applies to IRFs that meet the

definition of rural in FY 2005 in §412.602 and become urban under the FY 2006 CBSA-based designations. The IRFs that meet the criteria described in the previous sentence

will qualify for an adjustment to their payments in FY 2006 and FY 2007 equal to some

portion of the 19.14 percent rural adjustment effective in FY 2005. This adjustment is in

addition to the one-year blended wage index described above for discharges occurring on

or after October 1, 2005 and on or before September 30, 2006.

140.2.5.3 - Low-Income Patient (LIP) Adjustment: The Supplemental

Security Income (SSI)/Medicare Beneficiary Data for Inpatient

Rehabilitation Facilities (IRFs) Paid Under the Prospective Payment

System (PPS)

(Rev. 2673, Issued: 03-14-13, Effective: 04-22-13, Implementation: 04-22-13)

The LIP adjustment accounts for differences in costs among IRFs associated with

differences in the proportion of low-income patients treated. The LIP adjustment is

calculated as (1 + disproportionate share hospital (DSH) patient percentage) raised to a

power specified in the most recent IRF PPS final rule published in the Federal

Register. To compute the DSH patient percentage the following formula is used:

DSH = Medicare SSI Days + Medicaid, Non-Medicare Days

Total Medicare Days Total Days

This instruction provides the data for determining additional payment amounts for IRFs

with low-income patients. An SSI data file below shows the latest available IRF-specific

data to compute an IRF's SSI ratio for the associated specified fiscal year (FY). An IRF

may use this ratio as part of the formula to estimate their LIP adjustment for a cost

reporting period that begins subsequent to the FY specified by the data file. As

appropriate, a file will be updated annually (usually each October/November).

Patients who are enrolled in Medicare Advantage (administered through Medicare Part

C) should also be included in the Medicare fraction. These days will be included in the

Medicare/SSI fraction, but in order for them to be counted, the hospital must submit an

informational only bill (TOB 111), which includes both Condition Code 04 and the CMG

code from the IRF PAI, to their Medicare contractor. This will ensure that these days are

included in the IRF’s SSI ratio for Fiscal Year 2007 and beyond. Teaching IRFs do not

have to submit an additional bill with Condition Code 04. They already submit bills with

Condition Codes 04 and 69 for Indirect Medical Education payments and CMS will use

the information from these bills for the SSI ratio.

IRFs that received LIP payments during FY 2006 are also required to

submit informational only bills for their Medicare Advantage patients.

Informational Only Claim Elements:

• Covered 111 TOB

• Condition Code 04

• Medicare Fee-for-Service is the primary payer

• There is no MSP

• Beneficiary’s Medicare HICN

• For claims prior to October 1, 2011, report the Revenue Code 0024 line

containing CMG A9999 and, instead of inputting the transmission date of the

IRF-PAI in the service date field (as is required for FFS claims), input the

discharge date as a default for these informational only claims. The discharge date

is required on informational only claims to reduce reporting burden for IRFs who

may be submitting “old” informational only claims.

NOTE: Effective January 1, 2011, do not report the service date for the revenue code 0024

line. Instead, use occurrence code 50 in place of the service date to report the default

discharge date for informational only claims.

• Effective October 1, 2011, report the Revenue Code 0024 line containing the CMG

from the IRF-PAI and the transmission date of the IRF-PAI in the occurrence code

50 and date field (as is required for FFS claims).

• All other required claim elements

The SSI/Medicare beneficiary data for IRF PPS is available to A/B MACs (A)

electronically and contains the name of the facility, provider number, SSI days, covered

Medicare days, and the ratio of Medicare Part A patient days attributable to SSI

recipients. A/B MACs (A) will use this information to update their provider specific file.

The files are located at the following CMS Web site address:

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-

Payment/ProspMedicareFeeSvcPmtGen/index.html. Select Inpatient Rehabilitation

Facility PPS, then select, from the list at the left, SSI Data.

A/B MACs (A) use this data to determine an initial PPS payment amount, and if

applicable, to determine a final outlier payment amount for IRFs whose discharges are

during a specific cost reporting period. A/B MACs (A) make a determination of the

amount of this percentage to compute the final LIP adjustment which allows the year-end

settlement of a facility’s cost report. When the A/B MAC (A) settles a cost report for a

specific fiscal year, that settled cost report will determine the final SSI ratio that is

associated with that cost report. The A/B MAC (A) uses the most recently settled SSI

ratio to settle the current cost report. Once the final SSI ratio is determined for the actual

fiscal year the cost report corresponds to, a retrospective adjustment may be made to

account for the difference between the actual lip adjustment amount and the initial PPS

lip adjustment payment amount.

A - Clarification of Allowable Medicaid Days in Calculating the Disproportionate

Share Variable

Background

Under the IRF PPS, facilities receive additional payment amounts to account for the cost

of furnishing care to low-income patients. This is done by making adjustments to the

prospective payment rate. Under §1886(d)(5)(F) of the Act, the Medicare DSH

percentage is made up of two computations. The results of these two computations are

added together to determine the DSH percentage. First, the patient days of patients who,

during a given month, were entitled to both Medicare Part A and SSI (excluding those

patients who received only State supplementation) is divided by the number of covered

patient days utilized by patients under Medicare Part A for that same period. Second, a

determination is made regarding the patient days associated with beneficiaries who were

eligible for medical assistance (Medicaid) under a State plan approved under Title XIX

but who were not entitled to Medicare Part A (See 42 CFR 412.106(b)(4)) is determined.

This number is divided by the total number of patient days for that same period. The SSI

data is updated on an annual basis and these data are one of the components used to

determine the DSH variable that is part of the appropriate LIP adjustment for each IRF.

Included Days

In calculating the number of Medicaid days, the hospital must determine whether the

patient was eligible for Medicaid under a State plan approved under Title XIX on the day

of service. If the patient was so eligible, the day counts in the Medicare disproportionate

share adjustment calculation. The statutory formula for "Medicaid days" reflects several

key concepts. First, the focus is on the patient's eligibility for Medicaid benefits as

determined by the State, not the hospital's "eligibility" for some form of Medicaid

payment. Second, the focus is on the patient's eligibility for medical assistance under an

approved Title XIX State plan, not the patient's eligibility for general assistance under a

State-only program. Third, the focus is on eligibility for medical assistance under an

approved Title XIX State plan, not medical assistance under a State-only program or other

program. Thus, for a day to be counted, the patient must be eligible on that day for

medical assistance benefits under the Federal-State cooperative program known as

Medicaid (under an approved Title XIX State plan). In other words, for purposes of the

Medicare disproportionate share adjustment calculation, the term "Medicaid days" refers

to days on which the patient is eligible for medical assistance benefits under an approved

Title XIX State plan. The term "Medicaid days" does not refer to all days that have some

relation to the Medicaid program, through a matching payment or otherwise; if a patient is

not eligible for medical assistance benefits under an approved Title XIX State plan, the

patient day cannot become a "Medicaid day" simply by virtue of some other association

with the Medicaid program.

Medicaid days, for purposes of the Medicare disproportionate share adjustment

calculation, include all days during which a patient is eligible, under a State plan approved

under Title XIX, for Medicaid benefits, even if Medicaid did not make payment for any

services. Thus, Medicaid days include, but are not limited to, days that are determined to

be medically necessary but for which payment is denied by Medicaid because the provider

did not bill timely, days that are beyond the number of days for which a State will pay,

days that are utilized by a Medicaid beneficiary prior to an admission approval but for

which a valid enrollment is determined within the prescribed period, and days for which

payment is made by a third party. In addition, CMS recognizes the calculation days that

are utilized by a Medicaid beneficiary who is eligible for Medicaid under a State plan

approved under Title XIX through a managed care organization (MCO) or health

maintenance organization (HMO). However, in accordance with 42 CFR 412.106(b)(4), a

day does not count in the Medicare disproportionate share adjustment calculation if the

patient was entitled to both Medicare Part A and Medicaid on that day. Therefore, once

the eligibility of the patient for Medicaid under a State plan approved under Title XIX has

been verified, the A/B MAC (A) must determine whether any of the days are dual

entitlement days and, to the extent that they are, subtract them from the other days in the

calculation.

Excluded Days

Many States operate programs that include both State-only and Federal-State eligibility

groups in an integrated program. For example, some States provide medical assistance to

beneficiaries of State-funded income support programs. These beneficiaries, however, are

not eligible for Medicaid under a State plan approved under Title XIX, and, therefore,

days utilized by these beneficiaries do not count in the Medicare disproportionate share

adjustment calculation. If a hospital is unable to distinguish between Medicaid

beneficiaries and other medical assistance beneficiaries, then it must contact the State for

assistance in doing so.

In addition, if a given patient day affects the level of Medicaid DSH payments to

the hospital but the patient is not eligible for Medicaid under a State plan approved

under Title XIX on that day, the day is not included in the Medicare DSH

calculation.

It should be noted that the types of days discussed above are not necessarily the

only types of excluded days. See the chart below, which summarizes some, but

not necessarily all, of the types of days to be excluded from (or included in) the

Medicare DSH adjustment calculation.

To provide consistency in both components of the calculation, any days that are

added to the Medicaid day count must also be added to the total day count, to the

extent that they have not been previously so added.

Regardless of the type of allowable Medicaid day, the hospital bears the burden

of proof and must verify with the State that the patient was eligible under one of

the allowable categories during each day of the patient's stay. The hospital is

responsible for and must provide adequate documentation to substantiate the

number of Medicaid days claimed. Days for patients that cannot be verified by

State records to have fallen within a period wherein the patient was eligible for

Medicaid cannot be counted.

Types of Days Included/Excluded in the Medicare DSH Adjustment Calculation

Type of Day Description Eligible

Title XIX

Day

General

Assistance

Patient Days

Days for patients covered under a State-only (or county-only) general

assistance program (whether or not any payment is available for health

care services under the program). These patients are not Medicaid-eligible under the State plan

No

Other State-Only Health

Program Patient

Days

Days for patients covered under a State-only health program. These

patients are not Medicaid-eligible under the State plan

No

Charity Care

Patient Days

Days for patients not eligible for Medicaid or any other third-party payer,

and claimed as uncompensated care by a hospital. These patients are not

Medicaid-eligible under the State plan.

No

Actual 1902(r)(2)

and 1931(b)

Days

Days for patients eligible under a State plan based on a 1902(r)(2) or

1931(b) election. The se patients are Medicaid-eligible under the Title

XIX State plan under the authority of these provisions, which is exercised

by the State in the context of the approved State plan.

Yes

Type of Day Description Eligible

Title XIX

Day

Medicaid

Optional

Targeted Low-Income

Children

(CHIP-related)

Days

Days for patients who are Title XIX-eligible and who meet the definition

of "optional ta rgeted low -income children" under §1905(u)(2). T he

difference b etween the se children and othe r Title XIX children is the

enhanced FMAP rate available to the State. Th ese children are fully

Medicaid-eligible under the State plan.

Yes

Separate CHIP

Days

Days for patients who are eligible for benefits under a non-Medicaid

State program furnishing child health assistance to targeted low-income

children. These children are, by definition, not Medicaid-eligible under

No.