CMS Pub. 100-04, ch. 3, § 150.24

For all LTCHs, effective October 1, 2003, Medicare contractors are to use a CCR from the

latest final settled cost report or from the latest tentative settled cost report (whichever is

from the later period) to determine a LTCH’s CCR.

A. - Calculating an overall LTCH Medicare Cost-to-Charge Ratio

For the LTCH PPS outlier calculations (short stay and high cost), Medicare’s portion of

hospital costs are determined by using a hospital’s overall Medicare cost-to-charge ratio

(CCR). At the end of the cost reporting period, the hospital prepares and submits a cost

report to its Medicare contractor, which includes Medicare allowable costs and charges.

The Medicare contractor completes a preliminary review of the as-submitted cost report

and issues a tentative settlement. The cost report is later final settled, which may be based

on a subsequent review, and a Notice of Program Reimbursement (NPR) is issued.

The Medicare contractor shall update the PSF using the CCR calculated from the final

settled cost report or from the latest tentative settled cost report (whichever is from the

later period).

Under the LTCH PPS, the following methodology shall be used to calculate a hospital’s

overall Medicare cost-to-charge ratio based on FORM CMS 2552-2010:

1) Identify total Medicare inpatient costs from Worksheet D-1, Part II, line 49 minus

(Worksheet D, Part III, col. 9, lines 30 through 35 plus Worksheet D, Part IV, col. 11, line

200)

2) Identify total Medicare inpatient charges obtained from Worksheet D-3, Column 2,

lines 30 through 35 plus line 202 from the cost report (where possible, these charges

should be confirmed with the PS&R data).

3) Determine the LTCH’s overall Medicare CCR by dividing the amount in step 1 by the

amount in step 2.

B. - Use of Alternative Data in Determining CCRs For LTCHs

Effective August 8, 2003, the CMS 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 Regional Office and CMS Central Office to

seek approval to use a CCR based on alternative data. For example, a CCR may be

revised more often if a change in a LTCHs operations occurs which materially affects a

LTCH’s costs and/or charges. The CMS Regional Office, in conjunction with the CMS

Central Office, must approve the Medicare contractor’s request before the Medicare

contractor may use a CCR based on alternative data. Revised CCRs will be applied

prospectively to all LTCH claims processed after the update. Medicare contractors shall

send notification to the CMS Central Office via email to outliersIPPS@cms.gov.

C. - Ongoing CCR Updates Using CCRs From Tentative Settlements For Hospitals

Subject to the LTCH PPS

Medicare contractors shall continue to update a LTCH’s CCR (in the Provider Specific

File) each time a more recent cost report is settled (either final or tentative). A revised

CCR shall be entered into the Provider Specific File not later than 30 days after the date of

the latest settlement used in calculating the CCR.

D. - Request for use of a Different CCR by CMS, the Medicare Contractor or the

LTCH

Effective August 8, 2003, CMS (or the Medicare contractor) may specify an alternative

CCR if it believes that the CCR being applied is inaccurate. In addition, a LTCH will

have the opportunity to request that a different CCR be applied in the event it believes the

CCR being applied is inaccurate. The LTCH 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 LTCH, the Medicare

contractor notifies the CMS Regional Office and CMS Central Office of any such request.

The CMS Regional Office, in conjunction with the CMS Central Office, will approve or

deny any request by the LTCH or Medicare contractor for use of a different CCR.

Medicare contractors shall send requests via email to the CMS Central at

outliersIPPS@cms.hhs.gov.

E. - Notification to Hospitals Under the LTCH PPS of a Change in the CCR

The Medicare contractor shall notify a LTCH whenever it makes a change to its CCR.

When a CCR is changed as a result of a tentative settlement or a final settlement, 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 LTCH about a change to their CCR.

F. - Mergers, Conversions and Errors with CCRs

Effective April 1, 2011, for LTCHs that merge, Medicare contractors shall continue to use

the CCR from the LTCH with the surviving provider number. If a new provider number is

issued, as explained in §150.25 below, Medicare contractors should use the Statewide

average CCR because a new provider number indicates the creation of a new hospital (as

stated in 42 CFR §§ 412.525(a)(4)(iv)(C)(1) and 412.529(c)(3)(iv)(C)(1), a new hospital is

defined as an entity that has not accepted assignment of an existing hospital’s provider

agreement). However, the policy of §150.24 part B and C can be applied to determine an

alternative to the Statewide average CCR.

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 should be

used until a CCR can be computed from the LTCH’s 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 hospital’s 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 hospital’s 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 payments 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.