CMS Pub. 100-04, ch. 3, § 150.26

A. - General

For all LTCHs, reconciliation is effective beginning with discharges occurring in a

hospital’s first cost reporting period beginning on or after October 1, 2003.

MACs shall refer cost reports to the CMS Central Office for approval of reconciliation of

the outlier payments of hospitals paid under the LTCH PPS at the time of cost report

settlement if they meet the following criteria:

1. The actual CCR is found to be plus or minus 10 percentage points or more 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.

In addition to the criteria above, for cost reports with a begin date on or after October 1,

2024, MACs shall refer cost reports to the CMS Central Office for approval of

reconciliation of the outlier payments of hospitals paid under the LTCH PPS at the time of

cost report settlement if they meet the following criteria:

1. The actual CCR is found to be plus or minus 20 percent or more from the CCR

used during that time period to make outlier payments, and

2. Total outlier payments in that cost reporting period exceed $500,000.

Also, for hospitals paid under the LTCH PPS, for cost reporting periods with a begin date

on or after October 1, 2024, MACs shall refer to the CMS Central Office for approval of

reconciliation at the time of cost report settlement any new hospital in its first cost

reporting period (regardless of the change to the CCR and no matter the amount of outlier

payments during the 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

Reimbursement (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 LTCH’s outlier payments in a cost reporting period be reconciled if the LTCH’s

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 LTCH’s 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

provider’s 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)

Final settled CCR from 01/01/2004-12/31/2004 cost report: 0.35

Total (short-stay and high cost) outlier payout in 01/01/2004-12/31/2004 cost reporting

period: $600,000

Weighted Average CCR: 0.474, completed as follows:

CCR Days Weight Weighted CCR

0.40 91 0.248 (91 Days / 366 Days) (a) 0.099=

(0.40 * 0.248)

0.50 275 0.751 (275 Days / 366 Days ) (b) 0.375=

(0.50 * 0.751)

TOTAL *366 (a)+(b) =0.4742

*NOTE: There are 366 days in the year because 2004 was a leap year.

The LTCH meets the criteria for reconciliation in this cost reporting period because the

weighted average CCR at the time the claim was originally paid changed (by more than

ten percentage points) from 0.474 to 0.35 at the time of final settlement, and the provider

received (combined) outlier payments greater than $500,000 for the entire cost reporting

period.