CMS Pub. 100-04, ch. 3, § 190.6.3.2

The teaching status adjustment is made on a claim basis as an interim payment and the

final payment in full for the claim is made during the final settlement of the cost report.

The difference between those interim payments and the actual teaching adjustment amount

based on information from the cost report are adjusted through lump sum

payments/recoupments when the cost report is settled.

The teaching adjustment is calculated as follows:

1. Determine the product of the wage-adjusted Federal per diem base rate and the

applicable teaching, rural, DRG, comorbidity, and age adjustments.

2. Determine the product of the wage adjusted base rate and the applicable rural, DRG,

comorbidity, and age adjustments.

3. Determine the difference of these two products (Step 1 minus Step 2).

4. Calculate and sum the variable per diem amounts for the product in Step 2 to calculate

the Federal payment net of the teaching adjustment amount.

5. Calculate and sum the variable per diem amounts for the difference in Step 3 to

calculate the portion of the Federal payment attributable to the teaching adjustment.

6. To obtain the total Federal payment necessary for outlier calculations, etc., add Steps 4

and 5 together. Step 5 alone is the teaching adjustment portion of the Federal payment,

and can be separately identified and reconciled on the cost report.