US · guidance
CMS Pub. 100-04, ch. 3, § 190.7.2.1
How to Calculate Outlier Payments
1 - Calculate the Adjusted Fixed Dollar Loss Threshold Amount
• Multiply the threshold amount by the labor share and the area wage index;
• Multiply the threshold amount by the non-labor share and any applicable COLA
(Alaska or Hawaii);
• Add these two products and then multiply by any applicable facility-level
adjustments (teaching, rural); and
• Add this amount to the sum of the Federal per diem payment and ECT payment to
obtain the adjusted threshold amount.
2 - Calculate Eligible Outlier Costs
• Multiply reported hospital charges by the cost-to-charge ratio to calculate cost.
• Subtract the adjusted threshold amount from the cost. This is the amount subject
to outlier payments.
• Divide this amount by the length of stay to calculate the per diem outlier amount.
• For days 1 through 9, multiply this per diem outlier amount by 0.80. For day 10
and thereafter, multiply the per diem outlier amount by 0.60. The sum of these
amounts is the total outlier payment.
History
(Rev. 1101, Issued: 11-03-06, Effective: 01-01-05, Implementation: 12-04-06)
Provenance
- Source
- cms.gov
- Retrieved
- 2026-08-25
- Edition
- iom-2026-08-25
- Content hash
b0fe6dc651b4f462098df5b9ce25384740d4f54a2642f2bbac20ffbc242a8b4f
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