CMS Pub. 100-04, ch. 3, § 190.7.2.2

For discharges in cost reporting periods beginning on or after January 1, 2005, Medicare

contractors are to use a CCR from the latest settled cost report or from the latest tentative

settled cost report (whichever is from the later period) to determine the IPF’s CCR. Cost-to-charge ratios are updated each time a subsequent cost report is settled or tentatively

settled. Total Medicare charges consist of the sum of inpatient routine charges and the sum

of inpatient ancillary charges including capital. Total Medicare costs consist of the sum of

inpatient routine costs (net of private room differential and swing bed cost) plus the sum

of ancillary costs plus capital-related pass-through costs only. Based on current Medicare

cost reports and worksheets, specific instructions are described below.

Hospitals

For IPFs that are psychiatric hospitals:

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

(Worksheet D, Part III, column 8, lines 25 through 30, plus Worksheet D, Part IV,

column 7, line 101).

2) Identify total Medicare charges (the sum of routine and ancillary charges) from

Worksheet D-4, column 2, the sum of lines 25 through 30 and line 103 from the

cost report; where possible, these charges should be confirmed with the PS&R

data.

3) Divide the Medicare costs by the Medicare charges to compute the CCR.

Distinct Part Units

For IPFs that are distinct part psychiatric units:

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

(Worksheet D, Part III, column 8, line 31 plus Worksheet D, Part IV, column 7,

line 101).

2) Identify total Medicare charges (the sum of routine and ancillary charges) from

Worksheet D-4, Column 2, line 31 plus line 103 from the cost report; where

possible, these charges should be confirmed with the PS&R data.

3) Divide the Medicare costs by the Medicare charges to compute the CCR.

All references to Worksheets and specific line numbers shall correspond with the sub-provider identified as the IPF unit that has the letter "S" or “M” in the third position of the

Medicare provider number.

A. - Use of Alternative Data in Determining CCRs For IPFs Subject to the IPF PPS

Under 42 CFR 412.424( d)(3)(i,), for discharges in cost reporting periods beginning on or

after January 1, 2005, CMS may direct Medicare contractors to use an alternative CCR to

the CCRs from the latest settled cost report or latest tentatively settled cost report, if CMS

believes this will result in a more accurate CCR. In addition, 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

contact the CMS Central Office to seek approval to use a CCR based on alternative data.

B. - Request by the IPF for use of a Different CCR

For discharges in cost reporting periods beginning on or after January 1, 2005, an IPF may

request that an alternative CCR be applied in the event it believes the CCR being applied

is inaccurate. The IPF 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. The CMS Regional Office,

in conjunction with the CMS Central Office, will approve or deny any request after

evaluation by the Medicare contractor of the evidence presented by the IPF. Revised

CCRs are applied prospectively to all IPF claims. Medicare contractors shall send

notification to the CMS Central Office via the following address and e-mail address:

CMS

C/O Division of Chronic Care Management-IPF Outlier Team

7500 Security Blvd.

Mail Stop C5-05-27

Baltimore, MD. 21244

outliersipf@cms.hhs.gov

C. - Application of National Median CCRs for IPFs

For discharges in cost reporting periods occurring on or after January 1, 2005, the Medicare

contractor may use the national CCRs for an IPF in one of the following circumstances:

1. New IPFs that have not yet submitted their first Medicare cost report.

2. IPFs whose CCR is in excess of 3 standard deviations above the corresponding national

geometric mean (that is, above the ceiling).

3. Other IPFs for whom the Medicare contractor obtains inaccurate or incomplete data with

which to calculate a CCR.

For new IPFs, we are using the national median CCRs until the facility’s actual CCR can be

computed using the first tentatively settled or final settled cost report, which will then be used

for the subsequent cost report period.

NOTE: IPF PPS provides two national ceilings, one for IPFs located in rural areas and one for

IPFs located in urban areas. We computed the ceilings by calculating the national average and

the standard deviation of the CCR for both urban and rural IPFs.

The policies in section E below can be applied as an alternative to the national median CCR.

For those IPFs assigned the national median CCR, the CCR must be updated every October 1st

based on the latest national median CCRs published in each year’s IPF PPS notice or final rule

until the hospital is assigned a CCR based on the latest tentative or final settled cost report or a

CCR based on the policies of part E and F of this section.

D. - Notification to IPFs Under the IPF PPS of a Change in the CCR

The Medicare contractor shall notify an IPF 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 an IPF about a change to their CCR(s).

E. - Ongoing CCR Updates Using CCRs From Tentative Settlements For Entities

Subject to the IPF PPS

For discharges beginning on or after January 1, 2005, Medicare contractors are to use a

CCR from the latest settled cost report or from the latest tentatively settled cost report

(whichever is from the later period) to determine the IPF’s CCR. Under the IPF PPS,

Medicare contractors must update the IPFs CCR on the Provider Specific File to reflect

the IPFs CCR from the most recent tentative settlements or final settled cost reports,

(whichever is the later period). Revised CCRs 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.

Subject to the approval of CMS, an IPF’s CCR may be revised more often if a change in a

hospital’s operations occurs which materially affects a hospital’s costs or charges. A

revised CCR will be applied prospectively to all IPF PPS claims processed after the

update.

F. - Alternative CCRs

Effective for discharges in cost reporting periods beginning on or after January 1, 2005,

the CMS Central Office may direct Medicare contractors to use an alternative CCR to the

CCR from the later of the latest settled cost report or latest tentatively settled cost report, if

CMS believes this will result in a more accurate CCR. In addition, 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, the Medicare contractor

shall contact the CMS Central Office to seek approval to use a CCR based on alternative

data. Also, a facility will have the opportunity to request that a different CCR be applied

in the event it believes the CCR being applied is inaccurate. The IPF 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. The CMS Regional Office and CMS Central Office must approve any such

request after evaluation by the Medicare contractor of the evidence presented by the IPF.

G. - IPF Mergers, Ownership Changes, and Errors with CCRs

Effective April 1, 2011, in the case of a merger, the Medicare contractor shall use the CCR

from the IPF with the surviving provider number. If a new provider number (i.e., a new

provider agreement is signed because the new owner refused assignment of the existing

provider agreement) is issued the Medicare contractor shall use the national CCR based on

the facility location of either urban or rural.

In instances where errors related to CCRs and/or outlier payments are discovered,

Medicare contractors shall contact CMS Central Office to seek guidance. Medicare

contractors may contact the CMS Central Office via the address and email address listed

in part B of this section.

If a cost report is reopened after final settlement and as a result of this reopening there is a

change to the CCR, Contractors shall contact the CMS regional and Central Office for

further instructions. Contractors may contact the CMS Central Office via the address and

email address listed in part B of this section.

H. - Maintaining a History of CCRs and Other Fields in the Provider Specific File

When reprocessing claims 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: -23 -Intern to Bed Ratio -24 --Bed

Size -25 -Operating Cost to Charge Ratio and 21 -Case Mix Adjusted Cost Per Discharge.

A separate history outside of the PSF is not necessary. 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.