CMS Pub. 100-04, ch. 3, § 190.7.2.3

A. - General

Under §412.424 (d) (3) (i), for IPF services furnished during cost reporting periods

beginning on or after January 1, 2005, IPF outlier payments may be reconciled upon cost

report settlement to account for differences between the overall ancillary CCR used to pay

the claim at its original submission by the provider, and the CCR determined at final

settlement of the cost reporting period during which the service was furnished. IPF PPS

outlier payments are reconciled if the CMS Central Office and Regional Office confirm

that reconciliation is appropriate.

Effective for cost reporting periods beginning on or after April 1, 2011, subject to the

approval of the CMS Central Office and Regional Office, the Medicare contractor shall

reconcile an IPF’s outlier claims at the time of cost report final settlement if they meet the

following criteria:

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

used during that time period to make outlier payments, and

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

To determine if an IPF 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 overall ancillary CCR prior to issuing a Notice of Program

Reimbursement (NPR). If the criteria for IPF outlier 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 §190.7.2.5 of this chapter. The NPR cannot be

issued nor can the cost report be finalized until IPF outlier reconciliation is complete.

These IPF cost reports will remain open until their claims have been processed for IPF

PPS outlier reconciliation.

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 IPF PPS outlier

reconciliation and outlier payments), Medicare contractors shall notify the CMS Central

and Regional Offices for further instructions. Notification to the CMS Central Office shall

be sent to the address and email address provided in §190.7.2.2(B) above.

Medicare contractors shall notify the CMS Central Office and Regional Office if a cost

report was final settled and meets the qualifications for IPF PPS outlier reconciliation.

Notification to the CMS Central Office shall be sent to the address and email address

provided in §190.7.2.2 (B).

B. - Reconciling Outlier Payments IPFs

Beginning with the first cost reporting period starting on or after January 1, 2005, IPF

outlier payments may be reconciled at cost report settlement to account for differences

between the cost-to-charge ratio (CCR) used to pay the claim at its original submission by

the provider, and the CCR determined at final settlement of the cost reporting period

during which the discharge occurred. Effective for cost reporting periods beginning on or

after April 1, 2011, if an IPF meets the criteria in part A of this section, the Medicare

contractor shall follow the instructions below in §190.7.2.5. The following examples

demonstrate how to apply the criteria for reconciliation (as discussed in part A above):

EXAMPLE A:

Cost Reporting Period: 01/01/2010-12/31/2010

Operating CCR used to pay original claims submitted during cost reporting period: 0.40

(In this example, this CCR is from the tentatively or final settled 2007 cost report)

Final settled operating CCR from 01/01/2010-12/31/2010 cost report: 0.50

Total IPF PPS outlier payout in 01/01/2010-12/31/2010 cost reporting period: $600,000

Because the CCR of 0.40 used at the time the claim was originally paid changed to 0.50 at

the time of final settlement, and the provider received greater than $500,000 in IPF PPS

outlier payments during that cost reporting period, the criteria are met for reconciliation,

and therefore, the Medicare contractor notifies the Central Office and the Regional Office.

The provider’s IPF PPS outlier payments for this cost reporting period are reconciled

using the correct CCR of 0.50.

In the event that multiple CCRs are used in a given cost reporting period to calculate

outlier payments, Medicare contractors should calculate a weighted average of the CCRs

in that cost reporting period. Example B below shows how to weight the CCRs. The

Medicare contractor shall then compare the weighted CCR to the CCR determined at the

time of final settlement of the cost reporting period to determine if IPF PPS outlier

reconciliation is required. Total IPF PPS outlier payments for the entire cost reporting

period must exceed $500,000 in order to trigger reconciliation.

EXAMPLE B:

Cost reporting period: 01/01/2010-12/31/2010

Overall CCR used to pay original claims submitted during cost reporting period:

0.40 from 01/01/2010 to 03/31/2010 (This CCR could be from the tentatively settled

2006 cost report.)

0.50 from 04/01/2010 to 12/31/2010 (This CCR could be from the tentatively settled 2007

cost report.)

Final settled operating CCR from 01/01/2010 - 12/31/2010 cost report: 0.35

Total IPF outlier payout in 01/01/2010 -12/31/2010 cost reporting period: $600,000

Weighted average CCR: 0.476

CCR DAYS Weight Weighted CCR

0.40 90 0.247 (90 Days / 365

Days)

(a) 0.099 = (0.40 *

0.247)

0.50 275 0.753 (275 Days /

365 Days)

(b) 0.377 = (0.50 *

0.753)

TOTAL 365 365 (a)+(b) = 0.476

The IPF meets the criteria for IPF PPS outlier reconciliation in this cost reporting period

because the variance from the weighted average CCR at the time the claim was originally

paid compared to the CCR from the cost report at the time of settlement is greater than 10

percentage points (from 0.476 to 0.35) and the provider received total IPF outlier

payments greater than $500,000 for the entire cost reporting period.

Even if the IPF does not meet the criteria for reconciliation in §190.7.2.3, subject to

approval of the CMS Central and Regional Offices, the Medicare contractor has the

discretion to request that IPF PPS outlier payments in a cost reporting period be reconciled

if the IPF’s most recent cost and charge data indicate that the IPF PPS outlier payments to

the IPF were significantly inaccurate. The Medicare contractor sends notification to the

CMS Regional Office and Central Office via the address and email address provided in

§190.7.2.2 (B). Upon approval of the CMS Central and Regional Office that IPF’s outlier

claims need to be reconciled, Medicare contractors should follow the instructions in

§190.7.2.3.