CMS Pub. 100-04, ch. 3, § 190.7.2.4

Effective for discharges occurring on or after January 1, 2005, at the time of any

reconciliation under §190.7.2, IPF outlier payment may be adjusted to account for the time

value of money of any adjustments to IPF outlier payments as a result of reconciliation.

The time value of money is applied from the midpoint of the IPF’s cost reporting period

being settled to the date on which the CMS Central Office receives notification from the

Medicare contractor that reconciliation should be performed.

If an IPF’s outlier payments have met the criteria for reconciliation, Medicare contractors

will calculate the aggregate adjustment using the instructions below concerning

reprocessing claims and determine the additional amount attributable to the time value of

money of that adjustment. The index that will be used to calculate the time value of

money is the monthly rate of return that the Medicare trust fund earns. This index can be

found at http://www.ssa.gov/OACT/ProgData/newIssueRates.html.

The following formula shall be used to calculate the rate of the time value of money.

(Rate from Web site as of the midpoint of the cost report being settled / 365) * # of days

from that midpoint until date of reconciliation. NOTE: The time value of money can be a

positive or negative amount depending if the provider is owed money by CMS or if the

provider owes money to CMS.

For purposes of calculating the time value of money, the “date of reconciliation” is the day

on which the CMS Central Office receives notification. This date is either the postmark

from the written notification sent to the CMS Central Office via mail by the Medicare

contractor, or the date an email was received from the Medicare contractor by the CMS

Central Office, whichever is first.

EXAMPLE C:

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

Midpoint of cost reporting period: 07/01/2010

Date of reconciliation: 12/31/2010

Number of days from midpoint until date of reconciliation: 547

Rate from Social Security Web site: 4.625%

Overall ancillary CCR used to pay actual original claims in cost reporting period: 0.40

(This CCR could be from the tentatively settled 2006 or 2007 cost report.)

Final settled operating CCR from 01/01/2009 - 12/31/2009 cost report: 0.50

Total IPF outlier payout in 01/01/2009 - 12/31/2009 cost reporting period: $600,000

Because the CCR fluctuated from 0.40 at the time the claims were originally paid to 0.50

at the time of final settlement and the provider has an IPF outlier payout greater than

$500,000, the criteria have been met to trigger reconciliation. The Medicare contractor

follows the procedures in §190.7.2.4.

The reprocessing of claims indicates the revised IPF hospital outlier payments are

$700,000.

Using the values above, the rate that is used for the time value of money is determined:

(4.625 / 365) * 548 = 6.9438%

Based on the claims reconciled, the provider is owed $100,000 ($700,000 - $600,000) for

the reconciled amount and $6,943.80 for the time value of money.