US · guidance
CMS Pub. 100-04, ch. 3, § 20.1.2.3
Threshold and Marginal Cost
The Medicare contractor, using Pricer, determines an appropriate additional payment for
inpatient services where hospital charges for covered services furnished to the beneficiary,
adjusted for cost, are extraordinarily high. CMS annually determines, and includes in the
annual IPPS Final Rule and in Pricer, the threshold beyond which a cost outlier is paid. The
additional payment amount is the difference between the estimated cost for the discharge
(determined by multiplying the hospital specific CCR by the hospital’s charges for the
discharge) and the threshold criteria established for the applicable DRG multiplied by a
marginal cost factor of 80 percent. (The marginal cost factor for burn cases is 90 percent, as
described in §20.1.2.8.) CMS includes the marginal cost factor in Pricer. For more
explanation on the calculation of outliers visit our Web site at
http://www.cms.hhs.gov/AcuteInpatientPPS/04_outlier.asp#TopOfPage
History
(Rev. 2111, Issued: 12-03-10, Effective: 04-01-11, Implementation: 04-04-11)
Provenance
- Source
- cms.gov
- Retrieved
- 2026-08-25
- Edition
- iom-2026-08-25
- Content hash
5bddabb7e6c44116990f7913a68bf9ba55afd465088ff453f714a570cdea0d11
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