CMS Pub. 100-04, ch. 3, § 20.4.8

A3-3611.8

Total Federal PPS payments are reduced by an amount equal to anticipated outlier payments

for the year to fund capital and operating outlier payments. Outlier payments apply only to

the Federal portions of capital payments. Pricer calculates outlier payments.

Pricer used a combined methodology to determine the day outlier payment rate for capital

and operating day outliers (Day outliers were eliminated after FY 1997). A second

combined methodology is used to determine the cost outlier payment rate for capital and

operating costs. A capital or operating cost outlier is paid only if both capital and operating

costs related to an admission exceed the combined outlier threshold. Pricer pays the higher

of the combined total cost outlier payment or the total day outlier payment. An exception

applies to a transferring hospital. A transferring hospital may be paid a cost outlier, but may

not be paid a day outlier unless DRG 385 or 456 applies. The outlier computation

methodology is contained in the A/B MAC (A) Pricer installation guide. (See §20.7 for the

common thresholds that apply to both operating and capital outliers.)