CMS Pub. 100-04, ch. 3, § 20.5

A3-3610.16, HO-415.17

Section 1886(d)(5)(C) of the Act provides for exceptions and adjustments to the standardized

prospective payment amounts to take into account the special needs of RRCs. The

adjustment allowed for approved RRCs is that they are paid based upon the urban, rather

than rural, prospective payment rates as adjusted by the applicable DRG weighting factor

and the rural area index. In addition, OBRA 89 (P.L. 101-239) extended RRC status through

cost reporting periods beginning before October 1992 to any hospital classified as an RRC as

of September 30, 1989.

To retain status as an RRC effective with the cost reporting period beginning on or after

October 1, 1992, a hospital must have met the criteria for classification as an RRC in at least

two of the prior three years, or qualify on the basis of the requirements for initial RRC

certification for the current year. The A/B MAC (A) will not review the RRC status of a

hospital before the end of its third full cost reporting year as an RRC. It will limit review of

RRCs in operation more than three years at the beginning of FY 1993 to a hospital's most

recent three years. RRCs that pass review as meeting RRC status for at least two of the last

three years receive a 3-year extension of their RRC status.

The rates in Pricer include a reduction in the adjusted standardized amounts for all hospitals

to ensure that total PPS payment neither increase nor decrease as a result of the increase in

payments to RRCs.

To qualify for initial RRC status for cost reporting periods beginning on or after October 1,

1992, a rural hospital must have had at least 275 beds, or the hospital must have met one of

three criteria in 42 CFR 412.96(c) (3), (4) and (5), and both of the following requirements:

• The hospital's case-mix index value for FY 91 must have been at least 1.2760, or

equal to the median case-mix index value for urban hospitals (excluding hospitals

with approved teaching programs) calculated by CMS for the census region in which

the hospital is located, if fewer.

• For its cost reporting period that began during FY 1991, the hospital must have had at

least 5000 discharges, or equal to the median number of discharges for urban

hospitals in that census region, if fewer, or if an osteopathic hospital, must have had

at least 3000 discharges.

The CMS publishes the median case-mix index value and the median number of discharges

annually in the PPS update in the "Federal Register."