CMS Pub. 100-04, ch. 4, § 70.3

For services provided during calendar years 2003, TOPs continued to decrease for all

providers except those hospitals that receive hold harmless TOPs (cancer hospitals,

children’s hospitals, and rural hospitals having 100 or fewer beds). To avoid TOP

overpayments, contractors were instructed to revise the monthly interim TOP calculations

to reflect the new calculation.

Monthly TOPs calculations that contractors are required to calculate are described below.

This calculation is effective for services provided between January 1, 2003, and

December 31, 2003.

Step 1 - Compute the pre-BBA amount for each month by first multiplying the total

charges for covered services for all OPPS services on claims paid during the month

and reduce the total charges to cost by multiplying them by the outpatient cost to

charge ratio and then multiplying this amount by the provider-specific payment-to-

cost ratio (PSPCR).

Step 2 - Add together the total Medicare program payments, unreduced coinsurance

and deductible applied for all APCs, as well as all outlier payments and transitional

pass-through payments for drugs, biologicals and/or devices for those same claims

paid during the month as those used in Step 1. If the result is greater than the result of

step 1, go to step 7. No transitional payment is due this month.

Step 3 - If the hospital is a children’s hospital, a small rural hospital with not more

than 100 beds or a cancer hospital go to step 4. If any other type of hospital, divide

the result of step 2 by the result of step 1, skip step 4 and perform step 5 or 6 as

appropriate.

Step 4 - If the hospital is a children’s hospital, a small rural hospital with not more

than 100 beds or a cancer hospital, subtract the result of step 2 from the result of step

1 and pay .85 times this amount. Do not perform steps 5-6.

Step 5 - If the result of step 3 is equal to or greater than .9 but less than 1.0, subtract

the result of step 2 from the result of step 1, and multiply the difference by .6 and pay

.85 times this amount.

Step 6 - If the result of step 3 is less than .9, multiply the result of step 1 by .06 and

pay .85 times this amount.

Step 7 - When the result of step 2 is greater than the result of step 1 for the final

month of a provider’s cost report period, do nothing more. When the result of step 2

is greater than the result of step 1 for any other month, store all step 1 and step 2

totals and include these totals with the totals for the next month’s TOP calculation.