CMS Pub. 100-04, ch. 4, § 70.4

2005

(Rev. 1657, Issued: 12-31-08, Effective: 01-01-09, Implementation: 01-05-09)

Section 411 of the Medicare Modernization Act (MMA) provided that for services

provided on or after January 1, 2004, TOPs are discontinued for all CMHCs and all

hospitals except for rural hospitals having 100 or fewer beds, sole community hospitals

(SCHs) which are located in rural areas, and cancer and children’s hospitals. For

CMHCs and hospitals for which TOPs will be discontinued, interim TOPs are to be paid

for services furnished through December 31, 2003.

Hold harmless TOPs shall continue for services rendered through December 31, 2005, for

rural hospitals having 100 or fewer beds. Cancer hospitals and children’s hospitals are

permanently held harmless. In addition, hold harmless TOPs are paid to sole community

hospitals that are located in rural areas, with respect to services furnished during the

period that begins with the provider’s first cost reporting period beginning on or after

January 1, 2004, and ends on December 31, 2005. NOTE: If a qualifying SCH has a

cost reporting period that begins on a date other than January 1, TOPs and interim TOPs

payments will not be paid for services furnished after December 31, 2003, and before the

beginning of the provider’s next cost reporting period. If a hospital qualifies as both a

rural hospital having 100 or fewer beds and as a SCH located in a rural area, for purposes

of § 70.4, the hospital will be treated as a rural hospital having 100 or fewer beds, thereby

avoiding a gap in payment if the cost reporting period does not begin on January 1.

If the contractor identifies additional hospitals that are eligible for TOPs payments, the

contractor shall make the appropriate interim payments retroactive to January 1, 2004, for

small rural hospitals and retroactive to the provider’s first day of the cost reporting period

beginning on or after January 1, 2004 for rural SCHs having greater than 100 beds.

For 2004-2005, providers will receive interim TOPs payments of 85 percent, and will

receive the additional 15 percent (to reach 100 percent) at cost report settlement.

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

This calculation is effective for services provided between January 1, 2004, and

December 31, 2005.

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 4. 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, a rural sole community hospital, or a cancer hospital, subtract

the result of step 2 from the result of step 1 and pay .85 times this amount.

Step 4 - 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.