CMS Pub. 100-04, ch. 4, § 70.6

Hold harmless transitional outpatient payments (TOPs) to small rural hospitals and rural

sole community hospitals that were scheduled to expire December 31, 2008. Section 147

of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) extends

the hold harmless provision for small rural hospitals with 100 or fewer beds through

December 31, 2009, at 85 percent of the hold harmless amount. Section 147 also

provides 85 percent of the hold harmless amount from January 1, 2009, through

December 31, 2009, to sole community hospitals with 100 or fewer beds. Essential

Access Community Hospitals (EACHs) are considered to be sole community hospitals

under section 1886(d)(5)(D)(iii)(III) of the Act. Therefore, EACHs are also eligible for

TOPs for CY 2009.

Cancer and children's hospitals are permanently held harmless and continue to receive

TOPs payments in CY 2009.

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

This calculation is effective for services provided between January 1, 2009, and

December 31, 2009.

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

(including reconciled outlier payments and the time value of money) 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 cancer hospital, a rural hospital with

100 or fewer beds, or a sole community hospital (including EACHs) with

100 or fewer beds, subtract the result of step 2 from the result of step 1 and

pay .85 times this amount. If the hospital is not one of the hospital types

listed above, no payment is made.

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.