CMS Pub. 100-04, ch. 4, § 70.7

CY 2012

(Rev. 2531, 08-24-12, Effective:10-01-12, Implementation:10-01-12)

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

sole community hospitals were scheduled to expire December 31, 2009. Section 3121 of

the Affordable Care Act extended the hold harmless provision for small rural hospitals

with 100 or fewer beds through December 31, 2010, at 85 percent of the hold harmless

amount. Sole Community Hospitals (SCHs) and Essential Access Community Hospitals

(EACHs) are no longer limited to those with 100 or fewer beds effective January 1, 2010

through December 31, 2010 and these providers will receive TOPs payments at 85

percent of the hold harmless amount until December 31, 2010. Section 108 of the

Medicare and Medicaid Extenders Act of 2010 (MEA) further extended the hold

harmless provision for rural hospitals with 100 or fewer beds and to all SCHs (and

EACHs) regardless of bed size through December 31, 2011 at 85 percent of the hold

harmless amount.

Section 308 of the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA) as

amended by section 3002 of the Middle Class Tax Relief and Jobs Creation Act, extends

the Outpatient Hold-Harmless provision, effective for dates of service on or after January

1, 2012, through December 31, 2012, to rural hospitals with 100 or fewer beds.

Section 308 of the Temporary Payroll Tax Cut Continuation Act of 2011 also extended

through February 29, 2012 the hold harmless provision for SCHs (and EACHs) without

the bed size limitation. However, section 3002 of the Middle Class Tax Relief and Jobs

Creation Act extended through December 31, 2012, the hold harmless provision for

SCHs (and EACHs) that have no more than 100 beds.

Cancer and children's hospitals are permanently held harmless under section

1833(t)(7)(D)(ii) of the Social Security Act.

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

This calculation is effective for services provided by SCH (and EACHs) with more than

100 beds between January 1, 2010 and February 29, 2012. This calculation is effective

for services provided by rural hospitals with 100 or fewer beds and SCHs (and EACHs)

with 100 or fewer beds between January 1, 2010 and December 31, 2012.

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 rural hospital with 100 or fewer beds,

or a sole community hospital (including EACHs), 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.