Medicare Outlier Payment
Final Rule
Current Status as of June 12, 2003
On June 9, 2003 the Centers for Medicare & Medicaid Services
(CMS) published the final
rule (68 Fed. Reg. 34494) modifying the methodology for
outlier payments made under the Medicare Inpatient Prospective
Payment System and the Long-Term Care Hospital Prospective
Payment System. Outlier payments are made to hospitals to
help offset some of the financial losses associated with treating
extremely high cost Medicare cases. The AAMC submitted comments
(PDF, 8 pages, 55KB) on the outlier proposed rule.
Background
CMS did not include a transition period in the final rule.
However, it decided that it will not implement its decision
to use more recent cost to charge ratios (CCRs) until October
1, 2003. The final rule says it will use tentatively settled
cost reports, rather than final settled cost reports to determine
outlier payments. Other provisions of the final rule go into
effect August 8, 2003.
The rule states the Agency recognizes that using more recent
CCRs compared to the older CCRs that are currently being used
could potentially result in a large drop in a hospital's CCR
(and thus outlier payments) which would have a negative impact
"that may occur for some hospitals solely due to the delay
in settling their cost reports." So rather than implementing
this provision August 8, they will hold off until October
1. However, the rule states that even before October 1, FIs
can use more recent CCRs for those hospitals that "appear
to have disproportionately benefited from the time lag in
updating the CCRs." CMS will be issuing instructions
in the near future to the FIs to help them identify these
hospitals. In addition, the final rule states that:
- CMS is eliminating the use of statewide averages effective
August 8, 2003
- The outlier threshold will remain at $33,560 for the rest
of FY 2003.
- CMS will initiate a reconciliation process but only for
those hospitals where the CCR used for outlier payments
is significantly higher than what is reflected on the hospital's
cost report that coincides with the same time period as
the cases for which outlier payments were made. They state
they will be issuing instructions on this issue.
Final Rule
The final rule, published June 9, 2003, in the Federal Register,
is available in text format and Portable Document Format (PDF)
42 CFR Part 412, Change in Methodology for Determining
Payment for Extraordinarily High-Cost Cases (Cost Outliers)
Under the Acute Care Hospital Inpatient and Long Term Care
Hospital Prospective Payment Systems; Final Rule
- Part I [pp.34493–34515 ]: Text
/ PDF
Contacts
Karen Fisher, Sr. Director, Health Care Affairs
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140
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