Monday, 24 April 2017

Payment for Blood Clotting Factor Administered to Hemophilia Inpatients

Section 6011 of Public Law (P.L.) 101-239 amended §1886(a)(4) of the Social Security Act (the Act) to provide that prospective payment system (PPS) hospitals receive an additional payment for the costs of administering blood clotting factor to Medicare hemophiliacs who are hospital inpatients. Section 6011(b) of P.L. 101.239 specified that the payment be based on a predetermined price per unit of clotting factor multiplied by the number of units provided. This add-on payment originally was effective for blood clotting factors furnished on or after June 19, 1990, and before December 19, 1991. Section 13505 of P. L. 103-66 amended §6011 (d) of P.L. 101-239 to extend the period covered by the add-on payment for blood clotting factors administered to Medicare inpatients with hemophilia through September 30, 1994. Section 4452 of P.L. 105-33 amended §6011(d) of P.L. 101-239 to reinstate the add-on payment for the costs of administering bloodclotting factor to Medicare beneficiaries who have hemophilia and who are hospital inpatients for discharges occurring on or after October 1, 1998.

A/B MACs (B) shall process non-institutional blood clotting factor claims. 

The A/B MACs (A) shall process institutional blood clotting factor claims payable under either Part A or Part B.

A. - Inpatient Bills 

Under the Inpatient Prospective Payment System (IPPS), hospitals receive a special addon payment for the costs of furnishing blood clotting factors to Medicare beneficiaries with hemophilia, admitted as inpatients of PPS hospitals. The clotting factor add-on payment is calculated using the number of units (as defined in the HCPCS code long descriptor) billed by the provider under special instructions for units of service. 

The PPS Pricer software does not calculate the payment amount. The Fiscal Intermediary Shared System (FISS) calculates the payment amount and subtracts the charges from those submitted to Pricer so that the clotting factor charges are not included in cost outlier computations. 

Thursday, 20 April 2017

Claims Processing

The Qualifying DSH Percent uses the following provider type codes to enable Pricer to calculate the appropriate rates for these facilities: 
• 14 for a MDH that is not an RRC; 
• 15 for a MDH that is also an RRC; 
• 16 for a rebased SCH that is not an RRC; and 
• 17 for a rebased SCH that is also an RRC.

The A/B MAC (A) calculates the HSP rate and determines the greatest HSP rate (for SCHs, FY 1982, 1987, 1996 or 2006; for MDHs, FY 1982, 1987 or 2002). Then the A/B MAC (A) updates the HSP rate to the applicable FY and enters that amount in the PPS Facility Specific Rate of the Provider-Specific File (PSF), for the applicable effective date. The HSP rate is to be entered even if the Federal rate is expected to result in higher payments than the applicable HSP rate. Preloading the applicable HSP rate before the effective date is acceptable as long as the correct effective date is used for the PSF record. The A/B MAC (A) leaves the field blank if the hospital was not in operation during any of the applicable HSP base years

Pricer will calculate the payment based on the higher of the Federal rate or the HSP rate. Where the HSP rate is higher, Pricer reports the amount of the difference in the hospitalspecific field. The A/B MAC (A) carries this amount forward in the hospital-specific payment field to its PS&R record for use at cost settlement.

Billing Applicable to PPS

Stays Prior to and Discharge After IPPS Implementation Date

A3-3610.4, HO-415.7

When the admission is before the hospital's PPS effective date and the discharge is later than that date (transition claims), the Medicare payment for the period before PPS is on a reasonable cost basis and the payment for the period after PPS is on a DRG basis.

The hospital must submit two bills. The first bill is for the period before the PPS effective date and is processed and paid in accordance with requirements in effect before the hospital's PPS effective date. The second bill is processed under PPS but the amount of payment on the first bill is subtracted from it. A/B MACs (A) make the adjustment by subtracting the interim payment from the prospective payment (before any deduction for deductible or coinsurance) for the inpatient operating costs applicable to the days in the prior period. The interim payment applicable to the prior period is adjusted to exclude estimated costs related to capital and direct medical education, kidney acquisition costs, and for bad debts for uncollectible deductible and coinsurance. A/B MACs (A) will make an estimate if necessary.

For hospitals previously receiving interim payment on the basis of an average cost per diem or under PIP, the A/B MAC (A) determines and removes a per diem amount for the excluded costs for that period from the interim payments before reducing the prospective payment amount applicable to the discharge in the subsequent period under PPS. Similarly, for hospitals that received a percentage of billed charges, the portion of the percentage applicable to the excluded cost items is removed. The net percentage to the charges billed in the prior period (cut-off bill) is applied. The resulting amount is subtracted from the PPS payment applicable to the discharge in the subsequent period.

For transition claims, payment must not exceed the higher of what would have been paid under PPS including the outlier adjustment or any earlier cost payment. The final amount is not reduced to less than zero. No further adjustments are appropriate.

The interim payments used to reduce the prospective payment amounts are considered to represent fairly the inpatient operating costs incurred and fair payment for the portion of the stay occurring in the prior period. Therefore, the adjustment is final and not subject to further modification.

On bills covering two cost reporting periods:

• Each bill includes charges and covered days that apply to the period covered.
• The cut-off bill for the cost period is completed per Chapter 25.
• The PPS bill contains principal diagnosis and surgical procedures for the entire stay. 
The PPS bill shows the admission date, but the period covered begins with the first day of the new accounting year. 
• Where discharge is on the first day of the new accounting year, a PPS bill is still due. Some payment may be due the provider, and the open admission must be closed on CMS' records. There are no accommodation charges on the day of discharge; the hospital will report ancillary charges for the day of discharge on the prior bill.
• Coinsurance days and related amounts are applied separately to each bill, i.e., the proper deduction for coinsurance days reported on the second bill is taken from that bill.

Monday, 17 April 2017

Criteria and Payment for Sole Community Hospitals and for Medicare Dependent Hospitals

A. - Criteria for Sole Community Hospitals (SCHs) 

A sole community hospital (SCH) is a hospital that is paid under the Medicare hospital inpatient prospective payment system (IPPS) and is either located more than 35 miles from other like hospitals or is located in a rural area, and meets the criteria for SCH status as specified at 42 CFR 412.92 (Title 42 of the Code of Federal Regulations, Section 412.92, Special treatment: Sole community hospitals). A hospital may be designated as an SCH effective with cost reporting periods beginning on or after October 1, 1990.

B. - Criteria for Medicare Dependent Hospitals (MDHs) 

A Medicare-dependent, small rural hospital (MDH) is a hospital that is paid under the Medicare hospital inpatient prospective payment system (IPPS) and meets the criteria for MDH status as specified at 42 CFR 412.108 (Title 42 of the Code of Federal Regulations, Section 412.108 Special treatment: Medicare-dependent, small rural hospitals). A hospital may be designated as an MDH effective with cost reporting periods beginning on or after April 1, 1990, and ending on or before March 31, 1993, and for discharges occurring on or after October 1, 1997, and before October 1, 2011.

C. - Payment to SCHs and MDHs 

SCHs and MDHs are paid based on either the Federal rate or their hospital-specific (HSP) rate, whichever will result in the greatest payment. The HSP rate is the hospital’s rate based on their updated costs per discharge for a particular fiscal year (FY) as specified in statute. Like all IPPS hospitals paid, SCHs and MDHs are paid for their discharges based on the diagnosis-related DRG classification and weights regardless of whether payment based on the Federal rate or the hospital’s HSP rate results in the greatest payment.

SCHs will be paid based on their HSP rate for either FY 1982, 1987, 1996 (for cost reporting periods beginning on or after October 1, 2000) or 2006 (for cost reporting periods beginning on or after January 1, 2009) if this results in a greater payment than the Federal rate. For more detail, see 42 CFR 412.92(d) and 42 CFR 412.73, 412.75, 412.77, and 412.78, respectively, for determining the HSP rates for FYs 1982, 1987, 1996 and 2006. 

MDHs will be paid based on their HSP rate for either FY 1982, 1987, or 2002 (for cost reporting periods beginning on or after October 1, 2006) if this results in a greater payment than the Federal rate. For more detail, see 42 CFR 412.108(c) and 42 CFR 412.73, 412.75, and 412.79, respectively, for determining the HSP rates for FYs 1982, 1987, and 2002.

In addition, qualifying SCHs and MDHs that experience a significant decrease in its number of discharges may receive an additional payment as specified at 42 CFR 412.92(e) and 42 CFR 412.108(d), respectively. 

Thursday, 13 April 2017

Market Basket Update

A3-3611.10 

For FY 1992 through FY 1995, the update to the Federal and the hospital-specific rates is based on actual increases in capital-related costs per discharge adjusted for case mix change. For example, FY 1993 rate updates are based on a comparison of inpatient capital costs per case in Medicare cost reports beginning in FY 1990 and the costs per case in the cost reports beginning in FY 1988. The update computation will be modified after FY 1995 to reflect the capital market basket index, changes in capital requirements and new technology. Annual updates for periods after FY 1992 will be effective October 1 for all PPS hospitals, rather than the start of cost report periods that begin during that FY.

Rural Referral Centers (RRCs)

A3-3610.16, HO-415.17

Section 1886(d)(5)(C) of the Act provides for exceptions and adjustments to the standardized prospective payment amounts to take into account the special needs of RRCs. The adjustment allowed for approved RRCs is that they are paid based upon the urban, rather than rural, prospective payment rates as adjusted by the applicable DRG weighting factor and the rural area index. In addition, OBRA 89 (P.L. 101-239) extended RRC status through cost reporting periods beginning before October 1992 to any hospital classified as an RRC as of September 30, 1989. 

To retain status as an RRC effective with the cost reporting period beginning on or after October 1, 1992, a hospital must have met the criteria for classification as an RRC in at least two of the prior three years, or qualify on the basis of the requirements for initial RRC certification for the current year. The A/B MAC (A) will not review the RRC status of a hospital before the end of its third full cost reporting year as an RRC. It will limit review of RRCs in operation more than three years at the beginning of FY 1993 to a hospital's most recent three years. RRCs that pass review as meeting RRC status for at least two of the last three years receive a 3-year extension of their RRC status.

The rates in Pricer include a reduction in the adjusted standardized amounts for all hospitals to ensure that total PPS payment neither increase nor decrease as a result of the increase in payments to RRCs.

To qualify for initial RRC status for cost reporting periods beginning on or after October 1, 1992, a rural hospital must have had at least 275 beds, or the hospital must have met one of three criteria in 42 CFR 412.96(c) (3), (4) and (5), and both of the following requirements:

• The hospital's case-mix index value for FY 91 must have been at least 1.2760, or equal to the median case-mix index value for urban hospitals (excluding hospitals with approved teaching programs) calculated by CMS for the census region in which the hospital is located, if fewer. 

• For its cost reporting period that began during FY 1991, the hospital must have had at least 5000 discharges, or equal to the median number of discharges for urban hospitals in that census region, if fewer, or if an osteopathic hospital, must have had at least 3000 discharges.

The CMS publishes the median case-mix index value and the median number of discharges annually in the PPS update in the "Federal Register."

Sunday, 9 April 2017

Capital PPS Exception Payments

A3-3611.7, 42 CFR 412.348

Exception payments are provided for hospitals with inordinately high levels of capital obligations. Payment is made to a hospital paid under either the fully prospective payment methodology, or the hold-harmless payment methodology. Exception payments will expire at the end of the 10-year transition period. Exception payments ensure that:

• Sole community hospitals receive 90 percent of their Medicare inpatient capital costs; 
• Urban hospitals with 100 or more beds and a disproportionate share patient percentage of at least 20.2 percent receive 80 percent of their Medicare inpatient capital costs; and 
• All other hospitals receive 70 percent of their Medicare inpatient capital costs.

Pricer adds interim exception payments to the basic capital payment, using the rate entered in positions 189-194 of the provider-specific file. The A/B MAC (A) adjusts these interim payments, as needed, at cost report settlement.

A hospital is entitled to an additional payment if its capital payments for the cost reporting period would otherwise be less than the applicable minimum payment level. The additional payment equals the difference between the applicable minimum payment level and the capital payments that the hospital would otherwise receive minus any offset amount.

A limited exception is also provided during the 10-year transition period for hospitals that experience unanticipated extraordinary circumstances that require an unanticipated major capital expenditure. Events such as a tornado, earthquake, catastrophic fire, or a hurricane are examples of extraordinary circumstances. The capital project must cost at least $5 million (net of proceeds from other payment sources such as insurance, litigation decisions and other State, local or Federal government funding programs) to qualify for this exception. An eligible hospital's minimum payment level under this exception is 85 percent of costs associated with the unanticipated capital expenditure and the applicable minimum payment level for its other Medicare inpatient capital costs.

Total estimated payments under the exception process may not exceed 10 percent of the total estimated capital prospective payments (exclusive of hold-harmless payments for old capital) for the same fiscal year.

These limited exceptions must be approved by CMS prior to payment. If approved, the A/B MAC (A) includes the limited exception payment amount per discharge in the exception field of the provider specific file.

Capital Outliers

A3-3611.8 
Total Federal PPS payments are reduced by an amount equal to anticipated outlier payments for the year to fund capital and operating outlier payments. Outlier payments apply only to the Federal portions of capital payments. Pricer calculates outlier payments. 

Pricer used a combined methodology to determine the day outlier payment rate for capital and operating day outliers (Day outliers were eliminated after FY 1997). A second combined methodology is used to determine the cost outlier payment rate for capital and operating costs. A capital or operating cost outlier is paid only if both capital and operating costs related to an admission exceed the combined outlier threshold. Pricer pays the higher of the combined total cost outlier payment or the total day outlier payment. An exception applies to a transferring hospital. A transferring hospital may be paid a cost outlier, but may not be paid a day outlier unless DRG 385 or 456 applies. The outlier computation methodology is contained in the A/B MAC (A) Pricer installation guide

Thursday, 6 April 2017

Blended Payments

A3-3611.3 

Hospitals with a FY 1990 hospital-specific rate for capital below the Federal rate are paid a fully prospective capital rate based on a blend of their hospital-specific rate and the Federal rate. The payment for discharges occurring during a cost-reporting period that began in FY 1992 is based on a blend of 90 percent of the hospital-specific rate and 10 percent of the Federal rate. The payment for discharges occurring during a cost-reporting period that began in FY 1993 is based on a blend of 80 percent of the hospital-specific rate and 20 percent of the Federal rate. The Federal portion of the payment increases by 10 percent each year and the hospital-specific portions decreases by 10 percent each year, culminating in payment at 100 percent of the Federal rate in the tenth year.

Capital Payments in Puerto Rico

A3-3611.4 
A special standard rate applies to Puerto Rico. It is a combination of 50 percent of the Federal capital amount and 50 percent of the Puerto Rican capital amount. It is used in lieu of the Federal rate to compute hold harmless and fully prospective payments for PPS hospitals in Puerto Rico.

Old and New Capital

A3-3611.5 

Old capital is a hospital asset that: 
• Has been put in use for patient care on or before December 31, 1990; or 
• Has been legally committed to by an enforceable contract entered into on or before December 31, 1990, and put in patient use before October 1, 1994

All other assets are considered new for Medicare purposes.

New Hospitals

A3-3611.6 

New hospitals that open during the national 10-year transition are exempt from capital PPS payment for their first two years of operation. A new hospital is one that does not have a 12-month cost reporting period that ended on or before September 30, 1990. The new hospital exemption does not apply to:

• A new acute care hospital that operated as a PPS excluded hospital for 2 or more years before its transition to PPS; 
• A hospital which has been open more than 2 years, but has participated in Medicare fewer than 2 years;
• A hospital that closes and reopens within 2 years under the same or different ownership; or 
• A hospital that builds a new or replacement facility at the same or a new location, even if a change of ownership or new leasing arrangements are involved

A new hospital is paid 85 percent of its reasonable costs for capital during the exemption period. The hospital's second year of operation is the base period for determination of the hospital-specific rate and old capital assets. Effective with its third year of operation, the hospital is paid:

• The fully prospective methodology if the hospital-specific rate is less than the Federal rate. The A/B MAC (A) uses the blend rate applicable to the Federal FY in which the base period begins. For example, a new hospital with a hospitalspecific rate less than the Federal rate and a base year beginning in FY 1995 is paid 70 percent of its hospital-specific rate and 30 percent of the Federal rate; or 
• The hold harmless methodology if the hospital-specific rate is greater than the Federal rate. Hold harmless payments may continue for up to 8 years. They may continue beyond the first cost reporting period that begins on or after October 1, 2000.

Sunday, 2 April 2017

Federal Rate

The standard Federal capital payment for FY 1992 and later years is based on the projected national average Medicare capital costs per discharge for each of the fiscal years. The Federal rate is adjusted for each hospital's case mix, day and cost outliers and wage index location. A hospital qualifies for a capital DSH adjustment if it is located in a large urban or other urban area, has at least 100 beds, and has a disproportionate share (DSH) percentage greater than 0.

The Federal rate is adjusted annually to reflect changes in these factors. 

An adjustment is also provided to the Federal rate for indirect costs of medical education of interns and residents. The A/B MAC (A) calculates the adjustment by dividing the hospital's full-time equivalent total of interns and residents by the hospital's total patient days (line 8, column 6 of worksheet S3 of the CMS Form 2552-89, minus the total of the lines 1B, 1C, 1D, and 7, divided by the number of days in the cost reporting period.) It reviews the hospital's records and makes any needed changes in the count at the end of the cost reporting period. It enters the indirect medical education adjustment ratio in positions 184-188 of the provider-specific file for use by Pricer

Hold Harmless Payments

A3-3611.2

In FY 1992, hospitals with a hospital-specific rate for capital that is above the Federal PPS rate for the cost reporting period that ended in FY 1990 can receive the higher of: 
• The hold harmless-old capital rate, which is 100 percent of the reasonable costs of old capital for sole community hospitals, or 85 percent of the reasonable costs associated with old capital for all other hospitals, plus a payment for new capital
• The hold harmless - 100 percent Federal rate.

The A/B MAC (A) adjusts the hospital-specific rate in the cost report for the period ending in FY 1990 for case mix. It updates the rate to FY 1992 levels using the projected increase in national average capital costs per discharge to initially determine whether a hospital should be paid under the hold harmless or the fully prospective methodology. The type of methodology is entered in the provider-specific file.

Hospitals paid under the fully prospective methodology may change to the hold harmless methodology if justified by the addition of obligated capital and other changes in remaining old capital costs subsequent to the base period. This option is available through the later of a hospital's cost reporting period beginning in FY 94 or after obligated capital has been put in use. Hospitals must request an extension from the A/B MAC (A) by the later of January 1, 1993, or within 180 days of the event causing the delay, if they will be unable to put an asset in use for inpatient care by October 1, 1996. The new hospital-specific rate reflects the disposal of old assets and the addition of obligated capital costs, but not new capital acquisitions. If the recalculated hospital-specific rate exceeds the Federal rate, the hospital will be paid under the hold harmless methodology. The payment methodology in effect for FY 94 (or after the obligated capital has been put in use, if later) determines the payment methodology applicable for the remainder of the transition period under either transition payment methodology.

The A/B MAC (A) does not hold harmless a hospital for increased costs resulting from a lease arrangement entered into after December 31, 1990.

If a hospital has such low Medicare utilization in its original capital base period that it is not required to file a cost report, its hospital-specific rate will be based on its old capital costs per discharge in the first 12-month cost reporting period for which a cost report is filed.

The A/B MAC (A) converts a reasonable cost/hold harmless hospital to the 100 percent Federal payment rate when:
• Advantageous due to reductions in depreciation and/or the allowable percentage of old capital; 
• A hospital elects to be paid at 100 percent of the Federal rate; or 
• A hospital does not maintain adequate records to identify its old capital related costs. 

The A/B MAC (A) enters the payment methodology change in the provider-specific file. 

An adjustment is also provided to the Federal rate for indirect costs of medical education of interns and residents. The A/B MAC (A) calculates the adjustment by dividing the hospital's full-time equivalent total of interns and residents by the hospital's total patient days (line 8, column 6 of worksheet S3 of the CMS Form 2552-89, minus the total of the lines 1B, 1C, 1D, and 7, divided by the number of days in the cost reporting period). It reviews the hospital's records and makes any needed changes in the count at the end of the cost reporting period. It enters the indirect medical education adjustment ratio in positions 184-188 of the provider-specific file for use by Pricer

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