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Reconcilition of Outlier Payments: How the Cost-to-Charge Ratio (CCR) Matters

In this post, I’d like to explain what happens when your final settled CCR is different from your priced CCR. I discussed before in the outlier discussion that the ratio of cost-to-charge (RCC or CCR) matters. However, this calculation is used merely to price your claims and is subject to final reconciliation.

The regulations state:

(4) For discharges occurring on or after August 8, 2003, any reconciliation of outlier payments will be based on operating and capital cost-to-charge ratios calculated based on a ratio of costs to charges computed from the relevant cost report and charge data determined at the time the cost report coinciding with the discharge is settled. – 42 CFR 412.84(i)(4)http://www.law.cornell.edu/cfr/text/42/412.84

But when reconciliation happens is found in section 20.1.2.5 in Chapter 3 of the Medical Claims Processing Manual. Here is what we know:

The cost-to-charge will be reconciled at the time of final settlement if

  1. The actual operating CCR is found to deviate 10% points from the CCR at the time of payment. For those who need a brush up, Merriam Webster tells us that a percentage point is defined as 1%.
  2. Total outlier payments in the cost report period exceed $500,000.
  3. If you have multiple units paid under IPPS (for instance IPF IPPS and regular IPPS), the consequence of this section is unclear. Must both units meet both conditions or is each condition applied to each unit paid under IPPS separately? This is a point that is not readily answered in this section.

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