Directory
Industry Insights
Medicare Outlier Reconciliation Process
By: John Harris
John Harris
Partner
Consulting
Health Care
Wichita
316.265.2811
A recent policy from the Centers for Medicare & Medicaid Services (CMS) could create the need for health care providers to repay outlier payments in certain situations.
Outlier payments for Medicare claims are made when estimated costs of individual cases are compared to a threshold; if the estimated cost exceeds the threshold, an additional payment is made over and above the inpatient diagnosis related group or outpatient ambulatory payment classification amounts. These estimates are computed using the prior-year actual average cost-to-charge ratios (CCR) from Medicare cost report data filed annually with the Medicare Administrative Contractors (MACs), multiplied by the actual charges for each individual case.
A policy published in late 2010 and finalized in early 2011 allows MACs to recoup payments that seem excessive if they meet the following criteria:
- Actual operating CCRs are at least 10 percentage points different from the CCR used to calculate outliers during the cost report period
- Outlier payments total more than $500,000 in a year
However, if a hospital does not meet these criteria, the MAC can—at its discretion—review outlier payments based on cost report data if it believes the payments were significantly inaccurate. In either case, the MAC must request CMS Regional and Central Office approval to proceed with such reconciliation. The MAC may apply these criteria back to 2003.
MACs have increasingly targeted providers who meet the above criteria, as well as those situations where the provider did not meet both criteria but the MAC nonetheless received permission to recoup funds.
Any facility receiving outlier payments should be evaluating charge structures and past cost reporting periods in which they have outlier payments, since repayments could be requested in the near future.
For more on the potential effect on your organization, contact your BKD advisor.
Directory
Subscribe