42 C.F.R. § 412.525 Adjustments to the Federal prospective payment.
Title 42 - Public Health
Link to an amendment published at 71 FR 48140, Aug. 18, 2006. (a) Adjustments for high-cost outliers. (1) CMS provides for an additional payment to a long-term care hospital if its estimated costs for a patient exceed the adjusted LTC-DRG payment plus a fixed-loss amount. For each long-term care hospital rate year, CMS determines a fixed-loss amount that is the maximum loss that a hospital can incur under the prospective payment system for a case with unusually high costs. (2) The fixed-loss amount is determined for the long-term care hospital rate year using the LTC-DRG relative weights that are in effect on July 1 of the rate year. (3) The additional payment equals 80 percent of the difference between the estimated cost of the patient care (determined by multiplying the hospital-specific cost-to-charge ratios by the Medicare allowable covered charge) and the sum of the adjusted Federal prospective payment for the LTC-DRG prospective payment system payment and the fixed-loss amount. (4)(i) For discharges occurring on or after October 1, 2002 and before August 8, 2003, no reconciliations will be made to outlier payments upon cost report settlement to account for differences between the estimated cost-to-charge ratio and the actual cost-to-charge ratio of the case. (ii) For discharges occurring on or after August 8, 2003, high-cost outlier payments are subject to the provisions of §§412.84(i)(1), (i)(3), and (i)(4) and (m) for adjustments of cost-to-charge ratios. (iii) For discharges occurring on or after October 1, 2003, high-cost outlier payments are subject to the provisions of §412.84(i)(2) for adjustments to cost-to-charge ratios. (b) Adjustments for Alaska and Hawaii. CMS adjusts the Federal prospective payment for the effects of a higher cost of living for hospitals located in Alaska and Hawaii. (c) Adjustments for area levels. The labor portion of a long-term care hospital's Federal prospective payment is adjusted to account for geographical differences in the area wage levels using an appropriate wage index (established by CMS), which reflects the relative level of hospital wages and wage-related costs in the geographic area (that is, urban or rural area as determined in accordance with paragraph (c)(1) or (c)(2) of this section) of the hospital compared to the national average level of hospital wages and wage-related costs. The appropriate wage index (established by CMS) is updated annually. (1) For cost reporting periods beginning on or after October 1, 2002, with respect to discharges occurring during the period covered by such cost reports but before July 1, 2005, the application of the wage index under the long-term care hospital prospective payment system is made on the basis of the location of the facility in an urban or rural area as defined in §412.62(f)(1)(ii) and (f)(1)(iii), respectively. (2) For discharges occurring on or after July 1, 2005, the application of the wage index under the long-term care hospital prospective payment system is made on the basis of the location of the facility in an urban or rural area as defined in §412.64(b)(1)(ii)(A) through (C). (d) Special payment provisions. CMS adjusts the Federal prospective payment to account for— (1) Short-stay outliers, as provided for in §412.529; and (2) A 3-day or less interruption of a stay and a greater than 3-day interruption of a stay, as provided for in §412.531. [67 FR 56049, Aug. 30, 2002, as amended at 68 FR 34163, June 6, 2003; 68 FR 34515, June 9, 2003; 69 FR 25721, May 7, 2004; 70 FR 24222, May 6, 2005]
Title 42: Public Health
PART 412—PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL SERVICES
Subpart O—Prospective Payment System for Long-Term Care Hospitals
§ 412.525 Adjustments to the Federal prospective payment.
