[Code of Federal Regulations] [Title 42, Volume 2] [Revised as of October 1, 2002] From the U.S. Government Printing Office via GPO Access [CITE: 42CFR412.84] [Page 408-409] TITLE 42--PUBLIC HEALTH HUMAN SERVICES PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL SERVICES--Table of Contents Subpart F--Payment for Outlier Cases and Special Treatment Payment for New Technology Sec. 412.84 Payment for extraordinarily high-cost cases (cost outliers). (a) A hospital may request its intermediary to make an additional payment for inpatient hospital services that meet the criteria established in accordance with Sec. 412.80(a). (b) The hospital must request additional payment-- (1) With initial submission of the bill; or (2) Within 60 days of receipt of the intermediary's initial determination. (c) Except as specified in paragraph (e) of this section, an additional payment for a cost outlier case is made prior to medical review. (d) As described in paragraph (f) of this section, the QIO reviews a sample of cost outlier cases after payment. The charges for any services identified as noncovered through this review are denied and any outlier payment made for these services are recovered, as appropriate, after a determination as to the provider's liability has been made. (e) If the QIO finds a pattern of inappropriate utilization by a hospital, all cost outlier cases from that hospital are subject to medical review, and this review may be conducted prior to payment until the QIO determines that appropriate corrective actions have been taken. (f) The QIO reviews the cost outlier cases, using the medical records and itemized charges, to verify the following: (1) The admission was medically necessary and appropriate. (2) Services were medically necessary and delivered in the most appropriate setting. (3) Services were ordered by the physician, actually furnished, and not duplicatively billed. (4) The diagnostic and procedural codings are correct. (g) The intermediary bases the operating and capital costs of the discharge on the billed charges for covered inpatient services adjusted by the cost to charge ratios applicable to operating and capital costs, respectively, as described in paragraph (h) of this section. (h) The operating cost-to-charge ratio and, effective with cost reporting periods beginning on or after October 1, 1991, the capital cost-to-charge ratio used to adjust covered charges are computed annually by the intermediary for each hospital based on the latest available settled cost report for that hospital and charge data for the same time period as that covered by the cost report. Statewide cost-to- charge ratios are used in those instances in which a hospital's operating or capital cost-to-charge ratios fall outside reasonable parameters. CMS sets forth these parameters and the statewide cost-to- charge ratios in each year's annual notice of prospective payment rates published under Sec. 412.8(b). (i) If any of the services are determined to be noncovered, the charges for these services will be deducted from the requested amount of reimbursement but not to exceed the amount claimed above the cost outlier threshold. [[Page 409]] (j) Except as provided in paragraph (k) of this section, the additional amount is derived by first taking 80 percent of the difference between the hospital's adjusted operating cost for the discharge (as determined under paragraph (g) of this section) and the operating threshold criteria established under Sec. 412.80(a)(1)(ii); 80 percent is also taken of the difference between the hospital's adjusted capital cost for the discharge (as determined under paragraph (g) of this section) and the capital threshold criteria established under Sec. 412.80(a)(1)(ii). The resulting capital amount is then multiplied by the applicable Federal portion of the payment as determined in Sec. 412.340(a) or Sec. 412.344(a). (k) For discharges occurring on or after April 1, 1988, the additional payment amount for the DRGs related to burn cases, which are identified in the most recent annual notice of prospective payment rates published in accordance with Sec. 412.8(b), is computed under the provisions of paragraph (j) of this section except that the payment is made using 90 percent of the difference between the hospital's adjusted cost for the discharge and the threshold criteria. [50 FR 12741, Mar. 29, 1985, as amended at 50 FR 35689, Sept. 3, 1985; 51 FR 31496, Sept. 3, 1986; 53 FR 38529, Sept. 30, 1988; 54 FR 36494, Sept. 1, 1989; 55 FR 15174, Apr. 20, 1990; 56 FR 43448, Aug. 30, 1991; 57 FR 39823, Sept. 1, 1992; 59 FR 45398, Sept. 1, 1994; 62 FR 46028, Aug. 29, 1997]