CMS Increases OPPS’ Outlier Fixed Dollar Threshold for 2012

CMS has increased the fixed dollar threshold for an outlier payment to be made on outpatient services from $1,900 to $2,025 for service provided after January 1, 2012. Outlier payments are made when the cost of furnishing a service or procedure exceeds 1.75 times the set reimbursement rate for the service and the service costs the provider at least $2,025 more than the set reimbursement rate.

This outlier threshold was increased from $1,900 to $2,025 as a result of an error CMS made in calculating the update to the 2012 outpatient prospective payment system (OPPS).  Upon review, CMS realized that unpaid claims from previous years were not removed from the calculation used to determine the median cost for services provided in 2012. The correct application of this calculation has an impact on the median costs used to establish the relative payment, which impacts the CY 2012 OPPS  payment rates, copayments, and outlier threshold amounts.

The error also required the calculation of  new reimbursement amounts for several ambulatory payment classifications (APC) reported in various addenda to the Final rule. The new payment amounts can be obtained in the various updated addenda.    

CMS also erroneously reported in the Final rule updating the OPPS for 2012 the incorrect statewide average cost-to-charge ratios (CCRs) for 2012.  The CCRs in the Final rule were the same as the they were reported in the Proposed rule.  The correct updated statewide average CCRs that should have been reported in the Final rule have now been reported in the Federal Register.

CMS uses overall hospital-specific CCRs calculated from the hospital’s most recent cost report to determine outlier payments, payments for pass-through devices, and monthly interim transitional corridor payments under the OPPS during the PPS year. Medicare contractors cannot calculate a CCR for some hospitals because there is no cost report available. For these hospitals, CMS uses the statewide average default CCRs to determine the payments mentioned above until a hospital’s Medicare contractor is able to calculate the hospital’s actual CCR from its most recently submitted Medicare cost report. These hospitals include, but are not limited to, hospitals that are new, have not accepted assignment of an existing hospital’s provider agreement, and have not yet submitted a cost report.