Claims Processing

The Qualifying DSH Percent uses the following provider type codes to enable Pricer to calculate the appropriate rates for these facilities: 

• 14 for a MDH that is not an RRC; 

• 15 for a MDH that is also an RRC; 

• 16 for a rebased SCH that is not an RRC; and 

• 17 for a rebased SCH that is also an RRC.

The A/B MAC (A) calculates the HSP rate and determines the greatest HSP rate (for SCHs, FY 1982, 1987, 1996 or 2006; for MDHs, FY 1982, 1987 or 2002). Then the A/B MAC (A) updates the HSP rate to the applicable FY and enters that amount in the PPS Facility Specific Rate of the Provider-Specific File (PSF), for the applicable effective date. The HSP rate is to be entered even if the Federal rate is expected to result in higher payments than the applicable HSP rate. Preloading the applicable HSP rate before the effective date is acceptable as long as the correct effective date is used for the PSF record. The A/B MAC (A) leaves the field blank if the hospital was not in operation during any of the applicable HSP base years

Pricer will calculate the payment based on the higher of the Federal rate or the HSP rate. Where the HSP rate is higher, Pricer reports the amount of the difference in the hospitalspecific field. The A/B MAC (A) carries this amount forward in the hospital-specific payment field to its PS&R record for use at cost settlement.

Billing Applicable to PPS

Stays Prior to and Discharge After IPPS Implementation Date

A3-3610.4, HO-415.7

When the admission is before the hospital's PPS effective date and the discharge is later than that date (transition claims), the Medicare payment for the period before PPS is on a reasonable cost basis and the payment for the period after PPS is on a DRG basis.

The hospital must submit two bills. The first bill is for the period before the PPS effective date and is processed and paid in accordance with requirements in effect before the hospital's PPS effective date. The second bill is processed under PPS but the amount of payment on the first bill is subtracted from it. A/B MACs (A) make the adjustment by subtracting the interim payment from the prospective payment (before any deduction for deductible or coinsurance) for the inpatient operating costs applicable to the days in the prior period. The interim payment applicable to the prior period is adjusted to exclude estimated costs related to capital and direct medical education, kidney acquisition costs, and for bad debts for uncollectible deductible and coinsurance. A/B MACs (A) will make an estimate if necessary.

For hospitals previously receiving interim payment on the basis of an average cost per diem or under PIP, the A/B MAC (A) determines and removes a per diem amount for the excluded costs for that period from the interim payments before reducing the prospective payment amount applicable to the discharge in the subsequent period under PPS. Similarly, for hospitals that received a percentage of billed charges, the portion of the percentage applicable to the excluded cost items is removed. The net percentage to the charges billed in the prior period (cut-off bill) is applied. The resulting amount is subtracted from the PPS payment applicable to the discharge in the subsequent period.

For transition claims, payment must not exceed the higher of what would have been paid under PPS including the outlier adjustment or any earlier cost payment. The final amount is not reduced to less than zero. No further adjustments are appropriate.

The interim payments used to reduce the prospective payment amounts are considered to represent fairly the inpatient operating costs incurred and fair payment for the portion of the stay occurring in the prior period. Therefore, the adjustment is final and not subject to further modification.

On bills covering two cost reporting periods:

• Each bill includes charges and covered days that apply to the period covered.

• The cut-off bill for the cost period is completed per Chapter 25.

• The PPS bill contains principal diagnosis and surgical procedures for the entire stay. 

The PPS bill shows the admission date, but the period covered begins with the first day of the new accounting year. 

• Where discharge is on the first day of the new accounting year, a PPS bill is still due. Some payment may be due the provider, and the open admission must be closed on CMS' records. There are no accommodation charges on the day of discharge; the hospital will report ancillary charges for the day of discharge on the prior bill.

• Coinsurance days and related amounts are applied separately to each bill, i.e., the proper deduction for coinsurance days reported on the second bill is taken from that bill.

Split Bills

A3-3610.6, HO-415.9 

Under PPS, split billing is not needed for cost reporting purposes; however, it is necessary to show on the bill the coinsurance days in each calendar year for proper application of the coinsurance amount. 

For admissions prior to the cost reporting year under IPPS with a discharge after the beginning of the prospective payment year, the DRG payment for the discharge is reduced by the cost of services furnished in the prior period. 

The hospital uses the day or charge statistics on the bill representing the portion of the stay in the prior period to determine the cost of the services furnished. Split bills are not needed at the end of the government's fiscal year or the calendar year as changes in DRG prices are determined by the date of discharge. This is shown in value codes 09 (first year coinsurance) and 11 (second year coinsurance). 

PPS days on the cost report are allocated to the year of the discharge. Hospitals not on IPPS, LTCHPPS, or IRFPPS continue to submit split bills at the end of their fiscal years and allocate the days to the hospital year in which they occurred. 

When split billing applies, DRG payments are made only on bills that show a discharge date and status. No DRG payment is made on PPS bills that show "still patient" status. 

The hospital may not split a bill for the periods before and after the onset of capital PPS that fall into the same billing period. Capital payment issued for an inpatient hospital stay that begins prior to and ends after the onset of capital PPS is the amount determined by Pricer for that DRG. No reasonable cost capital pass through payment is payable for the portion of the stay that pre-dates capital PPS.