| Note: This spreadsheet is only an estimate of payment. It is not to be relied upon for exact payment. |
| OUTLIER EXAMPLE |
| The following example simulates the outlier payment for a case at a generic hospital in the San Francisco, California CBSA, which is a large urban area. The patient was discharged on or after October 1, 2006 and the hospital incurred Medicare approved charges of $200,000. The DRG assigned to this example was 498 (Spinal Fusion Posterior). The DRG 498 relative weight is 2.9896. The hospital is 100% Federal for capital payment purposes. |
| Table of Operating Values Used in Calculation | Table of Capital Values Used in Calculation |
| DRG 498 Relative Weight: | 2.9896 | DRG 498 Relative Weight: | 2.9896 |
| Labor-related | $3,397.52 | Federal Capital Rate | $427.03 |
| Nonlabor-related | $1,476.97 | Large Urban Add on | 1.03 |
| San Francisco CBSA Wage Index | 1.5419 | San Francisco CBSA GAF | 1.3452 |
| Cost of Living Adjustment (COLA) | 1 | Cost of Living Adjustment | 1 |
| IME Operating Adjustment Factor | 0.0744 | IME Operating Adjustment Factor | 0.0243 |
| DSH Operating Adjustment Factor | 0.1413 | DSH Operating Adjustment Factor | 0.0631 |
| Labor Related Portion | 0.697 | Capital Cost to Charge Ratio | 0.04 |
| Nonlabor Related Portion | 0.303 |
| Operating Cost to Charge Ratio | 0.38 |
| Other Factors |
| Billed Covered Charges | $200,000 |
| Fixed Loss Outlier Threshold | $24,485 |
| Marginal Cost Factor | 0.8 |
| Step 1: Determine Federal Operating Payment with IME and DSH: |
| Federal Rate for Operating Costs = (DRG Relative Weight x ((Labor Related Large Urban Standardized Amount x San Francisco CBSA Wage Index) + (Nonlabor Related National Large Urban Standardized Amount x Cost of Living Adjustment)) x (1 + IME + DSH)) |
| Federal Operating Payment With IME and DSH = | $24,407.58 |
| Step 2: Determine Federal Capital Payment with IME and DSH: |
| Federal Rate for Capital Costs = ((DRG Relative Weight x Federal Capital Rate x Large Urban Add-On x Geographic Cost Adjustment Factor x COLA) x (1 + IME + DSH)) |
| Federal Capital Payment With IME and DSH = | $1,923.47 |
| Step 3: Determine Operating and Capital Costs: |
| Operating Costs = Billed Charges x Operating Cost to Charge Ratio |
| Operating Costs = | $76,000 |
| Capital Costs = Billed Charges x Capital Cost to Charge Ratio |
| Capital Costs = | $8,000 |
| Step 4: Determine Operating and Capital Outlier Threshold |
| A. Operating CCR to Total CCR = Operating CCR / (Operating CCR + Capital CCR) |
| Operating CCR to Total CCR = | 0.9048 |
| B. Capital CCR to Total CCR = Capital CCR / (Operating CCR + Capital CCR) |
| Capital CCR to Total CCR = | 0.0952 |
| C. Operating Outlier Threshold = ((Fixed Loss Threshold x ((Labor related portion x San Francisco CBSA Wage Index) + Nonlabor related portion)) x Operating CCR to Total) + Federal Payment with IME and DSH:
|
| Operating Outlier Threshold = | $54,929.28 |
| D. Capital Outlier Threshold = (Fixed Loss Threshold x Geographic Adj. Factor x Large Urban Add-On x Capital CCR to Total CCR) + Federal Payment with IME and DSH
|
| Capital Outlier Threshold = | $5,153.16 |
| Step 5: Determine Operating and Capital Outlier Payment Amount |
| A. Determine if Total Costs are Greater than Combined Threshold = (if (operating costs+ capital costs) > (operating threshold + capital threshold)) |
| Determine if Total Costs are Greater than Combined Threshold | TRUE, Continue With The Next Step |
| B. Operating Outlier Payment = (Operating Costs - Operating Outlier Threshold) x Marginal Cost Factor |
| Operating Outlier Payment = | $16,856.58 |
| C. Capital Outlier Payment = (Capital Costs - Capital Outlier Threshold) x Marginal Cost Factor |
| Note: If Capital Outlier Payment Amount is Negative, we default this amount to 0 |
| Capital Outlier Payment = | $2,277.47 |
JustGottaMakeIt
M4HospitalPaymentExample.xlsx
