• Cost outlier — an inpatient hospital discharge that is extraordinarily costly. Hospitals may be eligible to receive additional payment for the discharge. Section 1886(d)(5)(A) of the social security act provides for Medicare payments to Medicare-participating hospitals in addition to the basic prospective payments for cases incurring extraordinarily high costs.
• To qualify for outlier payment, a case must have costs above a fixed-loss cost threshold amount (a dollar amount by which the costs of a case must exceed payments to qualify for outliers).
• Total covered charges for an inpatient admission are $100,000 (hospital costs)
• The prospective payment system (PPS) threshold amount for the DRG is $65,000 (fixed-loss threshold amount)
• The Centers for Medicare & Medicaid Services (CMS) publishes the outlier threshold amounts in the annual inpatient prospective payments system (IPPS) final rule. Providers may access CMS’ website to download the IPPS pricer.
• Inlier — a case where the cost of treatment falls within the established cost boundaries of the DRG payment. To determine if the inpatient hospital claim meets the criteria for cost outlier reimbursement, two pieces of information are needed: 1) total covered charges and 2) PPS threshold amount. If the total covered charges exceed the PPS threshold amount, follow the coding rules for inpatient cost outlier claims.
• DRG cutoff day — the “To” date or “End” date of the inlier period. Once the PPS threshold amount is known add the daily covered charges incurred by the patient until determining the day that covered charges reach the cost outlier threshold amount. Exclude days and charges during noncovered spans (e.g., occurrence span code 74 [noncovered level of care], 76 [patient liability], 79 [payer code] dates).
• Occurrence code (OC) 47 — a code that indicates the first day the inpatient cost outlier threshold is reached or the date after the DRG cutoff date. For Medicare purposes, a beneficiary must have regular coinsurance and/or lifetime reserve days available beginning on this date to allow coverage of additional daily charges for the purpose of making cost outlier payments. OC47 date cannot be equal to or during dates coded for occurrence span code 74, 76, or 79. Click here for an example. pdf file
• Occurrence code A3 — (Benefits Exhausted) the last date for which benefits are available and after which no payment can be made.
• Occurrence span code 70 — a code and span of time that indicates the from and through dates during the PPS inlier stay for which the beneficiary has exhausted all regular days and/or coinsurance days, but which is covered on the cost report. Click here for an example. pdf file
• Condition code 61 — a code that indicates this bill is a cost outlier. Click here for an example. pdf file
• Condition code 67 — a code that indicates the beneficiary has elected not to use lifetime reserve (LTR) days.
• Condition code 68 — a code that indicates the beneficiary has elected to use lifetime reserve (LTR) days.
Q: When should occurrence span code (OSC) 70 be used?
A: OSC70 should be coded on the cost outlier claim when the beneficiary’s benefit days have exhausted and there are extra days within the inlier portion of the claim. The claim may be paid up to the diagnosis related group (DRG), as long as there are benefit days remaining for the claim.
Answering this question will assist in submitting the claim correctly. Did the beneficiary’s regular, coinsurance or life time reserve days exhaust during the inlier portion of the stay?
• If no — submit claim as regular inpatient claim or follow guidelines for using occurrence code 47 and A3, if applicable.
• If yes —
• Did the regular benefit days exhaust during the inlier period?
• Indicate occurrence span code 70.
• Did life time reserve days exhaust during the inlier period? Note: Lifetime reserve days can be billed only in the inlier period when these are the only benefit days available at the time of admission.
• The from and through dates should represent the period of time during the prospective payment system (PPS) inlier stay for which the benefit days are exhausted.
If a beneficiary has at least one regular benefit day remaining in the benefit period available for use at the time of admission, the entire stay up to the DRG cutoff will be paid for by Medicare.
All charges for dates within the occurrence span code 70 should be billed as covered.
• OSC 70 — Non-utilization dates (for payer use on hospital bills only). The from/through dates during a prospective payment system (PPS) inlier stay for which the beneficiary has exhausted all regular days and/or coinsurance days, but which is covered on the cost report.
Q: Should a claim be submitted as a cost outlier?
A: Yes, we encourage you to code the claim appropriately when submitting it the first time. You have access to the Centers for Medicare & Medicaid Services’ (CMS) PRICER software external link which helps you determine the prospective payment system (PPS) threshold. Once you determine the PPS threshold and confirm the claim can be submitted as a cost outlier, you should code the claim appropriately and forward to the fiscal intermediary standard system (FISS).
To determine if the inpatient hospital claim meets criteria for cost outlier reimbursement, you need two pieces of information:
• Total covered charges, and
• PPS threshold amount
If the total covered charges exceed the PPS threshold amount by CMS’ published standards for the current year, then you should follow the coding rules for inpatient cost outlier claims.
Occurrence code 47 — indicates the first day the inpatient cost outlier threshold is reached or the date after the diagnostic related group (DRG) cutoff date. For Medicare purposes, a beneficiary must have regular coinsurance and/or lifetime reserve days available beginning on this date to allow coverage of additional daily charges for the purpose of making cost outlier payments. Occurrence code 47 cannot be equal to or during the dates of occurrence span code 74 or 76.
Occurrence span code 74 — the from/through dates for a period at a non-covered level of care in an otherwise covered stay, excluding any period reported with occurrence span codes 76, 77, or 79. Codes 76 and 77 apply to most non-covered care. Used for leave of absence, or for repetitive part B services to show a period of inpatient hospital care or outpatient surgery during the billing period. Also used for home health association (HHA) or hospice services billed under part A, but not valid for HHA under prospective payment system (PPS).
Occurrence span code 76 — the from/through dates for a period of non-covered care for which the provider is permitted to charge the beneficiary. Codes should be used only where the Medicare administrative contractor (MAC) or fiscal intermediary (FI)of the quality improvement organization (QIO) has approved such charges in advance and the patient has been notified in writing three days prior to the ‘from’ date of this period.
Q: When is it appropriate to use occurrence code 47 when submitting an inpatient cost outlier claim?
A: Reference the Outlier Flowchart pdf file after asking this question: Does the cost for an inpatient stay exceed the cost outlier threshold amount?
• If no — submit claim as regular inpatient claim.
• If yes — are there enough benefit days (regular or life time reserve) to cover the medically necessary days?
• If yes — submit claims as regular inpatient claim. Do not indicate occurrence code 47.
• If no — indicate occurrence code 47 and date of the first full day of cost outlier status (the day after the day that covered charges reach the cost outlier threshold).
• For Medicare purposes, cost outlier payments are paid for each day during the outlier period that the beneficiary has an available benefit day (regular, coinsurance, and/or life time reserve).
• Diagnosis related group (DRG) claims without cost outlier payments can never have regular benefit days combined with life time reserve benefit days. When regular benefit and life time reserve days are billed on the same claim, life time reserve usage begins on the cost outlier date (should be equal to occurrence code 47 date).