1. Medicare Pricing for Indian Health Services (IHS) Under the Medicare-Like Rate (MLR) Policy
Sarah Shirey-Losso
Joe Bryson

2. Objectives After this presentation, you will be able to:
Understand how MLR affects you
Know what payments fall under the MLR policy
Have a broad understanding of various Medicare payment systems
Be familiar with obtaining PPS Pricer software
Be familiar with how to navigate PC Pricer software
Understand how to enter necessary pricing inputs
Know where to go to obtain necessary pricing information

3. What payments fall under the MLR Policy?
Inpatient Acute Care Prospective Payment System (PPS)
Inpatient Psychiatric PPS
Inpatient Rehabilitation PPS
Long-Term Care Hospital PPS
Outpatient PPS
Skilled Nursing Facility PPS
Reasonable Cost Reimbursement to non-PPS hospitals

4. How can I identify claims from the various providers?
The Medicare Provider Number
also know as the OSCAR number

5. Provider Number Ranges
Acute care hospitals
XX0001-XX0879
Psychiatric Hospitals
XX4XXX, ‘S’ or ‘M’ in the third digit
Rehabilitation hospitals
XX3025-XX3099, ‘T’ or ‘R’ in the third digit
Long Term Care Hospitals
XX2000-XX2299
Critical Access Hospitals
XX1300-XX1399

6. Provider Number Ranges (cont.)
Skilled Nursing Facilities
XXX5XXX
Swing Beds
‘U’, ‘W’, ‘Y’, or ‘Z’ in the third digit
Children's Hospitals
XX300-XX3399
Cancer Hospitals
100271, , , , , , , , , ,

7. Instructions for Downloading and Running CMS PPS PC Pricers
Joe Bryson

8. Step 1: Go to PC Pricer website
to obtain all CMS PPS PC Pricer Software.
Note: For illustration purposes, we have included Inpatient PPS PC Pricer screen-shots, though these the steps will be the same for downloading any PC Pricer software.

10. Step 2: Select PC Pricer

11. Step 3: Install PC Pricer version based on claim’s Through Date
Double-click

12. You will receive the following window. Select “Open.”
The following window will appear. Double-click on the file.

13. The following will appear. Select “Run.”

14. The following window will appear.
To unzip to the default C: drive on your PC, select “Unzip.” To unzip to another drive, first replace the “C” with the letter of the drive you wish to unzip to. Then, select “Unzip.”
After a few seconds, you will receive the following window. Click “OK.”

15. Step 4: Opening the PC Pricer
Go to the PC Pricer folder you extracted and saved to your PC. Below is what an idea of what the IPPS Pricer Folder looks like.
Double-Click

16. The following window will appear. Select the “.exe” formatted file.

17. The following window will appear.

18. Step 5: Running the PC Pricer
Type in the letter of the drive you unzipped
the PC Pricer to (such as, F) to initiate the program.

19. The following PC Pricer HOME screen will appear.
Select ‘Y’ if you would like to calculate payment.
Select ‘V’ if you would like to view provider specific information
Select ‘Q’ to quit and exit the program.

20. Calculating Payment Calculating payment is specific to each PPS
Therefore, we will provide you with specific instructions on how to enter data for calculation among the following PC Pricers
Inpatient PPS
Inpatient Rehabilitation Facility PPS
Inpatient Psychiatric Facility PPS

21. Inpatient Prospective Payment System (IPPS) Pricer
Sarah Shirey-Losso

22. Background Inpatient Acute Care Hospitals are paid under this system
Children’s Hospitals, Cancer Hospitals, Critical Access hospitals are not
For background on IPPS, see:
Internet Only Manual (IOM) Pub , Chapter 3

23. CORE ELEMENTS OF THE IPPS PAYMENT
The standardized amounts, which are the basic payment amounts
A wage index to account for differences in hospital labor costs
The DRG relative weights, which account for differences in the mix of patients treated across hospitals
An add-on payment for hospitals that serve a disproportionate share of low-income patients

24. CORE ELEMENTS OF THE IPPS PAYMENT (cont.)
An add-on payment for hospitals that incur indirect costs of medical education (IME)
An additional payment for cases that are unusually costly, called outliers
An additional payment for cases that have new technologies

25. Additional Information
The IPPS is updated annually every October
CMS has created a web-based Pricer program to calculate the claim payment
Known as the IPPS PC Pricer

26. Calculating Payment Using the IPPS PC Pricer

27. Enter ‘Y’

28. Enter the OSCAR # here

29. Enter Patient ID if desired

30. Enter From Date on claim

31. Enter Through Date on claim

32. Enter DRG

33. Enter ‘N’

34. Enter ‘N’

35. Enter ‘Y’ if Patient Status Code = 02

36. Enter ‘Y’ if PS Code is: 03, 05, 06, 62, 63, or 65

37. Enter Total Covered Charges on claim

38. Enter ‘Y’ if Procedure Code is 86.98

39. Enter ‘Y’ if Procedure Code 39.73

40. Enter ‘Y’ if Procedure Code is 84.58

41. Enter ‘Y’ if Procedure Code is 52.85

42. Enter how many times Procedure Code 52.85 is reported (max of 2)

43. Enter ‘Y’ to calculate PPS Payment

44. Total IPPS Payment

45. For additional assistance please contact:
Sarah Shirey-Losso (410) or
Joe Bryson (410) or
Valeri Ritter (410) or

46. Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) Pricer
Sarah Shirey-Losso

47. Background Paid under the IRF PPS:
Freestanding inpatient rehab hospitals
Rehab units located in acute care hospitals
Critical access hospitals
For background, please refer to:
Internet Only Manual (IOM) Pub , Chapter3, Section 140

48. Background
The IRF PPS will utilize information from a patient assessment instrument (IRF PAI) to classify patients into distinct groups based on clinical characteristics and expected resource needs
Rehab hospitals have the IRF PAI in their facility and determine the case-mix group (CMG)

49. CORE ELEMENTS of IRF PPS
The standardized amounts, which are the basic payment amounts
A wage index to account for differences in hospital labor costs
The CMG relative weights
An add-on payment to compensate hospitals for their percentage of low-income patients (LIP)
An add-on payment for hospitals located in rural areas

50. CORE ELEMENTS of IRF PPS (cont.)
An add-on payment for hospitals that incur indirect costs of medical education
An additional payment for cases that are unusually costly, called outliers
Additional adjustments are made for:
interrupted stays
short stays of less than three days
transfers (defined as less than the average length of stay for the CMG)

51. Additional Information
IRF PPS is updated annually in October
The following slides demonstrates the IRF PPS PC Pricer

52. Calculating Payment Using the IRF PPS PC Pricer

53. Enter ‘Y’

54. Enter OSCAR Number

55. Enter patient ID if desired

56. Enter CMG (revenue code 0024)

57. Enter PS code from the claim

58. Enter '0'

59. Enter covered days

60. Not Applicable to IHS
(tab through)

61. From date
Thru date

62. Enter covered charges

63. Enter 'Y'

64. Total IRF PPS
Payment

65. For additional assistance please contact:
Sarah Shirey-Losso (410) or
Joe Bryson (410) or
Valeri Ritter (410) or

66. Inpatient Psychiatric Facility Prospective Payment System (IPF PPS) Pricer
Sarah Shirey-Losso

67. Inpatient Psychiatric Facility PPS
Who is paid under the IPF PPS?
Freestanding inpatient psychiatric hospitals
Psych units located in acute care hospitals
Critical access hospitals
Unlike IPPS, IRF, and LTCH, IPFs are paid on a per diem methodology at discharge

68. CORE ELEMENTS of IPF PPS
For background on IPF PPS, refer to:
Pub , Chapter 3, Section 190

69. CORE ELEMENTS of IPF PPS
Under the IPF PPS, the Federal per diem rate includes inpatient operating and capital related costs (including routine and ancillary services) and is adjusted by:
Geographic factors
Patient characteristics: Age, Presence of specified comorbidities
Facility characteristics: rural adjustment and indirect teaching
Services provided: Diagnosis Related Group (DRG) classification, Length of stay

70. CORE ELEMENTS of IPF PPS (cont.)
Additional payments are provided for the following:
Patients treated in IPFs that have a qualifying emergency department receive a higher payment for the first day of the stay
The number of Electroconvulsive Therapy (ECT) treatments furnished; and
Outlier payments for cases that have extraordinarily high costs

71. CORE ELEMENTS of IPF PPS (cont.)
The per diem base rate excludes pass-through costs such as bad debts and graduate medical education (GME)
Release Schedule for the IPF PPS:
annual release occurs in July
updates are made in October for comorbidities and DRGs

72. Calculating Payment Using the IPF PPS Pricer

73. Enter ‘Y’

74. Enter provider number

75. Enter patient ID if desired

76. Enter DRG
(15 valid DRGs for IPF)

77. Enter patient age
(at admission)

78. Enter the billed length of stay

79. Enter # of times 94.27 is on claim

80. Enter the PS code from the claim

81. Enter 'N'

82. Enter 'N' unless source of admission on the claim is 'D'

83. Enter discharge date

84. Enter total covered charges billed on the claim

85. Enter all "other" DX on the claim

86. Enter primary procedure code followed by all other procedure codes

87. Enter 'Y' to calculate PPS payment

88. Total IPF PPS payment

89. For additional assistance please contact:
Sarah Shirey-Losso (410) or
Joe Bryson (410) or
Valeri Ritter (410) or

90. Long Term Care Hospital PPS
Sarah Shirey-Losso

91. LTCH PPS: Definition
Certified under Medicare as short-term acute-care hospitals and for the purpose of Medicare payments in general
Defined as having an average inpatient length of stay of greater than 25 days
DRG based payment system (like IPPS); called LTC-DRGs

92. LTCH PPS: Background For background on IPF PPS, refer to:
IOM Pub , Chapter 3, Section 150

93. CORE ELEMENTS OF THE LTCH PPS PAYMENT
The standardized amounts, which are the basic payment amounts
A wage index to account for differences in hospital labor costs
The LTC-DRG relative weights, which account for differences in the mix of patients treated across hospitals. LTC-DRGs are weighted to account for resources used for more medically complex patients

94. CORE ELEMENTS OF THE LTCH PPS PAYMENT (cont.)
An additional payment for cases that are unusually costly, called outliers
Adjustments for short stay cases, interrupted stays, and co-located providers

95. LTCH PPS Does Not Include
Bad Debts
DME
Blood Clotting Factors

96. Additional Information
The LTCH PPS is updated annually every July
DRGs are updated in October of each year

97. Additional Information (cont.)
CMS has created a web-based Pricer program to calculate the claim payment.
Training Guide and Implementation instructions are located at:

98. For additional assistance please contact
Sarah Shirey-Losso (410) ,
Joe Bryson, (410) ,
Valeri Ritter, (410) ,

99. Skilled Nursing Facility Prospective Payment System (SNF PPS) Pricer
Joe Bryson

100. SNF PPS: Background
SNF and Swing Bed (SB) facilities are paid under this system
Critical Access Hospital Swing Beds are not

101. SNF PPS: Background (cont.)
For background on SNF PPS, see:
Pub , Chapter 6:
Pub , Chapter 7:

102. CORE ELEMENTS OF THE SNF PPS PAYMENT
Unadjusted federal per diem rate (basic payment amount)
Wage index to account for differences in area wage levels (Note: Hospital wage data is used)
Case-mix relative weights, which account for differences in the mix of patients treated across SNFs and SBs
Add-on payment for patients with AIDS, made after all other adjustments (wage and case-mix)

103. CORE ELEMENTS OF THE SNF PPS PAYMENT (cont.)
The SNF PPS is updated annually every October
CMS has created a web-based Pricer program to calculate the claim payment
Training Guide and Implementation instructions are located at:

104. For additional assistance please contact:
Jason Kerr (410) or

105. The Outpatient Prospective Payment System (OPPS) Pricer
Joe Bryson

106. Introduction to OPPS: Coverage
The Outpatient PPS covers the following:
Hospital outpatient services
Certain Part B services furnished to inpatients with no Part A benefits
Partial hospitalization services furnished by Community Mental Health Centers (CMHCs)
Certain vaccines
Splints, casts and antigens for Hospice patients

107. Introduction to OPPS: Coverage (cont.)
Services provided from a clinic/unit ONLY if the clinic/unit is billing under the hospital’s Medicare provider number (i.e., OSCAR) and the services were billed on a 13x Type of Bill (TOB)
Professional services and professional components are NOT covered under MLR

108. Introduction to OPPS: Key Terms
Healthcare Common Procedure Coding System (HCPCS):
Code that is billed on the claim to represent a procedure, item or service. Each HCPCS is mapped to an APC for payment
Ambulatory Payment Classification (APCs):
Payment group for services that are clinically similar and require similar resource use
Coinsurance:
Amount of patient responsibility taken out of the total APC payment.
Reimbursement:
Amount paid to hospital minus all applicable coinsurance and deductibles

109. Introduction to OPPS: Payment Adjustments
Packaging:
A bundling of items and services that are considered to be an integral part of another billed service paid under the OPPS. No separate APC payment is made for packaged services
Discounting:
Reduction in APC payment due to multiple procedures on the same day or due to a terminated procedure

110. Introduction to OPPS: Payment Adjustments (cont.)
Outlier:
Additional payment made for extraordinarily high cost services
Geographic:
Wage adjustment to account for differences in wages across geographical areas. Sixty percent of the total OPPS payment is wage-adjusted by multiplying payment by the hospital’s wage index

111. Introduction to OPPS: Manual Reference
To view detailed claim processing instructions, go to Publication (Claims Processing), Chapter 4 at:

112. OPPS Pricing: Background
The OPPS Pricer determines payment by using inputs from the following:
Hospital claim data
Outpatient Code Editor (OCE) output
Provider specific data (pulled from the Outpatient Provider Specific File)

113. OPPS Pricing: Outpatient Code Editor (OCE)
Two major functions of the OCE:
Edit claim data to identify errors
Set payment flags to direct the OPPS Pricer on how to price a particular claim

114. OPPS Pricing: Pricer There is no OPPS PC Pricer Pricer Files
Are posted at:
Consist of:
pricing logic
APC rates
wage indices
payment adjustment tables
provider specific information
Can assist in manual pricing

115. OPPS Pricing: Pricer Files
Below are the filenames and descriptions of the Pricer files that can be downloaded:
Baseapc – readable APC table
Basewinxv – readable MSA table
Basewnxcv – readable CBSA table
Devred – list of devices for device reduction
Oppsacpc – compressed APC table
Oppscal – pricer calculation logic
Oppsof – compressed list of devices for offsetting
Oppswinxcv – compressed MSA table
Oppswnxcv – compressed CBSA table
Psfall – Provider-Specific Data

116. OPPS Pricing: Obtaining Software
Contact a vendor/contractor to obtain OPPS pricing software or to simply contract this work out
Selection of a vendor is based on your individual tribe’s preference and resources. Vendor information can be obtained via the internet

117. OPPS Pricing: References
Outpatient Code Editor - Information regarding the OCE can be found at the following website:
OPPS Pricer - OPPS Pricer files can be obtained by selecting the applicable quarterly link at the following site and downloading the files:

118. Reasonable Cost Reimbursement
Joe Bryson

119. Reasonable Cost Providers
Critical Access Hospitals (CAHs)
Medicare provider number (also known as OSCAR) range: xx1300 – xx139
TEFRA
Children’s Hospitals
Provider number range: xx3300 – xx3399
Cancer Hospitals
Territory Hospitals

120. Cost Reimbursement under IHS/CHS
No cost report settlement under IHS/CHS
Apply the hospital’s Cost-to-Charge Ratio (CCR) to the billed “covered” charges on the claim

121. How do I obtain a hospital’s Cost-to-Charge Ration (CCR)?
Contact the servicing hospital’s Medicare Fiscal Intermediary (FI)

122. Reasonable Cost: TEFRA Payment Example
Children’s Hospital
LOS 7/1/07 – 7/5/07
Total Covered Charges = $12,000.00
CCR = 0.62
Multiply total covered charges by CCR: $12,000 x .62 = $7,440.00

123. Reasonable Cost: CAH Payment Example
LOS 7/1/07 – 7/3/07
Total Covered Charges = $2,935.60
CCR = .62
Multiply total covered charges by CCR:
$2, x .62 = $1,820.07
2. Multiply Cost by 101%:
$1, x 101% = $1,838.28
***Same formula applies to outpatient CAHs

124. For additional assistance, please contact:
Cindy Murphy at (410) or

125. The End