Hospitals Received Millions in Excessive Outlier Payments Because CMS Limits the Reconciliation Process

Outlier claim payments are based on hospital cost reports from the latest cost-reporting period for which the cost report is either settled as final or tentatively settled. The Centers for Medicare & Medicaid Services (CMS) requires its Medicare administrative contractors to reconcile outlier payments by using information from the updated current cost-reporting period, but only if the cost report meets the following criteria: the actual cost-to-charge ratio (CCR) is found to be plus or minus 10 percentage points from the CCR applied during the payment period (10-percentage-point threshold), and the outlier payments in that cost reporting period exceed $500,000.