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Reconciliations of Outlier Payments

Outliers are additional payments that Medicare provides to hospitals for beneficiaries who incur unusually high costs. The original outlier payments are based on the cost-to-charge ratio from the most recently settled cost report. The actual cost-to-charge ratio for the year in which the service was provided is available only at the time of cost report settlement for that year. Centers for Medicare & Medicaid Services performs outlier reconciliations at the time of cost report settlement. Without timely reconciliations and final settlements, the cost reports remain open and funds may not be properly returned to the Medicare Trust Fund (42 CFR § 412.84(i)(4)). We will review Medicare outlier payments to hospitals to determine whether Centers for Medicare & Medicaid Services performed necessary reconciliations in a timely manner to enable Medicare contractors to perform final settlement of the hospitals' associated cost reports. We will also determine whether the Medicare contractors referred all hospitals that meet the criteria for outlier reconciliations to Centers for Medicare & Medicaid Services.

Announced or Revised Agency Title Component Report Number(s) Expected Issue Date (FY)
Complete Centers for Medicare & Medicaid Services Reconciliations of Outlier Payments Office of Audit Services A-05-16-00060 W-00-16-35451; W-00-16-35781; various reviews 2020