Palmetto GBA - Jurisdiction 11 Part A - Critical Access Hospital (CAH) Optional Method Election for Outpatient Services

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Critical Access Hospital (CAH) Optional Method Election for Outpatient Services

MLN Matters® Number: MM7404
Related Change Request (CR) #: 7404
Related CR Release Date: May 27, 2011
Effective Date: October 1, 2010
Related CR Transmittal #: R2232CP
Implementation Date: October 3, 2011

Provider Types Affected
Critical Access Hospitals (CAHs) paid under the optional method election (Method II) submitting claims for outpatient services to Fiscal Intermediaries (FI) and A/B Medicare Administrative Contractors (A/B MAC) are affected by this article.

What You Need to Know
Prior to a change made in the Fiscal Year (FY) 2011 Inpatient Prospective Payment System (IPPS) final rule, if a CAH chose to be paid under the optional method (Method II), it was required to make that election on an annual basis.

However, in the FY 2011 IPPS final rule, the Centers for Medicare & Medicaid Services (CMS) changed the regulations for the optional method election.

Effective for cost reporting periods beginning on or after October 1, 2010, if you elected the optional method in your most recent cost reporting period beginning before October 1, 2010, that election remains in place until you submit a termination request to your FI or A/B MAC. You will no longer be required to make an annual election.
Effective for cost reporting periods beginning on or after October 1, 2010, if you had not elected the optional method in your most recent cost reporting period beginning before October 1, 2010, and wish to elect the optional method or you had elected that method in your most recent cost reporting period beginning before October 1, 2010, but had terminated that election, and you wish to re-elect the optional method, that election remains in place until you submit a termination request to your FI or A/B MAC. You will no longer be required to make an annual election.
Effective for cost reporting periods beginning on or after October 1, 2010, if you choose to terminate your optional method election, you must submit a termination request to your FI or A/B MAC at least 30 days prior to the start of the next cost reporting period.
Effective for cost reporting periods beginning on or after October 1, 2010, if you had not been paid under the optional method in your most recent cost reporting period beginning before October 1, 2010, or had been paid using the optional method in your most recent cost reporting period beginning before October 1, 2010, but had terminated that election, and you choose to be paid under the optional method on or after October 1, 2010, you must make this election in writing and that election must be delivered to your FI or A/B MAC at least 30 days before the start of the first cost reporting period for which the election is effective.

Please be sure that your staffs are aware of these changes.

Background
CAHs can be paid for outpatient services using either the standard method (also referred to as “Method I”) or the optional method (also referred to as “Method II”). Under the standard method, the physician or practitioner is paid under the physician fee schedule for the professional service by their carrier or A/B MAC whereas, under the optional method, the physician or practitioner reassigns his or her billing rights to the CAH and the CAH is paid 115 percent of the physician fee schedule amount for the professional service by the FI or A/B MAC. Under both methods, facility services are reimbursed at 101 percent of reasonable cost.

Additional Information
The official instruction, CR7404 issued to your FI and A/B MAC regarding this change may be viewed at http://www.cms.gov/Transmittals/downloads/R2232CP.pdf on the CMS website.

If you have any questions, please contact the Palmetto GBA Provider Contact Center at their toll-free number, (866) 830-3455.

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This article was prepared as a service to the public and is not intended to grant rights or impose obligations. This article may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations and other interpretive materials for a full and accurate statement of their contents. CPT only copyright 2010 American Medical Association.

last updated on 06/08/2011

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