Statewide Average Cost-to-Charge Ratios

20.1.2.2 - Statewide Average Cost-to-Charge Ratios (Rev. 2111, Issued: 12-03-10, Effective: 04-01-11, Implementation: 04-04-11) For discharges prior to August 8, 2003, Statewide average CCRs are used in those instances in which a hospital’s operating or capital CCRs fall above or below reasonable parameters. CMS sets forth these parameters and the Statewide average CCRs in each year’s annual notice of prospective payment rates. For discharges occurring on or after August 8, 2003, the Medicare contractor may use a Statewide average CCR if it is unable to determine an accurate operating or capital CCR for a hospital in one of the following circumstances: 1. New hospitals that have not yet submitted their first Medicare cost report. (For this purpose, a new hospital is defined as an entity that has not accepted assignment of an existing hospital’s provider agreement in accordance with 42 CFR 489.18.) 2. Hospitals whose operating or capital CCR is in excess of 3 standard deviations above the corresponding national geometric mean. This mean is recalculated annually by CMS and published in the annual notice of prospective payment rates issued in accordance with § 412.8(b) of the CFR. 3. Other hospitals which accurate data with which to calculate either an operating or capital CCR (or both) are not available. However, the policies of §20.1.2.1 part C and part E can be applied as an alternative to the Statewide average. For those hospitals assigned the Statewide average operating and/or capital CCRs, these CCRs must be updated every October 1 based on the latest Statewide average CCRs published in each year’s annual notice of prospective payment rates until the hospital is assigned a CCR based on the latest tentative or final settled cost report or a CCR based on the policies of §20.1.2.1 part C of this manual. A hospital is not assigned the Statewide average CCR if its CCR falls below 3 standard deviations from the national mean CCR. In such a case, the hospital’s actual operating or capital CCR is used.