On October 15, 2010, the Centers for Medicare and Medicaid Services (CMS) issued Transmittal 2066 to address the submission of informational only claims by Critical Access Hospitals (CAHs) as well as Maryland Waiver Hospitals in order to track Part C patient days for purposes of  calculating the Electronic Health Record (EHR) incentives available to such hospitals. Informational only claims are billed for patients enrolled in a Medicare Advantage (MA) Plan.  The Transmittal also includes the Incentive Payment formula for Subsection (d) hospitals as well as CAHs, as follows: 

200.1 – Payment Calculation

(Rev. 2066, Issued: 10-15-10, Effective: 10-01-10, Implementation: 01-03-11)

 A – Incentive Payment Calculation for Subsection (d) Hospitals

[Initial Amount] x [Medicare Share] x [Transition Factor]

• Initial Amount equals $2,000,000 + [$200 per discharge for the 1,150th – 23,000th discharge]
• Medicare Share equals Medicare/(Total*Charges), whereas:
  • Medicare equals [number of Inpatient Bed Days for Part A Beneficiaries] plus [number of Inpatient Bed Days for MA Beneficiaries]
  • Total equals [number of Total Inpatient Bed Days]
  • Charges equals [Total Charges minus Charges for Charity Care*] divided by [Total Charges]
• Transition Factor:

B – Incentive Payment Calculation for Critical Access Hospitals (CAHs)

CAH Reasonable Cost x Medicare Share*

 * See Medicare Share computation in sub-section A above.

This Transmittal amends Chapter 3 on Inpatient Hospital Billing in the Medicare Claims Processing Manual. CMS is to issue a provider education articles related to this Transmittal in the coming days, which will be made available on the CMS MLN Matters Articles webpage.