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Outlier Payments Fraud

For particular hospital inpatients that generate extremely high costs (due to patient level of condition and length of stay), Medicare makes additional outlier payments to offset the financial impact to hospitals for these outlier patients. As each given DRG is paid the same base amount (see Diagnosis Related Group in this Glossary) the hospital is provided with additional monies dependent upon the extent of the outlier cases. These payments are based on costs, or charges as adjusted by a hospital’s cost-to charge ratio (CCR). CCR’s affect outlier payment because cost is incorporated into payment calculation for these cases. For outpatients, outlier payments are made for services or procedures with costs that exceed the PPS payment rate for their APC group threefold. The statute sets a limit on projected aggregate outlier payments. Upcoding DRG’s is one way that fraud actors generate increased outlier payments.

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