Medi-Cal Outlier Payments

Diagnostic Related Groups payments are final, but outlier payments are subject to recalculation based on the audited Cost to Charge Ratio (CCR).  

Outlier payments are additional payments made in addition to the Diagnostic Related Group (DRG)  payment for inpatient stays that are exceptionally expensive for a hospital.  An annual threshold and a marginal cost percentage are established for determination of the outlier payment.  The recalculation would occur if there is a material change in the filed CCR vs the audited CCR.  

The recalculation could result in either a payment due to the provider or a payment due to the Program. The outlier audit generally occurs during the cost report audit but can be held at a separate time if warranted.  

General notes:

  • The DRG outlier recalculation policy began state fiscal year (SFY) 2016-2017.
  • Affects Medi-Cal traditional services, not Managed Care
  • High impact provider - Children's Hospitals, those with high NICU services
  • No impact to Public Hospitals reimbursed under the 1115 Waiver (Cali DPHs)

See links for specifics on the thresholds and calculations. (Updated annually)

Medi-Cal SFY 2022-23, DRG Payment Policies, Provider Training, May 24 and 25, 2022  



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