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(DRG base payment/ national average length of stay) * (actual length of stay + 1) = transfer-adjusted allowed amount;

(9) the department will make outlier payments for high-cost cases; in order to receive an outlier payment, the estimated financial loss to a hospital must exceed a threshold, calculated by the department, that aims to result in outlier payments between five percent and 15 percent of total payments; the department will multiply amounts in excess of that threshold by a marginal cost percentage, as follows, to calculate outlier payments:

(A) estimated cost is calculated as: charges * cost-to-charge ratio = estimated cost;

(B) estimated gain or loss is calculated as: DRG base payment (or transfer-adjusted allowed amount if applicable) - estimated cost = estimated gain or loss;

(C) if estimated loss is greater than the cost outlier threshold, the claim qualifies for an outlier payment; the department will publish the cost outlier threshold value on the department’s website;

(D) the outlier payment is calculated as: (estimated loss - cost outlier threshold) * outlier payment percentage = cost outlier payment;

(E) outlier payments are added to the DRG base payment, or transfer-adjusted allowed amount if applicable;

(10) the department will utilize a cost-to-charge ratio in the calculation of outlier payments; the department will assign a hospital-specific cost-to-charge ratio to in-state general acute care hospitals and designated border hospitals; the department will assign the in-state average cost-to-charge ratio to all other out-of-state hospitals;

(11) the department will adjust the DRG base rate for an in-state teaching hospital for direct medical education costs reported on the Medicare hospital cost report; the specific criteria and methodology for teaching hospital base rate adjustments are described in the Alaska Provider Billing Manual, adopted by reference in 7 AAC 160.900;

(12) the APR DRG base payment is calculated by multiplying the hospital’s base rate by the relative weight and each policy adjuster; transfer adjustments and outlier payment calculations follow this initial calculation;

(13) the department will reimburse all services, supplies, and devices provided during an inpatient stay through the DRG payment; however, the department may make a payment in addition to the DRG payment for

(A) a quality incentive program; or

(B) another initiative adopted by regulation under the Administrative Procedure Act (AS 44.62).