CHA News Article

Proposed Rule Includes Changes to LTCH Payment and Policies

The proposed rule for the Medicare inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) PPS for federal fiscal year (FFY) 2014, issued April 26 by the Centers for Medicare & Medicaid Services (CMS), contains several provisions affecting payment and policy for LTCHs. CHA’s overview of policy proposals related to LTCH payment, the “25 percent rule,” quality reporting, and patient and facility criteria research is provided below. In the coming weeks, CHA will issue a more detailed summary, including facility-specific DataSuite reports, and will collaborate with members to develop comments in response to the proposed rule (a first-glance summary related to the IPPS proposals was released in yesterday’s CHA News). The complete proposed rule is available at and will be published in the May 10 Federal Register. Comments are due June 25 at 2 p.m. (PT).


CMS is proposing an annual update to LTCH payments of 1.1 percent, based on a market basket update of 2.5 percent, reduced by a productivity adjustment of 0.4 percent and an additional 0.3 percent reduction mandated by the ACA. In addition, the proposal includes a 0.6 percent increase for short-stay outlier and high-cost outlier payment adjustments, as well as the second of three 1.3 percent cuts that are part of the one-time budget-neutrality adjustment initiated in FY 2013.    

25 Percent Rule

Under the 25 percent rule, LTCH payments are reduced to an inpatient PPS-comparable amount for referrals from general acute hospitals that exceed a 25 percent threshold. Congress authorized a five-year hold on the full implementation of the 25 percent rule, which expired in 2012. Subsequently, in the FFY 2013 final rule, CMS extended the prior statutory 25 percent rule relief for an additional year. However, this proposed rule would not extend the current 25 percent rule relief, meaning it would expire for all LTCHs for cost reporting periods beginning on or after Oct. 1, 2013.

Quality Reporting

CMS proposes to add three new measures to the FFY 2017 LTCH quality reporting program:

  • Methicillin-resistant Staphylococcus aureas (MRSA) bacteremia;
  • Clostridium difficile (C Diff); and
  • Unplanned all-cause, all-condition readmissions to LTCHs

The agency also proposes to add a falls measure for long-stay patients for the FFY 2018 program.

Patient and Facility Criteria Research

While no major policy changes regarding patient and facility criteria are proposed, CMS reports ongoing research regarding a potential approach to focus LTCHs on the treatment of medically stable but high-acuity or “chronically critically ill  (CCI)”  patients. CMS describes potential future revisions of LTCH PPS that would be designed to encourage LTCHs to admit patients fitting the CCI profile and asserts that these patients represent the core patient populations served by LTCHs. Under this approach, CCI patients would be reimbursed the full LTCH PPS amount, while patients not meeting CCI criteria would be reimbursed based on an inpatient PPS amount.