MEDICARE PROPOSES PAYMENT UPDATES AND POLICY CHANGES FOR LONG TERM CARE HOSPITALS FOR 2005 RATE YEAR
The Centers for Medicare & Medicaid Services today issued a proposed rule that would increase the Medicare payment rates for long-term care hospitals (LTCHs) by 2.9 percent starting July 1, 2004. Medicare expects aggregate payments to these hospitals to increase to $2.33 billion during the 2005 LTCH rate year.
Long-term care hospitals, in general, are defined as hospitals that have an average Medicare inpatient length of stay greater than 25 days. These hospitals typically provide extended medical and rehabilitative care for patients who are clinically complex and may suffer from multiple acute or chronic conditions. Services typically include comprehensive rehabilitation, respiratory therapy, head trauma treatment and pain management.
The Long-term Care Hospital prospective payment system (LTCH PPS), which now sets payments for over 300 long term care hospitals, was designed to assure appropriate payment for services to the medically complex patients treated in these facilities, while providing incentives to hospitals to provide more efficient care of Medicare beneficiaries. Payments under the LTCH PPS are updated based on the most recent CMS–determined adjustment factor for hospitals excluded from the acute care inpatient PPS (the "excluded hospital with capital market-basket") and on provider-specific data received by CMS.
In this notice of proposed rulemaking, CMS is also proposing to expand the existing interrupted stay policy to include a discharge and readmission to the long-term care hospital within three days, regardless of where the patient goes upon discharge. The existing interrupted stay policy was designed to identify a single episode of care and to avoid overpayments by Medicare. Under the existing policy, if a long term care hospital patient is discharged to and readmitted from an acute care hospital within nine days, an inpatient rehabilitation facility within 27 days, or a skilled nursing facility within 45 days, the entire LTCH hospitalization, both before and after the interruption, is seen as one episode of care, generating one LTC-DRG payment. Under the proposed provision, in addition to the existing criteria, if a patient is discharged home or to any another Medicare site of care and readmitted to the long-term care hospital within three days, the hospital would be paid for only one episode of care. Furthermore, any tests or procedures provided during the interruption would be considered as having occurred during that stay, and included in the LTC-DRG payment to the LTCH consistent with existing regulations which require that all inpatient services provided during a hospitalization be delivered either directly or "under arrangements" with another facility. Therefore, under this proposed policy, payment for such tests or services would be the responsibility of the LTCH.
CMS is also proposing regulations to establish a procedure by which a satellite or remote location of a long-term care hospital will be able to qualify as a separate certified LTCH. The proposed rule also proposes a revised procedure for calculating a hospital’ s average length of stay for purposes of qualifying for payment under the LTCH PPS.
CMS is not proposing at this time to change the LTCH diagnosis-related groups and relative weights. Because the LTCH-DRGs and their relative weights are related to the inpatient hospital DRGs, those changes will be made at the same time as the hospital IPPS update on October 1, 2004.
The LTCH PPS is being phased in over five years. During the transition, hospitals are paid a blend of their costs (subject to a per discharge limit) and the Federal rate. At the end of the phase-in, all hospitals will be paid 100 per cent at the Federal rate. A long-term care hospital may also exercise a one-time, irrevocable election to move to full Federal PPS payment at the start of any of its cost reporting periods during the transition period.
The proposed rule will be published in the January 30 Federal Register. Comments will be accepted until March 23, and a final rule will be published in the spring.