FY 2018 LTCH PPS Medicare fee-for-service final rule released

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The Centers for Medicare & Medicaid Services (CMS) recently released its final rule to update the Medicare fee-for-service long-term acute-care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2018, which begins Oct. 1, 2017.

  • FY 2018 will be the first year of full implementation of the statutorily mandated, two-tiered payment system for LTCHs, which includes a standard LTCH rate for higher-acuity cases and a site-neutral payment for lower-acuity cases.
  • After budget-neutrality adjustments, based on the final rule, traditional LTCH PPS rates would decrease by a net of 2.5 percent, while payment rates for site-neutral cases are expected to decrease by a net of 20 percent.
  • For FY 2018, the CMS adopted its proposal for a regulatory moratorium on the 25 percent rule, so the agency can evaluate whether the policy is still needed. (The 25 percent rule allows an LTCH to admit up to 25 percent of its patients from a single general acute-care hospital; for patients admitted past the 25 percent threshold, an LTCH faces a Medicare reimbursement reduction.)
  • CMS finalized its proposal to pay all short-stay outlier cases a graduated per diem that blends the inpatient PPS and LTCH amounts, thereby removing any financial incentive to delay discharge.
  • The rule also finalized a number of changes to the FY 2020 LTCH Quality Reporting Program. The CMS will add measures assessing pressure ulcer changes, compliance with a spontaneous breathing trial, and ventilator liberation rates. In addition, as proposed, the CMS will remove an existing pressure ulcer measure and a measure assessing all-cause readmissions within 30 days of LTCH discharge.
  • CMS scaled back its proposal to require LTCHs to collect certain standardized patient assessment data, beginning with LTCH admissions on or after April 1, 2018, to comply with the Improving Medicare Post-Acute Care Transformation Act of 2014.

SDAHO continues to analyze the final rule and will provide additional information, including facility-specific impact reports, in the near future.