The Centers for Medicare and Medicaid Services issued a final rule under which Medicare total payments to long-term care hospitals are expected to exceed $4 billion for rate year 2008. The rule is designed to assure appropriate payment for treatment of severely ill or medically complex patients, while providing incentives for more efficient care.
CMS is updating the long-term care hospital prospective payment system federal rate by 0.71% to $38,356.45 for RY08. This update reflects the rehabilitation, psychiatric, and long-term care market basket of 3.2% and an adjustment of 2.49% to account for coding practices. CMS analysis of the latest available long-term care hospital claims data indicates that a significant portion of the estimated 3.49% increase in observed case mix between FY04 and FY05 is due to changes in coding practices and documentation rather than to the treatment of more resource-intensive patients. Therefore, the standard federal rate for RY08 has been adjusted by the most recent estimate of the market basket for RY08 (3.2%) and -2.49%, the difference between the observed case mix increase in FY05 (3.49%) and the real case mix increase (1%) due to increases in patient severity. The payment per discharge to long-term care hospitals is significantly higher than the federal rate for acute care hospitals paid under the inpatient PPS, which for FY07 is about $5,300 per discharge.
The final rule sets the outlier fixed-loss amount for RY08 at $22,954, up from $14,887 in rate year 2007. According to CMS, this revision to the threshold is necessary to limit estimated aggregate outlier payments to 8 percent of total estimated payments under the long-term care hospital PPS. The final rule does not revise the long-term care DRGs and relative weights.
Access the fact sheet on the final rule. Download the final rule (779 pages).
