Healthcare Financial News

On May 19, the Centers for Medicare and Medicaid Services (CMS) issued an interim final rule with comment (IFC) modifying the “25 percent threshold policy” for certain long-term care hospitals (LTCHs) and LTCH satellites and establishing moratoria on new LTCHs and LTCH satellites, and bed increases in existing LTCHs and LTCH satellites. The IFC addresses payment policies under the LTCH prospective payment system mandated by the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA).

Under the 25 percent threshold policy, before rate year 2008, if an LTCH hospital-within-a-hospital (HwH) admitted more than 25 percent of its patients from its collocated host hospital, CMS generally applied an adjustment to payment for those discharges in excess of the 25 percent of admissions from the host hospital. CMS did not apply the adjustment, however, to “grandfathered” HwHs or LTCH satellites.  On May 1, 2007, in the rate year 2008 final rule CMS extended the 25 percent threshold payment adjustment to include the grandfathered HwHs and LTCH satellite facilities, and also extended the payment adjustment to patients from hospitals with which the LTCH or satellite facility was not co-located. In the May 19, 2008, IFC, CMS has delayed the extension of the 25 percent threshold payment adjustment to “grandfathered” LTCH HwHs and to freestanding LTCHs for three years and has increased the patient percentage thresholds from 25 percent to 50 percent for certain LTCH HwH and satellite discharges admitted from a colocated hospital, and from 50 percent to 75 percent for certain LTCH HwH and satellite discharges admitted from a co-located rural, MSA-dominant, or urban single hospital.  These provisions are effective for cost reporting periods beginning on or after December 29, 2007, and before December 29, 2010.

CMS will accept comments on the IFC--which is to be published in the May 22, 2008, Federal Register--until July 21, 2008.

To find out more about the IFC, and for detail about the on LTCHs, LTCH satellites, and bed increases in existing LTCHs and LTCH satellites, go to CMS’s fact sheet on the rule or the rule posted on the CMS web site.

CMS is soliciting applications from healthcare providers in Texas, Oklahoma, Colorado, and New Mexico for the Acute Care Episode (ACE) demonstration, a new demonstration intended to test the use of a global payment for an episode of care as an alternative approach to payment for service delivery. According to CMS, “Bundled payment for such episodes should foster coordination of care between hospitals and physicians as well as produce savings to the Medicare program.” The focus of the demonstration will be on cardiac and orthopedic inpatient surgical services.

CMS will clarify issues and answer questions regarding the ACE demonstration in an informational teleconference for potential applicants and other interested parties, scheduled for June 4 from 3 to 4:30 pm EST. The call-in number is (888) 982-4492 (with the passcode “Acute Care”). More information about the demonstration is available at the ACE demonstration web page.