On September 21, 2016, the House Ways and Means Committee approved H.R. 5713, the “Sustaining Healthcare Integrity and Fair Treatment Act of 2016” or “SHIFT Act.” The primary focus of the SHIFT Act is to provide an additional delay in full implementation of the “25 Percent Rule” for long-term acute care hospitals (LTCHs). The legislation also would tighten CMS’s authority to impose Medicare enrollment moratoria to prevent providers and suppliers from evading the moratoria by locating outside of moratoria areas.

Under the 25 Percent Rule, an LTCH is allowed to admit up to 25% of its patients from a single general acute care hospital; for patients admitted past the 25% threshold, an LTCH faces a significant Medicare reimbursement reduction. Current law has precluded CMS from fully implementing the 25 Percent Rule for freestanding LTCHs for cost reporting years beginning before July 1, 2016, and for LTCH hospitals-within-hospitals (HIHs) for cost reporting years beginning before October 1, 2016. The SHIFT Act would prohibit full implementation of the 25 Percent Rule for nine months for both freestanding LTCHs and LTCH HIHs for discharges occurring on or after October 1, 2016 through June 30, 2017. (However, it would also allow the 25 Percent Rule to go into effect for LTCH HIHs for cost-reporting years beginning on or after July 1, 2016, rather than October 1, 2016, thereby creating a gap period before the nine-month prohibition would begin.)

The SHIFT Act also provides relief from certain other LTCH payment policies for a limited number of LTCHs with special circumstances. First, it would eliminate the exception to the statutory exclusion of site-neutral and Medicare Advantage patients from the average-length-of-stay (ALOS) calculation for newer LTCHs, so that the ALOS calculation methodology would be the same for all LTCHs. Second, it would create a temporary exception to the application of the site-neutral payment policy for certain LTCHs categorized as spinal cord specialty hospitals, and extend an exception to that policy for certain severe wound discharges from grandfathered LTCH HIHs. Third, the SHIFT Act would remove certain cancer hospitals specializing in neoplastic disease (so-called “subclause (II)” LTCHs) from their classification as LTCHs and provide for cost-based reimbursement for such hospitals.

The SHIFT Act also would broaden the impact of CMS’s current authority to impose a moratorium on the enrollment of new Medicare providers and suppliers of a particular type in a particular geographic area for program integrity purposes. Specifically, it would prohibit Medicare or Medicaid payment for services furnished in a geographic area covered by a moratorium by a provider or supplier who enrolls on or after the effective date of the moratorium, even if the provider or supplier was not located within the geographic area covered by the moratorium.

The Senate has not yet considered H.R. 5713.