In tandem with the IPPS proposed rule, CMS released its annual payment update for the FY 2010 long-term acute care hospital (LTCH) PPS. For FY 2010, CMS projects a 2.8% increase in payments under LTCH-PPS, resulting in $135 million in additional payments compared to FY 2009. The proposed standard federal rate will be $39,349.05, up from $39,114.36 in FY 2009. The proposed 0.6% increase in the standard federal rate is based on the market basket update of 2.4%, offset by a negative 1.8% adjustment to account for changes in documentation and coding practices that do not reflect increases in patient severity. The remaining 2.2% estimated increase in payments relates to proposed payment changes that affect high cost outlier and short stay outlier cases. CMS seeks comments on the 1.8% adjustment, along with comments on whether to implement a stand-alone market basket for each type of hospital excluded from the IPPS. CMS also proposes to revise the Medicare severity long-term care diagnostic related groups (MS-LTC-DRGs) classifications consistent with changes to the IPPS MS-DRGs. The proposed rule also sets forth a fixed loss amount of $16,059 and a ceiling on the LTCH cost-to-charge ratio of 1.227. In addition to these payment provisions, CMS proposes to amend the “separateness criteria” to provide more consistent criteria for satellite facilities and hospitals-within-hospitals. The official version of the rule is scheduled to be published on May 22, 2009. Comments are due by June 30, 2009.