On July 31, 2009, CMS released its final rule updating long-term acute care hospitals (LTCH) prospective payment system (LTCH PPS) payments and policies for rate year (RY) 2010, which begins October 1, 2009. CMS is providing a 2.5% inflation update, resulting in $153 million in additional payments compared to FY 2009. The standard federal rate for RY 2010 is set at $39,896.65, an increase from $39,114.36 in RY 2009. This increase in the standard federal rate reflects the 2.5% market basket update less an adjustment of 0.5% to account for changes CMS attributes to documentation and coding practices that occurred in FY 2007. CMS is not adopting, however, its earlier proposal to adjust LTCH rates in 2010 by -1.3% to account for changes in documentation and coding in FY 2008 during the first year under the severity-adjusted patient classification system. The rule also: finalizes revisions to the Medicare severity long-term care diagnosis related group (MS-LTC-DRGs) classifications consistent with changes to the IPPS MS-DRGs; adopts a high cost outlier fixed loss amount of $18,425; sets the labor-related share at 75.779%; and establishes a cost-to-charge ratio ceiling of 1.232. In addition to these payment provisions, CMS is finalizing its June 3, 2009 interim final rule correcting FY 2009 LTCH PPS payments for patients discharged on or after June 3, 2009 through September 30, 2009. CMS also is finalizing two May 2008 interim final rules with comment period that implemented certain provisions of the Medicare, Medicaid, and SCHIP Extension Act of 2007 relating to payments to LTCHs and LTCH satellite facilities, the establishment of LTCHs and LTCH satellite facilities, and increases in beds in existing LTCHs and LTCH satellite facilities. The rule also includes an interim final rule with comment period implementing provisions of the American Recovery and Reinvestment Act that further amended provisions related to payments to LTCHs and LTCH satellite facilities and increases in beds in existing LTCHs and LTCH satellite facilities. With certain exceptions, the rule is effective October 1, 2009. The rule is scheduled to be published in the Federal Register on August 27, 2009.