CMS has released its final rule updating Medicare LTCH policies and rates for FY 2013. CMS estimates that estimated payments per discharge are expected to increase approximately 1.7%, on average, for all LTCHs from FY 2012 to FY 2013 as a result of the payment rate and policy changes presented in this final rule. Highlights of the rule include the following provisions:

  • Two different standard federal rates will apply to discharges during FY 2013. During the first three months of FY 2013, the standard federal rate is $40,915.95, falling to $40,397.96 during the last nine months (both rates are above the FY 2012 rate of $40,222). The rate reflects a market basket increase of 2.6%, less a productivity adjustment of -0.7% and less an additional -0.1% adjustment mandated by ACA. For the last nine months of FY 2013, the market basket increase reflects a budget neutrality adjustment (discussed below). The final rule reflects the adoption of an LTCH-specific market basket based entirely on Medicare cost report data from LTCHs (replacing the rehabilitation, psychiatric, and LTCH market basket).
  • CMS adopted a one-time budget neutrality adjustment that results in a permanent 3.75% reduction to the LTCH base rate. The adjustment is being implemented over three years (FYs 2013, 2014 and 2015), except it does not apply to payments for discharges occurring on or after October 1, 2012 through December 29, 2012 because of a statutory prohibition (resulting in the two standard federal rates for FY 2013).
  • The fixed loss amount for high-cost outlier cases will be $15,408, down from $17,931 in FY 2012.
  • CMS adopted a one-year extension of the moratorium on the full application of the 25% Rule. While certain LTCHs with cost reporting periods that begin between July 1, 2012 and September 30, 2012 do not qualify for the one-year extension until their subsequent cost reporting period, CMS is providing a “supplemental moratorium” for certain of these LTCHs effective for discharges occurring on or after October 1, 2012 and through the end of the cost reporting period. CMS is finalizing this extension “in light of CMS’s ongoing research which may result in LTCH payment policies that could eliminate the need for the 25 percent rule.”.
  • Medicare payment for so-called “very short-stay cases” generally will be lowered to a rate based on the acute IPPS per diem beginning with discharges occurring on or after December 29, 2012.
  • CMS adopted two additional quality measures for LTCH reporting beginning in FY 2016: Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay), and Influenza Vaccination Coverage Among Healthcare Personnel.