Press Releases

MEDICARE PROPOSES UPDATED RATES FOR LONG TERM CARE HOSPITALS

The Centers for Medicare & Medicaid Services today issued a proposed rule that would increase the Medicare payment rate for long-term care hospitals (LTCHs) by 2.2 percent starting July 1. These hospitals are to be paid under a prospective payment (PPS) system, as required by statute, effective for cost reporting periods beginning on or after October 1, 2002. The system, which now sets payments for over 280 hospitals, was designed to assure appropriate payment for services to severely ill or medically complex patients, while providing incentives to hospitals for more efficient care of Medicare beneficiaries. Payments under the LTCH PPS are updated based on new provider data received by CMS; the proposed rule is the first such update.

Long-term care hospitals, in general, are defined as hospitals that have an average Medicare inpatient length of stay greater than 25 days. These hospitals typically provide extended medical and rehabilitative care for patients who are clinically complex and may suffer from multiple acute or chronic conditions. Services may include comprehensive rehabilitation, respiratory therapy, cancer treatment, head trauma treatment and pain management.

Among the additional policies included in this proposed rule, CMS is proposing to

• Move the effective date for the annual update in payment rates from October 1 to July 1. Currently both the inpatient hospital and long term care hospital prospective payment systems are updated each October 1. Placing the LTCH PPS on a different update cycle from the inpatient prospective payment system will facilitate more efficient use of resources.
• Eliminate a restriction on the number of satellite beds that can be established by certain LTCH’s. This provision would be effective at the beginning of the first cost-reporting period during which a LTCH elects to be paid under 100 percent of the Federal rate or when the LTCH PPS is completely phased in, whichever comes first.

The proposed rule will be published in the March 7 Federal Register. Comments on the proposed rule will be accepted until May 6, 2003. CMS plans to publish a final rule later this spring.