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Medicare Compliance & Reimbursement

Long-Term Care:

Final Rule Contains Big Increase For LTCHs

Published on Wed May 19, 2004

Long-term care hospitals could be big winners.

Medicare payments to long-term care hospitals will increase 3.1 percent, or $2.96 billion, under a final rule in the May 7 Federal Register.

This is better than expected. Those figures are an increase from the 2.9 percent, or $2.33 billion, in increased payments under the LTCH prospective payment system that the Centers for Medicare & Medicaid Services projected in its Jan. 30 proposed rule.

The difference is "largely due to the more rapid than expected transition of hospitals from a blend of the federal rate and reasonable cost-based payment to 100 percent of the federal rate," CMS said in an April 30 press release.

The final rule also sets the 2005 high-cost outlier fixed-loss amount for LTCHs at $17,864. This is down from the 2004 level of $19,500, while the proposed rule had contained an increase in the fixed-loss amount to $21,864. The fixed loss amount is used to set the high-cost outlier threshold, which is the amount by which a hospital's cost for a particular case must exceed the standard Medicare reimbursement before Medicare makes an additional payment.

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