Long-term, acute-care hospitals are bracing for possibly shrinking Medicare reimbursement because of the CMS' proposed regulations for 2005 inpatient payments. The proposal includes requirements that would make it much harder to qualify as such a facility and receive higher Medicare payments than general hospitals. As of 2005, Medicare would require long-term, acute-care hospitals that operate within other hospitals to have separate ownership and to draw no more than 25% of their admissions from the host hospitals. The proposal "comes as a major surprise to the industry and Wall Street," according to a Jefferies & Co. analysis. Standard & Poor's placed industry giant Select Medical Corp., Mechanicsburg, Pa., on Credit Watch after the chain said most of its 79 long-term, acute-care hospitals would not meet the 25% requirement. At deadline, Select's stock had lost roughly one-fourth of its market value. Citing a tripling in the number of long-term, acute-care hospitals between 1993 and 2003, the Medicare Payment Advisory Commission recently urged policymakers to craft a better definition of such hospitals based on complexity of care. The CMS will accept comments on the proposed regulations until July 12 and will issue final regulations later this year. -- by Jeff Tieman
CMS plan a blow to long-term, acute-care industry
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