The CMS proposed last week that long-term acute-care facilities get no update for the 2007 rate year, freezing the federal rate at $38,086 per patient.
The CMS also proposed several changes to the short-stay outlier policy and the outlier threshold. The rate year runs from July 1, 2006, through June 30, 2007.
In its proposed rule, which is in lockstep with the Medicare Payment Advisory Commission's recommendations, the CMS essentially said that LTACs have been receiving Medicare payments above and beyond what their caseload would ordinarily allow. A CMS analysis indicates that while Medicare margins increased to 11.7% in 2004 from 8.8% the previous year, they did so without a commensurate increase in case costs. Meanwhile, acute-care hospital Medicare margins were negative 3%, with acute-care hospitals losing money on Medicare reimbursement, according to MedPAC's report released earlier this month. In its January report, MedPAC said that freezing the LTAC payments at the 2006 level would boost efficiency in those facilities without affecting the quality of care delivered to Medicare patients.
The proposed rule, which CMS released Jan. 19, is the fourth time in as many years that the federal agency has proposed significant changes in the way LTACs are reimbursed, said William Walters, chief executive officer of the Acute Long Term Hospital Association, in a statement.
The association opposes the changes. "By holding LTAC hospitals to a zero-marketbasket update and proposing changes in the way short-stay outliers are reimbursed, the proposed regulation short-circuits the debate about quality in post-acute care and instead resorts to the expedient means of simply cutting reimbursements to address the growth in LTAC hospital spending," Walters said.
Also, under the short-stay outlier payments, the CMS proposed a rule that would reduce full reimbursement if the patient stays less than the average length of stay, 25 days, affecting about 37% of LTAC patient population. Also, the CMS said it would propose an outlier fixed-loss amount for rate year 2007 at $18,489 compared with $10,501 for rate year 2006.
Public comment will be accepted until March 20. The rule will be published in the Jan. 27 Federal Register, but is available online.