Its not every day that the words vendetta and outrage are used to describe the actions of the CMS, but thats how one provider assessed the agencys work in releasing a final rule for long-term acute-care hospitals last week.
The CMS final rule for LTAC hospitals on May 1 came amid a host of proposed rules the agency has released for the post-acute sector since April 27. Pleasing some providers, such as skilled-nursing facilities, and falling in line with expectations for others, such as inpatient psychiatric facilities, the CMS final rule for LTAC hospitals reached a tipping point that angered leaders in that industry.
In the final rule for fiscal 2008which extends from July 1, 2007, until June 30, 2008the CMS updated the long-term-care hospital prospective payment system federal rate by 0.71% to $38,356.45 per patient per discharge. Louisville, Ky.-based provider Kindred Healthcare issued a news release about the final rule, saying it projects an overall decrease in payments to all Medicare certified LTAC hospitals of 3.8% compared to an impact estimated at 2.9% under the proposed rule.
And here is where the frustration began for some long-term-care providers. The final rule for LTAC hospitals included provisions that differed from the CMS proposed rule in late January. But the CMS did not give the industry an opportunity to comment on the final rule, according to Peter Baronoff, chairman and chief executive officer of Promise Healthcare in Boca Raton, Fla., and president of the Acute Long-Term Hospital Association. One such change was a 24% increase in the high-cost outlier threshold from $18,477 in the proposed rule to $22,954 in the final rule. This compares with a rate of $14,887 in fiscal 2007.
CMS is saying you have to lose more to get more, Baronoff said.
In addition, this segment continues to be frustrated by the CMS failure to establish admission criteria for patients in LTAC settings. These criteria, rather than arbitrary payment changes, would be a more effective strategy for this segment, according to Baronoff.
CMS staffers have had a vendetta against the LTAC hospital industry and ignore our industry data, Baronoff said, adding that the agency does not agree with Congress about the importance of long-term acute-care hospitals in the continuum of care.
For its part, the CMS said in a news release it will continue to explore implementing a recommendation from the Medicare Payment Advisory Commission to develop facility and patient-level criteria for LTAC hospitals. But Rod Laughlin, president and CEO of Regency Hospital Co. in Alpharetta, Ga., said the agency has already had ample time.
Were tired of waiting on CMS, Laughlin said. We dont think its that difficult to come up with patient criteria, he said, adding that the CMS would then be able to analyze the criterias effectiveness. Were not suggesting they get it right the first time.
The final rule also extended the 25% rule, which currently applies to LTAC hospitals and satellite facilities of LTAC hospitals that are co-located with a host hospital (typically an acute-care hospital) to include free-standing facilities.
They were concerned that some LTAC hospitals were closely affiliated with a major hospital and that the hospital was inappropriately moving these patients to LTACs, Laughlin said regarding why the rule was first established. This presupposes that administrators get together and collude. In the real world, the doctor makes the decision. It takes a doctor to recommend admission. Administrators dont sit around and for financial reasons decide to move patients like puppets.
Baronoff echoed Laughlins statement, saying he would like to see a CMS staff member in a position to tell a physician, a patient and a patients family that the patient could not be admitted to a facility where he or she would receive appropriate care because of an arbitrary patient rule. Calling the CMS treatment of the industry an outrage, Baronoff said he thinks the CMS will wait three years until the 25% rule is fully phased in and then decide to move forward on the issue of patient certification criteria.
This is not fair to senior citizens who are the overwhelming majority of our medical patients, Baronoff said. Legislation is our only alternative, or perhaps changes in CMS staff.
The industry has worked to advance legislation on Capitol Hill, where two bills were introduced in the House and Senate in the past year. Robert Hawkins, an analyst with Stifel, Nicolaus & Co. who covers the industry, said its too early to tell what action the new Congress will take. But he agreed that the important issue continues to be patient criteria, not payment changes.
Last week, the American Hospital Association sent a letter to Rep. Pete Stark (D-Calif.), chairman of the House Ways and Means health subcommittee, to offer the associations perspective on legislation regarding long-term-care hospitals. Specifically, the AHA said the 25% rule inappropriately uses referral sources to limit LTCH admissions, and that once the CMS implements a patient-screening assessment tool, the 25% rule would no longer be necessary and should be eliminated. And the association went a step further, suggesting that legislation include a timetable for the CMS in this area. We believe requiring CMS to follow a specific timeline is appropriate, and that an appropriate target date for implementation of such a patient screening tool could be accomplished within two years of enactment of LTCH legislation.
Other segments received better news from the CMS last week. Providers of skilled nursing, inpatient psychiatric, home health and inpatient rehabilitation stand to receive marketbasket increases for 2008 (See chart).
We were pleased with the update in the proposed rule, said Susan Feeney, spokeswoman for the American Health Care Association, which represents the nursing home industry. There were changes in the methodology to determine the update this year and in future years. Were still looking at that and what impact it will have.
Separately, Feeneys association issued a news release last week in conjunction with its testimony to the Senate Special Committee on Aging about continued quality improvements in nursing homes. A culture of cooperation among long-term-care providers, regulators and consumers is essential to continuing to build on the improvements in patient-care quality, the association said.
Mark Covall, executive director of the National Association of Psychiatric Health Systems, said the CMS proposed rule for inpatient psychiatric facilities updates the federal base rate by 3.2% beginning July 1, 2007. Though not a surprise, the payment update allows for some predictability to providers, Covall said.
In the end, it was the CMS strategy toward LTAC hospitals that triggered the most reactionand is likely to cause the most frustration.
There is no good news from CMS, said Regencys Laughlin. They are slashing and burning as usual.