LTAC hospitals saved from $85 million cut, for now
Long-term acute-care hospitals around the country are hopeful the Trump administration will permanently abolish a proposed policy that would dramatically reduce their Medicare reimbursement.
The CMS is freezing for one year the so-called 25% rule while it assesses whether the policy is needed. Under the proposed rule, long-term acutecare hospitals would see a 50% to 60% reduction in Medicare payments if more than a quarter of patients come from a single acute-care hospital. Cuts would total $85 million in 2018, according to the CMS.
“This is a step in the right direction and hopefully the rule will go away entirely,” said Anthony Misitano, CEO of Post Acute Medical, a Pennsylva- nia-based operator of LTAC facilities.
The 25% rule stemmed from concerns that acute-care hospitals were prematurely discharging patients, especially in cases where they also owned the long-term care facility. The rule has been delayed frequently by both the CMS and Congress in response to provider push back. Most recently, the 21st Century Cures Act delayed its implementation until Oct.1, 2017.
Hospitals were most concerned about what the 25% pay rule would do to those in rural or underserved areas with one major long-term acute-care hospital.
“There is nowhere else where that (long-term acute-care hospital) can go to get cases,” said Lane Koenig, director of policy and research at the National Association of Long Term
Hospitals. “You’re kind of screwed in those instances.”
The CMS tried to address that scenario by raising the threshold to 50% for hospitals in markets with few acute-care hospitals. However, that higher threshold still leaves some hospitals in a lurch.
Lou Little, CEO of Sparrow Specialty Hospital, an LTAC facility in Lansing, Mich., said its sister hospital Edward W. Sparrow facility is the dominant acute-care player in its market. It accounts for as much as 65% of his hospitals’ cases.
“The reduction would be a real haircut,” Little said. “Any margin you would hope to have would go away.”
LTAC hospitals already face reduced Medicare funds because of a new site-neutral payment policy that kicked in last year. The CMS projects that payments to LTACs will decrease by approximately 2.4%, or $110 million in fiscal 2018, because of the change. That’s on top of the $363 million cut they received this fiscal year.