LTAC hos­pi­tals saved from $85 mil­lion cut, for now

Modern Healthcare - - NEWS - By Vir­gil Dickson

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.

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