Tuesday, April 19, 2016

IPPS/LTCH Proposed Payment Rule



On April 18, 2016 the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to update fiscal year (FY) 2017 Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS). The proposed rule, which would apply to approximately 3,330 acute care hospitals and approximately 430 LTCHs, would affect discharges occurring on or after October 1, 2016.

CMS projects LTCHs will experience a decrease of $355 million, or 6.9%, to $4.757 billion in 2017 compared to 2016, even though these facilities are set to experience a net 1.3% increase in reimbursements for care provided to patients meeting the statutory LTCH patient criteria. The challenge is the two-year transition to the patient criteria that was finalized last year and began to be implemented in 2016, depending on a facility’s cost reporting calendar year. The agency long has indicated that slightly more than half of the patients treated at LTCHs would qualify under the patient criteria. CMS estimates that spending on care provided to site-neutral patients will decline by $367 million, or 21%, in FY17.

The proposed Medicare inpatient hospital reimbursement regulation included few unexpected elements with one exception. Specifically, CMS proposed larger than expected recoupment to mitigate the short-stay policy known as the “two midnight rule.” In the IPPS proposed rule, CMS projects total inpatient hospital spending would rise by $539 million over

To view the rule, click here and to view the CMS factsheet click here. If you have questions, suggestions or concern, feel free to contact us.


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