CMS has released two rules impacting Medicare payment policy for long-term care hospitals (LTCHs). First, CMS issued an interim final rule with comment period implementing LTCH-related portions of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA), including provisions related to the payment adjustment for certain short-stay outliers, the federal standard rate for the last three months of rate year (RY) 2008, and adjustment of the high cost outlier fixed-loss amount. For discharges occurring on or after April 1, 2008 through June 30, 2008, the revised standard federal rate is $38,086.04, and the revised high cost outlier fixed-loss amount is $20,707. MMSEA provisions regarding payment adjustments based upon the percentage of LTCH admissions from other facilities and a moratorium on the certification of new LTCHs and satellites, and the expansion of beds in existing facilities, will be issued in a forthcoming regulation. The rule was published May 6 and goes into effect June 5, although CMS will accept comments until June 30, 2008. Second, CMS released its final LTCH PPS payment update for RY 2009. The final rule is effective for a 15-month period, from July 1, 2008 through September 30, 2009 as a result of changing the annual LTCH PPS rate update from a July-June update cycle to a fiscal year update cycle (October – September). The rule provides for an overall 2.7% increase in the LTCH federal standard rate, reflecting a 3.6% market basket update with a negative 0.9% adjustment to account for increases in case-mix resulting from coding practices. The rule increases the fixed-loss amount for high cost outlier cases to $22,960. In addition, the rule provides that CMS may make a one-time prospective budget neutrality adjustment to LTCH-PPS rates no earlier than December 29, 2010 and no later than October 1, 2012. CMS also solicits comments regarding whether to subject LTCHs to the hospital-acquired conditions payment provision that now apply to general acute care hospitals paid under the inpatient PPS (IPPS). The rule will be published May 9; the advance version is available here.