CMS has issued two regulations implementing Affordable Care Act provisions impacting hospital inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) payments.

  • First, CMS has issued a “supplement” to its May 4, 2010 fiscal year (FY) 2011 IPPS and LTCH PPS proposed rule to implement provisions of the Affordable Care Act relating to FY 2011 Medicare payments for these facilities. CMS estimates that the supplemental rule would decrease cumulative operating and capital payments for IPPS providers by $820 million, while increasing LTCH payments by $13 million for FY 2011 (which is less than the prior estimate of a $41 million increase LTCH payments in FY 2011). Among other things, the supplemental proposed rule implements Affordable Care Act provisions that: reduce the FY 2011 IPPS market basket update by 0.25 percentage points and reduce the FY 2011 LTCH PPS annual update by 0.5 percentage points; provide additional payments for hospitals in counties with low per-enrollee Medicare spending; revise the hospital wage index for hospitals in frontier states; expand eligibility for certain low-volume payment adjustments; revise geographic reclassification eligibility standards; establish a national (rather than statewide) budget neutrality adjustment to the calculation of the rural floor for hospital wage index; extend the Medicare Dependent Hospitals program; and adjust payments to critical access hospitals for certain outpatient facility and ambulance services. With regard to LTCHs, the supplemental proposed rule extends for an additional two years provisions of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) affecting certain LTCHs and LTCH satellite facilities, including (1) relief from payment adjustments for LTCHs whose admissions from co-located or non co-located hospitals exceed a certain threshold (commonly referred to as the “25% Rule”), (2) the moratorium on establishing new LTCHs and LTCH satellite facilities or expanding bed capacity in existing facilities, (3) the application of an adjustment for short stay outlier discharges, and (4) a one-time adjustment of the standard federal rate. The supplemental rule will be published in the Federal Register on June 2, 2010.  Note that CMS had provided conflicting information about the comment deadline for the supplemental rule; a separate correction notice clarifies that the comment deadline is June 18, 2010.
  • Second, on June 2, 2010, CMS is publishing final wage indices, hospital reclassifications, payment rates, impacts, and other related tables effective for the FY 2010 IPPS and rate year 2010 LTCH PPS, reflecting changes mandated by the Affordable Care Act applicable to rates during the remainder of FY/RY 2010 (April 1, 2010–September 31, 2010). These provisions require the extension of the expiration date for certain geographic reclassifications and special exception wage indices through September 30, 2010; and certain market basket updates for the IPPS and LTCH PPS. The standard federal rate for discharges under LTCH PPS occurring on or after April 1, 2010 is revised to $39,794.95. This change reflects a decrease from $39,896.65 established in the original LTCH PPS rule for RY 2010. The revised standard federal rates described in the notice are effective for payment years beginning October 1, 2009, although hospitals are paid based on these rates for discharges on or after April 1, 2010.