Aggregate LTCH PPS payments for RY 2009 are estimated at approximately $4.44 billion, based on the proposed changes presented in the proposed rule, an increase of approximately $124 million over estimated payments in RY 2008.

CMS is proposing to change the annual update schedule for the LTCH PPS payment rate and related policy changes which are currently effective beginning each July 1 to coincide with the annual update of the MS-LTC-DRG classifications and recalibration of the relative weights which are effective beginning each October 1. This policy is being proposed in response to industry concerns and to help maximize CMS resources. In order for CMS to consolidate the annual update to payment rates and changes to the MS-LTC-DRGs so both are made on October 1, CMS is proposing to make the rates for RY 2009 effective for a 15-month period from July 1, 2008 through September 30, 2009.


In unusually costly cases, Medicare may pay an LTCH an additional amount, called an outlier payment, in addition to the federal prospective payment for the MS-LTC-DRG. To be eligible for this payment, the LTCH's estimated costs in treating the case must exceed the MS-LTC-DRG payment by the outlier fixed-loss amount. For RY 2009, CMS is proposing to increase the fixed-loss amount for high cost outlier cases to $21,199 from $20,738. As under current regulations, estimated aggregate high cost outlier case payments are limited to 8 percent of total estimated LTCH payments.

At the outset of the LTCH PPS, which was implemented for cost reporting periods beginning on or after October 1, 2002, CMS regulations specified that the agency would review payments under the LTCH PPS, and, if appropriate, propose a one-time prospective adjustment to the LTCH PPS rates by October 1, 2006 (later changed to July 1, 2008). The purpose of this adjustment was to ensure that the effect of any significant difference between the data used in the original budget neutrality calculations, and more recent data, would not be perpetuated in the LTCH PPS rates for future years. CMS is not proposing to implement the one-time prospective adjustment to the Federal rate for RY 2009 because of changes made by the Medicare Extension Act. However, the proposed rule presents a possible methodology for evaluating whether a one-time budget neutrality adjustment may be appropriate.

CMS will issue guidance on the implementation of additional provisions relating to LTCHs that were contained in the recently adopted Medicare Extension Act at a later time.

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