The Centers for Medicare and Medicaid Services (“CMS”) recently released a final rule that is meant to empower patients and reduce administrative burdens by advancing the MyHealthData and the CMS Patients Over Paperwork initiatives. Payment policies and reimbursement rates are updated under the “Medicare Hospital Inpatient Prospective Payment System (“IPPS”) and Long-Term Acute Care Hospital (“LTCH”) Prospective Payment System Final Rule,” which will modernize Medicare by aiding in the shift from a fee-for-service to value-based payment system. The final rule also creates greater transparency surrounding hospital prices, increases accessibility to Electronic Health Records (“EHR”), and allows providers to spend less time on paperwork and more time with patients.
The final rule reveals that CMS has finally decided to put an end to a special payment adjustment policy, known as the 25% rule. The 25% rule was introduced in 2004, but its implementation had been postponed for years due to concerns about reimbursement. The 25% rule would have reduced LTCH Medicare reimbursement if more than a quarter of the LTCH hospital had patients from a single acute-care hospital. The National Association of Long-Term Hospitals estimated that the reduced rate would have caused LTCHs to receive 50% to 60% less in reimbursement.
The rule was originally crafted by CMS because LTCHs often failed to follow payment criteria that defined qualifications for prospective payment system rates. This issue was addressed in the Bipartisan Budget Act of 2013 with the site-neutral payment policy. AHA Executive Vice President, Thomas Nickels said in a letter to CMS, “given the scale of LTCH cuts under site-neutral payment, implementing the 25% rule… would unjustifiably exacerbate the instability and strain on the field, which would threaten access for the high-acuity, long-stay patients that require LTCH-level care.” Furthermore, alternative payment models are now in place, which incentivize hospitals to follow the payment criteria.