CMS has finalized the long-term care hospital prospective payment system for FY 2024, increasing overall payments by 0.2% ($6 million) compared to FY 2023. The update includes a $4 million reduction in standard LTCH PPS payments and a $10 million increase in site-neutral payments. However, a fixed-loss threshold of $59,873 for high-cost outlier cases will lead to a 2.9% reduction in net standard payments to LTCHs. The American Hospital Association expresses concern over inadequate payment updates and potential financial strain on LTCHs. Provisions take effect on Oct. 1.
On August 1, the Centers for Medicare & Medicaid Services (CMS) issued the final rule for the long-term care hospital prospective payment system for fiscal year 2024. As part of this rule, CMS has implemented an update that is projected to increase overall payments to LTCHs by 0.2%, equivalent to $6 million, in comparison to FY 2023. This includes a $4 million reduction in standard LTCH PPS payments and a $10 million increase in site-neutral payments.
For standard rate cases, the agency has confirmed a market basket update of 3.5%, which is adjusted down by 0.2% for productivity. However, for high-cost outlier cases, CMS has established a fixed-loss threshold of $59,873 for FY 2024, in contrast to $38,518 in FY 2023. Although this final number is lower than the initially proposed $94,378, it will still result in a 2.9% reduction in overall net standard payments to LTCHs.
In response to the CMS final rule, Ashley Thompson, the American Hospital Association’s (AHA) Senior Vice President for Public Policy Analysis and Development, expressed deep concern over the inpatient and long-term care hospital payment updates. The AHA believes that the adoption of some suggested improvements in the long-term care hospital outlier threshold calculation is positive, but they are worried that the finalized figure is still 55% higher than the current one. This could put a strain on the financial stability of many long-term care hospitals, impacting their ability to provide care for the sickest patients who are already a significant financial burden.
The provisions of this final rule are expected to take effect on October 1. AHA members will receive a Special Bulletin containing further details on the rule.
