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March 24, 2008

Kerry N. Weems

Acting Administrator

Centers for Medicare & Medicaid Services

Hubert H. Humphrey Building

200 Independence Avenue, S.W., Room 445-G

Washington, DC 20201

Re: (CMS-1393-P) Comments on "Medicare Program; Prospective Payment
System for Long-Term Care Hospitals RY 2009: Proposed Annual Payment
Rate Updates, Policy Changes, and Clarifications; NPRM."

Dear Mr. Weems:

Sparrow Specialty Hospital (SSH), welcomes the opportunity to submit
these comments on the notice of proposed rulemaking ("NPRM") published
on January 29, 2008 in 73 *Fed. Reg.* 5342 *et seq*. Sparrow Specialty
Hospital is a 36-bed long-term acute care hospital located in Lansing,
MI and we are committed to serving the very ill in our community.

Sparrow Specialty Hospital agrees with and strongly supports CMS'
proposal to change the LTCH rulemaking cycle to a single, annual
rulemaking. As CMS recently acknowledged in the preamble to the RY 2009
update rule, two annual rulemakings, which change payment rates can lead
to difficulties for LTCHs engaging in a normal annual budgeting process.

Sparrow Specialty Hospital is appreciative of CMS' proposal to revise
the LTCH rulemaking process to a single rulemaking, commencing in
October 1, 2010. SSH understands the policy reasons for a fifteen month
"extended FY 2009 update" and endorses that proposal as a reasonable and
necessary measure to align LTCHs to a one year rulemaking with
short-term inpatient prospective payment system ("IPPS") hospitals.

However, SSH recommends that the LTCH update be established either in a

separate rulemaking, or as a separate component within the IPPS rule. We
are of this view because the LTCH-PPS system contains its own unique
components. Therefore, it is important that Medicare payment policies
pertaining to LTCHs not be confused with IPPS payment policies.

In addition, the market basket indicates a 3.5 percent inflationary
increase for Rehabilitation, Psychiatric and Long-Term Care, however the
CMS proposes a FY 2009 market basket increase of only 2.6 percent. This
is particularly alarming since the U.S. Congress required LTCH payments
for April -- June 2008 to be paid using the FY 2007 payment rate, rather
than the 2008 rate. Furthermore, the proposed rule uses the 2007 rate
for calculating the 2009 update for the LTCH PPS, a unilateral move by
the CMS that is not authorized by Congress. As a result, SSH strongly
opposes this and recommends instead the LTCH PPS update for 2009 be
applied to the 2008 rate, rather than the 2007 rate.

SSH also opposes increasing the threshold for outlier payments from
\$20,738 to \$21,999, which would result in fewer patients qualifying
for these special payments that cover costs associated with
extraordinary cases.

Overall, If all proposed policy changes in this rule are enacted, it is
projected that Medicare payments to Michigan LTCHs would increase by
only 1.2 percent in FY 2009 which is well below the projected
inflationary increases in our industry.

Sparrow Specialty Hospital thanks you for the opportunity to submit
these comments. Please feel free to contact the undersigned if we may be
of further assistance.

Sincerely,

*Kira M. Carter*

Kira M. Carter, MHA, FACHE

Sparrow Specialty Hospital

President and CEO