(Medicare Claims Processing Manual)

o Before October 1, 2005 designation as a LTCH.   For purposes of full payment under the LTCH PPS during the transition period, the percentage of discharges from the LTCH HwH originating from the host hospital for each applicable cost reporting period, may not exceed the percentage of discharges during the hospitals cost reporting period during FY 2004 that were admitted from the host hospital.   Year 1 --  (cost reporting periods beginning on or after October 1, 2004 through September 30, 2005) a hold harmless   o Payments will be made under the LTCH PPS but the percentage of LTCH HwH discharges originating from the host may not exceed the percentage for such patients established for cost reporting periods during FY 2004.   Year 2 --  (cost reporting periods beginning on or after October 1, 2005 through September 30, 2006)   o LTCH HwHs will be paid under the otherwise unadjusted LTCH PPS for the percentage of discharges originating from their host hospital that do not exceed the lesser of the percentage of those patients for their FY 2004 cost reporting period or 75 percent.   o For discharges in excess of that threshold, the payments will be determined under the basic payment formula specified above.   Year 3 --  (cost reporting periods beginning on or after October 1, 2006 through September 30, 2007)   o LTCH HwHs will be paid under the otherwise unadjusted LTCH PPS for the percentage of discharges originating from their host hospital that do not exceed the lesser of the percentage of those patients for their FY 2004 cost reporting period or 50 percent.   o For discharges in excess of that threshold, the payments will be determined under the basic payment formula specified above.   Year 4 --  (cost reporting periods beginning on or after October 1, 2007 through September 30, 2008)   o LTCH HwHs  will be paid under the otherwise unadjusted LTCH PPS for the percentage of discharges originating from their host hospital that do not exceed the 25 percent or the applicable percentage described for specific circumstances above.   o For discharges in excess of that threshold, the payments will be determined under the basic payment formula specified above.   Transition Period for all LTCHs affected by the Above Described Regulations for cost reporting periods beginning on or after July 1, 2008.  NOTE:   MMSEA as amended by the ARRA and further amended by the ACA changes described above applicable for cost reporting periods beginning on or after July 1, 2007, and before July 1, 2012 for grandfathered LTCH HwHs and freestanding LTCHs.   The full payment threshold adjustment will be phased in over 3- years as follows:   Year 1 -  (for cost reporting periods beginning on or after July 1, 2007 through June 30, 2008)   o LTCHs and LTCH satellites will be paid under the otherwise unadjusted LTCH PPS for the percentage of discharges originating from a referring hospital that do not exceed the lesser of the percentage of those patients for their RY 2005 cost reporting period or 75 percent.   o For discharges in excess of that threshold, the payments will be determined under the basic payment formula specified above.   Year 2 -  (for cost reporting periods on or after July 1, 2008 through June 30, 2009),  o LTCHs and LTCH satellites will be paid under the otherwise unadjusted LTCH PPS for the percentage of discharges originating from a referring hospital that do not exceed the lesser of the percentage of those patients for their RY 2005 cost reporting period or 50 percent.   o For discharges in excess of that threshold, the payments will be determined under the basic payment formula specified above.   Year 3 -  (for cost reporting periods on or after July 1, 2009)   o All LTCHs and LTCH satellites subject to the payment threshold policy effective for RY 2008, will be subject to the 25 percent (or applicable percentage) threshold.   o For discharges in excess of that threshold, the payments will be determined under the basic payment formula specified above.   Implementation:    The payment threshold policy for discharges from co- located LTCH HwHs and LTCH satellites admitted from their hosts (including grandfathered LTCH HwHs and satellites) is determined based on a location -specific basis.    The payment threshold policy for discharges from LTCHs and LTCH satellites admitted from referring hospitals with which they are not co-located is determined based upon provider numbers for both the LTCH and the referring hospital.   For LTCHs and LTCH satellites subject to both the FY 2005 and the RY 2008 threshold payment adjustment policies    If a co -located LTCH or a co -located referring hospital (host) shares a provider number with a hospital or satellite at another location, threshold determinations will continue to be location -specific for the co -located LTCH and host.  The threshold percentage determinations will be applied to all other location or campus of either a LTCH or referring hospital in the aggregate.  For example, when the policy finalized for RY 2008 is fully phased in, a co-located LTCH (LTCH A) and host (referring hospital A) will have a 25 percent threshold under the policy finalized for FY 2005.  If referring hospital A shares a provider number with a remote location (RH A), then another 25 percent threshold will be applied to patients discharged from LTCH A that were admitted RH A.    We note that for cost reporting periods beginning on or after October 1, 2007, non- grandfathered co -located LTCHs, are fully phased -in to the full 25 percent (or applicable percentage threshold) for discharges admitted from their co -located hosts (under the initial 25 percent payment threshold established for FY 2005)s.   However, for discharges admitted from non- co-located referring hospitals, these LTCH HwHs and satellites are governed by the policy finalized for RY 2008.  Therefore, for cost reporting periods beginning on or after July 1, 2007 through June 30, 2008, the 75 percent threshold will apply, and the 50 percent threshold will apply for cost reporting periods beginning on or after July 1, 2008 through June 30, 2009 as described above in this response.)   Furthermore, under our finalized policy for RY 2008, grandfathered LTCH HwHs and satellites will be subject to the 3 -year transition that we are finalizing under this new policy for all  their discharges, both admitted from their co -located host and from other non- co-located referring hospitals.  When both policies apply:   If a patient discharged from a LTCH HwH or satellite was originally admitted from the host hospital and immediately prior to that admission to the host, the patient was being treated at the same LTCH HwH or LTCH satellite, both of the policies described in  this section, the 5 percent on- site policy as well as the 25 percent policy are applicable. In such a case, the following procedures should be followed keeping in mind that the 5 percent rule affects number of discharges and the 25 percent rule affects payment.   The on- site 5 percent computation is first in order to determine the real number of discharges.    Focusing on the relationship between an acute host and a LTCH HwH/satellite, if the number of revolving door discharges between these two facilities exceeds 5 percent during a CR period, this policy will collapse the number of discharges within that CR period, halving the # of revolving door LTCH stays where the intervening stay exceeded the threshold and eliminating from consideration those host stays that were bracketed by two LTCH stays. All such stays for the entire cost reporting period will be paid as  one LTCH PPS stay.   The next issue is to determine which of these stays will be paid an unadjusted LTCH PPS rate and which will be paid an amount equivalent to what would otherwise be paid under the IPPS. Cases prior to tripping the 25 percent threshold will be paid the other wise unadjusted LTCH PPS rate and those after the threshold that had not achieved outlier status at the host it will be paid based on the adjustment.   Because of the 5 percent policy that collapsed the discharges from the LTCH, for purposes of the 25 percent policy, we are focusing on fewer discharges in total from the LTCH and we need to determine what percent of these discharges originated in the host so that we can apply the payment adjustment.  BUT, in the event that  the 5 percent is not tripped during that cost reporting period, each acute-- >LTCH -->acute--> LTCH cycle, which will count as two LTCH discharges originating in the host for purposes of the 25 percent policy, since both the first and second LTCH admission were from the host.   150.9.1.5 - High Cost Outlier Cases (Rev. 1547, Issued:  07- 03-08; Effective:  07 -01-08; Implementation:  07 -07-08)  Additional payments are made for those cases that are considered high cost outliers.  A case falls into this category if the estimated cost of the case exceeds the outlier threshold (the LTC -DRG payment plus a fixed loss amount).  (Short -stay outliers, des cribed above, are also eligible for outlier payments if their costs exceed the outlier threshold.  The applicable short -stay outlier payment is used to determine the outlier threshold for short -stay outlier cases.)   The fixed loss amount is determined annually on July 1 such that projected outlier payments are equal to 8 percent of total LTCH PPS payments.  July 1, 2008, is the final rate year; LTCH PPS is moving back to a Federal Fiscal Year effective October 1, 2009 .  If the estimated cost of the case is greater than the outlier threshold an additional payment is added to the LTC -DRG payment amount.   The outlier payment is 80 percent of the difference between the estimated cost of the case and the outlier threshold (the LTC -DRG payment plus a fixed loss amount).  The estimated cost of the case is calculated by multiplying the Medicare allowable charge on the claim by the LTCH's overall cost -to-charge ratio obtained from the latest settled cost report.   For discharges occurring on or after August 8, 2003, (high cost  outlier payments may be reconciled upon cost report settlement to account for differences between the estimated cost-to-charge -ratio and the actual cost -to-charge ratio for the period during which the discharge occurs.  For further information, refer to t he June  9, 2003 High Cost Outlier final rule (68 FR 34506 -  34513).  150.10 - Facility-Level Adjustments  (Rev. 1547, Issued:  07-03- 08; Effective:  07 -01-08; Implementation:  07 -07-08)  Facility -level adjustments are based on individual LTCH characteristics.  The BIPA confers broad authority on the Secretary to include "appropriate adjustments to the long-term hospital payment system."  Variables examined include an area wage adjustment, adjustment for geographic reclassification, disproportionate share patient (DSH) percentage, and an adjustment for indirect medical education (IME).    The system includes an area wage adjustment that is being phased in over 5 years.  The wage adjustment is made by multiplying the labor- related share of the standard Federal rate by the applicable wage index value.    A LTCH's wage index is based on the Metropolitan Statistical Area (MSA) or rural area in which the hospital is physically located, without regard to geographic reclassification under http://www.ssa.gov/OP_Home/ssact/title18/1886.htm 1886(d)(8) - (10)  of the Act.  Effective July 1, 2005, an LTCH wage index is based on the Core- Based Statistical Area (CBSA).    The phase-in of the wage index adjustment is as follows: