(Medicare Claims Processing Manual)

With the passage of the Affordable Care Act of 2010, all provisions of MMSEA as amended by the ARRA affecting the LTCH PPS were extended an additional 2- years.  Therefore, provisions due to sunset on July 1, 2010, and October 1, 2010, have been extended until July 1 2012, and October 1, 2012, respectively.  The revisions to this section (below), indicate these new dates.    Admitted to co -located LTCHs and LTCH satellites from their host hospitals   o This policy was finalized for FY 2005   o If a LTCH HwH or satellite admits from its host hospital in excess of 25 percent or the applicable percentage) of its discharges for the LTCHs cost reporting period, an adjusted payment will be made of the lesser of the otherwise full payment under the LT CH PPS and an amount that would be equivalent to what Medicare would otherwise be paid under the IPPS.  For LTCHs and LTCH satellites subject to the transition period described below, there is a 3 -year transition to the full 25 percent threshold payment adjustment.   As amended by the MMSEA of 2007 and further amended by the ARRA and the ACA:    The percentage threshold for applicable LTCHs and LTCH satellites (i.e., subject to the transition described below) is raised from 25 percent to 50 percent for LTCH cost reporting periods beginning on or after October1, 2007, and before October 1, 2012.  Grandfathered LTCH satellites are also applicable for this increase, under the ARRA but on a July 1 cycle, as noted above.    For LTCHs with special circumstances, specified below, the 50 percent threshold is raised to 75 percent for the same 3- year period.   o In determining whether a hospital meets the 25 percent criterion, patients transferred from the host hospital that have already qualified for outlier payments at the acute host would not count as part of the hosts allowable percentage and therefore the payment would not be subject to the adjustment. Those patients would be eligible for full payment under the LTCH PPS. (Cases admitted from the host before the LTCH crosses the 25 percent or applicable threshold would be paid under the LTCH PPS.)    Admitted to Grandfathered LTCH HwHs and LTCH Satellites from their Host Hospitals   Prior to the enactment of the MMSEA and the ARRA, this policy was effective for cost reporting periods beginning on or after July 1, 2007.  o Subject to the 3- year transition described below, if a grandfathered LTCH HwH or a grandfathered satellite of a LTCH has admitted from its host hospital in excess of 25 percent or the applicable percentage) of its discharges for the LTCHs cost reporting period, an adjusted payment will be made of the lesser of the otherwise full payment under the LTCH PPS and an amount that would be equivalent to what Medicare would otherwise be paid under the IPPS.   o In determining whether a hospital meets the 25 percent criterion, patients transferred from the host hospital that have already qualified for outlier payments at the acute host would not count as part of the hosts allowable percentage and therefore the payment would not be subject to the adjustment. Those patients would be eligible for full payment under the LTCH PPS. (Cases admitted from the host before the LTCH crosses the 25 percent or applicable threshold would be paid under the LTCH PPS.)    Admitted to all LTCHs and LTCH Satellites from Referring Hospitals other than those with which they are Co -located:    This policy is effective for cost reporting periods beginning on or after July 1, 2007.   Subject to the 3- year transition specified below, if a LTCH or LTCH satellite admits from its host hospital in excess of 25 percent or the applicable percentage) of its discharges for the HwHs cost reporting period, an adjusted payment will be made of the  lesser of the otherwise full payment under the LTCH PPS and an amount that would be equivalent to what Medicare would otherwise be paid under the IPPS.  (See details of this payment adjustment below the discussion of the MMSEA and the ARRA changes.)    In determining whether a hospital meets the 25 percent criterion, patients transferred from the host hospital that have already qualified for outlier payments at the acute host would not count as part of the hosts allowable percentage and therefore the payment would not be subject to the adjustment. Those patients would be eligible for full payment under the LTCH PPS. (Cases admitted from the host before the LTCH crosses the 25 percent or applicable threshold would be paid under the LTCH PPS.)   As amended by the MMSEA of 2007 and further amended by the ARRA and the ACA:    For cost reporting periods beginning on or after July 1, 2007, and before July 1, 2012, grandfathered LTCH HwHs are exempted from the 25 percent threshold for admissions from co- located hospitals or referring hospitals with which they are not co- located.    Freestanding LTCHs, i.e., LTCHs not co- located with another hospital as a HwH or as a satellite are exempted from the 25 percent threshold for admissions from any referring hospital.  As amended by the ARRA of 2009:    The ARRA amended the MMSEA changes to the 25 percent threshold policy by adding another category of LTCHs that would be subject to the 3 -year delay in application of the 25 percent payment provision, i.e., LTCHs or LTCH satellites that were co -located with  provider -based locations of an IPPS hospital that did not deliver services payable under the IPPS at those campuses where the LTCHs or LTCH satellites were located.   The 5 -year delay in the application of the percentage threshold payment adjustment for each of the above categories is effective for cost reporting periods beginning on or after July 1, 2007 and before July 1, 2012.  NOTE:  For cost reporting periods beginning on or after July 1, 2007 and before July 1, 2012 or on or after October 1, 2007, and before October 1, 2012, as applicable (see explanation above), this payment adjustment continues to be applicable under the spe cific circumstances set forth in the MMSEA and the ARRA as amended by the ACA.  Payment adjustment under the 25 percent threshold payment policy  Under the LTCH PPS, payments for LTCH or LTCH discharges in excess of the specified threshold percentages are based on the lesser of an amount otherwise payable under the LTCH PPS or an amount that is equivalent to what would otherwise be paid under the IPPS for the costs of inpatient operating services would be based on the standardized amount adjusted by the applicable IPPS DRG weighting factors.  This amount would be further adjusted for area wage levels using the applicable IPPS labor -related share based on the CBSA where the LTCH is physically located and the IPPS wage index for non-reclassified hospitals published in the annual IPPS final rule.  For LTCHs located in Alaska and Hawaii, this amount would also be adjusted by the applicable COLA factors used under the IPPS. Furthermore, an amount equivalent to what would otherwise be paid under the IPPS for the costs of inpatient operating services would also include, where applicable, a DSH adjustment and where applicable, an IME adjustment.   Additionally, to arrive at the payment amount equivalent to what would otherwise be payable under the IPPS, a LTCH would also be paid under the LTCH PPS for the costs of inpatient capital-related costs, using the capital Federal rate determined under adjusted by the applicable IPPS DRG weighting factors.  This amount would be further adjusted by the applicable geographic adjustment factors set forth, including local cost variation (based on the IPPS wage index for non-reclassified hospitals published in the annual IPPS final rule), large urban location, and COLA, if applicable.  For discharges governed by this payment, an amount that is equivalent to an amount that would otherwise be paid under the IPPS for the inpatient capital- related costs would also include a DSH adjustment if applicable, and an equivalent IME adjustment), if applicable.   An amount equivalent to what would be paid under the IPPS would be determined based on the sum of the amount equivalent to what would be paid under the IPPS inpatient operating services and the amount equivalent to what would be paid under the IPPS for inpatient capital -related costs.  This is necessary since, under the IPPS, there are separate Medicare rates for operating and capital costs to acute care hospitals, while under the LTCH PPS, there is a single payment rate for the operating and capital costs of the inpatient hospitals services provided to LTCH Medicare patients.  Note that there is a difference between the policy that we have codified for adjusted payments to LTCH HwHs and satellites of LTCHs, which is based on an amount equivalent under the existing payment, and the additional component to the SSO payment adjustment that is based on an amount comparable to what would otherwise be paid under the IPPS adjustment. The distinction is that if a SSO case also qualifies as a high cost outlier (HCO) case after the SSO payment amount is determined, the SSO payment formula uses the LTCH PPS fixed loss amount. In contrast, under the payment adjustment for LTCH HwHs and LTCH satellites if the amount payable by Medicare for a specific case is equivalent  to what would be otherwise payable under the IPPS and the case also qualified as a HCO, the outlier payment for this case would be based on the IPPS HCO policy because the resulting payment would then be more equivalent to what would have been payable under the IPPS. Similarly, if under this payment adjustment the lesser amount resulted in an otherwise payable amount under the LTCH PPS, and the stay qualified as a HCO, Medicare would generate a HCO payment governed by the LTCH PPS fixed loss amount calculated under the LTCH PPS and if the estimated cost of the case exceeds the adjusted LTC -DRG plus a fixed loss amount under 412.525(a), the LTCH would receive an additional payment based on the LTCH PPS HCO policy.  Specific Circumstances (applicable to all of the above scenarios)   NOTE:   MMSEA changes described above, as amended by the ARRA and further amended by the ACA, are  applicable for cost reporting periods beginning on or after October 1, 2007, and before October 1, 2012, or on or after July 1 2007, and before July 1, 2012..   For LTCHs and LTCH satellites located in rural areas, instead of the 25 percent threshold, we provide for a 50 percent threshold for patients from any individual referral hospital.  In addition, in determining the percentage of patients admitted from that referring hospital, any patient that had been Medicare outliers at the host and then transferred to the HwH would be considered as if they were admitted from a non- host hospital.  Under MMSEA, the 25 percentage threshold is increased to 50 percent for applicable LTCH HwHs, satellites, and grandfathered satellites.    For urban single or MSA dominant referring hospitals, we would allow the LTCH or LTCH satellite to admit from the host up to the referring hospitals percentage of total Medicare discharges in the MSA. A floor of 25 percent and a ceiling of 51 percent appl ied to this variation.  Under MMSEA, the 50 percentage threshold is increased to 75 percent.   Transition Periods   For Medicare discharges from referring hospitals:    Admitted to co -located LTCHs and LTCH satellites from their host hospitals   o This policy was finalized for FY 2005.   This payment adjustment will be phased- in over 4 years for existing LTCH HwHs and also for LTCHs -under -formation that satisfy the following two -prong requirement:   o On or before October 1, 2004 they have certification as acute care hospitals, under Part 489; and   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.