The Centers for Medicare & Medicaid Services (CMS) recently released a final rule to update the Medicare fee-for-service (FFS) long-term care hospital (LTCH) prospective payment system (IPPS) for fiscal year (FY) 2026.
Specifically, the rule will:
- Increase the standard LTCH PPS rate by a net 2.9% after the 0.7% productivity adjustment and budget neutrality adjustments from $49,383 to $50,824 for LTCHs that meet the CMS quality program reporting requirements. LTCHs that fail to meet these requirements are subject to a 2-percentage point reduction to the annual update.
- Continue paying cases at the site-neutral rate if they fail to meet LTCH criteria.
- Increase the high-cost outlier (HCO) threshold by 2.5% for standard LTCH cases from the current $77,048 to $78,936 to achieve the target of paying roughly 8% of aggregate LTCH payments as HCO payments.
- Use the inpatient PPS cost outlier threshold finalized at $43,397 for site-neutral cases.
- Increase the labor-related share of the rate from 72.8% to 72.9%.
- Update the LTCH Quality Reporting Program to remove four standardized patient assessment data elements focused on social determinants of health and modifying the COVID-19 vaccine among patients and residents measure to exclude patients who expire.
The MHA continues to review the final rule and will provide LTCHs with an estimated impact analysis in the coming weeks. Members with questions should contact Vickie Kunz at the MHA.