Final Rule Released for FY 2022 Long-term Care Hospital Prospective Payment System

The Centers for Medicare & Medicaid Services (CMS) recently released a final rule to update the Medicare fee-for-service long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2022. Unless otherwise noted, provisions of the rule take effect Oct. 1, 2021, and will:

  • Provide a net 2.2% increase to the LTCH standard operating rate, after budget neutrality, for facilities that comply with the CMS quality reporting program (QRP) requirements. Facilities that fail to comply are subject to a 2 percentage point reduction.
  • Continue to pay all site-neutral cases at the full site-neutral rate, instead of the prior 50/50 blend of LTCH PPS and site-neutral rates. The CMS projects that site-neutral payments will account for 10% of all Medicare payments to LTCHs in FY 2022.
  • Adapt certain methodologies used to calculate the annual payment update to account for the impact of the COVID-19 public health emergency (PHE). The CMS used pre-PHE data from FY 2019 to set the FY 2022 payment rates.
  • Increase the high-cost outlier threshold by 21% from $27,195 to $33,015 for cases paid at the standard LTCH rate. The outlier threshold for cases paid at the site-neutral rate would continue to mirror the inpatient PPS outlier threshold finalized at $30,988.
  • Expand the LTCH quality reporting program (QRP) to assess the rate of COVID-19 Vaccination Coverage Among Health Care Personnel measure, with this rate to be publicly reported on the LTCH Care Compare website.
  • Update the denominator of the Transfer of Health Information to the Patient measure to exclude patients discharged to their homes under the care of a home health agency or hospice.
  • Begin public reporting for two additional quality measures — Compliance with Spontaneous Breathing Trial by Day 2 of the LTCH Stay and Ventilator Liberation Rate — beginning with the update of Care Compare in March 2022. The inaugural display of the measures will use data collected in the third quarter of 2020 through the second quarter of 2021; for subsequent updates, four rolling quarters of data will be used.
  • Finalize the agency’s proposals regarding publicly reported data affected by the COVID-19 reporting exemptions. In March 2020, the CMS issued guidance granting an exception to the LTCH QRP reporting requirements from the last quarter of 2019 through the second quarter of 2020.

The MHA will provide LTCHs with an updated impact analysis soon. Members with questions should contact Vickie Kunz at the MHA.