The moratorium on the full application of the 25 Percent Threshold Rule will expire for cost reporting periods beginning on or after October 1, 2013. It should be noted that the Rule does not apply to "subclause (II)" LTACHs, i.e. those that meet the requirements of 42 CFR § 412.23 (e)(2)(ii). With the expiration of the moratorium, full implementation of the 25 Percent Threshold Rule will apply to freestanding LTACHs and grandfathered, co-located LTACHs (those described in 42 CFR § 412.22(f)) for the first time. It will also lower the percentage threshold from 75% to 50% for co-located LTACHs in rural areas, as well as certain LTACHs admitting patients from MSA-dominant and urban single referring hospitals.
The moratorium is being allowed to lapse despite the fact that patient-level criteria for LTACHs have not yet been established. CMS believes that certain types of patients who are "chronically critically ill and considered medically complex" (CCI/MC) are more appropriate candidates for high-cost treatment at LTACHs than are other types of patients.
It appears to be the intent of CMS to ultimately define criteria for patients who should be treated at LTACHs, i.e. CCI/MC patients. If successfully implemented, these criteria may obviate the need for the 25 Percent Threshold Rule, although this is not guaranteed.
It should be noted, that for those discharges above the relevant threshold, LTACHs are paid the "IPPS-equivalent" amount which is different from the "IPPS-comparable" amount for short stay outliers. The "IPPS-comparable" amount is paid as a per diem not to exceed the full MS-DRG amount for that case. However, for purposes of the 25 Percent Threshold Rule the "IPPS-equivalent" amount is the entire MS-DRG amount such as would be payable under the IPPS.
Patients reaching high cost outlier status in the short term referral hospital are excluded from the 25% threshold calculation. CMS concedes in the final rule that it would make sense to exclude those that meet the patient-level criteria as they would be, by definition, appropriate for admission at a LTACH, but declines to do so at this time given that these criteria are not finalized. According to CMS, if they are "able to propose and finalize the CCI/MC patient profile framework and we retain the 25-percent threshold payment adjustment policy, we could consider excluding CCI/MC patients from the 25-percent threshold."