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August 13, 2013

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Murer Consultants, Inc. 


Cherilyn G. Murer, JD, CRA 



Michael A. Murer, JD 

Executive Vice President


Lyndean L. Brick, JD

Senior Vice President


58 North Chicago Street

7th Floor

Joliet, Illinois 60432

(815) 727-3355

Fax:  (815) 727-3360  



Acute Care Hospitals  

2014 Final Rules  



On August 2, CMS issued a final rule updating fiscal year (FY) 2014 Medicare payment policies and rates for long-term acute care hospitals (LTACHs).  These changes will have a significant impact on LTACHs both from a payment and data reporting perspective. The particulars of the final rule are discussed below.



LTACH PPS Payment Rate


Under the final rule, the standard federal rate for LTACHs is being increased by 1.7%. However, this will be reduced by 2% (to negative 0.3%) for hospitals that do not submit quality reporting data for 2014. The projected increase in payments from FY 2013 is approximately $72 million (or 1.3%).  


The 25 Percent Threshold Rule


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."


Quality Measures

The quality measures discussed in the proposed rule have not changed significantly in the final rule. Three quality measures will be in effect for the FY 2014 and 2015 (CAUTI, CLABSI, and Pressure Ulcers) as well as two additional for FY 2016 (influenza vaccines for appropriate patients and influenza vaccine for personnel). The only change from proposed rule is that the data collection period for both of these will correspond to flu season. As such, starting in 2014, LTACHs will be required to collect flu vaccination data for personnel and all patients admitted or discharged during flu season (October 1 - April 30).


The three proposed quality measures for FY 2017 were also finalized. These include:  

  • National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset MRSA Bacteremia Outcome Measur
  • National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-Onset Clostridium Difficile Infection (CDI) Outcome Measure 
  • All-Cause Unplanned Readmission Measure for 30 days Post-Discharge from Long-Term Care Hospitals

Additionally, CMS has decided to finalize its proposal to adopt the quality measure (Application of the Percent of Residents Experiencing One or More Falls with Major Injury) for FY 2018 and subsequent years. There are other, future quality measures under consideration. These center on safety and healthcare-associated infections and conditions; effective clinical processes; patient safety; patient and care-giver centered care; and communication and coordination of care.


Murer Consultants has worked extensively in this area. The expertise of Murer Consultants, in conjunction with the hospital/health system, directs and maintains the long term acute care hospital as a vital and contributing venue responsive to the needs of the patient, family and community. Our consultants are prepared to answer your questions and discuss your plans regarding your organization's long term acute care hospital. Please contact Murer Consultants by phone at (815) 727-3355 or by email at 


We would be happy to assist you.


Murer Consultants