CMS Ends “Site Neutral” Transitional Payments for LTCH Discharges Occurring in Fiscal Years 2016 to 2019

In 1999 and 2000, the Centers for Medicare & Medicaid Services (CMS) established the Long-Term Care Hospitals (LTCH) Prospective Payment System (PPS) for LTCH cost reporting periods beginning October 1, 2002. The LTCH PPS pays for the operating and capital-related costs of hospital inpatient stays in LTCHs through prospectively set rates under Medicare Part A. CMS updates the LTCH PPS each fiscal year through rulemaking and sometimes imposes “transitional payments” to smooth changes in LTCH payment rates. Because the federal statutes governing the LTCH PPS do not always mandate a dollar amount impact to LTCH providers, CMS’ transitional payments and rulemaking often contain new proposals and final rules that disproportionately impact certain types of LTCH providers or services. CMS’ fiscal year 2020 LTCH PPS final rule, promulgated on August 16, 2019, contains such a change by eliminating transitional payments involving “site neutral payment rates.”

The original article, “CMS Ends “Site Neutral” Transitional Payments for LTCH Discharges Occurring in Fiscal Years 2016 to 2019,” first appeared as an AHLA Practice Group Bulletin on November 14, 2019.