Medicare officially kills 25% rule for long-term care hospitals

The CMS on Thursday finalized its plan to eliminate the so-called 25% rule that would ding long-term care hospitals’ Medicare reimbursement rates.

Under the long-postponed policy, if more than a quarter of a long-term care hospital’s patients came from a single acute-care hospital, the long-term care hospital would receive a reduced Medicare reimbursement rate for patients exceeding that threshold.

The reduced rate would be 50% to 60% less than what they would have received otherwise, according to the National Association of Long Term Hospitals.

The 25% rule was first introduced in the CMS’ 2004 inpatient pay rule and has been delayed regularly since by both the CMS and Congress due to industry concerns. It was scheduled to finally kick in on Oct. 1.

Overall, under the changes included in this final rule, the CMS projects that long-term care hospital payments will increase by approximately 0.9%, or $39 million, in fiscal 2019. That’s down from the $110 million increase they received last year.

The latest inpatient pay rule also finalized the CMS’ overhaul of the meaningful use program to better emphasize measures that require the exchange of health information between providers and patients and give providers incentives to make it easier for patients to obtain their medical records electronically.

To reflect these priorities, it renamed the meaningful use program to “promoting interoperability” earlier this year.

The rule encourages providers to use application programming interfaces that would allow patients to collect their health information from multiple providers and incorporate all of their health information into a single application. That would allow patients to share their records with other clinicians easily, which could reduce duplication and improve continuity of care.

The rule will also eliminate some quality measures that acute-care hospitals report. All in all, the CMS will nix 18 measures, saving hospitals $72 million in reporting costs. The CMS said the measures were redundant and process-driven.

The changes outlined in the final annual inpatient hospital rule will give hospitals $4.8 billion more in Medicare inpatient funding next year. That amount is more than last fiscal year’s $2.4 billion bump in inpatient funding.

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