January 30, 2004

Medicare Program; Prospective Payment System for Long-Term Care Hospitals: Proposed Annual Payment Rate Updates and Policy Changes; Proposed Rule

This rule proposes an update to the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs). The payment amounts and factors used to determine the proposed updated Federal rates that are described in this proposed rule have been determined based on the LTCH PPS rate year. The annual update of the longterm care diagnosis-related groups (LTCDRG) classifications and relative weights remains linked to the annual adjustments of the acute care hospital inpatient diagnosis-related group system, and will continue to be effective each October 1. The proposed outlier threshold for July 1, 2004, through June 30, 2005, would also be derived from the LTCH PPS rate year calculations. In this proposed rule, we also are proposing to make clarifications to the existing policy regarding the designation of a satellite of a LTCH as an independent LTCH. In addition, we are proposing to expand the existing interrupted stay policy and proposing a change in the procedure for counting days in the average length of stay calculation for Medicare patients for hospitals qualifying as LTCHs.