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Good News for LTACH — 21st Century Cures Act

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Good News for LTACH — 21st Century Cures Act

On Tuesday, December 13th, 2016, President Obama signed into law the 21st Century Cures Act (the “Act”).  The Act includes a number provisions related to innovation of healthcare technology, various healthcare research initiatives, and mental health support.  Notably, however, there were a number of provisions incorporated into the Act which affect Long-Term Acute Care Hospitals (LTACHs).  Murer Consultants provided a brief overview of some of the key changes below and indicate whether the changes should be viewed as a positive or negative for the LTACH industry:

  • The prior LTACH moratoria extended the three exceptions only to new LTACHs and satellites, but did not extend the exceptions to the related prohibition on bed expansion.  The 21st Century Cures Act allows LTACHs to apply the three exceptions to the moratorium on LTACH bed expansion as well.  As a reminder, these exceptions require that an institution, prior to April 1, 2014:
    • Begin or be in the midst of a 6 month data collection;
    • Have a binding agreement for the construction, renovation, lease, or demolition of an LTACH and expend a minimum of $2.5 million dollars; or
    • Receive a CON.

This provision is retroactively effective as of April 1, 2014.  This revised language would permit LTACHs with previous plans meeting the exceptions to expand their certified beds prior to the sunset of the statutory moratorium on September 30, 2017.

  • Reduction to LTACH high cost outlier payments, requiring a higher threshold for LTACH discharges to qualify for outlier payments (exact amount has not been finalized by the Office of Management and Budget).
  • Modifies the Bipartisan Budget Act of 2013 to extend the enforcement prohibition on the LTACH 25-percent rule, which generally requires that no more than 25 percent of an LTACH’s admissions can come from the same inpatient acute hospital to retroactively apply to discharges occurring on or after October 1, 2016.  The non-enforcement of the 25% rule is extended to September 30, 2017.

Applies to Limited LTACHs

  • 25 Day ALOS Calculation:  The Bipartisan Budget Act of 2013 excluded Medicare Advantage and site neutral discharges from the calculation of the 25-day average length of stay requirement for all LTACHs operating under the Medicare program as of December 26, 2013.  The 21st Century Cures Act added a provision affording the same relief to any LTACH that takes advantage of the current law moratorium exceptions.
  • Spinal Cord Specialty LTACHs:  Provides for a temporary exception of the LTACH site-neutral reimbursement for certain non-profit, spinal cord specialty LTACHs that treat patients nationwide with brain and spinal cord injuries for fiscal years 2018 and 2019.  This provision applies to LTACHS “primarily providing treatment for catastrophic spinal cord or acquired brain injuries or other paralyzing neuromuscular conditions,” defined as 50-plus percent of discharges in CY 2013 classified as DRGs 28, 29, 52, 57, 551, 573, and 963.
  • Severe Wounds for Grandfathered LTACHs:  Provides for a temporary exception during fiscal year 2018 for all grandfathered LTACHs classified prior to 1995  to exclude the payments for hospitalizations for severe wounds (defined as LTCH-DRGs 602, 603, 539, and 540) from LTACH site-neutral reimbursement.  Rather, this exception specifies that LTCH-PPS reimbursement shall apply for severe wounds for grandfathered LTACHs during FY 2018.

Murer Consultants is a national expert in the area of post-acute care and has been involved in the feasibility and then development of more than 50 LTACHs since 1990.  Once developed, Murer Consultants has assisted its clients in the management of these facilities.  Murer Consultants is available to assist providers in all aspects related to LTACHs.

For more information on how these rules may affect your program, please contact us at (708) 478-7030.

Happy Holidays!

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