AHA Voices Concern Over CMS Payment Updates to LTC Hospitals

The American Hospital Association (AHA) expressed deep concern in response to long-term care (LTC) hospital payment updates finalized by the Centers for Medicare & Medicaid (CMS) on August 1, 2024.

“CMS’ payment updates for hospitals will exacerbate the already unsustainable negative or break-even margins many hospitals are already operating under as they care for their patients,” said Molly Smith, the association’s group vice president for public policy.

According to the AHA, the changes to the LTC hospital standard rate payment system will bump payments by 2% in fiscal year 2025. Also included are a market basket update of 3%, a cut of 0.5 percentage points for productivity, and a reduction in outlier payments.

“Specifically, due to an increase in the outlier threshold, CMS will reduce outlier payments as a percentage of total LTCH PPS [Long-Term Care Hospital Prospective Payment System] standard federal payment rate payments by 0.8%,” AHA reported. “CMS also finalized a rebasing of the LTCH market basket using a 2022 base year.”

The final LTC hospital outlier threshold represents an increase of 30%, Smith pointed out.

“Since FY 2021, this figure has increased by more than 180%, which forces these hospitals to absorb hundreds of thousands of dollars in additional losses when caring for the sickest patients,” Smith continued. “This increase will create serious access issues for patients and put additional burden back on acute-care hospitals and other providers that do not specialize in caring for this unique patient population.”

Smith also said a mandatory bundled payment model for 5 different surgical episodes in the final rule will not help to lower costs and promote quality care. 

“Not only is the model extremely similar to other bundled payment approaches that have failed to meet the statutory criteria for expansion as they have not reduced program costs or generated net savings,” she said, “it puts at particular risk many hospitals that are not of an adequate size or in a position to support the investments necessary to succeed.”

Reference
CMS releases FY 2025 final rule for long-term care hospitals. News release. American Hospital Association; August 1, 2024. Accessed August 6, 2024. https://www.aha.org/news/headline/2024-08-01-cms-issues-ltch-final-rule-fy-2025

AHA statement on FY 2025 final IPPS & LTCH payment rule. News release. American Hospital Association; August 1, 2024. Accessed August 6, 2024. https://www.aha.org/press-releases/2024-08-01-aha-statement-fy-2025-final-ipps-ltch-payment-rule